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 March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-4748
Resorts International, 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)
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 March 31, 1995: Common Stock - 39,694,172 shares and
Class B Redeemable Common Stock - 35,000 shares.
Exhibit Index is presented on page 16
Total Number of Pages 17
1<PAGE>
RESORTS INTERNATIONAL, INC.
FORM 10-Q
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of
Operations for the Quarters
Ended March 31, 1995 and 1994 3
Consolidated Balance Sheets
at March 31, 1995 and
December 31, 1994 4
Consolidated Statements of
Cash Flows for the Quarters
Ended March 31, 1995 and 1994 5
Notes to Consolidated
Financial Statements 6
Item 2. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations 9
Part II. Other Information
Item 5. Other Information 14
Item 6. Exhibits and Reports on
Form 8-K 14
2<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
(Unaudited)
Quarter Ended
March 31,
1995 1994
Revenues:
Casino $62,118 $ 74,728
Rooms 1,346 11,500
Food and beverage 3,030 13,344
Other casino/hotel revenues 1,186 6,829
Other operating revenues 3,441
Real estate related 2,081 2,030
69,761 111,872
Expenses:
Casino 37,064 48,393
Rooms 975 2,789
Food and beverage 3,389 10,446
Other casino/hotel operating expenses 8,632 17,146
Other operating expenses 2,623
Selling, general and administrative 10,122 15,742
Depreciation 3,188 6,305
Real estate related 236 316
63,606 103,760
Earnings from operations 6,155 8,112
Other income (deductions):
Interest income 1,237 689
Interest expense (6,291) (18,125)
Amortization of debt discounts (1,081) (12,570)
Recapitalization costs (4,382)
Proceeds from Litigation Trust 2,542
Net earnings (loss) $ 20 $(23,734)
Net earnings (loss) per share of
common stock $ -0- $ (1.18)
Weighted average number of shares
outstanding 39,694 20,157
3<PAGE>
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
March 31, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash (including cash equivalents
of $26,000 and $21,321) $ 39,125 $ 35,503
Restricted cash equivalents 3,235 5,388
Receivables, less allowance for
doubtful accounts of $3,893
and $3,901 6,263 6,509
Inventories 1,799 1,793
Prepaid expenses 7,644 9,531
Total current assets 58,066 58,724
Property and equipment, net of
accumulated depreciation of $52,204
and $49,024 244,258 246,758
Deferred charges and other assets 11,739 11,766
$314,063 $317,248
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities - accounts payable
and accrued liabilities $ 36,767 $ 41,051
Long-term debt, net of unamortized
discounts 213,545 212,466
Deferred income taxes 53,700 53,700
Shareholders' equity:
Common stock - $.01 par value 397 397
Class B Stock - $.01 par value
Capital in excess of par 129,237 129,237
Accumulated deficit (119,583) (119,603)
Total shareholders' equity 10,051 10,031
$314,063 $317,248
4<PAGE>
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Quarter Ended
March 31,
1995 1994
Cash flows from operating activities:
Cash received from customers $ 70,592 $111,301
Cash paid to suppliers and employees (57,709) (93,489)
Cash flow from operations before
interest and income taxes 12,883 17,812
Interest received 1,156 624
Interest paid (11,109) (4,108)
Income taxes paid (46)
Net cash provided by operating
activities 2,930 14,282
Cash flows from investing activities:
Payments for property and equipment (688) (2,528)
Casino Reinvestment Development
Authority deposits and bond purchases (773) (693)
Net cash used in investing activities (1,461) (3,221)
Cash flows from financing activities:
Payments of recapitalization costs (4,127)
Proceeds from Litigation Trust 2,542
Repayments of non-public debt (42)
Net cash used in financing activities -0- (1,627)
Net increase in cash and cash equivalents 1,469 9,434
Cash and cash equivalents at beginning
of period 40,891 76,794
Cash and cash equivalents at end
of period $ 42,360 $ 86,228
5<PAGE>
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. General:
The accompanying consolidated interim financial statements, which
are unaudited, include the operations of Resorts International, Inc.
