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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 33-50733-02
RESORTS INTERNATIONAL HOTEL, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 21-0423320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1133 Boardwalk, Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
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 52 through 58
Total Number of Pages 59
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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 29, 1996, 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
w i th 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. 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. GGRI 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 660 guest rooms, a 70,000 square foot
casino, an 8,000 square foot simulcast parimutuel 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 January 1996
through January 31, 2000 subject to a financial stability review after
two years. See "Regulation and Gaming Taxes and Fees" under "(c)
Narrative Description of Business" below.
1994 Restructuring
In April 1994 the joint plan of reorganization (the "Plan")
proposed by GGE, GGRI, RIH and certain other of GGE s subsidiaries was
confirmed by the Bankruptcy Court for the District of Delaware and on
May 3, 1994 (the Effective Date ) the Plan became effective.
Pursuant to the Plan, certain of GGE s previously outstanding
public debt was 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
GGE, 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 and RIH's guarantees of the Mortgage Notes and
the Junior Mortgage Notes are secured by liens on the Resorts Casino
Hotel.
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For further description of the securities issued pursuant to the
Plan and the related affiliated notes, guarantees and mortgages issued
by RIH see Note 7 of Notes to Consolidated Financial Statements. For
a description of a senior note purchase agreement (the "Senior
Facility") entered into by RIH pursuant to the Plan and other effects
of the Plan on RIH see Notes 9 and 2, respectively, 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
Through May 1995, the Resorts Casino Hotel in Atlantic City, New
Jersey, had a 60,000 square foot casino and a simulcast parimutuel
betting and poker area of approximately 8,000 square feet. In late
May 1995, the casino was expanded by approximately 10,000 square feet
which enabled RIH to increase the number of slot machines by
approximately 315 machines. At December 31, 1995, these gaming areas
contained 43 blackjack tables, 18 poker tables, 11 roulette tables, 10
dice tables, eight Caribbean stud poker tables, two baccarat tables,
two let it ride poker tables, one mini-baccarat table, one pai gow
poker table, one big six wheel, one sic bo table, 2,338 slot machines,
and five betting windows and four customer-operated terminals for
simulcast parimutuel betting. Also included in the simulcast area is
a keno lounge which has two keno cashier windows. There are also two
keno windows in the bus waiting area and one on the casino floor.
During 1995, RIH had total gaming revenues of $267,757,000. This
compares to total gaming revenues of $250,482,000 for 1994 and
$244,116,000 for 1993. In the last several years, approximately a
dozen new table games have been introduced in order to provide more
variety than the basic five table games of blackjack, roulette, craps,
baccarat and big six, which were the only games available for the
initial 15 years of the gaming industry in Atlantic City. 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
affect virtually all aspects of RIH's casino operations. See
"Competition" and "Regulation and Gaming Taxes and Fees" below.
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
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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
f a c ilities described above, the casino/hotel complex includes
approximately 660 guest rooms and suites, the 1,400-seat Superstar
Theater, seven restaurants, one cocktail lounge, 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. RIH also leases a lot
f r o m an unaffiliated party which provides valet parking for
approximately 180 cars. In June 1995 GGE acquired approximately 4.4
acres adjoining the Resorts Casino Hotel (the "Chalfonte Site"). RIH
leases this acreage from GGE for additional uncovered self parking for
approximately 140 cars and valet parking for approximately 420 cars.
Prior to GGE s acquisition of the Chalfonte Site, RIH had leased this
property from an unaffiliated party. The Chalfonte Site includes
approximately 265 feet of Boardwalk frontage. RIH intends to expand
the Resorts Casino Hotel by constructing hotel rooms, casino space and
a parking garage on this acreage commencing in late 1996. The
expanded facilities will be connected to the existing hotel structure
by a covered walkway already in place.
Consistent with industry practice, RIH reserves a portion of its
hotel rooms and suites as complimentary accommodations for high-level
casino wagerers. For 1995, 1994 and 1993 the average occupancy rates,
including complimentary rooms, which were primarily provided to casino
patrons, were 94%, 91% and 92%, respectively. The average occupancy
rate and weighted average daily room rental, excluding complimentary
rooms, were 51% and $59, respectively, for 1995. This compares with
47% and $64, respectively, for 1994, and 47% and $62, respectively,
for 1993.
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 seven years capital additions at Resorts Casino Hotel
exceeded $122,000,000. In 1995 RIH expanded its casino by
approximately 10,000 square feet and added approximately 315 slot
machines. Also in 1995, a new restaurant, California Pizza Kitchen,
was constructed and opened, five suites were renovated, and the
exterior of the building was painted. In 1994 RIH purchased 221 slot
machines, most of which replaced older models, and completed various
capital maintenance projects. In prior years, RIH converted certain
back-of-the-house space into an 8,000 square foot simulcast facility,
opened the VIP slot and table player lounge, "Club Griffin," and
converted the parking garage from valet to self-parking. RIH has a
continual capital maintenance program whereby it renovates its guest
rooms, replaces its slot machines with newer models, renovates its
p u blic areas, including restaurants, as well as improves its
infrastructure such as elevators and air conditioning.
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As stated above, RIH intends to expand the Resorts Casino Hotel
by constructing hotel rooms, additional casino space and a parking
garage on the Chalfonte Site which GGE now owns. RIH s expansion
plans are preliminary at this time, so the number of rooms and parking
spaces and the size of the additional casino space to be constructed,
as well as the estimated cost, are not yet determined. Excluding any
expenditures on the proposed expansion, capital expenditures in 1996
on the Resorts Casino Hotel will be limited to those of a capital
maintenance nature and are estimated to approximate $10,000,000.
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 GGE, is
featured in television commercials and in print advertisements. Mr.
Griffin also appears live at the Resorts Casino Hotel in numerous
e n t ertainment events including the nationally televised "Merv
Griffin's New Year's Eve Special 1995" which featured Harry Belafonte,
Tony Bennett and Trisha Yearwood. Merv Griffin's New Year's Eve
Special has been produced live at the Resorts Casino Hotel each year
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 10 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. This area was
further expanded in late May 1995. In the fall of 1994, RIH increased
its charter flight program to recapture lost market share in table
win. The charter program was further expanded in 1995 to attract mid-
level slot players. In the fall of 1994, RIH introduced the "Griffin
Games," created by Merv Griffin, whereby slot players are chosen at
random to participate in daily slot tournaments; daily tournament
winners qualify to participate in a $100,000 "winners tournament." In
January 1995 the "Griffin Games" were expanded to include patrons
playing blackjack and in January 1996 they were further expanded to
include roulette players. RIH also has a VIP slot and table player
lounge, "Club Griffin," which serves complimentary food and beverages.
