Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-4748
Griffin Gaming & Entertainment, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-0763055
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1133 Boardwalk, Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 344-6000
(Registrant's telephone number,
including area code)
Resorts International, Inc.
(Former name, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
Number of shares outstanding of each class of registrant's common
stock as of June 30, 1995: Common Stock - 7,941,035 shares and Class
B Redeemable Common Stock - 35,000 shares.
Exhibit Index is presented on page 21
Total number of pages 35
1<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
FORM 10-Q
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
at June 30, 1995 and
December 31, 1994 3
Consolidated Statements of
Operations for the Quarters
and Halves Ended June 30,
1995 and 1994 4
Consolidated Statements of
Cash Flows for the Halves
Ended June 30, 1995 and 1994 5
Notes to Consolidated
Financial Statements 6
Item 2. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations 10
Part II. Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 17
Item 4. Submission of Matters to a
Vote of Security Holders 17
Item 6. Exhibits and Reports on
Form 8-K 18
2<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
GRIFFIN GAMING & ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
June 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash (including cash equivalents
of $27,177 and $21,321) $ 41,958 $ 35,503
Restricted cash equivalents 5,359 5,388
Receivables, less allowance for
doubtful accounts of $4,010
and $3,901 7,608 6,509
Inventories 2,463 1,793
Prepaid expenses 8,809 9,531
Total current assets 66,197 58,724
Property and equipment, net of
accumulated depreciation of $55,972
and $49,024 254,509 246,758
Deferred charges and other assets 12,199 11,766
$332,905 $317,248
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
debt $ 560 $ 5
Accounts payable and accrued
liabilities 47,208 41,046
Total current liabilities 47,768 41,051
Long-term debt, net of unamortized
discounts 215,673 212,466
Deferred income taxes 53,700 53,700
Shareholders' equity:
Common Stock - $.01 par value 79 397
Class B Stock - $.01 par value
Capital in excess of par 129,572 129,237
Accumulated deficit (113,887) (119,603)
Total shareholders' equity 15,764 10,031
$332,905 $317,248
3<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
(Unaudited)
Quarter Ended Half Ended
June 30, June 30,
1995 1994 1995 1994
Revenues:
Casino $68,514 $ 72,314 $130,632 $ 147,042
Rooms 1,721 5,004 3,067 16,504
Food and beverage 2,867 7,359 5,897 20,703
Other casino/hotel revenues 1,458 2,903 2,644 9,732
Other operating revenues 1,136 4,577
Real estate related 2,140 2,100 4,221 4,130
76,700 90,816 146,461 202,688
Expenses:
Casino 38,922 37,266 75,986 85,659
Rooms 907 1,556 1,882 4,345
Food and beverage 3,251 6,726 6,640 17,172
Other casino/hotel
operating expenses 8,489 11,872 17,121 29,018
Other operating expenses 860 3,483
Selling, general and
administrative 9,271 13,709 19,393 29,451
Depreciation 3,774 4,485 6,962 10,790
Real estate related (96) 473 140 789
Write-down of non-operating
real estate 20,525 20,525
Loss on SIHL Sale 73,108 73,108
64,518 170,580 128,124 274,340
Earnings (loss) from
operations 12,182 (79,764) 18,337 (71,652)
Other income (deductions):
Interest income 735 537 1,972 1,226
Interest expense (6,308) (4,960) (12,599) (23,085)
Amortization of debt
discounts (913) (761) (1,994) (13,331)
Recapitalization costs (5,406) (9,788)
Proceeds from Litigation
Trust 2,542
Earnings (loss) before
extraordinary item 5,696 (90,354) 5,716 (114,088)
Extraordinary item - gain on
exchange of debt 187,300 187,300
Net earnings $ 5,696 $ 96,946 $ 5,716 $ 73,212
Per share data - primary:
Earnings (loss) before
extraordinary item $ .65 $(14.31) $ .68 $(22.03)
Extraordinary item 29.66 36.17
Net earnings $ .65 $ 15.35 $ .68 $ 14.14
Weighted average number
of shares and equivalents 8,788 6,315 8,366 5,179
Per share data - fully diluted:
Net earnings $ .65 $ .66
Weighted average number
of shares and equivalents 8,788 8,704
4<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Half Ended
June 30,
1995 1994
Cash flows from operating activities:
Cash received from customers $ 145,426 $ 198,959
Cash paid to suppliers and employees (114,173) (164,474)
Cash flow from operations before
interest and income taxes 31,253 34,485
Interest received 1,931 1,458
Interest paid (12,410) (4,113)
Income taxes paid (345)
Net cash provided by operating
activities 20,774 31,485
Cash flows from investing activities:
Cash proceeds from SIHL Sale, net of
cash balances transferred 38,742
Payments for property and equipment (14,713) (4,995)
Proceeds from sale of property 19
Casino Reinvestment Development
Authority deposits and bond
purchases (1,420) (1,360)
Net cash provided by (used in)
investing activities (16,133) 32,406
Cash flows from financing activities:
Proceeds from borrowing 1,815
Cash (including cash proceeds of SIHL
Sale) distributed to noteholders (101,129)
Collection of note receivable from
related party 3,008
Payments of recapitalization costs (6,106)
Proceeds from Litigation Trust 2,542
Repayments of non-public debt (47) (63)
Proceeds from exercise of stock
options 17
Net cash provided by (used in)
financing activities 1,785 (101,748)
Net increase (decrease) in cash and
cash equivalents 6,426 (37,857)
Cash and cash equivalents at beginning
of period 40,891 76,794
Cash and cash equivalents at end
of period $ 47,317 $ 38,937
5<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. General:
The accompanying consolidated interim financial statements, which
a r e u naudited, include the operations of Griffin Gaming &
Entertainment, Inc. ("GGE") and its subsidiaries. GGE was known as
Resorts International, Inc. until its name change, which was effective
June 30, 1995. "GGE" is used herein to refer to the corporation both
before and after its name change. The term "Company" as used herein
includes GGE and/or one or more of its subsidiaries, as the context
may require.
W h i l e the accompanying interim financial information is
unaudited, management of the Company believes that all adjustments
necessary for a fair presentation of these interim results have been
made and all such adjustments are of a normal recurring nature.
The notes presented herein are intended to provide supplemental
disclosure of items of significance occurring subsequent to December
31, 1994 and should be read in conjunction with the Notes to
Consolidated Financial Statements contained in pages 42 through 61 of
GGE's Annual Report on Form 10-K for the year ended December 31, 1994.
B. Disposition of Paradise Island and Related Operations:
The Company disposed of its Paradise Island operations and
properties as part of a prepackaged bankruptcy plan of reorganization
(the "Plan"), which was effective May 3, 1994. Pursuant to the Plan,
GGE sold 100% of the equity of its Bahamian subsidiaries along with
certain assets and liabilities of GGE and its U.S. subsidiaries which
supported the Paradise Island operations (the "SIHL Sale") to Sun
International Hotels Limited ("SIHL").
The consolidated statements of operations include the Paradise
Island operations through April 30, 1994.
F o r information as to the revenues and contribution to
consolidated earnings from operations of the operations disposed of,
see the Paradise Island portion of the casino/hotel segment and the
airline segment included in the segment tables in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
C. Reverse Repurchase Agreements:
Cash equivalents at June 30, 1995 included reverse repurchase
agreements (federal government securities purchased under agreements
to resell those securities) with the institutions listed in the
following table under which the Company had not taken delivery of the
underlying securities. These agreements matured on July 3, 1995,
except for $10,000 with City National Bank of Florida which will
mature on August 24, 1995.