("RII") and its subsidiaries. The term "Company" as used herein
includes RII 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
RII'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,
RII sold 100% of the equity of its Bahamian subsidiaries along with
certain assets and liabilities of RII 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 for the entire first quarter of 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 March 31, 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 April 3, 1995,
except for $10,000 with City National Bank of Florida which matured on
April 5, 1995.
6<PAGE>
(In Thousands of Dollars)
National Westminster Bank NJ $ 4,841
City National Bank of Florida $ 1,037
Prudential Securities, Inc. $22,277
D. Stock Option Plan:
In March 1995, the Compensation/Option Committee of RII's Board
of Directors granted options to purchase 575,000 shares of RII common
stock, subject to the approval by RII's shareholders of certain
amendments to RII's 1994 Stock Option Plan.
E. 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
March 31,
(In Thousands of Dollars) 1995 1994
Rooms $1,051 $1,139
Food and beverage 3,946 4,559
Other casino/hotel operations 1,318 1,656
Total allocated to casino $6,315 $7,354
7<PAGE>
F. Statements of Cash Flows:
Supplemental disclosures required by Statement of Financial
Accounting Standards No. 95 "Statement of Cash Flows" are presented
below.
Quarter Ended
March 31,
(In Thousands of Dollars) 1995 1994
Reconciliation of net earnings (loss) to
net cash provided by operating activities:
Net earnings (loss) $ 20 $(23,734)
Adjustments to reconcile net earnings
(loss) to net cash provided by operating
activities:
Depreciation 3,188 6,305
Amortization of debt discounts 1,081 12,570
Provision for doubtful receivables 218 816
Provision for discount on Casino
Reinvestment Development Authority
obligations, net of amortization 368 311
Recapitalization costs 4,382
Proceeds from Litigation Trust (2,542)
Net (increase) decrease in receivables 28 (429)
Net decrease in inventories and
prepaid expenses 1,709 2,740
Net decrease in deferred charges and
other assets 433 125
Net increase (decrease) in accounts
payable and accrued liabilities (4,115) 13,738
Net cash provided by operating activities $ 2,930 $ 14,282
G. Commitments and Contingencies:
RII 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.
8<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION
Liquidity
At March 31, 1995 the Company's working capital amounted to
$ 2 1 , 2 99,000, including unrestricted cash and equivalents of
$39,125,000. 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 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.
The Company will satisfy the interest payment due June 15, 1995
on its 11.375% Junior Mortgage Notes due 2004 by cash payment.
Capital Expenditures
During the first quarter of 1995 the Company's $688,000 of
capital expenditures were primarily for various guest room, back-of-
the-house and restaurant renovations at Merv Griffin's Resorts Casino
Hotel (the "Resorts Casino Hotel") in Atlantic City.
As previously reported, the Company received approval to increase
the casino gaming area at Resorts Casino Hotel by 10,000 square feet.
The Company has already modified a portion of its bus waiting area to
house approximately 180 slot machines and is presently converting Mr.
G's lounge to accommodate approximately 135 more slot machines. This
project is expected to be completed by Memorial Day weekend. The
estimated construction cost of these renovations, excluding the cost
of slot machines and related equipment, is approximately $1,500,000.
The new slot machines will be financed by a bank loan.
The Company also recently announced that it has signed a
franchise agreement with California Pizza Kitchen to open a new
restaurant in the Resorts Casino Hotel. The space formerly occupied
by the Celebrity Deli is currently being renovated to house this new
restaurant and a new cocktail lounge. This conversion, which is
e x pected to cost approximately $3,000,000 including furniture,
fixtures and equipment, is scheduled to be completed in late June.
9<PAGE>
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 entire first quarter of
1994 are included in the segment tables which follow.