As in prior years, RIH continues to emphasize entertainment as an
integral part of its marketing program. The production show Wahoo
Baby, created by Merv Griffin, opened in September 1995 to excellent
reviews. The entertainment schedule is supplemented on a monthly
basis with headliners who included, among others, Regis & Kathie Lee,
Rosie O Donnell and Tony Danza in 1995; for 1996 all of the preceding
headliners are scheduled, as well as Wayne Newton, Tom Jones and the
Beach Boys. In addition to the above, RIH continues to rely heavily
on its bus program to supply a critical mass of low to mid-level slot
players.
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New Convention Center and Casino/Hotel Expansion
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. Management of
RIH understands that the new convention center will have 500,000
square feet of exhibit space and an additional 109,000 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, and the construction of a new 500 room convention hotel.
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 will link the new convention center
and hotel with the Boardwalk. In all, six blocks are to be
transformed into an expansive park with extensive landscaping, night-
time lighting, a large fountain and pool with a 60-foot lighthouse.
It is believed that additional hotel rooms are necessary to
support the convention center as well as to allow Atlantic City to
become a competitive destination resort. Thus, in addition to the 500
room convention hotel, to further spur construction of new hotel rooms
and renovation of substandard hotel rooms into deluxe accommodations,
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 eight casino/hotels which are to receive CRDA financing
totaling the $100,000,000 set aside, and could result in the
construction of approximately 4,000 hotel rooms. The New Jersey
legislature is currently discussing the possibility of increasing the
fund by an additional $50,000,000 to provide further incentive for
additional hotel rooms. Also, Mirage Resorts, Inc., a Las Vegas,
Nevada casino/hotel company, has been selected to be the developer of
an approximately 180 acre tract in the Marina area of Atlantic City.
Mirage Resorts, Inc., proposes to build a $500,000,000, 2,000 room
casino/hotel on that tract. Management of RIH understands that
feasibility studies for development of the tract and its associated
infrastructure are in the preliminary stages.
Although these developments are viewed as positive and favorable
to the future prospects of the Atlantic City gaming industry,
management of RIH, at this point, can make no representations as to
whether, or to what extent, its results may be affected 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.
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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. However, Amtrak discontinued its express
rail service to Atlantic City in 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 spring of 1996. This
project includes a new second level for the terminal, additional
departure gates, an improved baggage handling system and sheltered
walkways connecting the terminal and planes.
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.
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
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 880,000 square feet of gaming area,
including simulcast betting and poker rooms, and 8,700 hotel rooms.
Significant additional expansion is expected in the near future due to
the previously discussed projects to be financed by the CRDA as well
as the expected re-opening in April 1996 of the Trump Regency Hotel,
which contains 500 hotel rooms and approximately 50,000 square feet
of casino floor space.
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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 (the "Showboat"). These three properties have a total of
more than 2,700 hotel rooms and approximately 308,000 square feet of
gaming space in close proximity to each other. In 1995, the three
casino/hotels combined generated approximately 30% of the gross gaming
revenue of Atlantic City. 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.
In recent years, competition for the gaming patron outside of
Atlantic City has become extremely intense. In 1988, only Nevada and
New Jersey had legalized casino operations. Currently, twenty four
states have legalized casinos on land, water or Indian reservations.
Also, The Bahamas and other destination resorts in the Caribbean and
Canada have increased the competition for gaming revenue. Thus, the
competition for the destination resort patron has intensified.
Directly competing with Atlantic City for the day-trip patron is a
casino/hotel on an Indian reservation in Connecticut which currently
operates more than 3,880 slot machines and whose slot revenue for the
year 1995 exceeded $575,000,000, which is twice the slot revenue of
the largest casino/hotel in Atlantic City. A second casino/hotel on
another Indian reservation located in the same area in Connecticut is
expected to open in the fall of 1996. 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 and Rhode
Island which would increase the competition for day-trip patrons.
This rapid expansion of casino gaming, particularly that which
has been or may be introduced into jurisdictions in close proximity to
Atlantic City, adversely affects 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 19% of table game
volume at the Resorts Casino Hotel in 1995, 21% in 1994 and 24% in
1993. The credit play percentage of table game volume for the
Atlantic City industry excluding RIH was 22% in 1995, 23% in 1994 and
23 % in 1993. RIH's gaming receivables, net of allowance for
uncollectible amounts, were $3,813,000, $4,216,000 and $3,618,000 as
of December 31, 1995, 1994 and 1993, 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
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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 personnel
trained and supervised by RIH. 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 3,800 employees during 1995
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 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 to administer the Casino Control Act. In general,
the provisions of the Casino Control Act concern: the ability,
character and financial stability and integrity of casino operators,
their officers, directors and employees and others financially
interested in a casino; the nature and suitability of hotel and casino
facilities, operating methods and conditions; and financial and
accounting practices. Gaming operations are subject to a number of
restrictions
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relating to the rules of games, type of games, credit play, size of
hotel and casino operations, hours of operation, persons who may be
e m p loyed, 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. Previous law
only allowed for casino expansion if a casino built new hotel rooms
first. 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, up to a maximum of
200,000 square feet. Future costs of regulation have been reduced as
new legislation (i) no longer requires hotel employees to be
registered, (ii) extends the term for casino and casino key employee
license renewals from two years to four years and (iii) allows greater
efficiency by either reducing or eliminating the time permitted the
Casino Control Commission to approve internal controls, patron
complimentary programs and 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 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 Resorts Casino Hotel. In
January 1996, RIH's license was renewed until January 31, 2000. RIH's
renewed license is subject to a financial stability review midway
through the license period.
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
restrictions, the sale, assignment, transfer, pledge or other
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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 GGE provides
that all securities of GGE 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.
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 securities 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
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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 license fees for the various
classes of employees. In addition, a casino 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.
Also, the Casino Control Act has been amended to create a new Atlantic
City fund (the "AC 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 contributed
to the AC Fund. Thereafter, beginning with fiscal year 1999/2000 and
for the following three fiscal years, an amount equal to the average
paid into the AC Fund for the previous four fiscal years shall be
contributed to the AC Fund. Each licensee s share of the amount to be
contributed to the AC 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.
The following table summarizes, for the periods shown, the fees
and taxes assessed upon RIH by the Casino Control Commission.
For the Year
1995 1994 1993
Gaming tax $21,402,000 $19,996,000 $19,545,000
License, investigation,
inspection and other fees 3,917,000 4,218,000 3,985,000
Contribution to AC Fund 224,000
$25,543,000 $24,214,000 $23,530,000
The Casino Control Act, as originally adopted, required a
licensee to make investments equal to 2% of the licensee's gross
r e venue (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. As discussed
in Note 14 of Notes to Consolidated Financial Statements certain
issues have been raised concerning the satisfaction of RIH's
investment obligations for the years 1979 through 1983.