6<PAGE>
(In Thousands of Dollars)
Prudential Securities, Inc. $19,643
National Westminster Bank NJ $ 7,588
City National Bank of Florida $ 1,734
D. Reverse Stock Split:
On June 27, 1995, GGE's shareholders approved a one-for-five
reverse stock split (the "Reverse Stock Split") of GGE's common stock
(the "Common Stock"), par value $.01 per share, of which there were
previously 100,000,000 shares authorized. The Reverse Stock Split
became effective on June 30, 1995, on which date each share of Common
Stock was reclassified into one-fifth of a new share of Common Stock
and the total authorized shares of Common Stock was, therefore,
reduced to 20,000,000. The par value of the Common Stock remains $.01
per share after the Reverse Stock Split. As of June 30, 1995,
$318,000 was reclassified from Common Stock to capital in excess of
par in order to reflect the Reverse Stock Split. GGE's Class B
Redeemable Common Stock (the "Class B Stock"), of which 35,000 shares
are outstanding and 120,000 shares are authorized, was not affected by
the Reverse Stock Split.
E. Stock Options and Warrants:
In March 1995, the Compensation/Option Committee of GGE's Board
of Directors granted options to purchase 115,000 shares of Common
Stock at an exercise price of $10.46875 per share (after adjustment
for the Reverse Stock Split), subject to the approval by GGE's
shareholders of certain amendments to GGE's 1994 Stock Option Plan
(the "1994 SOP"). Such approval was granted in June 1995. These
options are to vest 25% on September 27, 1995, and 25% on August 1,
1996, 1997 and 1998.
On June 30, 1995, in accordance with the 1994 SOP, the four
members of the Compensation/Option Committee were each granted options
to purchase 1,000 shares of Common Stock at an exercise price of
$14.0625 (after adjustment for the Reverse Stock Split). These
options are fully exercisable.
In accordance with the anti-dilution and adjustment provisions of
the 1994 SOP, GGE's previous stock option plan (the "1990 SOP") and
GGE's outstanding warrants, all of GGE's outstanding options and
warrants as of June 30, 1995 were reduced by 80% and the exercise
prices were increased accordingly as a result of the Reverse Stock
Split. As of June 30, 1995, GGE had the following options and
warrants outstanding after adjustment for the Reverse Stock Split:
7<PAGE>
Exercise Options Options
Plan Price Outstanding Exercisable
1990 SOP $ 9.37500 281,677 281,677
1994 SOP $ 5.15625 206,700 3,000
1994 SOP $10.46875 115,000 0
1994 SOP $14.06250 4,000 4,000
Warrants $ 6.00000 933,370 933,370
1,540,747 1,222,047
F. Complimentary Services:
The Consolidated Statements of Operations reflect each category
of operating revenues excluding the retail value of complimentary
services provided to casino patrons without charge. The rooms, food
and beverage, and other casino/hotel operations departments allocate a
percentage of their total operating expenses to the casino department
for complimentary services provided to casino patrons. These
allocations do not necessarily represent the incremental cost of
providing such complimentary services to casino patrons. Amounts
a l l ocated to the casino department from the other operating
departments were as follows:
Quarter Ended Half Ended
June 30, June 30,
(In Thousands of Dollars) 1995 1994 1995 1994
Rooms $1,248 $1,033 $ 2,299 $ 2,172
Food and beverage 4,203 3,607 8,149 8,166
Other casino/hotel operations 1,397 1,747 2,715 3,403
Total allocated to casino $6,848 $6,387 $13,163 $13,741
G. Per Share Data:
Per share data was computed using the weighted average number of
shares of outstanding Common Stock. When dilutive, stock options and
warrants were included as share equivalents using the treasury stock
method. Per share data has been restated for all periods presented to
give effect to the Reverse Stock Split.
8<PAGE>
H. Statements of Cash Flows:
Supplemental disclosures required by Statement of Financial
Accounting Standards No. 95 "Statement of Cash Flows" are presented
below.
Half Ended
June 30,
(In Thousands of Dollars) 1995 1994
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings $ 5,716 $ 73,212
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Extraordinary item - gain on exchange
of debt (187,300)
Loss on SIHL Sale 73,108
Write-down of non-operating real
estate 20,525
Depreciation 6,962 10,790
Amortization of debt discounts 1,994 13,331
Provision for doubtful receivables 500 1,097
Provision for discount on Casino
Reinvestment Development Authority
obligations, net of amortization 654 694
Deferred tax benefit (300)
Recapitalization costs 9,788
Proceeds from Litigation Trust (2,542)
Net loss on sale of property 138
Net (increase) decrease in receivables (1,599) 43
Net (increase) decrease in inventories
and prepaid expenses (120) 3,445
Net (increase) decrease in deferred
charges and other assets 414 (17)
Net increase in accounts payable
and accrued liabilities 6,253 15,473
Net cash provided by operating activities $20,774 $ 31,485
9<PAGE>
Half Ended
June 30,
(In Thousands of Dollars) 1995 1994
Non-cash investing and financing
activities:
Exchange of real estate in Atlantic
City (at carrying value of property
exchanged) $1,501
Exchange of Senior Secured Redeemable
Notes due April 15, 1994 for:
Mortgage Notes due 2003 and Junior
Mortgage Notes due 2004 (at
estimated market value) $135,300
SIHL Series A Ordinary Shares (at
estimated market value) 60,000
Common Stock (at estimated market
value) 24,415
Other liabilities 1,130
Reduction in note receivable from
related party applied to prepaid
services 2,310
Issuance of Common Stock in
settlement of certain
recapitalization costs 865
Increase in liabilities for additions
to other assets 81 122
I. Commitments and Contingencies:
GGE and certain of its subsidiaries are defendants in certain
litigation. In the opinion of management, based upon advice of
counsel, the aggregate liability, if any, arising from such litigation
w i ll not have a material adverse effect on the accompanying
consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION
Liquidity
At June 30, 1995 the Company's working capital amounted to
$ 1 8 , 4 29,000, including unrestricted cash and equivalents of
$41,958,000. A substantial amount of the unrestricted cash and
e q u i valents is required for day-to-day operations, including
approximately $10,000,000
10<PAGE>
of currency and coin on hand which amount varies by days of the week,
holidays and seasons, as well as additional cash balances necessary to
meet current working capital needs.
In addition, the Company has a $19,738,000 senior credit facility
(the "Senior Facility") available for the period ending May 2, 1996
should the Company have unforeseen cash needs. The Company believes
that the Senior Facility will serve as a safeguard if an emergency
arises from current operations, or serve as a source of funds for a
profitable investment opportunity. However, market interest rates and
other economic conditions, among other factors, will determine if it
is appropriate for the Company to draw on the Senior Facility.
Capital Expenditures and Resources
During the first half of 1995 the Company's $14,713,000 of
capital expenditures included approximately $6,100,000 for an Atlantic
City land acquisition, $3,700,000 for the conversion of certain
existing facilities into an additional 10,000 square feet of casino
gaming area and $2,300,000 for restaurant renovations at Merv
Griffin's Resorts Casino Hotel (the "Resorts Casino Hotel") in
Atlantic City. Although the latter two projects are now in service,
they will require approximately $1,100,000 of additional expenditures.
The Company purchased a 4.4 acre tract on the Boardwalk, adjacent
to Resorts Casino Hotel, from an affiliate of Harrah's Atlantic City
in exchange for certain non-operating real estate in the marina area
of Atlantic City and cash. The Company has been leasing this property
and using it as a parking lot since 1985. The Company expects to use
this additional acreage to expand its Atlantic City operations.