Revenues
Revenues by geographic and business segment were as follows (in
thousands of dollars):
Quarter Ended
March 31,
1995 1994
Casino/hotel:
Atlantic City, New Jersey:
Casino $62,118 $ 53,649
Rooms 1,346 1,178
Food and beverage 3,030 3,114
Other casino/hotel 1,186 932
67,680 58,873
Paradise Island, The Bahamas (a):
Casino 21,079
Rooms 10,322
Food and beverage 10,230
Other casino/hotel 5,897
-0- 47,528
Total casino/hotel 67,680 106,401
Real estate related -
Atlantic City, New Jersey 2,081 2,030
Airline (a) 4,228
Other segments 5
Intersegment eliminations (792)
Revenues from operations $69,761 $111,872
(a) These operations were disposed of through the SIHL Sale.
First Quarter 1995 Compared to 1994
Casino/hotel - Atlantic City, New Jersey
Casino revenues increased by $8,469,000 for the first quarter of
1995 as the Company's slot win and table game win increased by
$7,897,000 and $931,000, respectively. The Company's revenue from
poker, simulcasting and keno was down for the first quarter of 1995.
10<PAGE>
The Company's slot win and table game win were both up primarily due
to increases in amounts wagered and, to a lesser extent, increases in
hold percentages (ratio of casino win to total amount wagered for
slots or total amount of chips purchased for table games). 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.
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 for the entire first quarter of 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 is to operate the airline on behalf of SIHL for
a small management fee for a period not to extend beyond May 1995.
All profits earned or losses incurred in such operation are to accrue
to or be borne by SIHL. Airline revenues reflect airline operations
for the entire first quarter of 1994.
11<PAGE>
Contribution to Consolidated Net Earnings (Loss)
Results by geographic and business segment were as follows (in
thousands of dollars):
Quarter Ended
March 31,
1995 1994
Casino/hotel:
Atlantic City, New Jersey $ 2,819 $ (1,691)
Paradise Island, The Bahamas (a)(b) 6,412
2,819 4,721
Real estate related - Atlantic City,
New Jersey 1,840 1,708
Airline(a)(b) (5)
Other segments (17)
Corporate expense, net of management fees 1,496 1,705
Earnings from operations 6,155 8,112
Other income (deductions):
Interest income 1,237 689
Interest expense (6,291) (18,125)
Amortization of debt discounts (1,081) (12,570)
Recapitalization costs (4,382)
Proceeds from Litigation Trust 2,542
Net earnings (loss) $ 20 $(23,734)
(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 amount of $605,000
for the first quarter of 1994.
First Quarter 1995 Compared to 1994
Casino/hotel - Atlantic City, New Jersey
For the first quarter of 1995 casino, hotel and related operating
results increased by $4,510,000 as the increased revenues described
above were partially offset by a net increase in operating costs. The
most significant variances in operating expenses were increases in
casino promotional costs ($2,100,000), casino win tax ($700,000) and
performance and incentive bonuses ($700,000). 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
12<PAGE>
operating results for 1994 reflect the Company's operation of the
Paradise Island properties for the entire first quarter of 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. Pursuant to an agreement, the Company is to operate the
airline on behalf of SIHL for a small management fee for a period not
to extend beyond May 1995. All profits earned or losses incurred in
such operation are to accrue to or be borne by SIHL. Operating
results of the airline segment presented herein include airline
operations for the entire first quarter of 1994.
Corporate Expense
The corporate expense segment includes credits for management
fees which RII 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"),
RII's subsidiary that owns and operates the Resorts Casino Hotel,
amounted to $2,200,000 and $1,933,000 for the first quarter of 1995
and 1994, respectively. Management fees charged to other subsidiaries
totalled $1,498,000 for the first quarter of 1994.