- 13 -<PAGE>
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
1 9 9 5, 1994 and 1993 amounted to $3,348,000, $3,124,000, and
$3,054,000, respectively, and, with the exception of a $127,000 credit
received in 1995 for making a donation, have been satisfied by
deposits made with the CRDA. At December 31, 1995, RIH held
$5,567,000 face amount of bonds issued by the CRDA and had $18,197,000
on deposit with the CRDA. The CRDA bonds issued through 1995 have
interest rates ranging from 3.9% to 7% and have repayment terms of
between 20 and 50 years.
(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, and related personal
property of RIH compose the collateral securing the Mortgage Notes and
the Junior Mortgage Notes.
RIH has leased the approximately 4.4 acre Chalfonte Site from GGE
since GGE acquired the property in June 1995. Prior thereto, RIH
leased this property from an unaffiliated party. RIH currently uses
the Chalfonte Site for parking; however, as noted above, RIH intends
to expand the Resorts Casino Hotel by constructing hotel rooms, casino
space and a parking garage on this property commencing in late 1996.
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.
- 14 -<PAGE>
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.
On May 3, 1994, as part of the Plan 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 GGE in repayment of RIH's intercompany
balance of $43,236,000 to GGE, with the balance of
$92,064,000 a distribution to GGE;
(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 GGE for
its ultimate distribution to certain of GGE s noteholders
pursuant to 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
r a tios are attained. As of December 31, 1995 dividends of
approximately $10,000,000 were permitted under these indentures.
- 15 -<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,
Operating Information (Note A) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Operating revenues $293,226 $276,733 $ 271,479 $ 262,740 $ 247,474
Earnings from operations $ 26,346 $ 20,791 $ 12,068 $ 21,049 $ 14,819
Recapitalization costs (Note B) (975) (2,727) (874)
Other income (deductions), net (Note C) (15,806) (7,992) 7,422 7,181 6,942
Earnings before income taxes and
extraordinary item 10,540 11,824 16,763 27,356 21,761
Income tax expense (Note D) (400) (10,942) (8,704)
Earnings before extraordinary item 10,540 11,824 16,363 16,414 13,057
Extraordinary item (Note E) 4,008
Net earnings $ 10,540 $ 15,832 $ 16,363 $ 16,414 $ 13,057
</TABLE>
<TABLE><CAPTION>
At December 31,
Balance Sheet Information (Note A) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total assets $224,397 $212,734 $ 264,164 $ 250,636 $ 235,235
Current maturities of notes payable to
affiliate and other long-term debt
(Note F) $ 589 $ 325,000 $ 643 $ 958
Notes payable to affiliate and other
long-term debt, excluding current
maturities (Note F) $127,680 $125,309 $ 325,904 $ 326,539
Shareholder's equity (deficit) $ 45,676 $ 35,136 $(147,995) $(164,358) $(180,772)
/TABLE
<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
Plan, which was effective May 3, 1994.
Note B: Recapitalization costs in 1992 through 1994 represent RIH's
allocated portion of GGE's consolidated recapitalization costs.
Note C: Includes interest income, interest expense and amortization
of debt discounts.
Note D: See Notes 1 and 12 of Notes to Consolidated Financial
Statements for discussion of income taxes for 1995, 1994 and 1993.
In 1992 and 1991 RIH had an agreement with GGE to provide for
federal and state income taxes at a combined rate of 40%.
Note E: 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 GGE'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.
Note F: These items are presented net of unamortized discounts.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Liquidity
At December 31, 1995 RIH had working capital of $22,144,000
including $38,027,000 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, in 1994 GGE restructured certain of its previously
outstanding public debt 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 is the principal source of funds
for servicing the Mortgage Notes and the Junior Mortgage Notes, as
well as any notes issued under the Senior Facility or similar working
capital facility, 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
$16,500,000. Based on projected operating results, management
believes that RIH's liquidity
- 17 -<PAGE>
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 in
1 9 93 amounted to $21,618,000, as RIH converted certain
back-of-the-house space into an 8,000 square foot simulcast facility
which also houses poker tables, various other table games, a keno
lounge and a full service bar. Also 280 slot machines were purchased,
most of which replaced older models, and the VIP slot and table player
lounge, "Club Griffin," opened. Capital expenditures in 1994 at
Resorts Casino Hotel totaled $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 and Caribbean
stud poker and various other capital maintenance projects. Capital
expenditures in 1995 at Resorts Casino Hotel totaled $13,272,000.
These included approximately $4,000,000 for the conversion of certain
existing facilities into an additional 10,000 square feet of casino
gaming area as RIH modified a portion of its bus waiting area to house
approximately 155 slot machines and converted Mr. G s lounge to
accommodate approximately 160 more slot machines. The cost noted
above includes the cost of slot machines and related equipment. RIH
also converted the space formerly occupied by the Celebrity Deli into
a California Pizza Kitchen and the new Oceanside cocktail lounge at a
cost of approximately $2,900,000. The balance of capital expenditures
for 1995 included approximately $900,000 for suite renovations, as
well as various other capital maintenance projects.
As discussed in Resort and Hotel Facilities under ITEM 1.
BUSINESS - (c) Narrative Description of Business, RIH intends to
expand its operations by constructing hotel rooms, additional casino
space and a parking garage on GGE s newly acquired Chalfonte Site,
though its plans are preliminary at this time. RIH is proceeding with
the development of cost estimates for such expansion and has not yet
determined the extent to which additional financing, if any, will be
required.
Pursuant to the Plan, 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, in turn, distributed such
cash to GGE for its ultimate distribution to certain of GGE s
noteholders pursuant to the Plan.
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.
Another significant use of funds in the last several years has
been deposits with the CRDA as required by the Casino Control Act.
- 18 -<PAGE>
Capital Resources and Other Sources of Funds
Since 1993, operations have been the most significant source of
funds to RIH.
In 1995, in connection with the casino expansion at Resorts
Casino Hotel, RIH financed the purchase of slot machines and related
equipment with a $1,815,000 bank loan.
The $19,738,000 Senior Facility (which is further described in
Note 9 of Notes to Consolidated Financial Statements) is available for
the period ending May 2, 1996 should RIH or GGE have additional cash
needs. Management believes that the Senior Facility will also serve
as a source of funds for expansion, development and/or an investment
opportunity as well as a safeguard if an emergency arises from current
operations. However, market interest rates and other economic
conditions, among other factors, will determine if it is appropriate
to draw on the Senior Facility or obtain a substitute facility.
RESULTS OF OPERATION
RIH operates in one business segment. Following is a discussion
of the results of operations for 1995 compared to 1994 and 1994
compared to 1993. The discussion should be read in conjunction with
the consolidated financial statements included herein.