The Company modified a portion of its bus waiting area to house
approximately 180 slot machines and converted Mr. G's lounge to
accommodate approximately 135 more slot machines. This project was
completed by Memorial Day weekend. The cost noted above includes the
cost of slot machines and related equipment. The new slot machines
were financed by a $1,815,000 bank loan.
In late June 1995 the Company opened the California Pizza Kitchen
and the new Oceanside cocktail lounge in the space formerly occupied
by the Celebrity Deli in Resorts Casino Hotel.
RESULTS OF OPERATIONS
General
The Paradise Island portion of the casino/hotel segment and the
airline segment were disposed of through the SIHL Sale effective May
3, 1994. Results of these operations for the first four months of
1994 are included in the segment tables which follow.
11<PAGE>
Revenues
Revenues by geographic and business segment were as follows (in
thousands of dollars):
Quarter Ended Half Ended
June 30, June 30,
1995 1994 1995 1994
Casino/hotel:
Atlantic City, New Jersey:
Casino $68,514 $65,278 $130,632 $118,927
Rooms 1,721 1,907 3,067 3,085
Food and beverage 2,867 3,943 5,897 7,057
Other casino/hotel 1,458 1,092 2,644 2,024
74,560 72,220 142,240 131,093
Paradise Island,
The Bahamas (a):
Casino 7,036 28,115
Rooms 3,097 13,419
Food and beverage 3,416 13,646
Other casino/hotel 1,811 7,708
-0- 15,360 -0- 62,888
Total casino/hotel 74,560 87,580 142,240 193,981
Real estate related -
Atlantic City, New Jersey 2,140 2,100 4,221 4,130
Airline (a) 1,446 5,674
Other segments 2 7
Intersegment eliminations (312) (1,104)
Revenues from operations $76,700 $90,816 $146,461 $202,688
(a) These operations were disposed of through the SIHL Sale.
Second Quarter and First Half 1995 Compared to 1994
Casino/hotel - Atlantic City, New Jersey
Casino revenues increased by $3,236,000 and $11,705,000 for the
second quarter and first half of 1995, respectively. For the second
quarter, the increase was due to increased slot revenues resulting
from increased amounts wagered. For this period a slight increase in
table game win was more than offset by a decrease in revenues from
poker, simulcasting and keno.
For the first half, the Company's slot win and table game win
increased by $11,514,000 and $1,036,000, respectively. The Company's
revenue from poker, simulcasting and keno was down for the first half
of 1995. The Company's slot win and table game win were both up
primarily
12<PAGE>
due to increases in amounts wagered, though slot win was also
favorably affected by an increase in hold percentage (ratio of casino
win to total amount wagered).
The increased amounts wagered reflect the Company's increased
emphasis on bus and junket air programs. In addition, poor weather
conditions during the first quarter of 1994 adversely affected
operations in that period as the principal means of transportation to
Atlantic City is by automobile or bus.
The decreases in food and beverage revenues for both the second
quarter and the first half of 1995 are primarily attributable to the
closing of the Celebrity Deli in early April and, to a lesser extent,
Mr. G's lounge in mid March for the renovations discussed under
"FINANCIAL CONDITION - Capital Expenditures and Resources" above.
Casino/hotel - Paradise Island, The Bahamas
The Company's Paradise Island casino/hotel facilities were
disposed of in the SIHL Sale effective May 3, 1994. The Company's
Paradise Island revenues for 1994 reflect the Company's operation of
the Paradise Island properties through April 30, 1994.
Airline
The Company's airline operation was effectively disposed of in
the SIHL Sale by means of an option/put agreement with a nominal
option price. The only aircraft owned by the Company was transferred
to a subsidiary of SIHL as part of the SIHL Sale. Pursuant to an
agreement, the Company operated the airline on behalf of SIHL for a
small management fee through early May 1995. All profits earned or
losses incurred in such operation accrued to or were borne by SIHL.
Airline revenues presented in the segment tables herein reflect
airline operations through April 30, 1994.
13<PAGE>
Contribution to Consolidated Earnings (Loss) Before Extraordinary Item
Results by geographic and business segment were as follows (in
thousands of dollars):
Quarter Ended Half Ended
June 30, June 30,
1995 1994 1995 1994
Casino/hotel:
Atlantic City, New Jersey $ 7,440 $ 6,988 $10,259 $ 5,297
Paradise Island,
The Bahamas (a)(b) 3,794 10,206
7,440 10,782 10,259 15,503
Real estate related -
Atlantic City, New Jersey 2,232 (18,902) 4,072 (17,194)
Airline(a)(b) (2) (7)
Other segments (7) (24)
Corporate expense, net of
management fees 2,510 1,473 4,006 3,178
Loss on SIHL Sale (73,108) (73,108)
Earnings (loss) from
operations 12,182 (79,764) 18,337 (71,652)
Other income (deductions):
Interest income 735 537 1,972 1,226
Interest expense (6,308) (4,960) (12,599) (23,085)
Amortization of debt
discounts (913) (761) (1,994) (13,331)
Recapitalization costs (5,406) (9,788)
Proceeds from Litigation
Trust 2,542
Earnings (loss) before
extraordinary item $ 5,696 $(90,354) $ 5,716 $(114,088)
(a) These operations were disposed of through the SIHL Sale.
( b ) The Paradise Island casino/hotel segment subsidized the
operations of Paradise Island Airlines, Inc. in the amounts of
$388,000 and $993,000 for the second quarter and first half,
respectively, of 1994.
Second Quarter and First Half 1995 Compared to 1994
Casino/hotel - Atlantic City, New Jersey
For the second quarter and first half of 1995 casino, hotel and
related operating results increased by $452,000 and $4,962,000,
respectively, as the increased revenues described above were partially
offset by net increases in operating costs.
14<PAGE>
For the second quarter the most significant variance in operating
expenses was an increase in casino promotional costs ($2,100,000).
For the first half the most significant variances in operating
expenses were increases in casino promotional costs ($4,200,000) and
casino win tax ($1,000,000). Casino promotional costs increased
primarily due to increases in the amount of cash giveaway to bus
patrons and costs associated with the expanded junket air program.
Casino win tax increased relative to the increase in casino revenues.
Casino/hotel - Paradise Island, The Bahamas
The Company's Paradise Island casino/hotel facilities were
disposed of in the SIHL Sale effective May 3, 1994. The Paradise
Island operating results for 1994 reflect the Company's operation of
the Paradise Island properties through April 30, 1994.
Real Estate Related - Atlantic City, New Jersey
Atlantic City real estate related results for both the second
quarter and the first half of 1995 include a $400,000 credit from the
favorable settlement of certain prior years' property tax appeals.
The results for this segment for both the second quarter and the first
half of 1994 include a charge of $20,525,000 for the write-down of
certain non-operating properties to net realizable value.
Airline
The Company's airline operation was effectively disposed of in
the SIHL Sale by means of an option/put agreement with a nominal
option price. Pursuant to an agreement, the Company operated the
airline on behalf of SIHL for a small management fee through early May
1995. All profits earned or losses incurred in such operation accrued
to or were borne by SIHL. Operating results of the airline segment
presented in the segment tables herein include airline operations
through April 30, 1994.
Corporate Expense
The corporate expense segment includes credits for management
fees which GGE charges certain subsidiaries based on three percent of
their gross revenues. The corresponding charges are included in the
segments where the respective subsidiary's operations are reported.
