SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
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)
Registrant's telephone number, including area code: 609-344-6000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
- continued-
Exhibit Index is presented on Pages 51 through 56
Total Number of Pages 57
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
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
As of February 28, 1995, there were 1,000,000 shares of the registrant's
common stock outstanding, all of which were owned by one shareholder.
Accordingly there is no current market for any of such shares.
The registrant meets the conditions set forth in General Instruction
J(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with
the reduced disclosure format permitted by that General Instruction.
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PART I
ITEM 1. BUSINESS
(a) General Development of Business
Resorts International Hotel, Inc. ("RIH") owns and operates Merv
Griffin's Resorts Casino Hotel (the "Resorts Casino Hotel") in Atlantic
City, New Jersey. RIH was incorporated in New Jersey in 1903. Prior to
May 3, 1994, RIH was a wholly owned subsidiary of Resorts International,
Inc. ("RII"). As part of a restructuring (the "Restructuring") of
certain publicly held debt securities of RII (the "Series Notes") which
was effective on May 3, 1994 (the "Effective Date"), RIH became a wholly
owned subsidiary of GGRI, Inc. ("GGRI"). GGRI, which is a wholly owned
subsidiary of RII, has no assets or operations other than those
represented by its investment in RIH.
The Resorts Casino Hotel is located on the Atlantic City Boardwalk
and has approximately 670 guest rooms, a 60,000 square foot casino, an
8,000 square foot racetrack simulcast betting and poker area and related
facilities.
Casino operations in Atlantic City are conducted under a casino
license which is subject to periodic review and renewal by action of the
New Jersey Casino Control Commission (the "Casino Control Commission").
RIH's current license was renewed in February 1994 through January 31,
1996 and is subject to certain financial reporting and other conditions.
See "Regulation and Gaming Taxes and Fees" under "(c) Narrative
Description of Business" below.
Restructuring of RII's Series Notes
RII and GGRI, RII's subsidiary which guaranteed the Series Notes,
proposed the Restructuring of the Series Notes which was accomplished
through a prepackaged bankruptcy plan of reorganization (the "Plan").
On March 21, 1994, after receiving the requisite acceptances for
confirmation of the Plan from holders of the Series Notes and equity
interests in RII, RII and GGRI filed their prepackaged bankruptcy cases
with the United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court"). The Plan was confirmed by the Bankruptcy
Court on April 22, 1994 and on the Effective Date all conditions to the
effectiveness of the Plan were either met or waived and the Plan became
effective.
Pursuant to the Plan, the Series Notes were exchanged for, among
other things, $125,000,000 principal amount of 11% Mortgage Notes (the
"Mortgage Notes") due September 15, 2003 and $35,000,000 principal
amount of 11.375% Junior Mortgage Notes (the "Junior Mortgage Notes")
due December 15, 2004. The Mortgage Notes and the Junior Mortgage Notes
were issued by Resorts International Hotel Financing, Inc. ("RIHF"), a
subsidiary of RII, and are guaranteed by RIH. The Mortgage Notes are
secured by a $125,000,000 promissory note made by RIH (the "RIH
Promissory Note"), the terms of which mirror the terms of the Mortgage
Notes. The Junior Mortgage Notes are secured by a $35,000,000
promissory note made by RIH (the "RIH Junior Promissory Note"), the
terms of which mirror the terms of the Junior Mortgage Notes. The RIH
Promissory Note, the RIH Junior Promissory Note
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and RIH's guarantees of the Mortgage Notes and the Junior Mortgage Notes
are secured by liens on the Resorts Casino Hotel.
The Restructuring also provided for certain funds or accounts
managed by Fidelity Management & Research Company ("Fidelity") to enter
into a senior credit facility with RIHF, RII and RIH (the "Senior
Facility") which would allow RIHF to borrow up to $20,000,000 through
the issuance of notes (the "Senior Facility Notes"). The Senior
Facility was to be available for a single borrowing during the one-year
period ending May 2, 1995. The Senior Facility Notes were to bear
interest at 11% per year and mature in 2002. RIHF and Fidelity recently
amended the Senior Facility, which amendment (i) extended the borrowing
period through May 2, 1996, (ii) increased the interest rate to 11.75%
and (iii) reduced the maximum amount of potential borrowing to
$19,738,000. The Senior Facility Notes, if issued, will also be
guaranteed by RIH and secured by a promissory note from RIH, the terms
of which will mirror the terms of the Senior Facility Notes. Market
interest rates and other economic conditions, among other factors, will
determine if it is appropriate for RIHF to draw on the Senior Facility.
For further description of the securities issued pursuant to the
Plan, the related affiliated notes, guarantees and mortgages issued by
RIH, and the Senior Facility, see Note 2 of Notes to Consolidated
Financial Statements.
(b) Financial Information about Industry Segments
RIH operates in one business segment. See "ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA."
(c) Narrative Description of Business
Gaming Facilities
The Resorts Casino Hotel in Atlantic City, New Jersey, has a 60,000
square foot casino and a racetrack simulcast betting and poker area of
approximately 8,000 square feet. At December 31, 1994, these gaming
areas contained 45 blackjack tables, 18 poker tables, 11 dice tables, 9
roulette tables, 4 Caribbean stud poker tables, 3 baccarat tables, 2
mini-baccarat tables, 2 pai gow poker tables, 1 big six wheel, 1 sic bo
table, 1,944 slot machines, 5 betting windows and 4 customer-operated
terminals for race book, and a keno parlor. As discussed below, Resorts
Casino Hotel has recently received approval from the Casino Control
Commission to expand its casino by an additional 10,000 square feet and
expects to complete such expansion by mid-1995.
During 1994, RIH had total gaming revenues of $250,482,000. This
compares to total gaming revenues of $244,116,000 for 1993 and
$233,780,000 for 1992. RIH has offered simulcast betting and poker
since June 1993, keno since June 1994 and Caribbean stud poker since
November 1994.
Casino gaming in Atlantic City is highly competitive and is
strictly regulated under the New Jersey Casino Control Act and
regulations promulgated thereunder (the "Casino Control Act"), which
a f fect virtually all aspects of RIH's casino operations. See
"Competition" and "Regulation and Gaming Taxes and Fees" below.
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Resort and Hotel Facilities
The Resorts Casino Hotel commenced operations in May 1978 and was
the first casino/hotel opened in Atlantic City. This was accomplished
by the conversion of the former Haddon Hall Hotel, a classic hotel
structure originally built in the early 1900's, into a casino/hotel. It
is situated on approximately seven acres of land with approximately 310
feet of Boardwalk frontage overlooking the Atlantic Ocean. The Resorts
Casino Hotel consists of two hotel towers, the 15-story East Tower and
the nine-story North Tower. In addition to the casino facilities
described above, the casino/hotel complex includes approximately 670
guest rooms and suites, the 1,400-seat Superstar Theater, eight
restaurants, two cocktail and entertainment lounges, a VIP slot and
table player lounge, an indoor swimming pool and health club, and retail
stores. The complex also has approximately 50,000 square feet of
convention facilities, including eight large meeting rooms and a 16,000
square foot ballroom.
RIH owns a garage that is connected to the Resorts Casino Hotel by
a covered walkway. This garage is used for patrons' self parking and
accommodates approximately 700 vehicles. Resorts Casino Hotel also
offers valet parking at nearby, uncovered leased lots that provide space
for approximately 600 cars and has an additional leased lot which
provides uncovered self-parking for approximately 170 cars.
Consistent with industry practice, RIH reserves a portion of its
hotel rooms and suites as complimentary accommodations for high-level
casino wagerers. For 1994, 1993 and 1992 the average occupancy rates,
including complimentary rooms, which were primarily provided to casino
patrons, were 91%, 92% and 93%, respectively. The average occupancy
rate and weighted average daily room rental, excluding complimentary
rooms, were 47% and $64, respectively, for 1994. This compares with 47%
and $62, respectively, for 1993, and 57% and $61, respectively, for
1992.
Capital Improvements
RIH has pursued a major capital improvements program since 1989 in
order to compete more effectively in the Atlantic City market. During
these six years capital additions at Resorts Casino Hotel exceeded
$109,000,000. In 1994 RIH purchased 221 slot machines, most of which
replaced older models, and completed various capital maintenance
projects. In 1993 RIH converted certain back-of-the-house space into a
s i mulcast facility, which houses five betting windows and four
customer-operated terminals and approximately 80 seats for simulcast
betting operations, as well as 18 poker tables, various other table
games and a bar with food service. Also, certain casino renovations
were completed, 280 slot machines were purchased, most of which replaced
older models, and the VIP slot and table player lounge, "Club Griffin,"
opened. In addition, guest room refurbishments continued and a new
centralized mobile communications system was installed. During the
years 1989 through 1992 improvements included refurbishment of rooms in
both the East Tower and the North Tower, casino renovations, purchase of
new slot machines and gaming equipment, conversion of the parking garage
from valet to self-parking, restaurant remodeling and upgrading,
renovation of public areas, installation of new computer equipment and
m a nagement information systems, as well as improvements to the
infrastructure such as elevators, air conditioning, and exterior
renovations and painting. As the major capital improvements program was
completed in 1993, management expects capital expenditures in
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1995, as in 1994, to be largely related to maintenance of existing
facilities. Such capital costs of a recurring nature are planned to
approximate $10,000,000 in 1995. It is currently estimated that an
additional $1,500,000 will be required to enlarge the gaming area by an
additional 10,000 square feet, which expansion was recently approved by
the Casino Control Commission. RIH also estimates that slot machines
for this additional gaming space will cost approximately $2,500,000; RIH
will explore leasing, rather than purchasing, these slot machines.
Marketing
RIH continues to take advantage of the celebrity status of Merv
Griffin, who is actively engaged in the marketing of the Resorts Casino
Hotel. Mr. Griffin, who is Chairman of the Board of RII, is featured in
television commercials and in print advertisements. Mr. Griffin also
appeared live at the Resorts Casino Hotel in "Merv Griffin's New Year's
Eve Special 1994" which was broadcast nationwide. Merv Griffin's New
Year's Eve Special has been produced at the Resorts Casino Hotel since
1991. Mr. Griffin is to continue to participate in the operations and
marketing of the Resorts Casino Hotel through the term of a License and
Services Agreement described in Note 8 of Notes to Consolidated
Financial Statements.
RIH's marketing strategy is designed to enhance the appeal of the
Resorts Casino Hotel to the mid and premium-level slot and table game
players, although slot players have been, in recent years, the primary
focus of RIH's marketing efforts. In 1993 RIH introduced the
"cash-back" program which rewards slot players with cash refunds or
complimentaries based on their volume of play and expanded and upgraded
"Hollywood Hills," its high-limit slot area. In the fall of 1994, RIH
increased its program of charter flights in an effort to recapture some
of its lost market share in table win. Also, in the fall of 1994, RIH
introduced the "Griffin Games," created by Merv Griffin, whereby slot
patrons are chosen at random to participate in daily tournaments with
the daily winners eventually participating in a $100,000 "winners
tournament." In January 1995 the "Griffin Games" were extended to those
patrons playing table games and, to further attract premium players, RIH
has budgeted in its 1995 capital expenditure program approximately
$800,000 to renovate its suites. The Resorts Casino Hotel also has a
VIP slot and table player lounge, "Club Griffin," which serves
complimentary food and beverages. Notwithstanding the preceding, RIH
continues to rely heavily on its bus program to produce low to middle
level slot players.
New Convention Center
In January 1992, the State of New Jersey enacted legislation that
authorized a financing plan for the construction of a new convention
center to be located on a 30-acre site next to the Atlantic City train
station at the base of the Atlantic City Expressway. RIH understands
that the new convention center will have 500,000 square feet of exhibit
s p ace and an additional 104,000 square feet of meeting rooms.
Construction of the new convention center began in early 1993 and it is
scheduled to be completed in early 1997.
The convention center is part of a broader plan that includes an
additional expansion of the Atlantic City International Airport, the
transformation of the main entryway into Atlantic City into a new
corridor,
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revitalizing the Boardwalk's commercial district by means of a themed
retail area, and the construction of new hotel rooms. Officials have
commented upon the need for improved commercial air service into
Atlantic City as a factor in the success of the proposed convention
center. See further discussion under "Transportation Facilities" below.
The corridor project presently includes plans for a new convention
hotel. In addition, to further spur construction of new hotel rooms and
renovation of substandard hotel rooms into deluxe accommodations to
support the new convention center, up to a total of $100,000,000 has
been set aside by the Casino Reinvestment Development Authority (the
"CRDA"), a public authority created under the Casino Control Act, to aid
in financing such projects. To date, the CRDA has approved the
expansion projects submitted by five casino/hotels which are to receive
CRDA financing approximating $84,000,000 and result in the construction
of approximately 2,100 hotel rooms.
Although these developments are viewed as positive and favorable to
the future prospects of the Atlantic City gaming industry, RIH, at this
point, can make no representations as to whether, or to what extent, its
operations may be improved by the completion of the new convention
center, the proposed airport expansion projects and the proposed
increase in number of hotel rooms in the area.
Transportation Facilities
The lack of an adequate transportation infrastructure in the
Atlantic City area continues to negatively affect the industry's ability
to attract patrons from outside a core geographic area. In 1989, Amtrak
express rail service to Atlantic City commenced from Philadelphia, New
York, Washington and other major cities in the northeast. This service
was expected to improve access to Atlantic City and expand the
geographic size of the Atlantic City casino industry's marketing base.