Revenues
Casino revenues from RIH's casino/hotel increased by $17,275,000
in 1995 and by $6,366,000 in 1994. RIH s slot and table game win
increased by $18,585,000 in 1995 and by $3,516,000 in 1994. RIH s
slot and table game win increases, which amounted to 8.1% in 1995 and
1.4% in 1994, compare to increases for the Atlantic City gaming
industry of 9.7% and 2.8% for those periods, respectively. This
market growth favorably reflects the expansion of existing Atlantic
City casinos and hotels; however, such expansion by RIH s competitors
adversely affects RIH's operations in that it significantly increases
its cost of obtaining additional revenue. In that regard, several
competing properties have announced expansion projects. See New
Convention Center and Casino/Hotel Expansion under ITEM 1. BUSINESS
- (c) Narrative Description of Business for related discussion.
In 1995 RIH s slot win increased by $16,310,000, due to increased
amounts wagered, and its table game win increased by $2,275,000,
primarily due to an increase in hold percentage (ratio of casino win
to total amount of chips purchased). The increased amounts wagered by
slot patrons reflect RIH s 10,000 square-foot casino expansion during
1995, which enabled RIH to increase its number of slot machines by
more than 15%, as well as increased emphasis on bus and junket air
programs. Further affecting the comparison of RIH s casino revenues
during the years presented was poor weather conditions during the
first quarter of 1994, which adversely affected operations in that
period as the principal means of transportation to Atlantic City is by
automobile or bus. RIH s revenue from poker, simulcasting and keno
combined decreased by $1,310,000 in 1995.
- 19 -<PAGE>
In the fall of 1994 RIH increased its program of charter flights
in an effort to recapture some of its lost market share of table game
win. During 1995 RIH also targeted table players through certain
other efforts, including match play promotions, the expansion of the
Griffin Games to include table players and renovation of some of
Resorts Casino Hotel s suites. More suite renovations are planned for
1996. However, in light of the increased promotions offered by
competing properties, RIH s expanded efforts in this area enabled RIH
to maintain, but not increase, its market share of table game win in
1995.
In 1994 RIH's slot win increased by $10,084,000 due to increased
amounts wagered, and table game win was down $6,568,000 primarily due
to decreased amounts wagered. RIH s percentage increase in slot win
in 1994 exceeded that of the Atlantic City industry. However, in 1994
the industry experienced a slight increase in table game win while
RIH s table game win decreased by 8.4%. These results reflect the
fact that slot players had been the prime focus of RIH's marketing
efforts until the fall of 1994 as discussed above. RIH's revenue from
poker, simulcasting and keno combined increased by $2,850,000 in 1994,
the first full year these games were offered.
The decrease in RIH s food and beverage revenues in 1995 was due
primarily to the closing of the Celebrity Deli in early April and, to
a lesser extent, Mr. G s lounge in mid March for the renovations
discussed under FINANCIAL CONDITION - Capital Expenditures and Other
Uses of Funds above. Also, there was a decline in the number of
patrons served at the "all-you-can-eat Beverly Hills Buffet. This
decline was attributable to price increases effected during the second
quarter of 1994 as management determined that this promotion was no
longer cost effective at the prior price levels.
RIH's food and beverage revenues were down in 1994 primarily due
to reduced patronage at the Beverly Hills Buffet due to price
increases noted above. Also in 1994, there was a general decline in
the number of patrons served at all of RIH's food and beverage
facilities.
As discussed above, because the principal means of transportation
to Atlantic City is by automobile or bus, the industry s results may
be affected by periods of inclement weather. In January and February
of 1996 the northeastern United States experienced the Blizzard of
1996" and other storms. These storms, as well as the threat of other
severe weather, adversely affected RIH s gaming revenues and may have
adversely affected its operating results in early 1996.
Earnings from Operations
C a sino, hotel and related operating results increased by
$5,555,000 for 1995 as the increased revenues described above were
partially offset by a net increase in operating costs. The most
significant variances in operating expenses were increases in casino
promotional costs ($7,300,000), casino win tax ($1,500,000), payroll
and related costs ($1,000,000) and the accrual for performance and
incentive bonuses ($1,000,000). Casino promotional costs increased
due to the expanded junket air program as well as increases in the
amount of cash giveaway to bus patrons. Casino win tax increased
relative to the increase in
- 20 -<PAGE>
casino revenues. Payroll and related costs increased due to increased
salary and wage rates, as the average number of employees was down
slightly for the year.
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. Another significant cost increase was
in the accrual for performance and incentive bonuses ($700,000).
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 a $50,000,000 note receivable from a former
Bahamian affiliate. This note was canceled as part of the Plan.
RIH's interest expense before the Effective Date was limited to
minor amounts incurred on capitalized lease obligations. Since the
Effective Date, RIH has borne, indirectly, the interest on the
Mortgage Notes and the Junior Mortgage Notes through notes payable to
RIHF, the terms of which mirror the terms of such notes. RIH will
also bear, indirectly, interest on any notes issued under the Senior
Facility or a similar working capital facility. See Notes 7 and 9 of
Notes to Consolidated Financial Statements for the terms of the
Mortgage Notes, the Junior Mortgage Notes and the Senior Facility.
- 21 -<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 23
Consolidated Balance Sheets at December 31,
1995 and 1994 24
Consolidated Statements of Operations for the
years ended December 31, 1995, 1994 and 1993 26
Consolidated Statements of Cash Flows for the
years ended December 31, 1995, 1994 and 1993 27
Consolidated Statements of Changes in
Shareholder's Equity for the years ended
December 31, 1995, 1994 and 1993 28
Notes to Consolidated Financial Statements 29
Financial Statement Schedule:
Schedule II: Valuation Accounts for the
years ended December 31,
1995, 1994 and 1993 44
Supplementary Data
Selected Quarterly Financial Data (Unaudited) 45
- 22 -<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, 1995 and 1994,
and the related consolidated statements of operations, changes in
shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1995. Resorts International Hotel, Inc.
i s an indirect wholly owned subsidiary of Griffin Gaming &
Entertainment, 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, 1995 and 1994, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1995, 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 19, 1996
- 23 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
December 31,
Assets 1995 1994
Current assets:
Cash (including cash equivalents
of $22,334 and $12,695) $ 38,027 $ 26,876
Restricted cash equivalents 750
Receivables, net 6,933 6,232
Inventories 2,447 1,793
Prepaid expenses 6,078 8,566
Total current assets 54,235 43,467
Property and equipment:
Land and land rights 53,060 53,060
Land improvements 158 158
Hotels and other buildings 115,960 108,051
Furniture, machinery and equipment 50,036 45,097
Construction in progress 200 41
219,414 206,407
Less accumulated depreciation (62,074) (48,906)
Net property and equipment 157,340 157,501
Deferred charges and other assets 12,822 11,766
$224,397 $212,734
See Notes to Consolidated Financial Statements.
