Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 33-50733-02
Resorts International Hotel, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 21-0423320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1133 Boardwalk, Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 344-6000
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
Number of shares outstanding of registrant's common stock as
of March 31, 1996: 1,000,000, all of which are owned by one
shareholder. Accordingly there is no current market for any of such
shares.
Exhibit Index is presented on page 12
Total number of pages 13
1<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
FORM 10-Q
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
at March 31, 1996 and
December 31, 1995 3
Consolidated Statements of
Operations for the Quarters
Ended March 31, 1996 and 1995 4
Consolidated Statements of
Cash Flows for the Quarters
Ended March 31, 1996 and 1995 5
Notes to Consolidated
Financial Statements 6
Item 2. Management's Discussion and
Analysis of Financial
Condition and Results of
Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on
Form 8-K 10
2<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
March 31, December 31,
1996 1995
(Unaudited)
ASSETS
Current assets:
Cash (including cash equivalents
of $22,814 and $22,334) $ 35,607 $ 38,027
Restricted cash equivalents 750 750
Receivables, less allowance for
doubtful accounts of $3,446
and $3,570 5,823 6,933
Inventories 2,231 2,447
Prepaid expenses 5,140 6,078
Total current assets 49,551 54,235
Property and equipment, net of
accumulated depreciation of
$63,800 and $62,074 155,277 157,340
Deferred charges and other assets 13,222 12,822
$218,050 $224,397
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 600 $ 589
Accounts payable and accrued
liabilities 24,947 26,044
Interest payable to affiliate 1,404 4,244
Due to GGE 2,930 1,214
Total current liabilities 29,881 32,091
Notes payable to affiliate, net
of unamortized discounts 127,125 126,761
Other long-term debt 766 919
Deferred income taxes 18,950 18,950
Shareholder's equity:
Common stock - $1 par value 1,000 1,000
Capital in excess of par 21,366 21,366
Retained earnings 18,962 23,310
Total shareholder's equity 41,328 45,676
$218,050 $224,397
3<PAGE>
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
(Unaudited)
Quarter Ended
March 31,
1996 1995
Revenues:
Casino $58,687 $62,118
Rooms 1,434 1,346
Food and beverage 2,712 3,030
Other casino/hotel revenues 1,176 1,186
64,009 67,680
Expenses:
Casino 37,713 37,064
Rooms 1,036 975
Food and beverage 3,270 3,389
Other casino/hotel operating
expenses 8,617 8,632
Selling, general and administrative 8,746 9,422
GGE parent services fee 2,089 2,200
Depreciation 2,955 3,179
64,426 64,861
Earnings (loss) from operations (417) 2,819
Other income (deductions):
Interest income 584 666
Interest expense (4,151) (4,195)
Amortization of debt discounts (364) (469)
Net loss $(4,348) $(1,179)
4<PAGE>
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Quarter Ended
March 31,
1996 1995
Cash flows from operating activities:
Cash received from customers $ 64,427 $ 68,511
Cash paid to suppliers and employees (60,336) (59,040)
Cash flow from operations before
interest 4,091 9,471
Interest received 566 587
Interest paid (6,991) (6,911)
Net cash provided by (used in)
operating activities (2,334) 3,147
Cash flows from investing activities:
Payments for property and equipment (892) (684)
Casino Reinvestment Development
Authority deposits and bond
purchases (768) (773)
Net cash used in investing
activities (1,660) (1,457)
Cash flows from financing activities:
Advances from (repayments to) GGE 1,716 (924)
Debt repayments (142)
Net cash provided by (used in)
financing activities 1,574 (924)
Net increase (decrease) in cash and
cash equivalents (2,420) 766
Cash and cash equivalents at beginning
of period 38,777 26,876
Cash and cash equivalents at end
of period $ 36,357 $ 27,642
5<PAGE>
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. General:
The accompanying consolidated interim financial statements, which
are unaudited, include the operations of Resorts International Hotel,
Inc. ("RIH") and its subsidiaries. RIH owns and operates Merv
Griffin's Resorts Casino Hotel (the "Resorts Casino Hotel"), a
casino/hotel complex located in Atlantic City, New Jersey. RIH is a
wholly owned subsidiary of GGRI, Inc. ("GGRI"), which is a wholly
owned subsidiary of Griffin Gaming & Entertainment, Inc. ("GGE"). GGE
was known as Resorts International, Inc. until its name change, which
was effective June 30, 1995. "GGE" is used herein to refer to RIH's
ultimate parent corporation both before and after its name change.
While the accompanying interim financial information is
unaudited, management of RIH believes that all adjustments necessary
for a fair presentation of these interim results have been made and
all such adjustments are of a normal recurring nature.