Recently, Amtrak announced that express rail service to Atlantic City
will be discontinued in April 1995.
Also, in 1989 the terminal at the Atlantic City International
Airport (located approximately 12 miles from Atlantic City) was expanded
to handle additional air carriers and large passenger jets, but
scheduled service to that airport from major cities by national air
carriers remains extremely limited. In order to attract increased air
service, expansion of the existing terminal is currently in progress.
This construction, which will double the size of the terminal, is
expected to be completed in the fall of 1995. This project includes a
new second level for the terminal, additional departure gates, an
improved baggage system and sheltered walkways connecting the terminal
and planes. Furthermore, in early 1995 the South Jersey Transportation
A u thority submitted a comprehensive master plan for the future
development of the airport which plan is currently being reviewed in
public hearings. The plan predicts a threefold increase in passenger
volume in the next 20 years and recommends $155,000,000 of improvements.
Since the inception of gaming in Atlantic City there has been no
significant change in the industry's marketing base or in the principal
means of transportation to Atlantic City, which continues to be
automobile and bus. The resulting geographic limitations and traffic
congestion have restricted Atlantic City's growth as a major destination
resort.
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RIH continues to utilize day-trip bus programs. A non-exclusive
easement enables the Resorts Casino Hotel to utilize a bus tunnel under
the adjacent Trump Taj Mahal Casino-Resort (the "Taj Mahal"), which
connects Pennsylvania and Virginia Avenues, and a service road exit from
the bus tunnel. This reduces congestion around the Pennsylvania Avenue
bus entrance to the Resorts Casino Hotel. To comfortably accommodate
its bus patrons, Resorts Casino Hotel has a waiting facility which is
located indoors, adjacent to the casino, and offers various amenities.
Competition
Competition in the Atlantic City casino/hotel industry is intense.
Casino/hotels compete primarily on the basis of promotional allowances,
entertainment, advertising, services provided to patrons, caliber of
personnel, attractiveness of the hotel and casino areas and related
amenities, and parking facilities. The Resorts Casino Hotel competes
directly with 11 casino/hotels in Atlantic City which, in the aggregate,
contain approximately 860,000 square feet of gaming area, including
simulcast betting and poker rooms, and 8,500 hotel rooms. These amounts
reflect increases of approximately 74,000 square feet of gaming area and
300 hotel rooms in 1994. Significant additional expansion is expected
in 1995 due to the previously discussed projects to be financed by the
CRDA as well as the recently passed amendments to the Casino Control Act
which amendments will permit three existing casino/hotels, in addition
to Resorts Casino Hotel, to increase their gaming area without adding
additional hotel rooms. As previously noted, RIH has received approval
from the Casino Control Commission to expand its casino by 10,000 square
feet and RIH anticipates completion of its expansion in mid-1995.
The Resorts Casino Hotel is located at the eastern end of the
Boardwalk adjacent to the Taj Mahal, which is next to the Showboat
Casino Hotel ("Showboat"). These three properties have a total of more
than 2,700 hotel rooms and approximately 295,000 square feet of gaming
space in close proximity to each other. A 28-foot wide enclosed
pedestrian bridge between the Resorts Casino Hotel and the Taj Mahal
allows patrons of both hotels and guests for events being held at the
Resorts Casino Hotel and at the Taj Mahal to move between the facilities
without exposure to the weather. A similar enclosed pedestrian bridge
connects the Showboat to the Taj Mahal, allowing patrons to walk under
cover among all three casino/hotels. The remaining nine Atlantic City
casino/hotels are located approximately one-half mile to one and
one-half miles to the west on the Boardwalk or in the Marina area of
Atlantic City.
A l l Atlantic City casino/hotels compete for customers with
casino/hotels located in Nevada, and in certain foreign resort areas,
including The Bahamas, particularly with respect to destination-oriented
business, including conventions. The Las Vegas casino/hotel industry
benefits from a favorable climate and nearby airport facilities that
serve most major domestic carriers.
Atlantic City casino/hotels also compete with casinos located in
other U.S. jurisdictions, particularly those close to New Jersey.
Colorado, Illinois, Iowa, Louisiana, Mississippi, Missouri and South
Dakota have legalized, and several other states, including Pennsylvania,
are currently considering legalizing limited land-based and riverboat
casino gaming. Additionally, certain gaming operations are conducted or
have been proposed on Federal Indian reservations in a number of states.
The gaming operation
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which competes directly with the Atlantic City casino/hotels is on an
Indian reservation in Connecticut which currently operates more than
3 , 8 0 0 slot machines and whose slot revenue in 1994 exceeded
$470,000,000, which is almost twice the slot revenue of the largest
casino/hotel in Atlantic City. In July 1993 the Oneida Indians opened a
casino near Syracuse, New York. Other Indian reservation projects have
been announced in the states of New York, Connecticut and Rhode Island.
This rapid expansion of casino gaming, particularly that which has been
or may be introduced into jurisdictions in close proximity to Atlantic
City, may adversely affect RIH's operations as well as the Atlantic City
gaming industry.
Gaming Credit Policy
Credit is extended to selected gaming customers primarily in order
to compete with other casino/hotels in Atlantic City which also extend
credit to customers. Credit play represented 21% of table game volume
at the Resorts Casino Hotel in 1994, 24% in 1993 and 23% in 1992. RIH's
gaming receivables, net of allowance for uncollectible amounts, were
$4,216,000, $3,618,000 and $4,503,000 as of December 31, 1994, 1993 and
1992, respectively. The collectibility of gaming receivables has an
effect on results of operations, and management believes that overall
collections have been satisfactory. Atlantic City gaming debts are
enforceable under the laws of New Jersey and certain other states,
although it is not clear whether other states will honor this policy or
enforce judgments rendered by the courts of New Jersey with respect to
such debts.
Security Controls
Gaming at the Resorts Casino Hotel is conducted by RIH trained and
supervised personnel. Prior to employment, all casino personnel must be
licensed under the Casino Control Act. Security checks are made to
determine, among other matters, that job applicants for key positions
have had no criminal ties or associations. RIH employs extensive
security and internal controls at its casino. Security in the Resorts
Casino Hotel utilizes closed circuit video cameras to monitor the casino
floor and money counting areas. The count of monies from gaming is
observed daily by government representatives.
Seasonal Factors
RIH's business activities are strongly affected by seasonal factors
that influence the New Jersey beach tourist trade. Higher revenues and
earnings are typically realized during the middle third of the year.
Employees
RIH had a maximum of approximately 3,900 employees during 1994 and
RIH believes that its employee relations are satisfactory.
Approximately 1,500 of RIH's employees are represented by unions. Of
these employees, approximately 1,200 are represented by the Hotel
Employees and Restaurant Employees International Union Local 54, whose
contract expires in September 1999. There are several union contracts
covering other union employees.
All of RIH's casino employees and casino hotel employees must be
licensed under the Casino Control Act. Casino hotel employees are those
employees whose work requires access to the casino, the casino
simulcasting facility or restricted casino areas. Each casino and
casino hotel employee
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must meet applicable standards pertaining to such matters as financial
responsibility, good character, ability, casino training and experience,
and New Jersey residency. Hotel employees are no longer required to be
registered with the Casino Control Commission.
Regulation and Gaming Taxes and Fees
General
RIH's operations in Atlantic City are subject to regulation under
the Casino Control Act, which authorizes the establishment of casinos in
Atlantic City, provides for licensing, regulation and taxation of
casinos and created the Casino Control Commission and the Division of
Gaming Enforcement. These bodies administer the Casino Control Act. In
general, the provisions of the Casino Control Act concern (i) the
ability, character and financial stability and integrity of casino
o p e r ators, their officers, directors and employees and others
financially interested in a casino; (ii) the nature and suitability of
hotel and casino facilities, operating methods and conditions and (iii)
financial and accounting practices. Gaming operations are subject to a
number of restrictions relating to the rules of games, number of games,
credit play, size and facilities of hotel and casino operations, hours
of operation, persons who may be employed, companies which may do
business with casinos, the maintenance of accounting and cash control
procedures, security and other aspects of the business.
There were significant regulatory changes from 1993 through early
1995. The Casino Control Commission approved poker and keno, which were
implemented by casinos in the summers of 1993 and 1994, respectively.
Also, the Casino Control Act was amended to allow casinos to expand
their casino floors before building the requisite number of hotel rooms,
subject to approval of the Casino Control Commission. This amendment
was designed to encourage hotel room construction by giving casino
licensees an incentive and an added ability to generate money to finance
hotel construction. Further legislation was passed allowing the Casino
Control Commission to approve increasing a casino's gaming space if a
licensee has had qualified rooms in an annexed approved casino/hotel or
rebuilds existing hotel rooms as part of a neighborhood rehabilitation
program. Previous law only allowed for casino expansion if a casino
built new hotel rooms. In addition, the minimum casino square footage
has been increased from 50,000 square feet to 60,000 square feet for the
first 500 qualifying rooms and allows for an additional 10,000 square
feet for each additional 100 qualifying rooms over 500. Future costs of
regulation have been reduced as new legislation (i) no longer requires
hotel employees to be registered and (ii) extends the term for casino
and casino key employee license renewals from two years to four years.
The new legislation also allows greater efficiency by either reducing or
eliminating the time permitted the Casino Control Commission to approve
(i) internal controls, (ii) patron complimentary programs and (iii) the
movement of gaming equipment.
Casino License
A casino license is initially issued for a term of one year and
must be renewed annually by action of the Casino Control Commission for
the first two renewal periods succeeding the initial issuance of a
casino license. Until recently, the Casino Control Commission was given
the authority to renew a casino license for a period of two years. This
period
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has been extended to four years, although the Casino Control Commission
may reopen licensing hearings at any time. A license is not
transferable and may be conditioned, revoked or suspended at any time
upon proper action by the Casino Control Commission. The Casino Control
Act also requires an operations certificate which, in effect, has a term
coextensive with that of a casino license.
On February 26, 1979, the Casino Control Commission granted a
casino license to RIH for the operation of the Resorts Casino Hotel. In
February 1994, RIH's license was renewed until January 31, 1996. RIH's
renewed license is subject to several conditions, including (i) RIH and
RII must provide certain periodic reports and immediate notification of
certain events related to RII's public debt securities to the Casino
Control Commission, (ii) RIH and RII must submit certain periodic
financial reports to the Casino Control Commission, (iii) certain
payments from RIH to related parties are subject to prior approval of
the Casino Control Commission and (iv) any borrowing under the Senior
Facility is subject to prior approval of the Casino Control Commission.
Restrictions on Ownership of Equity and Debt Securities
The Casino Control Act imposes certain restrictions upon the
ownership of securities issued by a corporation which holds a casino
license or is a holding, intermediary or subsidiary company of a
corporate licensee (collectively, "holding company"). Among other
r e s t rictions, the sale, assignment, transfer, pledge or other
disposition of any security issued by a corporation which holds a casino
license is conditional and shall be ineffective if disapproved by the
Casino Control Commission. If the Casino Control Commission finds that
an individual owner or holder of any securities of a corporate licensee
or its holding company must be qualified and is not qualified under the
Casino Control Act, the Casino Control Commission has the right to
propose any necessary remedial action. In the case of corporate holding
companies and affiliates whose securities are publicly traded, the
Casino Control Commission may require divestiture of the security held
by any disqualified holder who is required to be qualified under the
Casino Control Act.
In the event that entities or persons required to be qualified
refuse or fail to qualify and fail to divest themselves of such security
interest, the Casino Control Commission has the right to take any
necessary action, including the revocation or suspension of the casino
license. If any security holder of the licensee or its holding company
or affiliate who is required to be qualified is found disqualified, it
will be unlawful for the security holder to (i) receive any dividends or
interest upon any such securities, (ii) exercise, directly or through
any trustee or nominee, any right conferred by such securities or (iii)
receive any remuneration in any form from the corporate licensee for
services rendered or otherwise. The Amended and Restated Certificate of
Incorporation of RII provides that all securities of RII are held
subject to the condition that if the holder thereof is found to be
disqualified by the Casino Control Commission pursuant to provisions of
the Casino Control Act, then that holder must dispose of his or her
interest in the securities. The Mortgage Notes and Junior Mortgage
Notes are also subject to the qualification, divestiture and redemption
provisions under the Casino Control Act described herein.
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Remedies
In the event that it is determined that a licensee has violated the
Casino Control Act, or if a security holder of the licensee required to
be qualified is found disqualified but does not dispose of his
s e c u rities in the licensee or holding company, under certain
circumstances the licensee could be subject to fines or have its license
suspended or revoked.
The Casino Control Act provides for the mandatory appointment of a
conservator to operate the casino and hotel facility if a license is
revoked or not renewed and permits the appointment of a conservator if a
license is suspended for a period in excess of 120 days. If a
conservator is appointed, the suspended or former licensee is entitled
to a "fair rate of return out of net earnings, if any, during the period
of the conservatorship, taking into consideration that which amounts to
a fair rate of return in the casino or hotel industry."
Under certain circumstances, upon the revocation of a license or
failure to renew, the conservator, after approval by the Casino Control
Commission and consultation with the former licensee, may sell, assign,
convey or otherwise dispose of all of the property of the casino/hotel.
In such cases, the former licensee is entitled to a summary review of
such proposed sale by the Casino Control Commission and creditors of the
former licensee and other parties in interest are entitled to prior
written notice of sale.