- 24 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousand of Dollars, except par value)
Liabilities and Shareholder's December 31,
Equity 1995 1994
Current liabilities:
Current maturities of long-term debt $ 589
Accounts payable and accrued
liabilities 26,044 $ 24,365
Interest payable to affiliate 4,244 4,113
Due to GGE 1,214 4,411
Total current liabilities 32,091 32,889
Notes payable to affiliate, net
of unamortized discounts 126,761 125,309
Other long-term debt 919
Deferred income taxes 18,950 19,400
Commitments and contingencies
(Note 14)
Shareholder's equity:
Common stock - $1 par value
- 1,000,000 shares outstanding 1,000 1,000
Capital in excess of par 21,366 21,366
Retained earnings 23,310 12,770
Total shareholder's equity 45,676 35,136
$224,397 $212,734
See Notes to Consolidated Financial Statements.
- 25 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
For the Year Ended December 31,
1995 1994 1993
Revenues:
Casino $267,757 $250,482 $244,116
Rooms 6,978 7,134 6,974
Food and beverage 12,704 14,609 15,926
Other casino/hotel revenues 5,787 4,508 4,463
293,226 276,733 271,479
Expenses:
Casino 156,091 143,748 141,608
Rooms 3,698 3,243 3,402
Food and beverage 14,235 15,823 17,710
Other casino/hotel operating
expenses 34,155 34,759 34,764
Selling, general and
administrative 35,635 36,101 39,352
GGE parent services fee 9,651 9,082 8,911
Depreciation 13,415 13,186 13,664
266,880 255,942 259,411
Earnings from operations 26,346 20,791 12,068
Other income (deductions):
Interest income 2,386 3,623 7,615
Interest expense (16,740) (10,858) (193)
Amortization of debt discounts (1,452) (757)
Recapitalization costs (975) (2,727)
Earnings before income taxes
and extraordinary item 10,540 11,824 16,763
Income tax expense (400)
Earnings before extraordinary
item 10,540 11,824 16,363
Extraordinary item 4,008
Net earnings $ 10,540 $ 15,832 $ 16,363
See Notes to Consolidated Financial Statements.
- 26 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
For the Year Ended December 31,
1995 1994 1993
Cash flows from operating
activities:
Cash received from customers $ 291,573 $ 274,467 $ 272,150
Cash paid to suppliers and
employees (247,048) (242,154) (250,281)
Cash flow from operations
before interest and income
taxes 44,525 32,313 21,869
Interest received 2,308 1,296 10,973
Interest paid (16,609) (6,745) (193)
Income taxes paid to GGE (450)
Net cash provided by
operating activities 29,774 26,864 32,649
Cash flows from investing
activities:
Payments for property and
equipment (13,019) (7,744) (21,013)
Purchase of 12,899 Units (6,740)
CRDA deposits and bond purchases (3,152) (3,044) (3,025)
Proceeds from sale of property
and equipment 116
Net cash used in investing
activities (16,171) (17,412) (24,038)
Cash flows from financing
activities:
Proceeds from borrowing 1,815
Distribution to GGRI (12,262)
Advances from (repayments to) GGE (3,197) 4,788 (515)
Recapitalization costs paid
to GGE (975) (2,727)
Repayments of non-affiliated debt (320) (74) (2,065)
Net cash used in financing
activities (1,702) (8,523) (5,307)
Net increase in cash and cash
equivalents 11,901 929 3,304
Cash and cash equivalents at
beginning of period 26,876 25,947 22,643
Cash and cash equivalents at
end of period $ 38,777 $ 26,876 $ 25,947
See Notes to Consolidated Financial Statements.
- 27 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(In Thousands of Dollars)
Capital in
excess of par
(excess of
liabilities
RIH over assets at
common August 31, 1990 Retained
stock reorganization) earnings
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 GGE (38,168) (53,896)
Shares issued to GGRI in
exchange for the RIH-GGRI
Note 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
Net earnings for year 1995 10,540
Balance at December 31, 1995 $1,000 $ 21,366 $ 23,310
See Notes to Consolidated Financial Statements.
- 28 -<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 (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.
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.
Accounting Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
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 retail value
of such complimentary services excluded from revenues amounted to
$28,494,000, $26,074,000 and $25,560,000 for the years 1995, 1994 and
1993, respectively. The rooms, food and beverage, and other
casino/hotel operations departments allocate a percentage of their
total operating expenses to the casino department for complimentary
services provided to casino patrons. These allocations do not
n e c essarily 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:
- 29 -<PAGE>
(In Thousands of Dollars) 1995 1994 1993
Rooms $ 4,813 $ 4,016 $ 3,728
Food and beverage 16,846 14,547 16,250
Other casino/hotel operations 6,403 7,404 7,216
Total allocated to casino $28,062 $25,967 $27,194
Cash Equivalents
RIH considers all of its short-term money market securities
purchased 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.
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 reported below using the straight-line method for
financial reporting purposes.
Land improvements 10 - 25 years
Hotels and other buildings 22 - 28 years
Furniture, machinery and equipment 4 - 5 years
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.
- 30 -<PAGE>
Income Taxes
RIH and GGE's other domestic subsidiaries file consolidated
federal income tax returns with GGE.
RIH accounts for income taxes under the liability method
prescribed by Statement of Financial Accounting Standards No. 109
("SFAS 109"), "Accounting for Income Taxes." Under this method, the
deferred tax liability is determined based on the difference between
the financial reporting and tax bases of assets and liabilities and
enacted tax rates which will be in effect for the years in which the
differences are expected to reverse. Deferred tax liabilities are
recognized for differences that will result in taxable amounts in
future years. Deferred tax assets are recognized for differences that
will result in deductible amounts in future years and for
carryforwards. A valuation allowance is recognized based on estimates
of the likelihood that some portion or all of the deferred tax asset
will not be realized. 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.
Certain indentures described in Note 7 provide for a tax sharing
agreement between RIH and GGE which limits RIH s tax payments to GGE
to reimbursements of cash payments made by GGE for income or
alternative minimum taxes arising from the earnings or operations of
RIH.
Impact of Newly Issued Accounting Standards
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of ("SFAS 121"), which
requires impairment losses to be recorded on long-lived assets used in
o p erations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are
less than the assets carrying amount. SFAS 121 also addresses the
accounting for long-lived assets that are expected to be disposed of.
RIH will adopt SFAS 121 in 1996 and, based on current circumstances,
believes the effect, if any, of adoption will be insignificant.
NOTE 2 - 1994 RESTRUCTURING
In April 1994 the joint plan of reorganization (the "Plan")
proposed by GGE, GGRI, RIH and certain other of GGE s subsidiaries was
confirmed by the Bankruptcy Court for the District of Delaware and on
May 3, 1994 (the "Effective Date") the Plan became effective.
Pursuant to the Plan, certain of GGE s previously outstanding
public debt was 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
GGE, 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
- 31 -<PAGE>
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, RIH's guarantees of the Mortgage Notes and the Junior
Mortgage Notes and related collateral are described further in Note 7.
