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 September 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. 33-50733-02
Resorts International Hotel, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 21-0423320
(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 registrant's common stock as of
September 30, 1995: 1,000,000, all of which are owned by one
shareholder. Accordingly there is no current market for any of such
shares.
Exhibit Index is presented on page 14
Total number of pages 15
1<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
FORM 10-Q
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
at September 30, 1995 and
December 31, 1994 3
Consolidated Statements of
Operations for the Quarters
and Three Quarters Ended
September 30, 1995 and 1994 4
Consolidated Statements of
Cash Flows for the Three
Quarters Ended September 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 9
Part II. Other Information
Item 6. Exhibits and Reports on
Form 8-K 12
2<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash (including cash equivalents
of $21,397 and $12,695) $ 35,702 $ 26,876
Restricted cash equivalents 750
Receivables, less allowance for
doubtful accounts of $3,979
and $3,901 7,093 6,232
Inventories 2,382 1,793
Prepaid expenses 7,407 8,566
Total current assets 53,334 43,467
Property and equipment, net of
accumulated depreciation of
$59,142 and $48,906 158,261 157,501
Deferred charges and other assets 12,479 11,766
$224,074 $212,734
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 577 $ 5
Accounts payable and accrued
liabilities 27,167 24,352
Interest payable to affiliate 1,365 4,113
Due to GGE 1,634 4,411
Total current liabilities 30,743 32,881
Notes payable to affiliate, net
of unamortized discounts 126,392 125,309
Other long-term debt 1,070 8
Deferred income taxes 19,400 19,400
Shareholder's equity:
Common stock - $1 par value 1,000 1,000
Capital in excess of par 21,366 21,366
Retained earnings 24,103 12,770
Total shareholder's equity 46,469 35,136
$224,074 $212,734
3<PAGE>
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
(Unaudited)
Quarter Ended Three Quarters Ended
September 30, September 30,
1995 1994 1995 1994
Revenues:
Casino $76,058 $69,582 $206,690 $188,509
Rooms 2,113 2,424 5,180 5,509
Food and beverage 3,811 4,267 9,708 11,324
Other casino/hotel revenues 1,474 1,406 4,118 3,430
83,456 77,679 225,696 208,772
Expenses:
Casino 42,035 37,700 118,021 106,736
Rooms 819 873 2,701 2,431
Food and beverage 4,091 4,412 10,731 12,276
Other casino/hotel operating
expenses 8,737 9,002 25,858 26,333
Selling, general and
administrative 8,697 8,394 27,459 27,371
GGE parent services fee 2,790 2,558 7,436 6,846
Depreciation 3,340 3,295 10,284 10,037
70,509 66,234 202,490 192,030
Earnings from operations 12,947 11,445 23,206 16,742
Other income (deductions):
Interest income 574 443 1,750 3,194
Interest expense (4,204) (4,510) (12,540) (7,374)
Amortization of debt
discounts (318) (252) (1,083) (459)
Recapitalization costs (975)
Net earnings $ 8,999 $ 7,126 $ 11,333 $ 11,128
4<PAGE>
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Three Quarters Ended
September 30,
1995 1994
Cash flows from operating activities:
Cash received from customers $ 224,429 $ 206,695
Cash paid to suppliers and employees (187,078) (181,174)
Cash flow from operations before
interest 37,351 25,521
Interest received 1,681 782
Interest paid (15,288) (5,164)
Net cash provided by operating
activities 23,744 21,139
Cash flows from investing activities:
Payments for property and equipment (10,791) (3,885)
Proceeds from sale of property 116
Casino Reinvestment Development
Authority deposits and bond
purchases (2,234) (2,175)
Net cash used in investing
activities (13,025) (5,944)
Cash flows from financing activities:
Proceeds from borrowing 1,815
Distributions to GGRI (12,262)
Advances from (repayments to) GGE (2,777) 6,693
Recapitalization costs paid to GGE (975)
Debt repayments (181) (73)
Net cash used in financing
activities (1,143) (6,617)
Net increase in cash and cash
equivalents 9,576 8,578
Cash and cash equivalents at beginning
of period 26,876 25,947
Cash and cash equivalents at end
of period $ 36,452 $ 34,525
5<PAGE>
RESORTS INTERNATIONAL HOTEL, 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 Hotel,
Inc. ("RIH") and its subsidiaries. RIH owns and operates Merv
Griffin's Resorts Casino Hotel (the "Resorts Casino Hotel"), a
casino/hotel complex located in Atlantic City, New Jersey. RIH is a
wholly owned subsidiary of GGRI, Inc. ("GGRI"), which is a wholly
owned subsidiary of Griffin Gaming & Entertainment, Inc. ("GGE"). GGE
was known as Resorts International, Inc. until its name change, which
was effective June 30, 1995. "GGE" is used herein to refer to RIH's
ultimate parent corporation both before and after its name change.
W h i l e the accompanying interim financial information is
unaudited, management of RIH 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 28 through 40 of
RIH's Annual Report on Form 10-K for the year ended December 31, 1994.