License Fees, Taxes and Investment Obligations
The Casino Control Act provides for casino license renewal fees and
other fees based upon the cost of maintaining control and regulatory
activities, and various work permits and license fees for the various
classes of employees. In addition, a licensee is subject annually to a
tax of 8% of "gross revenue" (defined under the Casino Control Act as
casino win, less provision for uncollectible accounts up to 4% of casino
win) and license fees of $500 on each slot machine.
The following table summarizes, for the periods shown, the fees and
taxes assessed upon RIH by the Casino Control Commission.
For the Year
1994 1993 1992
Gaming tax $19,996,000 $19,545,000 $18,788,000
License, investigation,
inspection and other fees 4,218,000 3,985,000 4,417,000
$24,214,000 $23,530,000 $23,205,000
The Casino Control Act, as originally adopted, required a licensee
to make investments equal to 2% of the licensee's gross revenue (the
"investment obligation") for each calendar year, commencing in 1979, in
which such gross revenue exceeded its "cumulative investments" (as
defined in the Casino Control Act). A licensee had five years from the
end of each calendar year to satisfy this investment obligation or
become liable for an "alternative tax" in the same amount. In 1984 the
New Jersey legislature amended the Casino Control Act so that these
provisions now
- 12 -<PAGE>
apply only to investment obligations for the years 1979 through 1983.
Certain issues have been raised concerning the satisfaction of RIH's
investment obligations for the years 1979 through 1983. See Note 12 of
Notes to Consolidated Financial Statements for a discussion of these
issues.
Effective for 1984 and subsequent years, the amended Casino Control
Act requires a licensee to satisfy its investment obligation by
purchasing bonds to be issued by the CRDA or by making other investments
authorized by the CRDA, in an amount equal to 1.25% of a licensee's
gross revenue. If the investment obligation is not satisfied, then the
licensee will be subject to an investment alternative tax of 2.5% of
gross revenue. Licensees are required to make quarterly deposits with
the CRDA against their current year investment obligations. RIH's
investment obligations for the years 1994, 1993 and 1992 amounted to
$3,124,000, $3,054,000, and $2,930,000, respectively, and have been
satisfied by deposits made with the CRDA. At December 31, 1994, RIH
held $5,286,000 face amount of bonds issued by the CRDA and had
$15,577,000 on deposit with the CRDA. The CRDA bonds issued through
1994 have interest rates ranging from 3.9% to 7% and have repayment
terms of between 20 and 50 years.
Recent amendments to the Casino Control Act create a new Atlantic
City fund for economic development projects other than the construction
and renovation of casino/hotels. Beginning in fiscal year 1995/1996 and
for the following three fiscal years, if the amount of money expended by
the Casino Control Commission and the Division of Gaming Enforcement is
less than $57,300,000, the prior year's budget for these agencies, the
amount of the difference is to be deposited into the Atlantic City fund.
Thereafter, beginning with fiscal year 1999/2000 and for the following
three fiscal years, an amount equal to the average paid into the
Atlantic City fund for the previous four fiscal years shall be deposited
in the Atlantic City fund. Each licensee's share of the amount to be
contributed to the fund is based upon its percentage of the total
industry gross revenue for the relevant fiscal year. After eight years,
the casino licensee's requirement to contribute to this fund ceases.
(d) Financial Information about Foreign and Domestic Operations
and Export Sales
Virtually all of RIH's operations are conducted in Atlantic City,
New Jersey. See "(c) Narrative Description of Business" above.
ITEM 2. PROPERTIES
RIH's casino, resort hotel and related properties in Atlantic City
are owned in fee, except for approximately 1.2 acres of the Resorts
Casino Hotel site which are leased pursuant to ground leases expiring
from 2056 through 2067.
RIH's fee and leasehold interests in the Resorts Casino Hotel, the
contiguous parking garage and property, all additions and improvements
thereto, and related personal property of RIH compose the collateral
securing the Mortgage Notes and the Junior Mortgage Notes.
- 13 -<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The disclosure required by Item 4 has been omitted pursuant to
General Instruction J of Form 10-K.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
There is no trading market for RIH's common stock, all of which is
owned by GGRI.
As part of the Restructuring the following distributions were made
to RIH's parent companies:
(i) RIH issued the RIH Promissory Note and the RIH Junior
Promissory Note with a combined estimated fair value of
$135,300,000 to RII in repayment of RIH's intercompany
b a lance of $43,236,000 to RII, with the balance of
$92,064,000 a distribution to RII;
(ii) RIH distributed to GGRI a $50,000,000 note receivable by RIH
along with $3,375,000 accrued interest thereon and
(iii) RIH distributed all of its cash and equivalents in excess of
$15,000,000 as of the Effective Date, or $12,262,000, to
GGRI which, in turn, distributed such cash to RII for its
ultimate distribution to holders of Series Notes as part of
Excess Cash (as defined in the Plan).
The indentures pursuant to which the Mortgage Notes and the Junior
Mortgage Notes were issued prohibit RIH and its subsidiaries from paying
dividends, from making other distributions in respect of their capital
stock and from purchasing or redeeming their capital stock, with certain
exceptions, unless certain interest coverage ratios are attained.
- 14 -<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The information presented below should be read in conjunction with the consolidated financial statements,
including notes thereto, presented under "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA."
(In Thousands of Dollars)
<CAPTION>
For the Year Ended December 31,
1990
From Through
Operating Information (Note A) 1994 1993 1992 1991 September 1 August 31
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $276,733 $ 271,479 $ 262,740 $ 247,474 $ 76,216 $ 158,805
Earnings from operations $ 20,791 $ 12,068 $ 21,049 $ 14,819 $ 2,304 $ 3,449
Recapitalization costs (Note B) (975) (2,727) (874) (119,804)
Affiliated bad debt write-off (Note C) (98,983)
Other income (deductions), net (Note D) (7,992) 7,422 7,181 6,942 2,696 5,209
Earnings (loss) before income taxes and
extraordinary item 11,824 16,763 27,356 21,761 5,000 (210,129)
Income tax expense (Note E) (400) (10,942) (8,704)
Earnings (loss) before extraordinary item 11,824 16,363 16,414 13,057 5,000 (210,129)
Extraordinary item (Note F) 4,008 (17,335)
Net earnings (loss) $ 15,832 $ 16,363 $ 16,414 $ 13,057 $ 5,000 $(227,464)
At December 31,
Balance Sheet Information (Note A) 1994 1993 1992 1991 1990
Total assets $212,734 $ 264,164 $ 250,636 $ 235,235 $ 221,193
Current maturities of notes payable to
affiliate and other long-term debt
(Note G) $ 325,000 $ 643 $ 958 $ 1,044
Notes payable to affiliate and other
long-term debt, excluding current
maturities (Note G) $125,309 $ 325,904 $ 326,539 $ 326,787
Shareholder's equity (deficit) $ 35,136 $(147,995) $(164,358) $(180,772) $(193,829)
</TABLE>
- 15 -<PAGE>
Notes to Selected Financial Data
Note A: See Note 2 of Notes to Consolidated Financial Statements for a
description of the transactions that occurred in connection with the
Restructuring, which was effective May 3, 1994.
In 1990 RII and certain of its subsidiaries emerged from
bankruptcy proceedings pursuant to a former plan of reorganization.
This reorganization was accounted for using "fresh start" accounting.
Accordingly, all of RIH's assets and liabilities were restated to
reflect their estimated fair values and its accumulated deficit was
eliminated. RIH recorded the effects of the reorganization as of August
31, 1990. The 1990 operating information is presented separately for
the periods "Through August 31" and "From September 1" due to the new
basis of accounting which resulted from the application of fresh start
accounting.
Note B: Recapitalization costs in 1992 through 1994 represent RIH's
a l l ocated portion of RII's consolidated recapitalization costs.
Recapitalization costs in 1990 represent RIH's allocated portion of
RII's consolidated recapitalization costs as well as a net charge from
restating RIH's assets and liabilities to fair value in connection with
"fresh-start" accounting.
Note C: RIH's affiliated bad debt write-off resulted from the 1990
reorganization discussed above.
Note D: Includes interest income, interest expense and amortization of
debt discounts.
Note E: See Notes 1 and 10 of Notes to Consolidated Financial
Statements for discussion of income taxes for 1994, 1993 and 1992.
In 1991 RIH had an agreement with RII to provide for federal
and state income taxes at a combined rate of 40%.
No tax provision was recorded for the two periods of 1990 due
to the generation of additional net operating losses for federal and
state income tax purposes during the period through August 31 which were
sufficient to offset taxable income generated during the period from
September 1.
Note F: In November 1994, RIH purchased $12,899,000 principal amount
of Junior Mortgage Notes through the purchase of 12,899 Units (each
$1,000 principal amount of Junior Mortgage Notes is traded as a "Unit"
along with one share of RII's class B redeemable common stock) at a
price of $6,740,000. The resulting gain of $4,008,000 was recorded as
an extraordinary item.
The extraordinary item in 1990 represents RIH's write-off of
the remaining balance of $17,335,000 of deferred debt issuance costs
related to certain debt securities that were cancelled pursuant to the
1990 plan of reorganization.
Note G: These items are presented net of unamortized discounts.
- 16 -<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Liquidity
At December 31, 1994 RIH had working capital of $10,578,000
including $26,876,000 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.
As described in Note 2 of Notes to Consolidated Financial
Statements, RII recently restructured its Series Notes pursuant to a
prepackaged bankruptcy plan. The Plan was confirmed by the Bankruptcy
Court on April 22, 1994 and became effective on May 3, 1994. Pursuant
to the Plan, through its affiliated notes payable to RIHF, RIH will be
the principal source of funds for servicing the Mortgage Notes and the
Junior Mortgage Notes, as well as the Senior Facility Notes to the
extent issued. Annual interest expense on the Mortgage Notes and the
Junior Mortgage Notes, after the reduction for interest on the
$12,899,000 principal amount of Junior Mortgage Notes purchased by RIH
in November 1994, will total approximately $16,300,000. 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 liquidity due to the possibility of
unanticipated events and circumstances inherent in any projections.
Capital Expenditures and Other Uses of Funds
In recent years, capital expenditures have consistently been a
significant use of financial resources by RIH. Capital additions for
Resorts Casino Hotel in 1992 amounted to $15,548,000 and included the
conversion of the parking garage from valet to self-parking, the
construction of a covered walkway from the garage to the Resorts Casino
Hotel, the renovation of guest rooms, the purchase of slot machines and
improvements to the building's infrastructure. Capital additions in
1993 amounted to $21,618,000, as RIH converted certain back-of-the-house
space into an 8,000 square foot simulcast facility which houses five
betting windows and four customer-operated terminals and approximately
80 seats for simulcast betting operations, as well as poker tables,
various other table games and a full service bar. Also, certain casino
renovations were completed, 280 slot machines were purchased, most of
which replaced older models, and the VIP slot and table player lounge,
"Club Griffin," opened. In addition, guest room refurbishment continued
and a new centralized mobile communications system was installed.
Capital expenditures in 1994 at Resorts Casino Hotel totalled $7,744,000
and included the purchase of 221 slot machines, most of which replaced
older models, the purchase of equipment and minor renovations to
accommodate keno, which commenced in June 1994, and Caribbean stud
poker, which commenced in November 1994, and various other capital
maintenance projects.
Pursuant to the Restructuring, RIH distributed all of its cash and
cash equivalents in excess of $15,000,000 as of the Effective Date,
which amounted to $12,262,000, to GGRI. GGRI then distributed such cash
to RII
- 17 -<PAGE>
so that RII, in turn, could distribute Excess Cash to holders of Series
Notes.
In November 1994 RIH purchased $12,899,000 principal amount of
Junior Mortgage Notes through the purchase of 12,899 Units at a price of
$6,740,000.
Deposits made with the CRDA as required by the Casino Control Act,
repayments of debt under capitalized lease obligations and payment to
RII of RIH's allocable portion of RII's consolidated recapitalization
costs have been other uses of funds by RIH in the periods presented.
Capital Resources and Other Sources of Funds
Since 1992, operations have been the most significant source of
funds to RIH.
RIHF has the $19,738,000 Senior Facility available for the period
ending May 2, 1996 should RIH or RII have unforeseen cash needs.
Management 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 RIHF to draw on the Senior Facility.
RESULTS OF OPERATION
RIH operates in one business segment. Following is a discussion of
the results of operations for 1994 compared to 1993 and 1993 compared to
1 9 92. The discussion should be read in conjunction with the
Consolidated Financial Statements included herein.
Revenues
Casino revenues increased by $6,366,000 in 1994 and by $10,336,000
in 1993 as the modest growth in the Atlantic City casino industry
continues. The addition of poker and simulcast betting in June 1993 and
keno in June 1994 has added to the industry's revenues, though not
significantly. RIH believes that increased competition from other newly
opened or expanded jurisdictions which permit gaming has slowed the
growth of gaming revenue in Atlantic City. Expansion of existing
Atlantic City casinos has also adversely affected RIH's operations.
These factors have significantly increased RIH's cost of obtaining
additional revenue.