Management fees charged to Resorts International Hotel, Inc. ("RIH"),
GGE's subsidiary that owns and operates the Resorts Casino Hotel,
amounted to $2,446,000 and $2,355,000 for the second quarter of 1995
and 1994, respectively, and $4,646,000 and $4,288,000 for the first
half of 1995 and 1994, respectively. Management fees charged to other
subsidiaries totalled $473,000 and $1,971,000 for the second quarter
and first half, respectively, of 1994.
Corporate expense for the second quarter and first half of 1995
i n c ludes a credit of $1,000,000 from a favorable litigation
settlement.
15<PAGE>
T h e Environmental Protection Agency ("EPA") has named a
predecessor to GGE as a potentially responsible party in the Bay Drum
hazardous waste site (the "Site") in Tampa, Florida which the EPA has
listed on the National Priorities List. No formal action has
commenced against GGE and GGE intends to dispute any claims of this
nature, if asserted. Although it may ultimately be determined that
GGE is one of several hundred parties that are jointly and severally
liable for the costs of Site remediation and for damages to natural
resources at the Site caused by hazardous wastes, the extent of such
liability, if any, cannot be determined at this time.
Loss on SIHL Sale
The loss on SIHL Sale represents the difference between the
carrying values and the fair values of the assets and equity interests
sold in the SIHL Sale. See Note B of Notes to Consolidated Financial
Statements.
Other Income (Deductions)
The decreases in interest expense and amortization of debt
discounts for the first half of 1995 are attributable to the
restructuring of the Company's debt pursuant to the Plan. The Plan
resulted in GGE's exchange of its previously outstanding Senior
Secured Redeemable Notes due 1994 (the "Series Notes") for, among
other things, Mortgage Notes and Junior Mortgage Notes issued by a
subsidiary of GGE. This exchange resulted in a significant decrease
in the principal amount of debt outstanding as well as a reduction in
interest rates.
Interest expense for the second quarter of 1995 was greater than
that of the second quarter of 1994, as the Company did not accrue
interest on its Series Notes from the date it entered bankruptcy
proceedings, March 21, 1994, through the effective date of the
reorganization, May 3, 1994. The Company's Mortgage Notes and Junior
Mortgage Notes were issued on May 3, 1994.
Recapitalization costs include legal and other advisory fees
incurred in connection with the restructuring that was effected in May
1994.
Proceeds from Litigation Trust represent the distribution that
the Company received as a holder of units of beneficial interest in a
litigation trust (the "Litigation Trust") established under a previous
plan of reorganization.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
The following is an update of the status of certain litigation
which was previously described in "Item 3. Legal Proceedings" of GGE's
Annual Report on Form 10-K for the year ended December 31, 1994.
16<PAGE>
U.S. District Court Action - Rogers
The Company was served in this action on July 28, 1995, and has
until August 17, 1995 to file an answer to the complaint.
U.S. District Court Action - RII v. Lowenschuss
The Company's action against the Trustee of the Fred Lowenschuss
Associates Pension Plan is scheduled for trial on September 29, 1995
in the Bankruptcy Court for the District of New Jersey.
Item 2. Changes in Securities
Reverse Stock Split
At the annual meeting held on June 27, 1995, GGE's shareholders
approved changes to GGE's Amended and Restated Certificate of
Incorporation to allow for the one-for-five Reverse Stock Split of
Common Stock, $.01 par value, of which there were previously
100,000,000 shares authorized. The Reverse Stock Split became
effective on June 30, 1995, on which date each share of Common Stock
was reclassified into one-fifth of a new share of Common Stock and the
total authorized shares of Common Stock was, therefore, reduced to
20,000,000. The Class B Stock, of which 35,000 shares are outstanding
and 120,000 shares are authorized, was not affected by the Reverse
Stock Split. A copy of the form of amendment to GGE's Amended and
Restated Certificate of Incorporation is included as an exhibit
hereto.
Amendments to 1994 Stock Option Plan
At the annual meeting held on June 27, 1995, GGE's shareholders
approved amendments to GGE's 1994 Stock Option Plan to permit the
grant of non-qualified stock options to directors of subsidiaries of
GGE and to consultants and others providing services to the Company
and to increase the maximum number of options that may be granted in
any one year to officer and key employee participants. A copy of the
1994 Stock Option Plan, as amended, is filed as an exhibit hereto.
Item 4. Submission of Matters to a Vote of Security Holders
GGE held its annual meeting of shareholders on June 27, 1995, at
which meeting the following actions were taken:
(i) Shareholders elected Thomas E. Gallagher and Jay M.
Green to serve as directors. (The other four members of
GGE's Board of Directors, Merv Griffin, William J. Fallon,
Charles M. Masson and Vincent J. Naimoli, continue to serve
as directors.)
(ii) Shareholders approved the one-for-five Reverse Stock
Split of Common Stock, par value $.01 per share.
17<PAGE>
(iii) Shareholders approved an amendment to GGE's Amended
and Restated Certificate of Incorporation to change the name
of the company from "Resorts International, Inc." to
"Griffin Gaming & Entertainment, Inc."
(iv) Shareholders approved amendments to the Company's
1994 Stock Option Plan to permit the grant of non-qualified
stock options to directors of subsidiaries of GGE and to
consultants and others providing services to the Company and
to increase the maximum number of options that may be
granted in any one year to officer and key employee
participants.
(v) Shareholders ratified the appointment of Ernst &
Y o ung LLP, independent accountants, as the Company's
auditors for the fiscal year ending December 31, 1995.
A tabulation of votes on each of the matters voted on at the
annual meeting is presented below. Holders of Class B Stock were not
entitled to vote.
Votes Votes
FOR AGAINST Abstentions
Election of Thomas E.
Gallagher 35,120,169 1,002,340
Election of Jay M. Green 35,233,648 888,861
One-for-five Reverse Stock
Split 33,634,850 2,186,334 301,325
Company name change 34,695,353 1,219,904 207,252
Amendments to 1994 Stock
Option Plan 32,110,802 3,512,716 498,991
Ratification of auditors 35,500,808 310,089 311,612
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The following Part I exhibits are filed herewith:
Exhibit
Number Exhibit
(11) Statement re computation of per share data.
(27) Financial data schedule.
18<PAGE>
The following Part II exhibits are filed herewith:
Exhibit
Number Exhibit
(4)(a) Form of Amendment to Amended and Restated Certificate
of Incorporation. (Incorporated by reference to
Exhibit A to registrant's Definitive Proxy Statement
filed on May 23, 1995 on Schedule 14A.)
(4)(b) Resorts International, Inc. 1994 Stock Option Plan (as
amended on June 27, 1995).
b. Reports on Form 8-K
No Current Report on Form 8-K was filed by GGE covering an event
during the second quarter of 1995. No amendments to previously filed
Forms 8-K were filed during the second quarter of 1995.
19<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GRIFFIN GAMING & ENTERTAINMENT, INC.
(Registrant)
/s/ Matthew B. Kearney
Matthew B. Kearney
Executive Vice President - Finance
(Authorized Officer of Registrant
and Chief Financial Officer)
Date: August 10, 1995
20<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-Q for the quarterly period
ended June 30, 1995
EXHIBIT INDEX
Exhibit Reference to Previous Filing
Number Exhibit or Page Number in Form 10-Q
(4)(a) Form of Amendment to Incorporated by reference to
Amended and Restated Exhibit A to registrant's
Certificate of Definitive Proxy Statement
Incorporation. filed on May 23, 1995 on
Schedule 14A.