B. Reverse Repurchase Agreements:
C a s h equivalents at September 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 RIH had not taken delivery of the
underlying securities. These agreements matured during the first week
of October 1995.
(In Thousands of Dollars)
Prudential Securities, Inc. $11,914
National Westminster Bank NJ $11,004
6<PAGE>
C. Property and Equipment:
Property and equipment are depreciated over their estimated
useful lives reported below using the straight-line method for
financial reporting purposes.
Land improvements 10 - 25 years
Hotels and other buildings 22 years
Furniture, machinery and equipment 4 - 5 years
D. 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 retail value
of such complimentary services excluded from revenues amounted to
$9,554,000 and $7,583,000 for the third quarter of 1995 and 1994,
respectively, and $22,193,000 and $19,433,000 for the first three
quarters of 1995 and 1994, respectively. 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 Three Quarters Ended
September 30, September 30,
(In Thousands of Dollars) 1995 1994 1995 1994
Rooms $1,438 $1,071 $ 3,737 $ 3,022
Food and beverage 4,653 3,688 12,802 10,614
Other casino/hotel
operations 2,185 1,974 4,900 5,314
Total allocated to casino $8,276 $6,733 $21,439 $18,950
7<PAGE>
E. Statements of Cash Flows:
Supplemental disclosures required by Statement of Financial
Accounting Standards No. 95 "Statement of Cash Flows" are presented
below.
Three Quarters Ended
September 30,
(In Thousands of Dollars) 1995 1994
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings $11,333 $11,128
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 10,284 10,037
Provision for doubtful receivables 887 181
Provision for discount on Casino
Reinvestment Development Authority
obligations, net of amortization 1,175 1,098
Amortization of debt discounts 1,083 459
Recapitalization costs 975
Net increase in receivables (2,001) (788)
Net increase in interest receivable
from affiliate (2,250)
Net (increase) decrease in
inventories and prepaid expenses 570 (3,287)
Net decrease in deferred charges
and other assets 525 1,139
Net increase in accounts payable
and accrued liabilities 2,636 237
Net increase (decrease) in interest
payable to affiliate (2,748) 2,210
Net cash provided by operating activities $23,744 $21,139
8<PAGE>
Three Quarters Ended
September 30,
(In Thousand of Dollars) 1995 1994
Non-cash investing and financing
activities:
Distribute $125,000,000 promissory
note and $35,000,000 junior
promissory note as:
Repayment of advances from GGE $ 43,236
Distribution to GGE 92,064
Exchange of $325,000,000 note payable
to GGRI for shares of RIH common stock 325,000
Distribute $50,000,000 note receivable
from affiliate and accrued interest
thereon to GGRI 53,375
Increase in liabilities for additions
to other assets $179 176
F. Commitments and Contingencies:
RIH is a defendant in certain litigation. In the opinion of
management, based upon the advice of counsel, the aggregate liability,
if any, arising from such litigation will 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 September 30, 1995 RIH had working capital of $22,591,000
including $35,702,000 of unrestricted cash and equivalents. The day-
to-day operations of RIH require approximately $10,000,000 of currency
and coin on hand which amount varies by days of the week, holidays and
seasons. Additional cash balances are necessary to meet current
working capital needs.
RIH, through affiliated notes payable to Resorts International
Hotel Financing, Inc. ("RIHF"), a subsidiary of GGE, is the principal
source of funds for servicing the $125,000,000 principal amount 11%
Mortgage Notes (the "Mortgage Notes") and the $35,000,000 principal
amount 11.375% Junior Mortgage Notes (the "Junior Mortgage Notes")
issued by RIHF as part of the restructuring of GGE in May 1994. RIH
owns $12,899,000 principal amount of the Junior Mortgage Notes.
Annual interest expense on the Mortgage Notes and the Junior Mortgage
Notes,
9<PAGE>
after the reduction for interest on the $12,899,000 principal amount
of Junior Mortgage Notes held by RIH, will total approximately
$16,500,000. Based on projected operating results, management
believes that RIH's liquidity will continue to be satisfactory;
however, management can give no assurances as to RIH's future
l i quidity due to the possibility of unanticipated events and
circumstances inherent in any projections.
RIHF has a $19,738,000 senior credit facility (the "Senior
Facility") available for the period ending May 2, 1996 should RIH or
GGE have additional cash needs. Management believes that the Senior
Facility will also serve as a source of funds for expansion,
development and/or an investment opportunity as well as a safeguard if
an emergency arises from current operations. However, market interest
rates and other economic conditions, among other factors, will
determine if it is appropriate to draw on the Senior Facility. To the
extent the Senior Facility is utilized, RIH would be the primary
source of funds for servicing such debt.
RIHF will satisfy the interest due December 15, 1995 on the
Junior Mortgage Notes by cash payment. Therefore, on that date RIH
will pay interest due on its affiliated note payable to RIHF in cash.
Also on December 15, 1995, RIH will receive interest due on the
$12,899,000 principal amount of Junior Mortgage Notes owned by RIH.