RIH's revenue from poker, simulcasting and keno combined increased
by $2,850,000 in 1994 and amounted to $5,745,000 in 1993, the first year
any of these games were offered. RIH's win from slots and table games
increased by $3,516,000 in 1994 and by $4,591,000 in 1993, as increased
slot win more than offset decreased table game win. RIH's increases in
slot revenue, 6.0% in 1994 and 5.6% in 1993, exceeded those of the
industry's, 3.7% in 1994 and 4.8% in 1993. In 1993 RIH's decrease in
table game win, 3.3%, exceeded the industry's, 3.1%, and in 1994 RIH's
table game win declined by 8.4% while the industry's table game win
increased slightly. In 1993 RIH's table game win decreased due to a
lower hold percentage (ratio of casino win to total amount of chips
purchased), while the amount wagered did not fluctuate significantly
from the prior year. Also in 1993, RIH reduced the number of table
games in its casino by a
- 18 -<PAGE>
greater percentage than the reduction for the Atlantic City industry.
RIH's tables amounted to 7.8% and 7.2% of the industry's total number of
tables at the end of 1992 and 1993, respectively. In 1994, although
RIH's hold percentage remained lower than the industry's average, the
decrease in RIH's table game win was primarily attributable to a
decrease in amount wagered. RIH's tables amounted to 7.0% of the
industry's total number of tables at the end of 1994.
RIH's results reflect the fact that slot players have, until
recently, been the prime focus of RIH's marketing efforts. In an effort
to recapture some of its lost market share of table game win, in the
fall of 1994 RIH increased its program of charter flights, in early 1995
the "Griffin Games" promotion was expanded to include table players and
RIH is planning to renovate its suites to attract table patrons.
RIH's food and beverage revenues were down in 1994 primarily due to
reduced patronage at the "all-you-can-eat" Beverly Hills Buffet. During
the second quarter of 1994 prices at the Beverly Hills Buffet were
increased as management determined that this promotion was no longer
cost effective at the prior price levels. Also, there has been a
general decline in the number of patrons served at all of RIH's food and
beverage facilities.
Although total occupancy was relatively flat in 1993 compared to
1992, the number of complimentary rooms provided to casino patrons
increased. The reduced occupancy from rooms sold resulted in lower room
revenues during 1993.
Earnings from Operations
Casino, hotel and related operating results increased by $8,723,000
for 1994 due to the combination of the increased revenues described
above and a net decrease in operating expenses. The most significant
decreases in operating expenses in 1994 were in payroll and related
costs ($2,500,000), food and beverage costs ($1,400,000) and advertising
expense ($900,000). Payroll and related costs were down primarily due
to decreased staffing levels. The decrease in food and beverage costs
resulted primarily from reduced patronage at the Beverly Hills Buffet
and, to a lesser extent, other food and beverage facilities as described
above. Advertising costs were down largely because 1993 included
advertising costs associated with the introduction of the "cash-back"
program (a promotion which rewards slot players by giving cash back to
patrons based on their level of play) and the 15th anniversary
celebration of Resorts Casino Hotel. Favorable variances in these and
other costs were partially offset by increases in other expenses. The
most significant increase was in casino promotional costs ($2,500,000)
due primarily to the "cash-back" program noted above, which commenced in
late April 1993, and increased cash giveaways to bus patrons. Since the
introduction of the "cash-back" program RIH has reduced certain other
cash giveaway promotional mailings. Another significant cost increase
was in the accrual for performance and incentive bonuses ($700,000).
Casino, hotel and related operating results decreased by $8,981,000
for 1993 as increased revenues described above were offset by a net
increase in operating expenses. The most significant increases in
operating expenses were casino promotional costs ($7,700,000), payroll
and related costs ($6,000,000), other casino operating expenses
($2,600,000),
- 19 -<PAGE>
d e p reciation ($2,300,000), fees to The Griffin Group, Inc., a
corporation controlled by Merv Griffin, for services rendered under the
Griffin Services Agreement described in Note 8 of Notes to Consolidated
Financial Statements ($2,200,000) and entertainers fees and
accommodations ($1,000,000). The increase in casino promotional costs
was due primarily to the "cash-back" program. The majority of the
increase in payroll and related costs was due to merit and union
increases in salary and wage rates. The remaining increase in payroll
and related costs and a significant portion of the casino operating
costs increase were associated with the simulcast and poker facility
which opened in June 1993. The increase in entertainment costs resulted
from a return to offering more headliner shows in 1993. The most
significant cost reductions in 1993 were in the performance and
i n c e n tive bonus ($3,300,000) and in food and beverage costs
($1,400,000).
For a discussion of competition in the Atlantic City casino/hotel
industry see "Competition" under "ITEM 1. BUSINESS - (c) Narrative
Description of Business."
Other Income (Deductions)
Through the Effective Date, RIH's interest income had been largely
attributable to the $50,000,000 note receivable from RIB, a former
B a h amian affiliate. This note was cancelled as part of the
Restructuring.
RIH's interest expense before the Restructuring was limited to
minor amounts incurred on capitalized lease obligations. After the
Restructuring RIH is to bear, indirectly, the interest on the Mortgage
Notes, the Junior Mortgage Notes and, to the extent issued, the Senior
Facility Notes, through notes payable to RIHF, the terms of which mirror
the terms of such debt of RIHF. See Note 2 of Notes to Consolidated
Financial Statements for the terms of such new debt.
- 20 -<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
RIH's consolidated financial statements and supplementary data are
presented on the following pages:
Page
Financial Statements Reference
Report of Independent Auditors 22
Consolidated Balance Sheets at December 31,
1994 and 1993 23
Consolidated Statements of Operations for the
years ended December 31, 1994, 1993 and 1992 25
Consolidated Statements of Cash Flows for the
years ended December 31, 1994, 1993 and 1992 26
Consolidated Statements of Changes in
Shareholder's Equity (Deficit) for the years
ended December 31, 1994, 1993 and 1992 27
Notes to Consolidated Financial Statements 28
Pro Forma Financial Data (Unaudited) 41
Financial Statement Schedule:
Schedule II: Valuation Accounts for the
years ended December 31,
1994, 1993 and 1992 43
Supplementary Data
Selected Quarterly Financial Data (Unaudited) 44
- 21 -<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholder
Resorts International Hotel, Inc.
We have audited the accompanying consolidated balance sheets of
Resorts International Hotel, Inc. as of December 31, 1994 and 1993, and
t h e related consolidated statements of operations, changes in
shareholder's equity (deficit), and cash flows for each of the three
years in the period ended December 31, 1994. Resorts International
Hotel, Inc. is an indirect wholly owned subsidiary of Resorts
International, Inc. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
and schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Resorts International Hotel, Inc. at December 31,
1994 and 1993, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
/S/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 17, 1995,
except for Note 2,
as to which the date is
February 27, 1995
- 22 -<PAGE>
Resorts International Hotel, Inc.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
December 31,
Assets 1994 1993
Current assets:
Cash (including cash equivalents
of $12,695 and $11,446) $ 26,876 $ 25,947
Receivables, net 6,232 5,114
Interest receivable from affiliate 1,125
Note receivable from affiliate 50,000
Inventories 1,793 1,754
Prepaid expenses 8,566 5,642
Total current assets 43,467 89,582
Property and equipment:
Land and land rights 53,060 53,250
Land improvements 158 158
Hotels and other buildings 108,051 104,475
Furniture, machinery and equipment 45,097 40,456
Construction in progress 41 802
206,407 199,141
Less accumulated depreciation (48,906) (35,821)
Net property and equipment 157,501 163,320
Deferred charges and other assets 11,766 11,262
$212,734 $264,164
See Notes to Consolidated Financial Statements.
- 23 -<PAGE>
Resorts International Hotel, Inc.
CONSOLIDATED BALANCE SHEETS
(In Thousand of Dollars, except par value)
Liabilities and Shareholder's December 31,
Equity (Deficit) 1994 1993
Current liabilities:
Accounts payable and accrued liabilities $ 24,365 $ 24,900
Interest payable to affiliate 4,113
Notes payable to affiliate 325,000
Due to RII 4,411 42,859
Total current liabilities 32,889 392,759
Notes payable to affiliate, net of
unamortized discounts 125,309
Deferred income taxes 19,400 19,400
Commitments and contingencies (Note 12)
Shareholder's equity (deficit):
Common stock - $1 par value - 1,000,000
and 100 shares outstanding 1,000
Capital in excess of par (excess of
liabilities over assets at August 31,
1990 reorganization) 21,366 (198,829)
Retained earnings 12,770 50,834
Total shareholder's equity (deficit) 35,136 (147,995)
$212,734 $ 264,164
See Notes to Consolidated Financial Statements.
- 24 -<PAGE>
Resorts International Hotel, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
For the Year Ended December 31,
1994 1993 1992
Revenues:
Casino $250,482 $244,116 $233,780
Rooms 7,134 6,974 8,766
Food and beverage 14,609 15,926 16,056
Other casino/hotel revenues 4,508 4,463 4,138
276,733 271,479 262,740
Expenses:
Casino 143,748 141,608 127,847
Rooms 3,243 3,402 3,582
Food and beverage 15,823 17,710 17,658
Other casino/hotel operating expenses 34,759 34,764 33,281
Selling, general and administrative 36,101 39,352 39,292
RII parent services fee 9,082 8,911 8,629
Depreciation 13,186 13,664 11,402
255,942 259,411 241,691
Earnings from operations 20,791 12,068 21,049
Other income (deductions):
Interest income 3,623 7,615 7,576
Interest expense (10,858) (193) (395)
Amortization of debt discounts (757)
Recapitalization costs (975) (2,727) (874)
Earnings before income taxes and
extraordinary item 11,824 16,763 27,356
Income tax expense (400) (10,942)
Earnings before extraordinary item 11,824 16,363 16,414
Extraordinary item 4,008
Net earnings $ 15,832 $ 16,363 $ 16,414
See Notes to Consolidated Financial Statements.
- 25 -<PAGE>
Resorts International Hotel, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
For the Year Ended December 31,
1994 1993 1992
Cash flows from operating activities:
Cash received from customers $ 274,467 $ 272,150 $ 261,462
Cash paid to suppliers and employees (242,154) (250,281) (229,911)
Cash flow from operations before
interest and income taxes 32,313 21,869 31,551
Interest received 1,296 10,973 4,204
Interest paid (6,745) (193) (395)
Income taxes paid to parent (10,942)
Net cash provided by operating
activities 26,864 32,649 24,418
Cash flows from investing activities:
Payments for property and equipment (7,744) (21,013) (15,495)
Purchase of 12,899 Units (6,740)
CRDA deposits and bond purchases (3,044) (3,025) (2,871)
Proceeds from sale of property and
equipment 116
Net cash used in investing
activities (17,412) (24,038) (18,366)
Cash flows from financing activities:
Distribution to GGRI (12,262)
Advances from (repayments to) RII 4,788 (515) 1,582
Recapitalization costs paid to RII (975) (2,727) (874)
Repayments of non-affiliated debt (74) (2,065) (1,003)
Net cash used in financing
activities (8,523) (5,307) (295)
Net increase in cash and cash
equivalents 929 3,304 5,757
Cash and cash equivalents at beginning
of period 25,947 22,643 16,886
Cash and cash equivalents at end of
period $ 26,876 $ 25,947 $ 22,643
See Notes to Consolidated Financial Statements.
- 26 -<PAGE>
Resorts International Hotel, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S
EQUITY (DEFICIT)
(In Thousands of Dollars)
Capital in excess
of par (excess of
liabilities over
RIH assets at
common August 31, 1990 Retained
stock reorganization) earnings
Balance at December 31, 1991 $ -0- $(198,829) $ 18,057
Net earnings for year 1992 16,414
Balance at December 31, 1992 -0- (198,829) 34,471
Net earnings for year 1993 16,363
Balance at December 31, 1993 -0- (198,829) 50,834
Distribution of RIH
Promissory Note and RIH
Junior Promissory Note
to RII (38,168) (53,896)
Shares issued to GGRI in
exchange for the RIH-GGRI
Notes 1,000 324,000
Distribution of RIB Note and
accrued interest thereon to
GGRI (53,375)
Distribution to GGRI (12,262)
Net earnings for year 1994 15,832
Balance at December 31, 1994 $1,000 $ 21,366 $ 12,770
See Notes to Consolidated Financial Statements.
- 27 -<PAGE>
Resorts International Hotel, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Resorts International Hotel, Inc. ("RIH") owns and operates Merv
Griffin's Resorts Casino Hotel ("Resorts Casino Hotel"), a casino/hotel
complex located in Atlantic City, New Jersey. Prior to May 3, 1994, RIH
was a direct, wholly owned subsidiary of Resorts International, Inc.
("RII"). As part of a restructuring (the "Restructuring") of certain
publicly held debt securities of RII (the "Series Notes") which was
effective on May 3, 1994 (the "Effective Date"), RIH became a wholly
owned subsidiary of GGRI, Inc. ("GGRI"), which is a wholly owned
subsidiary of RII.
Principles of Consolidation
The consolidated financial statements include the accounts of RIH
and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
Revenue Recognition
RIH records as revenue the win from gaming activities which
represents the difference between amounts wagered and amounts won by
patrons. Revenues from hotel and related services and from theater
ticket sales are recognized at the time the related service is
performed.