(4)(b) Resorts International, Page 22.
Inc. 1994 Stock Option
Plan (as amended on
June 27, 1995).
(11) Statement re computation Page 34.
of per share data.
(27) Financial data schedule. Page 35.
21<PAGE>
EXHIBIT (4)(b)
RESORTS INTERNATIONAL, INC.
1994 Stock Option Plan
(as amended on June 27, 1995)
1. Purpose
Resorts International, Inc., a Delaware corporation ("RII"), by
means of this Stock Option Plan (the "Plan"), desires to afford
certain of its directors, officers, key employees, consultants and
others providing services to RII, and the directors, officers and key
employees of, and consultants and others providing services to, any
subsidiary thereof now existing or hereafter formed or acquired, an
opportunity to acquire a proprietary interest in RII, and thus to
create in such persons an increased interest in and a greater concern
for the welfare of RII and any subsidiary. As used in the Plan, the
term "subsidiary" shall mean any entity in which RII, directly or
indirectly, owns a controlling interest.
The stock options described in Sections 6, 7 and 8 (the
"Options"), and the shares of common stock, $.01 par value per share,
of RII (the "Common Stock") acquired pursuant to the exercise of such
Options are a matter of separate inducement and are not in lieu of any
salary or other compensation for services.
The Options granted under Section 6 are intended to be either
incentive stock options ("Incentive Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or options that do not meet the requirements for Incentive
Options ("Non-Qualified Options"), but RII makes no warranty as to the
qualification of any Option as an Incentive Option.
2. Administration
The Plan shall be administered by the Option Committee, or any
successor thereto, of the Board of Directors of RII or by such other
committee as determined by the Board (the "Committee"). The Committee
shall consist of not less than two members of the Board of Directors
of RII, each of whom shall qualify as a "disinterested person" to
administer the Plan within the meaning of Rule 16b-3, as amended, or
other applicable rules under Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and each of whom shall
qualify as an "outside director" within the meaning of Section 162(m)
of the Code. The Committee shall administer the Plan so as to conform
at all times with the provisions of Section 16(b) of the Exchange Act
and Rule 16b-3 promulgated thereunder. A majority of the Committee
shall constitute a quorum, and subject to the provisions of Section 5
the acts of a majority of the members present at any meeting at which
a quorum is present, or acts approved unanimously in writing by the
Committee, shall be the acts of the Committee.
22<PAGE>
The Committee may delegate to one or more of its members, or to
one or more agents, such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated
duties as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may
have under the Plan. The Committee may employ attorneys, consultants,
accountants, or other persons and the Committee, RII and its officers
and directors shall be entitled to rely upon the advice, opinions or
v a luations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon all persons who have received grants
under the Plan, RII and all other interested persons. No member or
agent of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the
Plan and all members and agents of the Committee shall be fully
protected by RII in respect of any such action, determination or
interpretation.
3. Shares Available
Subject to the adjustments provided in Section 10, the maximum
aggregate number of shares of Common Stock which may be purchased
pursuant to the exercise of Options granted under the Plan shall not
exceed 2,333,425 shares of Common Stock. If, for any reason, any
shares as to which Options have been granted cease to be subject to
purchase thereunder, including without limitation the expiration of
such Options, the termination of such Options prior to exercise or the
forfeiture of such Options, such shares thereafter shall be available
for grants to such individual or other individuals under the Plan
unless such shares, if so made available, would not be exempt under
Section 16(b) of the Exchange Act pursuant to Rule 16b-3. Options
granted under the Plan may be fulfilled in accordance with the terms
of the Plan with either authorized and unissued shares of Common Stock
or issued shares of such Common Stock held in RII's treasury or both,
at the discretion of RII.
4. Eligibility and Bases of Participation
Grants under the Plan (i) may be made, pursuant to Section 6, to
key employees and officers of RII or any subsidiary thereof who are
regularly employed on a salaried basis by RII or any subsidiary
thereof and who are so employed on the date of such grant (the
"Officer and Key Employee Participants"), (ii) may be made, pursuant
to Section 6, to directors of RII, other than Committee Participants
(as defined below), who are not employees and who are retained in such
capacity on the date of such grant (the "Director Participants"),
(iii) may be made, pursuant to Section 7, to individuals who serve on
the Committee or have been named to serve on the Committee in the
future (the "Committee Participants"), and (iv) may be made, pursuant
to Section 8, to directors of any subsidiary of RII and to consultants
and others providing services to RII or any subsidiary thereof (the
"Subsidiary and Consultant Participants").
The Officer and Key Employee Participants and the Director
Participants collectively are referred to as the "Grant Participants".
23<PAGE>
5. Authority of Committee
Subject to and not inconsistent with the express provisions of
the Plan and the Code, the Committee shall have plenary authority, in
its sole discretion, to:
a. other than with respect to Committee Participants, determine
the persons to whom Options shall be granted, the time when
such Options shall be granted, the number of Options, the
purchase price or exercise price of each Option, the
restrictions to be applicable to Options and the other terms
and provisions thereof (which need not be identical);
b. provide an arrangement through registered broker-dealers
whereby temporary financing may be made available to an
o p t ionee by the broker-dealer, under the rules and
regulations of the Federal Reserve Board, for the purpose of
assisting the optionee in the exercise of an Option, such
authority to include the payment by RII of the commissions,
fees and charges of the broker-dealer;
c. establish procedures for an optionee to pay the exercise
price of an Option in whole or in part by delivering that
number of shares owned by such optionee or by withholding
from the shares otherwise issuable upon the exercise of the
Option that number of shares having a Fair Market Value on
the date preceding the date of exercise which shall equal
the Option exercise price for the number of shares of Common
Stock as to which the optionee desires to exercise the
Option;
d. establish procedures for the collection of any taxes
required by any government to be withheld or otherwise
deducted and paid by RII or any subsidiary in respect of the
issuance or disposition of Common Stock acquired pursuant to
t h e exercise of an Option granted hereunder, which
procedures may include payment in whole or in part through
the delivery of shares of Common Stock owned by the optionee
or withholding from the shares otherwise issuable upon
exercise of the Option, valued on the basis of the Fair
Market Value on the date preceding such exercise;
e. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
f. make all determinations specified in or permitted by the
Plan or deemed necessary or desirable for its administration
or for the conduct of the Committee's business; and
g. establish any procedures determined to be appropriate in
discharging its responsibilities under the Plan.