Also pursuant to the Plan, RIHF, RIH and GGE entered into the
senior note purchase agreement (the "Senior Facility") described in
Note 9.
The Plan 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 GGE on the Effective
Date with the remainder a distribution to GGE. RIH's retained
earnings of $53,896,000 at April 30, 1994 was included in that
distribution.
- RIH exchanged a $325,000,000 non-interest bearing note payable to
GGRI (the "RIH-GGRI Note") 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.
- GGE contributed to GGRI the 100 shares of common stock of RIH
which GGE owned. This resulted in RIH's becoming a wholly owned
subsidiary of GGRI and an indirect subsidiary of GGE. RIH now
has a total of 5,000,000 shares of common stock authorized, of
which 1,000,000 shares are issued and outstanding.
- RIH distributed to GGRI, as a return of surplus, a $50,000,000
note receivable from a former Bahamian affiliate (the "RIB Note")
and accrued interest thereon. The RIB Note bore interest at 13
1/2% per annum, with interest payments due each May 1 and
November 1.
- 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 GGE so that GGE, in turn, could distribute cash to
holders of its previously outstanding debt.
NOTE 3 - CASH EQUIVALENTS
RIH's cash equivalents at December 31, 1995 included U.S.
Treasury Bills and reverse repurchase agreements (federal government
securities purchased under agreements to resell those securities)
under which RIH had not taken delivery of the underlying securities.
Restricted cash equivalents at December 31, 1995 represent a
certificate of deposit which is pledged as collateral for a letter of
credit.
- 32 -<PAGE>
NOTE 4 - RECEIVABLES
Components of receivables at December 31 were as follows:
(In Thousands of Dollars) 1995 1994
Gaming $ 7,332 $ 8,035
Less allowance for doubtful accounts (3,519) (3,819)
3,813 4,216
Non-gaming:
Hotel and related 1,163 799
Other 2,008 1,299
3,171 2,098
Less allowance for doubtful accounts (51) (82)
3,120 2,016
$ 6,933 $ 6,232
NOTE 5 - CRDA OBLIGATORY INVESTMENTS
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
satisfied, 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.
From time to time RIH has donated certain funds it has had on
deposit with the CRDA in return for either relief from its obligation
to purchase CRDA bonds or credits against future CRDA deposits.
At December 31, 1995, RIH had $5,567,000 face value of bonds
issued by the CRDA and had $18,197,000 on deposit with the CRDA. The
CRDA bonds have interest rates ranging from 3.9% to 7% and have
repayment terms of between 20 and 50 years. These bonds and deposits,
net of an estimated discount charged to expense to reflect the
below-market interest rate payable on the bonds, are included in other
assets in RIH's Consolidated Balance Sheet.
- 33 -<PAGE>
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 1995, 1994 and 1993 for discounts on obligations arising in
those years were $1,567,000, $1,461,000 and $1,541,000, respectively.
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of accounts payable and accrued liabilities at
December 31 were as follows:
(In Thousands of Dollars) 1995 1994
Accrued payroll and related taxes
and benefits $ 9,763 $ 9,417
Accrued gaming taxes, fees and
related assessments 7,211 7,064
Customer deposits and unearned
revenues 2,081 2,152
Trade payables 2,148 1,410
Other accrued liabilities 4,841 4,322
$26,044 $24,365
NOTE 7 - NOTES PAYABLE TO AFFILIATES
As described in Note 2, RIHF issued the Mortgage Notes and the
Junior Mortgage Notes and RIH issued the RIH Promissory Note and the
RIH Junior Promissory Note (the "RIH Notes") in connection with the
Plan. RIH issued the RIH Notes to GGE. GGE then transferred the RIH
Notes to RIHF in exchange for the Mortgage Notes and the Junior
Mortgage Notes, which were distributed pursuant to the Plan, and RIH
amended and restated the RIH Notes making them payable to RIHF.
The Mortgage Notes are secured by the $125,000,000 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, and related personal property. The liens
securing the Mortgage Notes will be subordinated to the lien securing
the Senior Facility Notes (described in Note 9) or notes issued under
a similar working capital facility, if such notes are issued.
The Junior Mortgage Notes are secured by the $35,000,000 RIH
Junior Promissory Note, the terms of which mirror the terms of the
Junior Mortgage Notes. 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 or notes issued under a similar working
capital facility, if such notes are issued, and are subordinated to
the liens securing the Mortgage Notes.
- 34 -<PAGE>
The indentures pursuant to which the Mortgage Notes and the
Junior Mortgage Notes were issued (collectively, the "Indentures")
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. As of December
31, 1995 dividends of approximately $10,000,000 were permitted under
these Indentures.
The Indentures also contain certain other restrictive covenants
on the part of RIH and its subsidiaries, 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 GGE not in excess of $1,000,000 in
the aggregate at any time outstanding and (y) loans to GGE from the
proceeds of the Senior Facility (or a 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 casino/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 10, the parent services agreement
with GGE which provides for the payment of the three percent services
fee described in Note 10, and a tax sharing agreement with GGE which
limits RIH s tax payments to GGE to reimbursements of cash payments
made by GGE for income or alternative minimum taxes arising from the
earnings or operations of RIH.
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 GGE's Class B redeemable common stock) at a
price of $6,740,000. The resulting gain of $4,008,000 was reported as
an extraordinary item.
- 35 -<PAGE>
The carrying value and fair value by component of notes payable
to affiliate at December 31, 1995 and 1994 were as follows:
1995 1994
Carrying Fair Carrying Fair
(In Thousands of Dollars) Value Value Value Value
RIH Promissory Note $125,000 $115,313 $125,000 $83,750
Less unamortized
discount (16,872) (18,123)
108,128 106,877
RIH Junior Promissory
Note 35,000 35,000
Less principal amount
of Junior Mortgage
Notes held by RIH (12,899) (12,899)
22,101 20,333 22,101 13,040
Less unamortized
discount (3,468) (3,669)
18,633 18,432
$126,761 $135,646 $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 RIH Notes for debt service and (ii)
collateralized and guaranteed by RIH.
No principal payments are due on the RIH Notes during the next
five years.
The accrual of interest and amortization of discounts on the RIH
Notes commenced on May 3, 1994. 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. 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 effective interest rates on the RIH Promissory Note and the
RIH Junior Promissory Note are 14.1% and 14.8%, respectively.
NOTE 8 - OTHER LONG-TERM DEBT
In May 1995, RIH obtained a bank loan in the amount of $1,815,000
in order to finance the purchase of new slot machines and related
equipment. The loan bears interest at 9.2% per year. Principal
payments on the loan are due as follows: 1996 - $589,000, 1997 -
$636,000 and 1998 - $283,000.