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
f o r complimentary services provided to casino patrons. These
allocations do not necessarily represent the incremental cost of
providing such complimentary services to casino patrons. Amounts
allocated to the casino department from the other operating departments
were as follows:
(In Thousands of Dollars) 1994 1993 1992
Rooms $ 4,016 $ 3,728 $ 3,010
Food and beverage 14,547 16,250 16,709
Other casino/hotel operations 7,404 7,216 6,174
Total allocated to casino $25,967 $27,194 $25,893
Cash Equivalents
RIH considers all of its short-term money market securities
p u rchased with maturities of three months or less to be cash
equivalents. The carrying value of cash equivalents approximates fair
value due to the short maturity of these instruments.
- 28 -<PAGE>
Inventories
Inventories of provisions, supplies and spare parts are carried at
the lower of cost (first-in, first-out) or market.
Property and Equipment
Property and equipment are depreciated over their estimated useful
lives using the straight-line method for financial reporting purposes.
Casino Reinvestment Development Authority ("CRDA") Obligations
Under the New Jersey Casino Control Act ("Casino Control Act"), RIH
is obligated to purchase CRDA bonds, which will bear a below-market
interest rate, or make an alternative qualifying investment. RIH
charges to expense an estimated discount related to CRDA investment
obligations as of the date the obligation arises based on fair market
interest rates of similar quality bonds in existence as of that date.
On the date RIH actually purchases the CRDA bond, the estimated discount
previously recorded is adjusted to reflect the actual terms of the bonds
issued and the then existing fair market interest rate for similar
quality bonds.
The discount on CRDA bonds purchased is amortized to interest
income over the life of the bonds using the effective interest rate
method.
Income Taxes
RIH and RII's other domestic subsidiaries file consolidated federal
income tax returns with RII.
Effective January 1, 1993, RIH adopted the liability method of
accounting prescribed by Statement of Financial Accounting Standards No.
109 ("SFAS 109"), "Accounting for Income Taxes." Although RIH is a
member of a consolidated group for federal income tax purposes, RIH
applies SFAS 109 on a separate return basis for financial reporting
purposes.
Prior to the adoption of SFAS 109, RIH had agreed with RII to
provide for federal and state income taxes using a combined rate of 40%.
Material transactions which would have been subject to combined tax
rates significantly different from the 40% rate were to be separately
tax effected. The resulting liability was settled on a current basis.
NOTE 2 - RESTRUCTURING OF RII'S SERIES NOTES
RII and GGRI, RII's subsidiary which guaranteed the Series Notes,
proposed the Restructuring of the Series Notes which was accomplished
through a prepackaged bankruptcy plan of reorganization (the "Plan").
On March 21, 1994, after receiving the requisite acceptances for
confirmation of the Plan from holders of the Series Notes and equity
interests in RII, RII and GGRI filed their prepackaged bankruptcy cases
with the United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court"). The Plan was confirmed by the Bankruptcy
Court on April 22, 1994 and on the Effective Date all conditions to the
effectiveness of the Plan were either met or waived and the Plan became
effective.
Pursuant to the Plan, the Series Notes were exchanged for, among
other things, $125,000,000 principal amount of 11% Mortgage Notes (the
"Mortgage
- 29 -<PAGE>
Notes") due September 15, 2003 and $35,000,000 principal amount of
11.375% Junior Mortgage Notes (the "Junior Mortgage Notes") due December
15, 2004. Hereinafter the Mortgage Notes and the Junior Mortgage Notes,
collectively, are referred to as the "New Debt Securities." The New
Debt Securities were issued by Resorts International Hotel Financing,
Inc. ("RIHF"), a subsidiary of RII, and are guaranteed by RIH. The
accrual of interest and amortization of discounts on the New Debt
Securities commenced on May 3, 1994. Also pursuant to the Plan, RIHF,
RIH and RII entered into the senior note purchase agreement (the "Senior
Facility") described below.
The Mortgage Notes are secured by a $125,000,000 promissory note
made by RIH (the "RIH Promissory Note"), the terms of which mirror the
terms of the Mortgage Notes. The RIH Promissory Note and RIH's guaranty
of the Mortgage Notes are secured by liens on the Resorts Casino Hotel,
consisting of RIH's fee and leasehold interests in the Resorts Casino
Hotel, the contiguous parking garage and property, all additions and
improvements thereto, and related personal property. The liens securing
the Mortgage Notes will be subordinated to the lien securing the Senior
Facility Notes (described below), if the Senior Facility Notes are
issued.
The Junior Mortgage Notes are secured by a $35,000,000 promissory
note made by RIH (the "RIH Junior Promissory Note"), the terms of which
m i r r or the terms of the Junior Mortgage Notes. In certain
circumstances, interest payable on the Junior Mortgage Notes may be
satisfied by the issuance of additional Junior Mortgage Notes, in which
case the balance of the RIH Junior Promissory Note would increase
accordingly. The RIH Junior Promissory Note and RIH's guaranty of the
Junior Mortgage Notes are also secured by liens on the Resorts Casino
Hotel property as described above. The liens securing the Junior
Mortgage Notes will be subordinated to the lien securing the Senior
Facility Notes, if the Senior Facility Notes are issued, and are
subordinated to the liens securing the Mortgage Notes.
The indentures pursuant to which the Mortgage Notes and the Junior
Mortgage Notes were issued (collectively, the "Indentures") prohibit RIH
a n d its subsidiaries from paying dividends, from making other
distributions in respect of their capital stock, and from purchasing or
redeeming their capital stock, with certain exceptions, unless certain
interest coverage ratios are attained. The Indentures also contain
certain other restrictive covenants on the part of RIH and its
s u b sidiaries, including (i) limitations on incurring additional
indebtedness, with certain exceptions; (ii) restrictions on making
loans to an affiliate or other person other than (x) intercompany
advances to RII not in excess of $1,000,000 in the aggregate at any time
outstanding and (y) loans to RII from the proceeds of the Senior
Facility (or similar working capital facility), provided, however, that
RIH can make certain loans or engage in certain credit transactions in
the operation of Resorts Casino Hotel, if such loans or credit
transactions are in the ordinary course of business of operating a
c a s ino/hotel and (iii) restrictions from entering into certain
transactions with affiliates on terms less favorable to RIH or its
subsidiaries than an arm's length transaction. In this regard, the
Indentures specifically permit affiliated transactions in connection
with the Senior Facility, the Griffin Services Agreement described in
Note 8, the parent services agreement with RII which provides for
payment of the three percent services fee described in Note 8, and a tax
sharing agreement with RII which limits RIH's tax payments to RII to
reimbursements of cash payments made by RII for income or alternative
minimum taxes arising from the earnings or operations of RIH.
- 30 -<PAGE>
The Senior Facility among RIHF, RII and RIH and certain funds and
accounts advised or managed by Fidelity Management & Research Company
("Fidelity"), as amended in February 1995, is available for a single
borrowing of up to $19,738,000 during the period ending May 2, 1996,
through the issuance of notes (the "Senior Facility Notes"). If issued,
the Senior Facility Notes will bear interest at 11.75% and will be due
in 2002. The Senior Facility Notes will be senior obligations of RIHF
secured by a promissory note from RIH in an aggregate principal amount
of up to $19,738,000 payable in amounts and at times necessary to pay
the principal of and interest on the Senior Facility Notes. The Senior
Facility Notes will be guaranteed by RIH and secured by a lien on the
Resorts Casino Hotel property as described above. The Senior Facility
Notes will also be secured by a pledge by GGRI of all issued and
outstanding shares of RIH common stock. In addition, the Senior
Facility Notes will be guaranteed by RII, which guaranty will be secured
by a pledge of all the issued and outstanding stock of GGRI and RIHF.
Market interest rates and other economic conditions, among other
factors, will determine if it is appropriate for RIHF to draw on the
Senior Facility.
The Restructuring also prescribed the following transactions
between RIH and its affiliates:
- RIH issued the RIH Promissory Note and the RIH Junior
Promissory Note in repayment of RIH's balance due to RII on
the Effective Date with the remainder a distribution to RII.
RIH's retained earnings of $53,896,000 at April 30, 1994 was
included in that distribution.
- GGRI exchanged the $325,000,000 RIH-GGRI Notes (see Note 7)
for 999,900 shares of common stock of RIH. In order to
accomplish this, RIH authorized an additional 4,997,500 shares
of its common stock.
- RII contributed to GGRI the 100 shares of common stock of RIH
which RII owned. This resulted in RIH's becoming a wholly
owned subsidiary of GGRI and an indirect subsidiary of RII.
RIH now has a total of 5,000,000 shares of common stock
a u t horized, of which 1,000,000 shares are issued and
outstanding.
- RIH distributed to GGRI, as a return of surplus, the
$50,000,000 RIB Note (see Note 5) and accrued interest
thereon.
- RIH distributed all of its cash and cash equivalents in excess
of $15,000,000 as of the Effective Date to GGRI. GGRI
distributed such cash to RII so that RII, in turn, could
distribute Excess Cash (as defined in the Plan) to holders of
Series Notes.
For pro forma effects of the Restructuring on continuing operations
of RIH assuming the Restructuring occurred on January 1, 1994 see "PRO
FORMA FINANCIAL DATA."
NOTE 3 - CASH EQUIVALENTS
Cash equivalents at December 31, 1994 included a reverse repurchase
agreement (U.S. Treasury Notes purchased under an agreement to resell
those notes) with National Westminster Bank NJ in the amount of
$6,317,000 under
- 31 -<PAGE>
which RIH had not taken delivery of the underlying securities. The
agreement matured on January 3, 1995. RIH's cash equivalents at
December 31, 1994 also included U.S. Treasury Bills.
NOTE 4 - RECEIVABLES
Components of receivables at December 31 were as follows:
(In Thousands of Dollars) 1994 1993
Gaming $ 8,035 $ 8,116
Less allowance for doubtful accounts (3,819) (4,498)
4,216 3,618
Non-gaming:
Hotel and related 799 534
Other 1,299 1,002
2,098 1,536
Less allowance for doubtful accounts (82) (40)
2,016 1,496
$ 6,232 $ 5,114
NOTE 5 - NOTE RECEIVABLE FROM AFFILIATE
In 1988, RIH loaned $50,000,000 pursuant to a pre-arranged
back-to-back loan to Resorts International (Bahamas) 1984 Limited
("RIB"), an indirect wholly owned subsidiary of RII which was disposed
of as part of the Restructuring, in exchange for a promissory note (the
"RIB Note"). Such note was payable on demand and bore interest at 13
1/2% per annum, with interest payments due each May 1 and November 1.
Pursuant to the Restructuring, RIH distributed the RIB Note and accrued
interest thereon to GGRI as a return of surplus. See Note 2.
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of accounts payable and accrued liabilities at December
31 were as follows:
(In Thousands of Dollars) 1994 1993
Accrued payroll and related taxes
and benefits $ 9,417 $ 9,159
Accrued gaming taxes, fees and
related assessments 7,064 6,620
Customer deposits and unearned
revenues 2,152 3,363
Trade payables 1,410 1,847
Other accrued liabilities 4,322 3,911
$24,365 $24,900
- 32 -<PAGE>
NOTE 7 - NOTES PAYABLE TO AFFILIATES
As described in Note 2, on May 3, 1994, RIH issued the RIH
Promissory Note and the RIH Junior Promissory Note (collectively, the
"New RIH Notes") to RII. RII then transferred the New RIH Notes to RIHF
in exchange for the Mortgage Notes and the Junior Mortgage Notes, and
RIH amended and restated the New RIH Notes making them payable to RIHF.
In November 1994, RIH purchased $12,899,000 principal amount of
Junior Mortgage Notes through the purchase of 12,899 Units (each $1,000
principal amount of Junior Mortgage Notes is traded as a "Unit" along
with one share of RII's class B redeemable common stock) at a price of
$6,740,000. The resulting gain of $4,008,000 is reported as an
extraordinary item.
The carrying value and fair value by component of Notes Payable to
Affiliate at December 31, 1994 were as follows:
Carrying Fair
Value Value
RIH Promissory Note $125,000 $83,750
Less unamortized discount (18,123)
106,877
RIH Junior Promissory Note $ 35,000
Less principal amount of Junior
Mortgage Notes held by RIH (12,899)
22,101 13,040
Less unamortized discount (3,669)
18,432
$125,309 $96,790
The fair values presented above are based on December 31 closing
market prices for RIHF's publicly traded debt because RIHF's debt is (i)
dependent on the New RIH Notes for debt service and (ii) collateralized
and guaranteed by RIH.
For a description of the RIH Promissory Note and the RIH Junior
Promissory Note see Note 2. Interest on the RIH Promissory Note is
payable semi-annually on March 15 and September 15 in each year.
Interest on the RIH Junior Promissory Note is payable semi-annually on
June 15 and December 15 in each year. The effective interest rates on
the RIH Promissory Note and the RIH Junior Promissory Note are 13.9% and
14.6%, respectively. No principal payments are required during the next
five years on the RIH Promissory Note or the RIH Junior Promissory Note.
In 1988, GGRI issued $325,000,000 principal amount of publicly
traded notes. GGRI loaned the proceeds of the notes to RIH in exchange
for, among other things, $325,000,000 of promissory notes payable to
GGRI (the "RIH-GGRI Notes"). The RIH-GGRI Notes, as amended in 1992,
were payable on demand after April 15, 1994 and were non-interest
bearing, but the principal amount accreted according to a schedule.
Pursuant to the Restructuring, GGRI exchanged the RIH-GGRI Notes for
999,900 shares of common stock of RIH. See Note 2.