6. Stock Options for Grant Participants
The Committee shall have the authority, in its sole discretion,
to grant Incentive Options or Non-Qualified Options or both Incentive
24<PAGE>
Options and Non-Qualified Options to Grant Participants (any such
Options, the "Participant Options") during the period beginning on May
3 , 1994 (the "Effective Date") and ending May 3, 2004 (the
"Termination Date"). Notwithstanding anything contained herein to the
contrary, Incentive Options may be granted only to Officer and Key
Employee Participants. As a condition to the granting of any
Participant Option, the Committee shall require that the person
receiving such Participant Option agree not to sell or otherwise
dispose of such Participant Option, any Common Stock acquired pursuant
to such Participant Option or any other "derivative security" (as
defined by Rule 16a-1(c) under the Exchange Act) for a period of six
months following the later of (A) the date of the grant of such
Participant Option or (B) the date when the exercise price of such
Participant Option is fixed if such exercise price is not fixed at the
date of grant of such Participant Option. The terms and conditions of
the Participant Options shall be determined from time to time by the
Committee; provided, however, that the Participant Options granted
under the Plan shall be subject to the following:
a. Exercise Price. The exercise price for each share of Common
Stock purchasable under any Participant Option granted
hereunder shall be such amount as the Committee, in its best
judgment, shall determine to be not less than 100% of the
Fair Market Value per share at the date the Participant
Option is granted; provided, however, that in the case of an
Incentive Option granted to a person who, at the time such
Incentive Option is granted, owns shares of capital stock of
RII, or of any subsidiary of RII, having more than 10% of
the total combined voting power of all classes of shares of
capital stock of RII or of such subsidiary, the exercise
price for each share shall be not less than 110% of the Fair
Market Value per share (as determined by the Committee) at
the date the Incentive Option is granted. In determining
the stock ownership of a person for purposes of this Section
6, the rules of Section 424(d) of the Code shall be applied
and the Committee may rely on representations of fact made
to it by such person and believed by it to be true. The
exercise price of the Participant Options will be subject to
adjustment in accordance with the provisions of Section 10.
b. Payment. The exercise price per share of Common Stock with
respect to each Participant Option shall be payable at the
time the Participant Option is exercised. Such price shall
be payable in cash, which may be paid by wire transfer in
immediately available funds, by check, by a commitment by a
broker-dealer to pay to RII that portion of any sale
proceeds receivable by the optionee upon exercise of a
Participant Option or by any other instrument acceptable to
RII or, in the discretion of the Committee, by delivery to
RII of shares of Common Stock or by any other method
permitted pursuant to Section 5. Shares delivered to or
withheld by RII in payment of the exercise price shall be
valued at the Fair Market Value of the Common Stock on the
day preceding the date of the exercise of the Participant
Option.
25<PAGE>
c. Limit On Annual Option Grants. No Officer and Key Employee
Participant may be granted in any fiscal year Participant
Options under the Plan cumulatively exercisable for more
than 500,000 shares of Common Stock.
d. Continuation of Employment. Notwithstanding anything else
contained herein, each Option granted to an Officer and Key
Employee Participant by its terms shall require the optionee
to remain in the continuous employ of RII or any subsidiary
thereof for at least six months (or three months in case of
an Incentive Option or such other time period as may apply
pursuant to Section 6.f. or 6.g.) from the date of grant of
the Option, before the right to exercise any part of the
Option will accrue.
e. Exercisability of Participant Options. Subject to this
Section 6 and Section 9, each Participant Option shall vest
and become exercisable on the dates and in the amounts set
forth in the particular stock option agreement between RII
and the optionee, provided, however, that a Participant
Option shall expire not later than ten years from the date
such Option is granted; and provided, further, however, that
in the case of an Incentive Option granted to a person who,
at the time such Incentive Option is granted, owns shares of
capital stock of RII, or of any subsidiary of RII, having
more than 10% of the total combined voting power of all
classes of shares of capital stock of RII or of such
subsidiary, such Incentive Option shall expire not later
than five years from the date such Incentive Option is
granted. The right to purchase shares shall be cumulative
so that when the right to purchase any shares has accrued
such shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the
Participant Option.
f. Death. In the event of the death of an optionee, all
Participant Options held by such optionee on the date of
such death shall vest in full and become immediately
exercisable. Upon such death, the legal representative of
such optionee, or such person who acquired such Participant
Options by bequest or inheritance or by reason of the death
of the optionee, shall have the right for one year after the
date of death (but not after the expiration or termination
of the Participant Options), to exercise such optionee's
Participant Options with respect to all or any part of the
shares of Common Stock subject thereto.
g. Disability. If the employment of an optionee is terminated
because of Disability (as defined in Section 12), all
Participant Options held by such optionee on the date of
such termination shall vest in full and become immediately
exercisable. Such optionee shall have the right for one
year after the date of such termination (but not after the
expiration or termination of the Participant Options), to
exercise such optionee's Participant Options with respect to
all or any part of the shares of Common Stock subject
thereto.
26<PAGE>
h. Retirement. In the event the employment of an Officer and
Key Employee Participant is terminated by reason of the
Retirement (as defined in Section 12) of the optionee, all
Participant Options held by such optionee on the date of
such termination shall vest in full and become immediately
exercisable. Such optionee shall have the right for three
months after the date of such termination (but not after the
expiration or termination of the Participant Options), to
exercise such optionee's Participant Options with respect to
all or any part of the shares of Common Stock subject
thereto, except that if such optionee at the time of
Retirement serves as a director of RII such options shall
remain exercisable as provided in Section 6.j. The
Committee, in its discretion, shall determine whether an
optionee's employment was terminated by reason of Retirement
and whether such optionee is entitled to the treatment
afforded by this subsection h.
i Other Termination or For Cause. If the employment of an
Officer and Key Employee Participant is terminated for any
reason other than those specified in subsections f., g. and
h. of this Section 6, such optionee shall have the right for
three months after the date of such termination (but not
after the expiration or termination of the Participant
Options), to exercise such optionee's Participant Options
with respect to all or any part of the shares of Common
S t o ck which such optionee was entitled to purchase
immediately prior to the time of such termination, except
that if such optionee at the time of such termination serves
as a director of RII such options shall remain exercisable
as provided in Section 6.j and if such optionee's employment
was terminated by RII or any subsidiary for good cause, such
optionee immediately shall forfeit all rights under his or
her Participant Options except as to the shares of Common
Stock already purchased. For the purposes of the Plan, the
term "for good cause" shall mean: (a) with respect to an
optionee who is a party to a written employment agreement
with RII or any subsidiary which contains a definition of
"for good cause" or "for cause" (or words of like import)
for purposes of termination of employment thereunder by RII
or any subsidiary thereof, "for good cause" or "for cause"
as defined therein; or (b) in all other cases as determined,
in its sole discretion, by the Committee or the Board of
Directors: (i) the wanton or willful commission by an
optionee of an act, or the wanton or willful omission or
failure to act, that causes substantial damage (by reason,
without limitation, of financial exposure or loss or damage
to reputation or goodwill) to RII or any subsidiary; (ii)
the commission by the optionee of an act of fraud,
i n t e n t i o n a l misrepresentation, embezzlement,
misappropriation or conversion in the performance of such
optionee's duties on behalf of RII or any subsidiary; (iii)
conviction of the optionee for commission of a felony; or
(iv) the continuing failure of an optionee to perform the
material duties of such optionee to RII or any subsidiary.
27<PAGE>
j. Cessation of Directorship. In the event a Grant Participant
shall cease to be a director of RII, such optionee shall
have the right for one year after the date of such cessation
(but not after the expiration or termination of the
Participant Options), to exercise such optionee's
Participant Options with respect to all or any part of the
shares of Common Stock subject thereto.
k. Maximum Exercise. To the extent the aggregate Fair Market
Value of Common Stock (determined at the time of the grant)
with respect to which Incentive Options are exercisable for
the first time by an optionee during any calendar year under
all plans of RII or any subsidiary, exceeds $100,000, or
such other amount as may be prescribed under Section 422 of
the Code or applicable regulations or rulings from time to
time, the excess thereof shall be treated as Non-Qualified
Options and not as Incentive Options.