Capital Expenditures and Resources
During the first three quarters of 1995 RIH's $10,791,000 of
c a pital expenditures included approximately $4,000,000 for the
conversion of certain existing facilities into an additional 10,000
square feet of casino gaming area and $2,900,000 for certain
restaurant renovations at the Resorts Casino Hotel.
RIH 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 RIH 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
RIH operates in one business segment. Following is a discussion
of the results of operations for the third quarter and first three
quarters of 1995 compared to 1994. The discussion should be read in
conjunction with the Consolidated Financial Statements included
herein.
Revenues
Casino revenues increased by $6,476,000 and $18,181,000 for the
third quarter and first three quarters of 1995, respectively. For the
third quarter RIH's slot and table game win increased by $5,422,000
and
10<PAGE>
$1,362,000, respectively, while revenues from poker, simulcasting and
keno declined. The increase in slot win was primarily due to
increased amounts wagered by patrons; the increase in table game win
was largely due to an increase in RIH's hold percentage (ratio of
casino win to total amount of chips purchased for table games or total
amount wagered for slots).
For the first three quarters, RIH's slot win and table game win
increased by $16,937,000 and $2,399,000, respectively. RIH's revenue
from poker, simulcasting and keno was down for this period. RIH s
slot win was up primarily due to an increase in amounts wagered,
though slot win was also favorably affected by an increase in hold
percentage. RIH's table game win was up due to increases in both
amounts wagered and hold percentage.
The increased amounts wagered reflect RIH's recent casino
expansion as well as increased emphasis on bus and junket air
programs. RIH s current junket programs were initiated in September
1994. 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 the first three
quarters was 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.
Earnings from Operations
For the third quarter and first three quarters of 1995 casino,
hotel and related operating results increased by $1,502,000 and
$6,464,000, respectively, as the increased revenues described above
were partially offset by net increases in operating costs.
For the third quarter the most significant variances in operating
expenses were increases in casino promotional costs ($1,700,000),
payroll and related costs ($800,000) and casino win tax ($600,000).
Casino promotional costs increased primarily due to increases in costs
associated with the junket air program, which was expanded in
September 1994. Payroll and related costs increased primarily due to
increased salary and wage rates, although the average number of
employees was up slightly for the quarter. Casino win tax increased
relative to the increase in casino revenues.
For the first three quarters the most significant variances in
o p erating expenses were increases in casino promotional costs
($6,000,000), casino win tax ($1,500,000), payroll and related costs
($1,400,000) and the accrual for performance and incentive bonuses
( $ 800,000). Casino promotional costs increased due to costs
associated with the expanded junket air program as well as increases
in the amount of cash giveaway to bus patrons. Casino win tax
increased relative to the increase in casino revenues. Payroll and
related costs increased due to increased salary and wage rates, as the
average number of employees was down slightly for the year-to-date
period.
11<PAGE>
Other Income (Deductions)
Included in RIH's interest income for the first three quarters of
1994 was $2,250,000 of interest earned on a $50,000,000 note
receivable from a former Bahamian affiliate. This note was canceled
in May 1994 as part of the restructuring of GGE.
Prior to GGE's restructuring in May 1994, RIH's interest expense
w a s limited to minor amounts incurred on capitalized lease
obligations. Since the restructuring, RIH bears the interest on the
Mortgage Notes and the Junior Mortgage Notes, through affiliated notes
payable to RIHF, the terms of which mirror the terms of such debt of
RIHF.
PART II. OTHER INFORMATION
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 RIH covering an event
during the third quarter of 1995. No amendments to previously filed
Forms 8-K were filed during the third quarter of 1995.
12<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 HOTEL, INC.
(Registrant)
/s/ Matthew B. Kearney
Matthew B. Kearney
Executive Vice President
(Authorized Officer of
Registrant and Chief
Financial Officer)
Date: November 10, 1995
13<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-Q for the quarterly period
ended September 30, 1995
EXHIBIT INDEX
Exhibit Page
Number Exhibit Number
(27) Financial data schedule 15
14<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RESORTS
INTERNATIONAL HOTEL, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED IN THE FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> $36,452<F1>
<SECURITIES> 0
<RECEIVABLES> $8,851
<ALLOWANCES> $3,979
<INVENTORY> $2,382
<CURRENT-ASSETS> $53,334
<PP&E> $217,403
<DEPRECIATION> $59,142
<TOTAL-ASSETS> $224,074
<CURRENT-LIABILITIES> $30,743
<BONDS> $127,462<F2>
<COMMON> $1,000
0
0
<OTHER-SE> $45,469
<TOTAL-LIABILITY-AND-EQUITY> $224,074
<SALES> 0
<TOTAL-REVENUES> $225,696
<CGS> 0
<TOTAL-COSTS> $157,311<F3>
<OTHER-EXPENSES> $10,284<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $13,623
<INCOME-PRETAX> $11,333
<INCOME-TAX> 0
<INCOME-CONTINUING> $11,333
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $11,333
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $21,397 AND
RESTRICTED CASH EQUIVALENTS OF $750.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F3>EXCLUDES DEPRECIATION EXPENSE.
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