- 33 -<PAGE>
The RIH-GGRI Notes and the RIB Note described in Note 5 related to
intercompany loans which were not anticipated to be repaid in the
ordinary course of business. In light of this and the fact that RII had
proposed the Restructuring of the Series Notes, which proposal included
the cancellation of both the RIH-GGRI Notes and the RIB Notes through a
series of transactions, it was not practical to estimate the fair values
of the RIH-GGRI Notes or the RIB Note at December 31, 1993.
NOTE 8 - RELATED PARTY TRANSACTIONS
RIH recorded the following income and expenses from RII and its
other subsidiaries:
(In Thousands of Dollars) 1994 1993 1992
Income - Interest from RIB $ 2,250 $6,750 $6,750
Expenses:
Parent services fee to RII $ 9,082 $8,911 $8,629
Property rentals to RII 325 325 325
Interest & amortization of
discounts on notes payable to
RIHF 11,604
$21,011 $9,236 $8,954
RII charges RIH the parent services fee of three percent of gross
revenues for administrative and other services.
In addition to the above, charges for insurance costs are allocated
to RIH based on relative amounts of operating revenue, payroll, property
value, or other appropriate measures. Also, recapitalization costs
reflected on the consolidated statements of operations represent RIH's
allocated portion of RII's consolidated recapitalization costs.
License and Services Agreement
In April 1993, RII, RIH and The Griffin Group, Inc. (the "Griffin
Group"), a corporation controlled by Merv Griffin, Chairman of the Board
of RII, entered into a license and services agreement (the "Griffin
Services Agreement") effective as of September 17, 1992, upon the
expiration of a previous license and services agreement. Pursuant to
the Griffin Services Agreement, Griffin Group granted RII and RIH a
non-exclusive license to use the name and likeness of Merv Griffin to
advertise and promote facilities and operations of RII and its
subsidiaries. Also pursuant to the Griffin Services Agreement, Mr.
Griffin is to provide certain services to RII and RIH, including serving
as Chairman of the Board of RII and as a host, producer and featured
performer in various shows to be presented in Resorts Casino Hotel, and
furnishing marketing and consulting services.
The Griffin Services Agreement is to continue until September 17,
1997 and provides for earlier termination under certain circumstances
including, among others, a change of control (as defined) of RII and RIH
and Mr. Griffin ceasing to serve as Chairman of the Board of RII.
- 34 -<PAGE>
The Griffin Services Agreement provides for compensation to Griffin
Group in the amount of $2,000,000 for the year ended September 16, 1993,
and in specified amounts for each of the following years, which increase
at approximately 5% per year. In accordance with the Griffin Services
Agreement, upon signing, RIH paid Griffin Group $4,100,000, representing
compensation for the first two years. Thereafter, the Griffin Services
Agreement called for annual payments on September 17, each representing
a prepayment for the year ending two years hence. In the event of an
early termination of the Griffin Services Agreement, and depending on
the circumstances of such early termination, all or a portion of the
compensation paid to Griffin Group in respect of the period subsequent
to the date of termination may be required to be repaid to RII and RIH.
In the Griffin Services Agreement RII and RIH agreed to indemnify,
defend and hold harmless Griffin Group and Mr. Griffin against certain
claims, losses and costs, and to maintain certain insurance coverage
with Mr. Griffin and Griffin Group as named insureds.
As part of the Restructuring, the payment due Griffin Group on
September 17, 1994 was settled by applying $2,310,000 as a reduction of
the balance of a note payable to RII by Griffin Group. On August 1,
1994, following review and approval by the independent members of RII's
Board of Directors, RII agreed to issue 1,940,000 shares of common stock
of RII to an affiliate of Griffin Group in satisfaction of the final
payment obligation of RIH and RII under the Griffin Services Agreement.
This payment of $2,425,000 would have been due on September 17, 1995.
The closing price of RII's common stock on the date of the agreement was
$1.0625 per share. The shares are not registered under the Securities
Act of 1933 and are restricted securities.
Other
RIH reimbursed Griffin Group $207,000, $130,000 and $25,000 for
charter air services related to RIH business rendered in 1994, 1993 and
1992, respectively.
In 1994 RIH incurred charges from unaffiliated parties of $394,000
in producing the live television broadcast of "Merv Griffin's New Year's
Eve Special" from Resorts Casino Hotel. For each of the 1993 and 1992
productions of "Merv Griffin's New Year's Eve Special," which also were
broadcast live on television, RIH paid $100,000 and provided certain
f a cilities, labor and accommodations to subsidiaries of January
Enterprises, Inc., of which Merv Griffin formerly was Chairman.
NOTE 9 - RETIREMENT PLANS
RIH has a defined contribution plan in which substantially all
non-union employees are eligible to participate. Employees of certain
other affiliated companies are also eligible to participate in this
plan. RIH and other subsidiaries of RII make contributions to the plan
based on a percentage of eligible employee contributions. RIH's pension
expense for this plan was $637,000, $681,000 and $665,000 for the years
1994, 1993 and 1992, respectively.
Union employees are covered by various multi-employer pension plans
to which contributions are made by RIH and other unrelated employers.
- 35 -<PAGE>
RIH's pension expense for these plans was $842,000, $844,000 and
$827,000 for the years 1994, 1993 and 1992, respectively.
NOTE 10 - INCOME TAXES
As discussed in Note 1, RIH adopted SFAS 109 effective January 1,
1993. In connection with the adoption of SFAS 109 RIH's deferred tax
liability of $19,000,000 as of January 1, 1993 was transferred to RIH
from RII. There were no other effects on the accompanying financial
statements.
In 1994 RIH's current federal provision of $1,100,000 was offset by
a deferred federal benefit of the same amount resulting from the
recognition of the carryback of future deductible amounts.
In August 1993 tax law changes were enacted which resulted in an
increase in RIH's federal income tax rate. The increase resulted in a
$400,000 increase in RIH's deferred income tax liability and a deferred
income tax provision of the same amount. The provision for income taxes
in 1993 also includes a current federal provision of $2,600,000 related
to federal taxable income generated in 1993, which is offset by a
deferred federal benefit of $2,600,000 resulting from the recognition of
the carryback of future deductible amounts.
No state tax provision was recorded in 1994 or 1993 due to the
utilization of state net operating loss ("NOL") carryforwards.
As described in Note 1, in 1992 RIH had an agreement with RII to
provide for federal and state income taxes at a combined rate of 40%.
In 1992 this resulted in income tax expense of $10,942,000.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of RIH's deferred tax liabilities and
assets as of December 31 were as follows:
(In Thousands of Dollars) 1994 1993
Deferred tax liabilities - basis
differences on property and equipment $(21,000) $(20,800)
Deferred tax assets:
Net operating loss carryforwards 65,800 65,800
Book reserves not yet deductible for tax 10,000 10,400
Tax credit carryforwards 2,100 2,000
Other 2,400 2,400
Total deferred tax assets 80,300 80,600
Valuation allowance for deferred tax assets (78,700) (79,200)
Deferred tax assets, net of valuation
allowance 1,600 1,400
Net deferred tax liabilities $(19,400) $(19,400)
- 36 -<PAGE>
The effective income tax rate on earnings before income taxes and
extraordinary items varies from the statutory federal income tax rate as
a result of the following factors:
1994 1993
Statutory federal income tax rate 35.0% 35.0%
Deferred income tax benefit based on
reversal of temporary differences (15.0%) (19.5%)
Net operating loss utilization (23.1%) (16.3%)
Other, including impact of increase
in tax rate in 1993 3.1% 3.2%
Effective tax rate 0.0% 2.4%
For federal tax purposes RIH had NOL carryforwards of approximately
$188,000,000 at December 31, 1994 which expire from 2003 through 2005.
These loss carryforwards were produced in periods prior to a change in
ownership of the consolidated group of which RIH is a part; therefore,
these loss carryforwards are limited in their availability to offset
future taxable income. For federal tax purposes, this limitation is
considered to be owned by a common parent and would not be available to
RIH unless the parent made an affirmative election to allocate some of
the limitation to RIH. Such election would not be made until such time
as RIH ceases to be a member of the group.
For financial reporting purposes, the tax provision has been
computed as if RIH were entitled to a full allocation of the group's
limitation. This has the effect of reducing RIH's current tax
provision; any remaining current tax provision of RIH is fully offset
b y a deferred tax benefit based on the reversal of temporary
differences. Pursuant to the tax sharing agreement provided for in the
Indentures, RIH is not permitted to make any tax payments to RII unless
RII is in a taxpaying position on a consolidated basis.
At December 31, 1994, RIH had NOL carryforwards in New Jersey of
approximately $136,000,000, which expire from 1995 through 1997.
Also, for federal tax purposes, RIH had tax credit carryforwards of
$2,100,000 at December 31, 1994, which expire from 1998 through 2009.
- 37 -<PAGE>
NOTE 11 - STATEMENTS OF CASH FLOWS
S u p plemental disclosure required by Statement of Financial
Accounting Standards No. 95, "Statement of Cash Flows," are presented
below.
(In Thousands of Dollars) 1994 1993 1992
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings $ 15,832 $16,363 $16,414
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Extraordinary gain on purchase of
12,899 Units (4,008)
Depreciation 13,186 13,664 11,402
Provision for discount on CRDA
obligations, net of amortization 1,456 1,538 1,447
Amortization of debt discounts 757
Provision for doubtful receivables 297 901 1,414
Deferred tax provision 400
Recapitalization costs 975 2,727 874
Net loss on sale of property 8 323 8
Net increase in receivables (1,415) (609) (346)
Net (increase) decrease in interest
receivable from affiliate (2,250) 3,375 (3,375)
Net increase in inventories and
prepaid expenses (2,963) (3,992) (580)
Net (increase) decrease in deferred
charges and other assets 1,164 (754) (1,309)
Net increase in interest payable to
affiliate 4,113
Net decrease in accounts payable
and accrued liabilities (288) (1,287) (1,531)
Net cash provided by operating
activities $ 26,864 $32,649 $24,418
Non-cash investing and financing
transactions:
Distribute RIH Promissory Note and
RIH Junior Promissory Note as:
Repayment of advances from RII $ 43,236
Distribution to RII 92,064
Exchange RIH-GGRI Notes for shares
of RIH common stock 325,000
Distribute RIB Note and accrued
interest thereon to GGRI 53,375
Increase in liabilities for additions
to property and equipment and other
assets 80 $632 $112
- 38 -<PAGE>
NOTE 12 - COMMITMENTS AND CONTINGENCIES
CRDA
The Casino Control Act, as originally adopted, required a licensee
to make investments equal to 2% of the licensee's gross revenue (as
defined in the Casino Control Act) (the "investment obligation") for
each calendar year, commencing in 1979, in which such gross revenue
exceeded its "cumulative investments" (as defined in the Casino Control
Act). A licensee had five years from the end of each calendar year to
satisfy this investment obligation or become liable for an "alternative
tax" in the same amount. In 1984 the New Jersey legislature amended the
Casino Control Act so that these provisions now apply only to investment
obligations for the years 1979 through 1983.
Effective for 1984 and subsequent years, the amended Casino Control
Act requires a licensee to satisfy its investment obligation by
purchasing bonds to be issued by the CRDA, or by making other
investments authorized by the CRDA, in an amount equal to 1.25% of a
licensee's gross revenue. If the investment obligation is not
s a tisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of gross revenue. Since 1985, a licensee has
been required to make quarterly deposits with the CRDA against its
current year investment obligation.
An analysis of RIH's investment obligations under the Casino
Control Act and RIH's means of settlement since 1979 follows:
(In Thousand of Dollars) 1973-1983 1984-1994 Total
Investment obligations $(21,637) $(32,296) $(53,933)
Means of settlement:
Housing related investments
under audit 13,104 13,104
Housing related investments
previously approved 1,000 1,000
CRDA deposits/bond purchases 7,533 31,523 39,056
Remaining investment obligation
at December 31, 1994, which was
deposited in January 1995 $ -0- $ (773) $ (773)
With regard to the housing related investments under audit, in
January 1988 the CRDA notified RIH of its interpretation as to the
periods of time during which expenditures could be made to satisfy
investment obligations. CRDA's interpretation differs from RIH's and if
found to be correct would decrease the amount of RIH's qualifying
expenditures by approximately $5,000,000 to $6,000,000. RIH believes
that its interpretation is correct and intends to contest this issue.
RIH also received a letter dated November 9, 1989, from the State
of New Jersey Department of the Treasury (the "Treasury") stating that
the housing related investments made by RIH were not sufficient to meet
its investment obligation for the years 1979 through 1983. The letter
also
- 39 -<PAGE>
stated that alternative tax in the amount of $21,637,000 was due for
those years, in addition to penalties and interest thereon which
amounted to $12,514,000 as of the date of the letter. As set forth in
the table above, RIH believes that $8,533,000 of such obligations have
been settled; $7,533,000 in cash and $1,000,000 by previously approved
housing related investments. Also, RIH has received audit reports
issued by an agency acting on behalf of the Treasury identifying
$10,165,000 of project development costs available for investment credit
towards the investment obligation. This leaves a total of $2,939,000 of
housing related investments under audit in question. RIH has notified
the Treasury that it takes exception to the Treasury's computation of
amounts due. Further, RIH believes that the $2,939,000 of housing
related investments in question will be found, under further audit, to
have been satisfied.