- 36 -<PAGE>
NOTE 9 - SENIOR FACILITY
Pursuant to the Plan, RIHF, GGE and RIH entered into the Senior
Facility with certain funds and accounts advised or managed by
Fidelity Management & Research Company. The Senior Facility, as
amended, 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 in Note 7. Market interest
rates and other economic conditions, among other factors, will
determine if it is appropriate to draw on the Senior Facility.
NOTE 10 - RELATED PARTY TRANSACTIONS
RIH recorded the following income and expenses from GGE and its
other subsidiaries:
(In Thousands of Dollars) 1995 1994 1993
Interest income from a former
Bahamian affiliate $ 2,250 $6,750
Expenses:
Interest and amortization of
discounts on notes payable
to RIHF $18,071 $11,604
Parent services fee to GGE 9,651 9,082 $8,911
Property rentals to GGE 810 325 325
Billboard rental to affiliate 50
$28,582 $21,011 $9,236
GGE 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 GGE's consolidated
recapitalization costs. See also Note 12 for a discussion of
alternative minimum taxes allocated to RIH by GGE.
License and Services Agreement
In April 1993, GGE, RIH and The Griffin Group, Inc. (the "Griffin
Group"), a corporation controlled by Merv Griffin, Chairman of the
Board
- 37 -<PAGE>
of GGE, entered into a license and services agreement (the "Griffin
Services Agreement") effective as of September 17, 1992. Pursuant to
the Griffin Services Agreement, Griffin Group granted GGE and RIH a
non-exclusive license to use the name and likeness of Merv Griffin to
advertise and promote facilities and operations of GGE and its
subsidiaries. Also pursuant to the Griffin Services Agreement, Mr.
Griffin is to provide certain services to GGE and RIH, including
serving as Chairman of the Board of GGE 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 GGE and
RIH and Mr. Griffin ceasing to serve as Chairman of the Board of GGE.
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 GGE and RIH.
In the Griffin Services Agreement GGE 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 1994 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 GGE by Griffin Group.
On August 1, 1994, following review and approval by the independent
members of GGE's Board of Directors, GGE agreed to issue 388,000
shares of common stock of GGE to an affiliate of Griffin Group in
satisfaction of the final payment obligation of RIH and GGE under the
Griffin Services Agreement. This payment of $2,425,000 would have
been due on September 17, 1995. The closing price of GGE's common
stock on the date of the agreement was $5.3125 per share. (The number
of shares and closing price stated herein were adjusted to reflect a
one-for-five reverse stock split of GGE s common stock which occurred
on June 30, 1995.) The shares are not registered under the Securities
Act of 1933 and are restricted securities.
Other
RIH reimbursed Griffin Group $183,000, $207,000 and $130,000 for
charter air services related to RIH business rendered in 1995, 1994
and 1993, respectively.
- 38 -<PAGE>
In 1995 and 1994 RIH incurred charges from unaffiliated parties
of $450,000 and $394,000, respectively, in producing the nationwide
television broadcast of "Merv Griffin's New Year's Eve Special" from
Resorts Casino Hotel. For the 1993 production of "Merv Griffin's New
Year's Eve Special," which was also broadcast nationwide, RIH paid
$100,000 and provided certain facilities, labor and accommodations to
subsidiaries of January Enterprises, Inc., of which Merv Griffin
formerly was Chairman.
Also from time to time RIH has reimbursed Griffin Group, at cost,
for certain costs incurred by Griffin Group on behalf of RIH. RIH has
also paid standard room rates for hotel rooms occupied by RIH
personnel or patrons of RIH at certain hotels owned or controlled by
Griffin Group.
NOTE 11 - 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 GGE make contributions to the
plan based on a percentage of eligible employee contributions. RIH's
pension expense for this plan was $641,000, $637,000 and $681,000 for
the years 1995, 1994 and 1993, respectively.
Union employees are covered by various multi-employer pension
plans to which contributions are made by RIH and other unrelated
employers. RIH's pension expense for these plans was $881,000,
$842,000 and $844,000 for the years 1995, 1994 and 1993, respectively.
NOTE 12 - INCOME TAXES
In 1995 RIH was allocated $450,000 of GGE s consolidated federal
alternative minimum tax ("AMT") in accordance with the tax sharing
agreement provided for in the Indentures. These charges reduced RIH s
deferred tax liability as the resulting AMT credits carry forward
indefinitely.
In 1995, 1994 and 1993 RIH had current federal provisions of
$1,100,000, $1,100,000 and $2,600,000, respectively. These were
offset by deferred federal tax benefits of the same amounts 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.
No state tax provision was recorded in 1995, 1994 or 1993 due to
the utilization of state net operating loss ("NOL") carryforwards.
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
- 39 -<PAGE>
purposes. Significant components of RIH's deferred tax liabilities
and assets as of December 31 were as follows:
(In Thousands of Dollars) 1995 1994
Deferred tax liabilities - basis
differences on property and equipment $(21,400) $(21,000)
Deferred tax assets:
NOL carryforwards 65,400 65,800
Book reserves not yet deductible
for tax 11,100 10,000
Tax credit carryforwards 800 2,100
Other 2,100 2,400
Total deferred tax assets 79,400 80,300
Valuation allowance for deferred
tax assets (76,950) (78,700)
Deferred tax assets, net of
valuation allowance 2,450 1,600
Net deferred tax liabilities $(18,950) $(19,400)
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:
1995 1994 1993
Statutory federal income tax rate 35.0% 35.0% 35.0%
Deferred income tax benefit of
temporary differences (10.4%) (15.0%) (19.5%)
NOL carryforwards utilized (28.5%) (23.1%) (16.3%)
Other, including impact of
increase in tax rate in 1993 3.9% 3.1% 3.2%
Effective tax rate 0.0% 0.0% 2.4%
F o r federal tax purposes RIH had NOL carryforwards of
approximately $187,000,000 at December 31, 1995 which expire as
follows: $40,000,000 in 2003, $50,000,000 in 2004, $96,000,000 in
2005 and $1,000,000 in 2009. The NOL carryforward expiring in 2009
represents charitable contributions in excess of amounts currently
d e ductible, which GGE elected to convert to NOLs. The NOL
carryforwards scheduled to expire in 2003 through 2005 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
- 40 -<PAGE>
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
by a deferred tax benefit based on the reversal of temporary
differences.
For tax purposes, because RIH files a consolidated tax return
with GGE and GGE s other subsidiaries, it is able to utilize the
current period losses and NOL carryforwards of the entire group; thus,
its usage of its own NOLs is substantially less than the taxable
income it generates.
At December 31, 1995, RIH had approximately $125,000,000 of NOL
carryforwards in New Jersey which expire as follows: $13,000,000 in
1996, $111,000,000 in 1997 and $1,000,000 in 2001.