The notes presented herein are intended to provide supplemental
disclosure of items of significance occurring subsequent to December
31, 1995 and should be read in conjunction with the Notes to
Consolidated Financial Statements contained in pages 29 through 43 of
RIH's Annual Report on Form 10-K for the year ended December 31, 1995.
B. Reverse Repurchase Agreements:
Cash equivalents at March 31, 1996 included reverse repurchase
agreements (federal government securities purchased under agreements
to resell those securities) with the institutions listed in the
following table under which RIH had not taken delivery of the
underlying securities. These agreements matured during the first week
of April 1996.
(In Thousands of Dollars)
Prudential Securities, Inc. $13,430
National Westminster Bank NJ $ 9,733
C. Complimentary Services:
The Consolidated Statements of Operations reflect each category
of operating revenues excluding the retail value of complimentary
services provided to casino patrons without charge. The retail value
of such complimentary services excluded from revenues amounted to
$5,639,000 and $5,671,000 for the first quarter of 1996 and 1995,
respectively. The rooms, food and beverage, and other casino/hotel
operations departments allocate a percentage of their total operating
expenses to the casino department for complimentary services provided
to casino patrons. These
6<PAGE>
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:
Quarter Ended
March 31,
(In Thousands of Dollars) 1996 1995
Rooms $1,110 $1,051
Food and beverage 3,823 3,946
Other casino/hotel operations 1,318 1,318
Total allocated to casino $6,251 $6,315
D. Statements of Cash Flows:
Supplemental disclosures required by Statement of Financial
Accounting Standards No. 95 "Statement of Cash Flows" are presented
below.
Quarter Ended
March 31,
(In Thousands of Dollars) 1996 1995
Reconciliation of net loss to net
cash provided by (used in) operating
activities:
Net loss $(4,348) $(1,179)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation 2,955 3,179
Provision for doubtful receivables 165 218
Provision for discount on Casino
Reinvestment Development Authority
obligations, net of amortization 348 368
Amortization of debt discounts 364 469
Net decrease in receivables 945 174
Net decrease in inventories and
prepaid expenses 1,154 1,502
Net (increase) decrease in deferred
charges and other assets (11) 433
Net increase (decrease) in accounts
payable and accrued liabilities (1,066) 699
Net decrease in interest payable
to affiliate (2,840) (2,716)
Net cash provided by (used in) operating
activities $(2,334) $ 3,147
7<PAGE>
E. Commitments and Contingencies:
RIH is a defendant in certain litigation. In the opinion of
management, based upon the advice of counsel, the aggregate liability,
if any, arising from such litigation will not have a material adverse
effect on the accompanying consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION
Liquidity
At March 31, 1996 RIH had working capital of $19,670,000
including $35,607,000 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.
R e s o rts International Hotel Financing, Inc. ("RIHF"), a
subsidiary of GGE, issued the 11% Mortgage Notes due 2003 (the
"Mortgage Notes") and the 11.375% Junior Mortgage Notes due 2004 (the
"Junior Mortgage Notes"), the debt service of which is supported
through affiliated notes payable by RIH. The indentures for the
Mortgage Notes and the Junior Mortgage Notes permit a $20,000,000
working capital facility to be senior to the Mortgage Notes and the
Junior Mortgage Notes. GGE, RIH and RIHF had previously negotiated a
senior credit facility (the "Senior Facility") of approximately
$20,000,000 which was available up to May 2, 1996. GGE, RIH and RIHF
allowed the Senior Facility to expire unutilized as the companies did
not have immediate needs for the funds, and, in light of current
market conditions, management believes that alternative sources of a
comparable working capital facility would be available at terms no
less favorable than those of the Senior Facility.
RIHF will satisfy the interest payment due June 15, 1996 on its
Junior Mortgage Notes by cash payment. Therefore, on that date RIH
will pay interest due on its affiliated note payable to RIHF in cash.
Also on June 15, 1996, RIH will receive interest due on the
$12,899,000 principal amount of Junior Mortgage Notes owned by RIH.
Capital Expenditures and Resources
During the first quarter of 1996 RIH's $892,000 of capital
expenditures included corridor carpeting and computer system upgrades.
GGE continues the development of its expansion plans for the 4.4
acre tract on the Boardwalk, adjacent to the Resorts Casino Hotel.