7. Stock Option Grants to Committee Participants
During the term of the Plan, on the date that a director of RII
commences service on the Committee (which in the case of the initial
members of the Committee shall be deemed to be at least twenty trading
days following the Effective Date), such Committee Participant
automatically shall be granted a Non-Qualified Option to purchase
10,000 shares of Common Stock, which Non-Qualified Option except as
otherwise provided in this Section 7 or Section 9 shall be exercisable
upon grant as to 50% of the shares covered thereby and shall be
exercisable as to the remaining 50% of the shares covered thereby on
the first anniversary of being granted. During the term of the Plan
on the third business day following the date of any annual meeting of
the holders of the Common Stock at which directors are elected, each
person who on such day is a Committee Participant automatically shall
be granted a Non-Qualified Option to purchase 5,000 shares of Common
Stock, which Non-Qualified Option, except as otherwise provided in
this Section 7 or Section 9, shall be fully exercisable upon grant as
to all of the shares covered thereby. A Non-Qualified Option granted
to a Committee Participant pursuant to this Section 7 is referred to
as a "Committee Option". If, on any date upon which Committee Options
are to be granted hereunder, the number of shares of Common Stock
remaining available for issuance under the Plan is insufficient for
the grant of the total number of Committee Options to all Committee
Participants otherwise entitled thereto pursuant to this Section 7,
each Committee Participant shall receive Committee Options to purchase
a proportionate number of the available number of shares remaining
(rounded down to the greatest number of whole shares of Common Stock
available). As a condition to the granting of any Committee Option,
the person receiving such Committee Option shall agree not to sell or
otherwise dispose of such Committee Option, any Common Stock acquired
pursuant to such Committee Option or any other "derivative security"
(as defined in Rule 16a-1(c) under the Exchange Act) for a period of
six months following the later of (A) the date of the grant of such
Committee Option or (B) the date when the exercise price of such
Committee Option is fixed if such exercise price is not fixed at the
date of grant of such Option. The terms and conditions of the
Committee Options shall be as follows:
28<PAGE>
a. Option Price. The exercise price of each share of Common
Stock purchasable under any Committee Options shall be such
amount as the Committee, in its best judgment, shall
determine to be 100% of the Fair Market Value per share at
the date the Committee Option is granted.
b. Payment. The exercise price per share of Common Stock with
respect to each Committee Option and any withholding tax due
in connection with such exercise may be paid by any of the
methods described under Sections 6.b. and 5.d.,
respectively, unless RII at the time is prohibited from
purchasing or acquiring shares of its Common Stock.
c. Exercisability. Notwithstanding anything to the contrary in
the Plan, no Committee Option shall be exercisable after the
earlier of (i) the expiration of ten years from the date
such Committee Option is granted and (ii) one year after
such Committee Participant ceases for any reason to be a
director of RII. The right to purchase shares under any
Committee Option shall be cumulative so that when the right
to purchase any shares has accrued such shares or any part
thereof may be purchased at any time thereafter until the
expiration or termination of the Committee Option.
d. Death. In the event of the death of any Committee
Participant, all Committee Options held by such Committee
Participant on the date of death shall vest in full and
become immediately exercisable. Upon such death, the estate
of the Committee Participant shall have the right for one
year after the date of death (but not after the expiration
or termination of such Committee Options), to exercise such
Committee Participant's Committee Options with respect to
all or any-part of the shares of Common Stock subject
thereto.
e. Amendment. The provisions of this Section 7 shall not be
amended more than one time in any six month period, other
than to comport with the amendments to the Code, the
Employee Retirement Income Security Act of 1974, as amended,
or the rules and regulations thereunder.
8. Stock Options for Subsidiary and Consultant Participants
The Committee shall have the authority, in its sole discretion,
t o g rant Non-Qualified Options to Subsidiary and Consultant
Participants (any such options, the "S&C Options") during the period
beginning on the Effective Date and ending on the Termination Date.
As a condition to the granting of any S&C Option, the Committee shall
require that the person receiving such S&C Option agree not to sell or
otherwise dispose of such S&C Option, any Common Stock acquired
pursuant to such S&C Option or any other "derivative security" (as
defined by Rule 16a-1(c) under the Exchange Act) for a period of six
months following the later of (A) the date of the grant of such S&C
Option or (B) the date when the exercise price of such S&C Option is
fixed if such exercise price is not fixed at the date of grant of such
S&C Option. The terms and conditions
29<PAGE>
of the S&C Options shall be determined from time to time by the
Committee.
9. Change of Control
Notwithstanding any provision herein to the contrary, upon the
occurrence of an event constituting a Change of Control (as defined in
Section 12), all Options granted under the Plan immediately shall
become fully exercisable.
10. Adjustment of Shares
In the event the outstanding shares of Common Stock shall be
increased or decreased or changed into or exchanged for a different
number or kind of shares of stock or other securities of RII or
a n o t her corporation by reason of any consolidation, merger,
combination, liquidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares or other like change in capital structure
of RII, the number or kind of shares or interests subject to an Option
and the per share price or value thereof shall be appropriately
adjusted by the Committee at the time of such event, provided that
each optionee's position with respect to the Option and the per share
price or value thereof, as a result of such adjustment, shall not be
worse than it had been immediately prior to such event. Any
fractional shares or interests resulting from such adjustment shall be
eliminated. Notwithstanding the foregoing, (i) each such adjustment
with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code and (ii) in no event shall any adjustment
be made that would render any Incentive Option other than an
"incentive stock option" for purposes of Section 422 of the Code. In
addition, in such event the Board of Directors of RII shall
appropriately adjust the number of shares of Common Stock for which
Options may be granted under the Plan.
11. Miscellaneous Provisions
a. Assignment or Transfer. No grant of any "derivative
security" (as defined by Rule 16a-l(c) under the Exchange
Act) made under the Plan and no rights or interests therein
shall be assignable or transferable by an optionee except by
will or the laws of descent and distribution or, except as
to Incentive Options, pursuant to a qualified domestic
relations order as defined in the Code. During the lifetime
o f an optionee, Options granted hereunder shall be
exercisable only by the optionee or the optionee's guardian
or legal representative.
b. Investment Representation. If a registration statement
u n d er the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Common Stock issuable
upon exercise of an Option is not in effect at the time such
Option is exercised, RII may require, for the sole purpose
of complying with the Securities Act, that prior to
delivering such Common Stock to the exercising optionee such
optionee must deliver to the Secretary of RII a written
statement (i) representing that
30<PAGE>
such Common Stock is being acquired for investment only and
not with a view to the resale or distribution thereof; (ii)
acknowledging that such Common Stock may not be sold unless
registered for sale under the Securities Act or pursuant to
an exemption from such registration and (iii) agreeing that
the certificates representing such Common Stock shall bear a
legend to the foregoing effect.
c. Costs and Expenses. The costs and expenses of administering
the Plan shall be borne by RII and shall not be charged
against any Option nor to any person receiving an Option.
d. Funding of Plan. The Plan shall be unfunded. RII shall not
be required to make any segregation of assets to assure the
satisfaction of any Option under the Plan.
e. Other Incentive Plans. The adoption of the Plan does not
preclude the adoption by appropriate means of any other
incentive plan for employees.
f. Effect on Employment. Nothing contained in the Plan or any
agreement related hereto or referred to herein shall affect,
or be construed as affecting, the terms of employment of any
G r ant Participants except to the extent specifically
provided herein or therein. Nothing contained in the Plan
or any agreement related hereto or referred to herein shall
impose, or be construed as imposing, an obligation on (i)
RII or any subsidiary to continue the employment of any
Grant Participant or (ii) any Grant Participant to remain in
the employ of RII or any subsidiary.
g. Termination or Suspension of the Plan. The Board of
Directors may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated under Section 13 of the Plan
or by action of the Board of Directors, shall terminate at
the close of business on the Termination Date. Options may
not be granted while the Plan is suspended or after it is
terminated. Rights and obligations under any Option granted
while the Plan is in effect shall not be altered or impaired
by suspension or termination of the Plan, except with the
consent of the person to whom the Option was granted. The
power of the Committee to construe and administer any Option
granted prior to the termination or suspension of the Plan
nevertheless shall continue after such termination or during
such suspension.
h. Savings Provision. With respect to persons subject to
Section 16 of the Exchange Act, the transactions under the
Plan are intended to comply with all applicable conditions
of Rule 16b-3 or its successors under the Exchange Act. To
the extent any provision of the Plan or action by the
Committee fails so to comply, it shall be deemed null and
void to the extent permitted by law.
i. Governing Law. The Plan, such Options as may be granted
hereunder and all related matters shall be governed by and
31<PAGE>
construed and enforced in accordance with the laws of the
State of Delaware.
j. Partial Invalidity. The invalidity or illegality of any
provision herein shall not be deemed to affect the validity
of any other provision.