These matters have been dormant for some time. RIH was verbally
contacted by the Treasury in late 1993 regarding the Treasury's proposal
for a resolution of these matters, but has had no communication since
then. If the CRDA's interpretation as to the periods of time during
which qualifying expenditures can be made is found to be correct, or if
the Treasury's issue is determined adversely, RIH could be required to
pay the relevant amount in cash to the CRDA. In the opinion of
management, based upon advice of counsel, the aggregate liability, if
any, arising from these issues will not have a material adverse effect
on the accompanying consolidated financial statements.
As reflected in the table above, through December 31, 1994, RIH had
made CRDA deposits/bond purchases totalling $39,056,000. However, in
August 1989 RIH donated $12,048,000 to the CRDA in exchange for which
R I H was relieved of its obligation to purchase CRDA bonds of
$18,193,000. Because RIH already had the $18,193,000 for bond purchases
on deposit with the CRDA, the difference between this amount and the
amount of the donation, or $6,145,000, was refunded to RIH in August
1989. Thus, at December 31, 1994, RIH had a remaining balance of
$5,286,000 face value of bonds issued by the CRDA and had $15,577,000 on
deposit with the CRDA. These bonds and deposits, net of an estimated
discount charged to expense to reflect the below-market interest rate
p a yable on the bonds, were recorded as other assets in RIH's
Consolidated Balance Sheets.
RIH records charges to expense to reflect the below-market interest
rate payable on the bonds it may have to purchase to fulfill its
investment obligation at the date the obligation arises. The charges in
1994, 1993 and 1992 for discounts on obligations arising in those years
were $1,461,000, $1,541,000 and $1,451,000 respectively.
Litigation
RIH is a defendant in certain litigation. In the opinion of
management, based upon 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.
- 40 -<PAGE>
PRO FORMA FINANCIAL DATA
Set forth below is an unaudited pro forma statement of operations
for the year ended December 31, 1994 which gives effect to the
Restructuring as if it occurred on January 1, 1994. The pro forma
s t atement of operations excludes the costs associated with the
Restructuring. The unaudited pro forma information is not necessarily
indicative of future results or what RIH's results of operations would
actually have been had the transactions occurred on January 1, 1994.
Such information should not be used as a basis to project results for
any future period.
- 41 -<PAGE>
Resorts International Hotel, Inc.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands of Dollars)
For the Year Ended December 31, 1994
Pro Forma
Historical Adjustments Pro Forma
Revenues:
Casino $250,482 $250,482
Rooms 7,134 7,134
Food and beverage 14,609 14,609
Other casino/hotel revenues 4,508 4,508
276,733 276,733
Expenses:
Casino 143,748 143,748
Rooms 3,243 3,243
Food and beverage 15,823 15,823
Other casino/hotel operating
expenses 34,759 34,759
Selling, general and
administrative 36,101 36,101
RII parent services fee 9,082 9,082
Depreciation 13,186 13,186
255,942 255,942
Earnings from operations 20,791 20,791
Other income (deductions):
Interest income 3,623 $(2,250)(a) 1,373
Interest expense (10,858) (5,899)(b) (16,757)
Amortization of debt discounts (757) (488)(b) (1,245)
Recapitalization costs (975) 975 (c) -0-
Earnings before extraordinary item $ 11,824 $(7,662) $ 4,162
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(a) Reflects the elimination of interest income on the RIB Note, which
note was distributed to GGRI as a return of surplus.
(b) Reflects interest expense and amortization of debt discounts on the
RIH Promissory Note and the RIH Junior Promissory Note from the assumed
transaction date of January 1, 1994 through the Effective Date.
(c) Reflects the elimination of recapitalization costs incurred in
connection with the Restructuring.
- 42 -<PAGE>
<TABLE>
SCHEDULE II
Resorts International Hotel, Inc. and Subsidiaries
VALUATION ACCOUNTS
(In Thousands of Dollars)
<CAPTION>
Balance at Additions Balance at
beginning charged to end of
of period expenses Deductions (A) period
<S> <C> <C> <C> <C>
For the year ended December 31, 1994:
Allowance for doubtful receivables:
Gaming $4,498 $ 237 $ (916) $3,819
Other 40 60 (18) 82
$4,538 $ 297 $ (934) $3,901
For the year ended December 31, 1993:
Allowance for doubtful receivables:
Gaming $4,200 $ 901 $ (603) $4,498
Other 48 (8) 40
$4,248 $ 901 $ (611) $4,538
For the year ended December 31, 1992:
Allowance for doubtful receivables:
Gaming $5,326 $1,334 $(2,460) $4,200
Other 327 80 (359) 48
$5,653 $1,414 $(2,819) $4,248
(A) Write-off of uncollectible accounts, net of recoveries.
</TABLE>
- 43 -<PAGE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(In Thousands of Dollars)
The table below reflects selected quarterly financial data for the years 1994 and 1993.
<CAPTION>
1994 1993
For the Quarter First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $58,873 $72,220 $77,679 $67,961 $60,336 $67,678 $80,800 $62,665
Earnings (loss) from
operations $(1,691) $ 6,988 $11,445 $ 4,049 $ 2,444 $ 2,565 $10,796 $(3,737)
Recapitalization costs (604) (371) (198) (317) (1,065) (1,147)
Other income (deductions),
net (A) 1,920 (2,240) (4,319) (3,353) 1,796 1,763 1,882 1,981
Earnings (loss) before
income taxes and
extraordinary item (375) 4,377 7,126 696 4,042 4,011 11,613 (2,903)
Income tax expense (400)
Earnings (loss) before
extraordinary item (375) 4,377 7,126 696 4,042 4,011 11,213 (2,903)
Extraordinary item 4,008
Net earnings (loss) $ (375) $ 4,377 $ 7,126 $ 4,704 $ 4,042 $ 4,011 $11,213 $(2,903)
(A) Includes interest income, interest expense and amortization of debt discounts.
</TABLE>
- 44 -<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
T h e following Items have been omitted pursuant to General
Instruction J of Form 10-K: ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT; ITEM 11. EXECUTIVE COMPENSATION; ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT and ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-
K
(a) Documents Filed as Part of This Report
1. The financial statement index required herein is incorporated by
reference to "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA."
2. The index of financial statement schedules required herein is
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA." Financial statement schedules not included
have been omitted because they are either not applicable or the
required information is shown in the consolidated financial
statements or notes thereto.
3. The following exhibits are filed herewith or incorporated by
reference:
Exhibit
Numbers Exhibit
(2) Plan of Reorganization. (Incorporated by reference to
Appendix A of the Information Statement/Prospectus included
in registrant's Form S-4 Registration Statement in File No.
33-50733.)
(3)(a)(1) Restated Certificate of Incorporation of RIH. (Incorporated
by reference to Exhibit 3.03 to registrant's Form S-1
Registration Statement in File No. 33-23063.)
(3)(a)(2) Certificate of Amendment to the Certificate of Incorporation
of RIH. (Incorporated by reference to Exhibit 3.05 to
registrant's Form S-4 Registration Statement in File No. 33-
50733.)
(3)(a)(3) F o r m of Certificate of Amendment of Certificate of
Incorporation of RIH. (Incorporated by reference to Exhibit
3.05(a) to registrant's Form S-1 Registration Statement in
File No. 33-53371.)
- 45 -<PAGE>
(3)(b) By-Laws of RIH. (Incorporated by reference to Exhibit 3.06
to registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(a) See Exhibits (3)(a) and (3)(b) as to the rights of holders
of registrant's common stock.
(4)(b)(1) Form of Indenture among RIHF, as issuer, RIH, as guarantor,
and State Street Bank and Trust Company of Connecticut,
National Association, as trustee, with respect to RIHF 11%
Mortgage Notes due 2003. (Incorporated by reference to
Exhibit 4.04 to registrant's Form S-4 Registration Statement
in File No. 33-50733.)
(4)(b)(2) Form of Mortgage between RIH and State Street Bank and Trust
Company of Connecticut, National Association, securing
Guaranty of RIHF Mortgage Notes. (Incorporated by reference
to Exhibit 4.22 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(4)(b)(3) Form of Mortgage between RIH and RIHF, securing RIH
Promissory Note. (Incorporated by reference to Exhibit 4.23
to registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(b)(4) Form of Assignment of Agreements made by RIHF, as Assignor,
to State Street Bank and Trust Company of Connecticut,
National Association, as Assignee, regarding RIH Promissory
Note. (Incorporated by reference to Exhibit 4.24 to
registrant's Form S-4 Registration Statement in File No. 33-
50733.)
(4)(b)(5) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Promissory
Note. (Incorporated by reference to Exhibit 4.25 to
registrant's Form S-4 Registration Statement in File No. 33-
50733.)
(4)(b)(6) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
Guaranty of RIHF Mortgage Notes. (Incorporated by reference
to Exhibit 4.26 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(4)(b)(7) Form of Assignment of Operating Assets made by RIH, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
Guaranty of RIHF Mortgage Notes. (Incorporated by reference
to Exhibit 4.28 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(4)(b)(8) Form of Assignment of Operating Assets made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Promissory
Note. (Incorporated by reference to Exhibit 4.34 to
registrant's Form S-4 Registration Statement in File No. 33-
50733.)
- 46 -<PAGE>
(4)(b)(9) Form of Amended and Restated $125,000,000 RIH Promissory
Note. (Incorporated by reference to Exhibit A to Exhibit
(4)(b)(1) hereto.)
(4)(c)(1) F o rm of Indenture between RIHF, as issuer, RIH, as
guarantor, and U.S. Trust Company of California, N.A., as
trustee, with respect to RIHF 11.375% Junior Mortgage Notes
due 2004. (Incorporated by reference to Exhibit 4.05 to
registrant's Form S-4 Registration Statement in File No. 33-
50733.)
(4)(c)(2) Form of Mortgage between RIH and U.S. Trust Company of
California, N.A., securing Guaranty of RIHF Junior Mortgage
Notes. (Incorporated by reference to Exhibit 4.29 to
registrant's Form S-4 Registration Statement in File No. 33-
50733.)
(4)(c)(3) Form of Mortgage between RIH and RIHF, securing RIH Junior
Promissory Note. (Incorporated by reference to Exhibit 4.30
to registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(c)(4) Form of Assignment of Agreements made by RIHF, as Assignor,
to U.S. Trust Company of California, N.A., as Assignee,
regarding RIH Junior Promissory Note. (Incorporated by
r e f erence to Exhibit 4.31 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(4)(c)(5) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Junior
Promissory Note. (Incorporated by reference to Exhibit 4.32
to registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(c)(6) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding Guaranty of RIHF Junior Mortgage Notes.
(Incorporated by reference to Exhibit 4.33 to registrant's
Form S-4 Registration Statement in File No. 33-50733.)
(4)(c)(7) Form of Assignment of Operating Assets made by RIH, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding the Guaranty of the RIHF Junior Mortgage
Notes. (Incorporated by reference to Exhibit 4.35 to
registrant's Form S-4 Registration Statement in File No. 33-
50733.)
(4)(c)(8) Form of Assignment of Operating Assets made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Junior
Promissory Note. (Incorporated by reference to Exhibit 4.27
to registrant's Form S-4 Registration Statement in File No.
33-50733.)
- 47 -<PAGE>
(4)(c)(9) F o rm of Amended and Restated $35,000,000 RIH Junior
Promissory Note. (Incorporated by reference to Exhibit A to
Exhibit (4)(c)(1) hereto.)
(10)(a)(1)* Resorts Retirement Savings Plan. (Incorporated by reference
to Exhibit (10)(c)(2) to RII's Form 10-K Annual Report for
the fiscal year ended December 31, 1991, in File No.
1-4748.)
(10)(a)(2)* Resorts International, Inc. Senior Management Stock Option
Plan. (Incorporated by reference to Exhibit 8.5 to Exhibit
35 to RII's Form 8 Amendment No. 1 to its Form 8-K Current
Report dated August 30, 1990, in File No. 1-4748.)
(10)(a)(3)* Form of RII 1994 Stock Option Plan. (Incorporated by
reference to Exhibit C to Exhibit 2 hereto.)
(10)(b)(1)* License and Services Agreement, dated as of September 17,
1992, among Griffin Group, RII and RIH. (Incorporated by
reference to Exhibit 10.34(a) to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(10)(b)(2)* Form of Amendment to License and Services Agreement, dated
as of September 17, 1992, among Griffin Group, RII and RIH.
( I n c o rporated by reference to Exhibit 10.34(b) to
registrant's Form S-4 Registration Statement in File No. 33-
50733.)
(10)(c) Form of Intercreditor Agreement by and among RIHF, RIH, RII,
GGRI, State Street Bank and Trust Company of Connecticut,
National Association, U.S. Trust Company of California, N.A.
a n d any lenders which provide additional facilities.
(Incorporated by reference to Exhibit 10.64 to registrant's
Form S-4 Registration Statement in File No. 33-50733.)
(10)(d)(1) Form of Note Purchase Agreement dated May 3, 1994, among
RIHF, RII and RIH, and certain funds advised or managed by
Fidelity with respect to issuance of Senior Facility Notes.
(Incorporated by reference to Exhibit 10.65 to Form S-1
Registration Statement in File No. 33-53371.)
(10)(d)(2) Revised term sheet for 11.0% Senior Secured Loan due 2002
with RIHF as issuer. (Incorporated by reference to Exhibit
10.54 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(10)(d)(3) Letter agreement dated February 27, 1995 amending Exhibit
(10)(d)(1) hereto. (Incorporated by reference to Exhibit
(10)(n)(3) to RII's Form 10-K Annual Report for the fiscal
year ended December 31, 1994, in File No. 1-4748.)