The entire addition will include up to 700 new hotel rooms, 70,000
square feet of casino space and a 2,000 space parking garage and
transportation center. Subject to receipt of regulatory approvals,
GGE plans to break ground in the fall of 1996 on the infrastructure
necessary to support the full expansion. The first phase of
construction is expected to
8<PAGE>
consist of 500 new hotel rooms, 50,000 square feet of casino floor
space and the new garage. Construction costs for this phase are
currently estimated at $200,000,000. Initial cash outlays are
expected to be from existing working capital and cash flow generated
by operations during the construction period. External sources of
financing will also be required. In this regard, GGE is exploring
various alternatives in both the public and private sectors.
RESULTS OF OPERATIONS
RIH operates in one business segment. Following is a discussion
of the results of operations for the first quarter of 1996 compared to
1995. The discussion should be read in conjunction with the
Consolidated Financial Statements included herein.
Revenues
Casino revenues decreased by $3,431,000 for the first quarter of
1996 due almost entirely to decreased slot win. Slot win was down
largely due to a decrease in hold percentage (ratio of casino win to
total amount wagered for slots or total amount of chips purchased for
table games) and, to a lesser extent, a decrease in amounts wagered by
patrons. Table game win was virtually flat as the effects of
increased hold percentage were offset by a decrease in amounts
wagered. Revenues from poker, simulcasting and keno were also down
slightly.
Two factors negatively affected RIH's performance in the first
quarter - heightened competition in the Atlantic City market for
patrons and severe weather conditions. As competition for patrons has
intensified, promotions - complimentary services (rooms, food and
beverage provided to patrons without charge), cash giveaways and
events - have increased. In recent quarters certain competitors have
increased complimentaries and cash giveaways dramatically. Although
RIH did increase its promotions during the first quarter, it elected
not to keep pace with the industry's increased promotions due to the
belief that the resulting increase in gaming win would not be
sufficient to justify the incremental costs incurred. Consequently,
RIH's market share of revenues suffered. Management can give no
assurance that the increased cost of obtaining gaming revenues will
not continue in future periods.
As noted above the severe weather experienced during the first
quarter of 1996 adversely affected operations in that period as the
principal means of transportation to Atlantic City is by automobile or
bus. The impact of inclement weather is more severe on the Resorts
Casino Hotel than on competing properties which are more accessible
from main thoroughfares and which currently have more covered parking
and covered terminals for bus patrons.
Earnings from Operations
For the first quarter of 1996 casino, hotel and related operating
results decreased by $3,236,000 due to the decreased revenues
described above. Although total operating expenses were relatively
flat, the most significant variances in operating expenses were
increases in casino promotional costs ($900,000) and payroll and
related costs ($400,000).
9<PAGE>
Casino promotional costs increased primarily due to an increase in the
amount of cash giveaways to bus patrons, although the number of bus
passengers was down. Payroll and related costs increased primarily
due to increased salary and wage rates, although the average number of
employees was down slightly for the quarter. These increases were
offset by decreases in the accrual for performance and incentive
bonuses ($700,000), casino win tax and other operating costs.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The following Part I exhibit is filed herewith:
Exhibit
Number Exhibit
(27) Financial data schedule.
b. Reports on Form 8-K
No Current Report on Form 8-K was filed by RIH covering an event
during the first quarter of 1996. No amendments to previously filed
Forms 8-K were filed during the first quarter of 1996.
10<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
RESORTS INTERNATIONAL HOTEL, INC.
(Registrant)
/s/ Matthew B. Kearney
Matthew B. Kearney
Executive Vice President
(Authorized Officer of
Registrant and Chief
Financial Officer)
Date: May 10, 1996
11<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-Q for the quarterly period
ended March 31, 1996
EXHIBIT INDEX
Exhibit Page
Number Exhibit Number
(27) Financial data schedule 13
12<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RESORTS
INTERNATIONAL HOTEL, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED IN THE FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> $36,357<F1>
<SECURITIES> 0
<RECEIVABLES> $7,564
<ALLOWANCES> $3,446
<INVENTORY> $2,231
<CURRENT-ASSETS> $49,551
<PP&E> $219,077
<DEPRECIATION> $63,800
<TOTAL-ASSETS> $218,050
<CURRENT-LIABILITIES> $29,881
<BONDS> $127,891<F2>
<COMMON> $1,000
0
0
<OTHER-SE> $40,328
<TOTAL-LIABILITY-AND-EQUITY> $218,050
<SALES> 0
<TOTAL-REVENUES> $64,009
<CGS> 0
<TOTAL-COSTS> $50,636<F3>
<OTHER-EXPENSES> $2,955<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $4,515
<INCOME-PRETAX> $(4,348)
<INCOME-TAX> 0
<INCOME-CONTINUING> $(4,348)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $(4,348)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $22,814 AND
RESTRICTED CASH EQUIVALENTS OF $750.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F3>EXCLUDES DEPRECIATION EXPENSE.
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