T h e Environmental Protection Agency ("EPA") has named a
predecessor to RII 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 RII and RII intends to dispute any claims of this
nature, if asserted. Although it may ultimately be determined that
RII 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 any
such liability, if any, cannot be determined at this time.
Other Income (Deductions)
The decreases in interest expense and amortization of debt
discounts for the first quarter of 1995 are attributable to the
restructuring of the Company's debt pursuant to the Plan, which
resulted in a significant decrease in the principal amount of debt
outstanding as well as a reduction in interest rates.
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.
13<PAGE>
PART II. - OTHER INFORMATION
Item 5. Other Information
President Appointed
RII's Board of Directors appointed Thomas E. Gallagher President
and Chief Executive Officer effective May 1, 1995. Mr. Gallagher, a
director of RII since 1993, also serves as President and Chief
Executive Officer of The Griffin Group, Inc., a company controlled by
Merv Griffin, Chairman of the Board of RII.
Annual Meeting Scheduled
RII's Board of Directors has set June 27, 1995 as the date of
RII's annual meeting. At such meeting holders of common stock of RII
as of the close of business on May 19, 1995 will be asked to vote on,
among other things, (i) election of two directors, (ii) changing the
company's name from Resorts International, Inc. to Griffin Gaming &
Entertainment, Inc., (iii) a reverse stock split of up to one-for-
five and (iv) certain amendments to RII's 1994 Stock Option Plan.
Holders of RII's Class B Redeemable Common Stock will not be entitled
to vote on matters at this annual meeting.
Showboat Lease Rent Increase
The annual lease payments to be received by RII under a 99-year
net lease of approximately 10 acres of Boardwalk property in Atlantic
City (the "Showboat Lease") have increased from $8,326,000 to
$8,560,000 due to an increase in the consumer price index for the year
ended March 31, 1995. The increased rent is effective for the lease
year commencing April 1, 1995. Lease payments received under the
Showboat Lease are passed-through (subject to certain adjustments) as
interest to holders of RII's First Mortgage Non-Recourse Pass-Through
Notes due June 30, 2000.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The following Part I exhibit is filed herewith:
Exhibit
Number Exhibit
(27) Financial data schedule
b. Reports on Form 8-K
No Current Report on Form 8-K was filed by RII covering an event
during the first quarter of 1995. No amendments to previously filed
Forms 8-K were filed during the first quarter of 1995.
14<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.
RESORTS INTERNATIONAL, INC.
(Registrant)
/s/ Matthew B. Kearney
Matthew B. Kearney
Executive Vice President -
Finance
(Authorized Officer of
Registrant and Chief
Financial Officer)
Date: May 11, 1995
15<PAGE>
RESORTS INTERNATIONAL, INC.
Form 10-Q for the quarterly period
ended March 31, 1995
EXHIBIT INDEX
Exhibit Page
Number Exhibit Number
(27) Financial data schedule 17
16<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RESORTS
INTERNATIONAL, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED IN THE FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> $42,360<F1>
<SECURITIES> 0
<RECEIVABLES> $8,290
<ALLOWANCES> $3,893
<INVENTORY> $1,799
<CURRENT-ASSETS> $58,066
<PP&E> $296,462
<DEPRECIATION> $52,204
<TOTAL-ASSETS> $314,063
<CURRENT-LIABILITIES> $36,767
<BONDS> $213,545<F2>
<COMMON> $397
0
0
<OTHER-SE> $9,654
<TOTAL-LIABILITY-AND-EQUITY> $314,063
<SALES> 0
<TOTAL-REVENUES> $69,761
<CGS> 0
<TOTAL-COSTS> $50,296<F3>
<OTHER-EXPENSES> $3,188<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $7,372
<INCOME-PRETAX> $20
<INCOME-TAX> 0
<INCOME-CONTINUING> $20
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $20
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $26,000 AND
RESTRICTED CASH EQUIVALENTS OF $3,235.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F3>EXCLUDES DEPRECIATION.
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