(10)(e) Form of Registration Rights Agreement dated as of April 29,
1994, among RII, RIHF, RIH, Fidelity and TCW. (Incorporated
by reference to Exhibit 10.66 to Form S-1 Registration
Statement in File No. 33-53371.)
- 48 -<PAGE>
(10)(f) F o r m o f Nominee Agreement between RIHF and RIH.
(Incorporated by reference to Exhibit 10.57 to Form S-1
Registration Statement in File No. 33-53371.)
(27) Financial data schedule.
_________________
* Management contract or compensatory plan.
Registrant agrees to file with the Securities and Exchange
Commission, upon request, copies of any instrument defining the rights
of the holders of its consolidated long-term debt.
(b) Reports on Form 8-K
No current report on Form 8-K was filed by RIH covering an event
during the fourth quarter of 1994. No amendments to previously filed
Forms 8-K were filed during the fourth quarter of 1994.
(c) Exhibits Required by Item 601 of Regulation S-K
The exhibits listed in Item 14(a)3. of this report, and not
incorporated by reference to a separate file, follow "SIGNATURES."
(d) Financial Statement Schedules Required by Regulation S-K
The financial statement schedule required by Regulation S-K is
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA."
- 49 -<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RESORTS INTERNATIONAL HOTEL, INC.
(Registrant)
Date: March 22, 1995 By /s/ Matthew B. Kearney
Matthew B. Kearney
Director and Executive Vice
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By /s/ Matthew B. Kearney March 22, 1995
Matthew B. Kearney
Director and Executive Vice President
(Principal Executive, Financial and
Accounting Officer)
By /s/ Lawrence Cohen March 22, 1995
Lawrence Cohen
Director
SUPPLEMENTAL INFORMATION
Because it is an indirect wholly owned subsidiary of RII, a
reporting company under the Securities Exchange Act of 1934, the
registrant does not prepare an annual report to security holders or any
proxy soliciting material.
- 50 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1994
EXHIBIT INDEX
Exhibit Reference to previous filing
Number Exhibit or page number in Form 10-K
(2) Plan of Reorganization Incorporated by reference to
Appendix A of the
Information
Statement/Prospectus
included in registrant's
Form S-4 Registration
Statement in File No. 33-
50733.
(3)(a)(1) Restated Certificate of Incorporated by reference to
Incorporation of RIH. Exhibit 3.03 to registrant's
Form S-1 Registration
Statement in File No. 33-
23063.
(3)(a)(2) Certificate of Amendment to Incorporated by reference to
the Certificate of Exhibit 3.05 to registrant's
Incorporation of RIH. Form S-4 Registration
Statement in File No. 33-
50733.
(3)(a)(3) Form of Certificate of Incorporated by reference to
Amendment of Certificate of Exhibit 3.05(a) to
Incorporation of RIH. registrant's Form S-1
Registration Statement in
File No. 33-53371.
(3)(b) By-Laws of RIH. Incorporated by reference to
Exhibit 3.06 to registrant's
Form S-4 Registration
Statement in File No. 33-
50733.
(4)(a) See Exhibits (3)(a) and
(3)(b) as to the rights of
holders of registrant's
common stock.
(4)(b)(1) Form of Indenture among Incorporated by reference to
RIHF, as issuer, RIH, as Exhibit 4.04 to registrant's
guarantor, and State Street Form S-4 Registration
Bank and Trust Company of Statement in File No. 33-
Connecticut, National 50733.
Association, as trustee,
with respect to RIHF 11%
Mortgage Notes due 2003.
- 51 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1994
EXHIBIT INDEX
Exhibit Reference to previous filing
Number Exhibit or page number in Form 10-K
(4)(b)(2) Form of Mortgage between RIH Incorporated by reference to
and State Street Bank and Exhibit 4.22 to registrant's
Trust Company of Form S-4 Registration
Connecticut, National Statement in File No. 33-
Association, securing 50733.
Guaranty of RIHF Mortgage
Notes.
(4)(b)(3) Form of Mortgage between RIH Incorporated by reference to
and RIHF, securing RIH Exhibit 4.23 to registrant's
Promissory Note. Form S-4 Registration
Statement in File No. 33-
50733.
(4)(b)(4) Form of Assignment of Incorporated by reference to
Agreements made by RIHF, as Exhibit 4.24 to registrant's
Assignor, to State Street Form S-4 Registration
Bank and Trust Company of Statement in File No. 33-
Connecticut, National 50733.
Association, as Assignee,
regarding RIH Promissory
Note.
(4)(b)(5) Form of Assignment of Leases Incorporated by reference to
and Rents made by RIH, as Exhibit 4.25 to registrant's
Assignor, to RIHF, as Form S-4 Registration
Assignee, regarding RIH Statement in File No. 33-
Promissory Note. 50733.
(4)(b)(6) Form of Assignment of Leases Incorporated by reference to
and Rents made by RIH, as Exhibit 4.26 to registrant's
Assignor, to State Street Form S-4 Registration
Bank and Trust Company of Statement in File No. 33-
Connecticut, National 50733.
Association, as Assignee,
regarding Guaranty of RIHF
Mortgage Notes.
(4)(b)(7) Form of Assignment of Incorporated by reference to
Operating Assets made by Exhibit 4.28 to registrant's
RIH, as Assignor, to State Form S-4 Registration
Street Bank and Trust Statement in File No. 33-
Company of Connecticut, 50733.
National Association, as
Assignee, regarding Guaranty
of RIHF Mortgage Notes.
- 52 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1994
EXHIBIT INDEX
Exhibit Reference to previous filing
Number Exhibit or page number in Form 10-K
(4)(b)(8) Form of Assignment of Incorporated by reference to
Operating Assets made by Exhibit 4.34 to registrant's
RIH, as Assignor, to RIHF, Form S-4 Registration
as Assignee, regarding RIH Statement in File No. 33-
Promissory Note. 50733.
(4)(b)(9) Form of Amended and Restated Incorporated by reference to
$125,000,000 RIH Promissory Exhibit A to Exhibit
Note. (4)(b)(1) hereto.
(4)(c)(1) Form of Indenture between Incorporated by reference to
RIHF, as issuer, RIH, as Exhibit 4.05 to registrant's
guarantor, and U.S. Trust Form S-4 Registration
Company of California, N.A., Statement in File No. 33-
as trustee, with respect to 50733.
RIHF 11.375% Junior Mortgage
Notes due 2004.
(4)(c)(2) Form of Mortgage between RIH Incorporated by reference to
and U.S. Trust Company of Exhibit 4.29 to registrant's
California, N.A., securing Form S-4 Registration
Guaranty of RIHF Junior Statement in File No. 33-
Mortgage Notes. 50733.
(4)(c)(3) Form of Mortgage between RIH Incorporated by reference to
and RIHF, securing RIH Exhibit 4.30 to registrant's
Junior Promissory Note. Form S-4 Registration
Statement in File No. 33-
50733.
(4)(c)(4) Form of Assignment of Incorporated by reference to
Agreements made by RIHF, as Exhibit 4.31 to registrant's
Assignor, to U.S. Trust Form S-4 Registration
Company of California, N.A., Statement in File No. 33-
as Assignee, regarding RIH 50733.
Junior Promissory Note.
(4)(c)(5) Form of Assignment of Leases Incorporated by reference to
and Rents made by RIH, as Exhibit 4.32 to registrant's
Assignor, to RIHF, as Form S-4 Registration
Assignee, regarding RIH Statement in File No. 33-
Junior Promissory Note. 50733.
- 53 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1994
EXHIBIT INDEX
Exhibit Reference to previous filing
Number Exhibit or page number in Form 10-K
(4)(c)(6) Form of Assignment of Leases Incorporated by reference to
and Rents made by RIH, as Exhibit 4.33 to registrant's
Assignor, to U.S. Trust Form S-4 Registration
Company of California, N.A., Statement in File No. 33-
as Assignee, regarding 50733.
Guaranty of RIHF Junior
Mortgage Notes.
(4)(c)(7) Form of Assignment of Incorporated by reference to
Operating Assets made by Exhibit 4.35 to registrant's
RIH, as Assignor, to U.S. Form S-4 Registration
Trust Company of California, Statement in File No. 33-
N.A., as Assignee, regarding 50733.
the Guaranty of the RIHF
Junior Mortgage Notes.
(4)(c)(8) Form of Assignment of Incorporated by reference to
Operating Assets made by Exhibit 4.27 to registrant's
RIH, as Assignor, to RIHF, Form S-4 Registration
as Assignee, regarding RIH Statement in File No. 33-
Junior Promissory Note. 50733.
(4)(c)(9) Form of Amended and Restated Incorporated by reference to
$35,000,000 RIH Junior Exhibit A to Exhibit
Promissory Note. (4)(c)(1) hereto.
(10)(a)(1) Resorts Retirement Savings Incorporated by reference to
Plan. Exhibit (10)(c)(2) to RII's
Form 10-K Annual Report for
the fiscal year ended
December 31, 1991, in File
No. 1-4748.
(10)(a)(2) Resorts International, Inc. Incorporated by reference to
Senior Management Stock Exhibit 8.5 to Exhibit 35 to
Option Plan. RII's Form 8 Amendment No. 1
to its Form 8-K Current
Report dated August 30,
1990, in File No. 1-4748.
(10)(a)(3) Form of RII 1994 Stock Incorporated by reference to
Option Plan. Exhibit C to Exhibit 2
hereto.
- 54 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1994
EXHIBIT INDEX
Exhibit Reference to previous filing
Number Exhibit or page number in Form 10-K
(10)(b)(1) License and Services Incorporated by reference to
Agreement, dated as of Exhibit 10.34(a) to
September 17, 1992, among registrant's Form S-4
Griffin Group, RII and RIH. Registration Statement in
File No. 33-50733.
(10)(b)(2) Form of Amendment to License Incorporated by reference to
and Services Agreement, Exhibit 10.34(b) to
dated as of September 17, registrant's Form S-4
1992, among Griffin Group, Registration Statement in
RII, and RIH. File No. 33-50733.
(10)(c) Form of Intercreditor Incorporated by reference to
Agreement by and among RIHF, Exhibit 10.64 to
RIH, RII, GGRI, State Street registrant's Form S-4
Bank and Trust Company of Registration Statement in
Connecticut, National File No. 33-50733.
Association, U.S. Trust
Company of California, N.A.
and any lenders which
provide additional
facilities.
(10)(d)(1) Form of Note Purchase Incorporated by reference to
Agreement dated May 3, 1994, Exhibit 10.65 to Form S-1
among RIHF, RII and RIH, and Registration Statement in
certain funds advised or File No. 33-53371.
managed by Fidelity with
respect to issuance of
Senior Facility Notes.
(10)(d)(2) Revised term sheet for 11.0% Incorporated by reference to
Senior Secured Loan due 2002 Exhibit 10.54 to registrant's
with RIHF as issuer. Form S-4 Registration State-
ment in File No. 33-50733.
(10)(d)(3) Letter agreement dated Incorporated by reference to
February 27, 1995 amending Exhibit (10)(n)(3) to RII's
Exhibit (10)(d)(1) hereto. Form 10-K Annual Report for
the fiscal year ended
December 31, 1994, in File
No. 1-4748.
- 55 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1994
EXHIBIT INDEX
Exhibit Reference to previous filing
Number Exhibit or page number in Form 10-K
(10)(e) Form of Registration Rights Incorporated by reference to
Agreement dated as of April Exhibit 10.66 to Form S-1
29, 1994, among RII, RIHF, Registration Statement in
RIH, Fidelity and TCW. File No. 33-53371.
(10)(f) Form of Nominee Agreement Incorporated by reference to
between RIHF and RIH. Exhibit 10.57 to Form S-1
Registration Statement in
File No. 33-53371.
(27) Financial data schedule. Page 57
- 56 -<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-K FOR THE PERIOD ENDED DECEMBER 31, 1994, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> $26,876<F1>
<SECURITIES> 0
<RECEIVABLES> $8,834
<ALLOWANCES> $3,901
<INVENTORY> $1,793
<CURRENT-ASSETS> $43,467
<PP&E> $206,407
<DEPRECIATION> $48,906
<TOTAL-ASSETS> $212,734
<CURRENT-LIABILITIES> $32,889
<BONDS> $125,309<F2>
<COMMON> $1,000
0
0
<OTHER-SE> $34,136
<TOTAL-LIABILITY-AND-EQUITY> $212,734
<SALES> 0
<TOTAL-REVENUES> $276,733
<CGS> 0
<TOTAL-COSTS> $197,573<F3>
<OTHER-EXPENSES> $13,186<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $11,615
<INCOME-PRETAX> $11,824
<INCOME-TAX> 0
<INCOME-CONTINUING> $11,824
<DISCONTINUED> 0
<EXTRAORDINARY> $4,008<F5>
<CHANGES> 0
<NET-INCOME> $15,832
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $12,695.
<F2>NOTES PAYABLE TO AFFILIATE, NET OF UNAMORTIZED DISCOUNTS.
<F3>EXCLUDED DEPRECIATION.
<F4>DEPRECIATION EXPENSE.
<F5>GAIN ON PURCHASE OF 12,899 UNITS (SEE NOTE 7 OF NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS).
</FN>
</TABLE>