12. Definitions
a. "Fair Market Value", as it relates to the Common Stock,
shall mean the average of the high and low sale prices of
such Common Stock on the date such determination is required
herein, or if there were no sales on such date, the average
closing bid and asked prices, as reported on the national
securities exchange on which RII's Common Stock is listed or
in the absence of such listing on the Nasdaq National Market
or if such Common Stock is not at the time listed on a
national securities exchange or traded on the Nasdaq
National Market, the value of such Common Stock on such date
as determined in good faith by the Committee.
b. "Disability" shall have the meaning set forth in Section
22(c)(3) of the Code.
c. "Change of Control" shall be deemed to have occurred if,
subsequent to the Effective Date of this Plan, (A) any
"person" (as such term is defined in Section 13(d) of the
Exchange Act) becomes the beneficial owner, directly or
indirectly, of either (x) a majority of the Common Stock or
(y) securities of RII representing a majority of the
combined voting power of RII's then outstanding voting
securities, or (B) during any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board of Directors of RII, at any time after
the beginning of such period, for any reason, cease to
constitute a majority of the Board of Directors of RII
unless the election of each new director was nominated or
ratified by at least two-thirds of the directors still in
office who were directors at the beginning of such two year
period; provided, however, that in the case of Director
Participants and Committee Participants, the failure of a
Director Participant or Committee Participant nominated for
re-election by management to be re-elected in a contested
proxy contest also shall constitute a Change of Control as
to such Director Participant or Committee Participant. For
the purposes of the Plan, a Class B Triggering Event (as
defined in RII's Form S-4, Registration No. 33-50733, filed
with the Securities and Exchange Commission) shall not
constitute a Change of Control.
d. "Retirement" shall mean the date upon which a Grant
Participant, having attained an age of not less than 59-1/2
or such other age as may be determined by the Committee in
its sole discretion, terminates his employment with RII or
any subsidiary, provided that such Grant Participant has
been employed by RII or any subsidiary.
32<PAGE>
13. Amendment of Plan
The Board of Directors of RII shall have the right to amend,
modify, suspend or terminate the Plan at any time, provided that no
amendment shall be made without stockholder approval which shall (i)
increase the total number of shares of the Common Stock of RII which
may be issued and sold pursuant to Options granted under the Plan
(except for increases due to adjustments in accordance with Section
10), (ii) materially increase the benefits accruing to participants
under the Plan, (iii) decrease the minimum exercise price in the case
of an Incentive Option or (iv) materially modify the provisions of the
Plan relating to eligibility with respect to Options. In no event may
the Plan be amended in any way that would retroactively impair the
Committee's discretion. The Board of Directors shall be authorized to
amend the Plan and the Options granted thereunder (A) to qualify such
Options as "incentive stock options" within the meaning of Section 422
of the Code or (B) to comply with Rule 16b-3 (or any successor rule)
under the Exchange Act. No amendment, modification, suspension or
termination of the Plan, without the consent of the holder thereof
shall adversely alter or impair any Options previously granted under
the Plan.
14. Effective Date
The Plan shall become effective at 9:00 A.M., Atlantic City, New
Jersey time, on the Effective Date, the Plan having been, and having
been deemed to be, approved by a vote of the stockholders of RII by
written consent within 12 months before the Effective Date pursuant to
section 6.6 of the Joint Plan of Reorganization under Chapter 11 of
the Bankruptcy Code Proposed by Resorts International, Inc., GGRI,
Inc., Resorts International Hotel, Inc., Resorts International Hotel
Financing, Inc., and P.I. Resorts Limited, as modified, and confirmed
by order, entered April 22, 1994, of the United States Bankruptcy
Court for the District of Delaware. Subject to the preceding sentence
and the right of the Board of Directors to terminate the Plan at any
time pursuant to Section 13 hereof, the Plan shall remain in effect
until the earlier of (i) the date that Options covering all shares of
Common Stock issuable under the Plan have been granted or (ii) the
Termination Date.
33<PAGE>
EXHIBIT 11
GRIFFIN GAMING & ENTERTAINMENT, INC.
COMPUTATION OF PER SHARE DATA
(In Thousands, except per share data)
Quarter Ended Half Ended
June 30, June 30,
1995 1994 1995 1994
Per Share Data - Primary:
Earnings (loss):
Earnings (loss) before
extraordinary item $5,696 $(90,354) $5,716 $(114,088)
Extraordinary item 187,300 187,300
Net earnings $5,696 $ 96,946 $5,716 $ 73,212
Shares and share
equivalents:
Weighted average number
of shares of Common
Stock outstanding 7,940 6,315 7,940 5,179
Weighted average number
of share equivalents
outstanding 848 426
Weighted average number
of shares and share
equivalents 8,788 6,315 8,366 5,179
Earnings (loss) per share:
Earnings (loss) before
extraordinary item $ .65 $(14.31) $ .68 $(22.03)
Extraordinary item 29.66 36.17
Net earnings $ .65 $ 15.35 $ .68 $ 14.14
Per Share Data - Fully
Diluted:
Net earnings $5,696 $5,716
Shares and share
equivalents:
Weighted average number
of shares of Common
Stock outstanding 7,940 7,940
Weighted average number
of share equivalents
outstanding 848 764
Weighted average number
of shares and share
equivalents 8,788 8,704
Net earnings per share $ .65 $ .66
34<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GRIFFIN
GAMING & ENTERTAINMENT, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
THERETO INCLUDED IN THE FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> $47,317<F1>
<SECURITIES> 0
<RECEIVABLES> $9,213
<ALLOWANCES> $4,010
<INVENTORY> $2,463
<CURRENT-ASSETS> $66,197
<PP&E> $310,481
<DEPRECIATION> $55,972
<TOTAL-ASSETS> $332,905
<CURRENT-LIABILITIES> $47,768
<BONDS> $215,673<F2>
<COMMON> $79
0
0
<OTHER-SE> $15,685
<TOTAL-LIABILITY-AND-EQUITY> $332,905
<SALES> 0
<TOTAL-REVENUES> $146,461
<CGS> 0
<TOTAL-COSTS> $101,769<F3>
<OTHER-EXPENSES> $6,962<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $14,593
<INCOME-PRETAX> $5,716
<INCOME-TAX> 0
<INCOME-CONTINUING> $5,716
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $5,716
<EPS-PRIMARY> .68
<EPS-DILUTED> .66
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $27,177 AND
RESTRICTED CASH EQUIVALENTS OF $5,359.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F3>EXCLUDES DEPRECIATION.
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