Also at December 31, 1995, RIH had federal income tax credit
carryforwards of approximately $400,000, which expire $100,000 per
y e ar between 2006 and 2009, and federal AMT tax credits of
approximately $400,000 which carry forward indefinitely.
- 41 -<PAGE>
NOTE 13 - STATEMENTS OF CASH FLOWS
Supplemental disclosures required by Statement of Financial
Accounting Standards No. 95, "Statement of Cash Flows," are presented
below.
(In Thousands of Dollars) 1995 1994 1993
Reconciliation of net earnings
to net cash provided by
operating activities:
Net earnings $10,540 $15,832 $16,363
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Extraordinary gain on purchase
of 12,899 Units (4,008)
Depreciation 13,415 13,186 13,664
Provision for discount on
CRDA obligations, net of
amortization 1,561 1,456 1,538
Amortization of debt discounts 1,452 757
Provision for doubtful
receivables 925 297 901
Deferred tax provision
(benefit) (450) 400
Recapitalization costs 975 2,727
Net loss on dispositions of
property and equipment 18 8 323
Net increase in receivables (1,879) (1,415) (609)
Net (increase) decrease in
interest receivable from
affiliate (2,250) 3,375
Net (increase) decrease in
inventories and prepaid
expenses 1,834 (2,963) (3,992)
Net (increase) decrease in
deferred charges and other
assets 530 1,164 (754)
Net increase in interest
payable to affiliate 131 4,113
Net increase (decrease) in
accounts payable and
accrued liabilities 1,697 (288) (1,287)
Net cash provided by operating
activities $29,774 $26,864 $32,649
- 42 -<PAGE>
(In Thousands of Dollars) 1995 1994 1993
Non-cash investing and financing
transactions:
Distribution of RIH Promissory
Note and RIH Junior Promissory
Note as:
Repayment of advances
from GGE $ 43,236
Distribution to GGE 92,064
Exchange RIH-GGRI Note for
shares of RIH common stock 325,000
Distribution of RIB Note and
accrued interest thereon to
GGRI 53,375
Increase in liabilities for
additions to property and
equipment and other assets 80 $632
NOTE 14 - COMMITMENTS AND CONTINGENCIES
CRDA
Certain issues have been raised by the CRDA and the State of New
Jersey Department of the Treasury (the "Treasury") concerning the
satisfaction of RIH s investment obligations for the years 1979
through 1983 (see Note 5). These matters were dormant for some time
until late 1995, when RIH was contacted by the CRDA. In a recent
meeting with CRDA representatives RIH was informed that it would be
hearing from the Treasury in the near future regarding a resolution of
these matters. If these issues are determined adversely, RIH could be
required to pay the relevant amount in cash to the CRDA. However,
management believes a negotiated settlement with an insignificant
monetary cost to RIH is probable.
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.
- 43 -<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, 1995:
Allowance for doubtful receivables:
Gaming $3,819 $902 $(1,202) $3,519
Other 82 23 (54) 51
$3,901 $925 $(1,256) $3,570
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
(A) Write-off of uncollectible accounts, net of recoveries.
/TABLE
<PAGE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(In Thousands of Dollars)
The table below reflects selected quarterly financial data for the years 1995 and 1994.
<CAPTION>
1995 1994
For the Quarter First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $67,680 $74,560 $83,456 $67,530 $58,873 $72,220 $77,679 $67,961
Earnings (loss) from
operations $ 2,819 $ 7,440 $12,947 $ 3,140 $(1,691) $ 6,988 $11,445 $ 4,049
Recapitalization costs (604) (371)
Other income
(deductions), net (A) (3,998) (3,927) (3,948) (3,933) 1,920 (2,240) (4,319) (3,353)
Earnings (loss) before
extraordinary item (1,179) 3,513 8,999 (793) (375) 4,377 7,126 696
Extraordinary item 4,008
Net earnings (loss) $(1,179) $ 3,513 $ 8,999 $ (793) $ (375) $ 4,377 $ 7,126 $ 4,704
(A) Includes interest income, interest expense and amortization of debt discounts.
/TABLE
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
The 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) R e s tated 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.)
- 46 -<PAGE>
(3)(a)(3) Form 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.)
(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) F o rm 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.)
- 47 -<PAGE>
(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.)
(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) Form 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 reference 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.)
- 48 -<PAGE>
(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.)
(4)(c)(9) Form 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 GGE'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 GGE'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)* Resorts International, Inc. 1994 Stock Option Plan (as
amended on June 27, 1995). (Incorporated by reference to
Exhibit (4)(b) to GGE s Form 10-Q Quarterly Report for the
quarter ended June 30, 1995, in File No. 1-4748.)
(10)(b)(1)* License and Services Agreement, dated as of September 17,
1992, among Griffin Group, GGE 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, GGE and
RIH. (Incorporated 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,
GGE, GGRI, State Street Bank and Trust Company of
Connecticut, National Association, U.S. Trust Company of
California, N.A. and 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.)
- 49 -<PAGE>
(10)(d)(1) Form of Note Purchase Agreement dated May 3, 1994, among
RIHF, GGE and RIH, and certain funds advised or managed by
Fidelity Management & Research Company 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 GGE'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 GGE, RIHF, RIH, Fidelity Management &
Research Company and The TCW Group, Inc. (Incorporated by
reference to Exhibit 10.66 to Form S-1 Registration
Statement in File No. 33-53371.)
(10)(f) Form of 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 1995. No amendments to previously filed
Forms 8-K were filed during the fourth quarter of 1995.
(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."
- 50 -<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 8, 1996 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 8, 1996
Matthew B. Kearney
Director and Executive Vice President
(Principal Executive, Financial and
Accounting Officer)
By /s/ Lawrence Cohen March 8, 1996
Lawrence Cohen
Director
SUPPLEMENTAL INFORMATION
Because it is an indirect wholly owned subsidiary of GGE, 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.
- 51 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit 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
Incorporation of RIH. to Exhibit 3.03 to
registrant's Form S-1
Registration Statement in
File No. 33-23063.
(3)(a)(2) Certificate of Amendment Incorporated by reference
to the Certificate of to Exhibit 3.05 to
Incorporation of RIH. registrant's Form S-4
Registration Statement in
File No. 33-50733.
(3)(a)(3) Form of Certificate of Incorporated by reference
Amendment of Certificate to Exhibit 3.05(a) to
of 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.
- 52 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(b)(1) Form of Indenture among Incorporated by reference
RIHF, as issuer, RIH, as to Exhibit 4.04 to
guarantor, and State registrant's Form S-4
Street Bank and Trust Registration Statement in
Company of Connecticut, File No. 33-50733.
National Association, as
trustee, with respect to
RIHF 11% Mortgage Notes
due 2003.
(4)(b)(2) Form of Mortgage between Incorporated by reference
RIH and State Street Bank to Exhibit 4.22 to
and Trust Company of registrant's Form S-4
Connecticut, National Registration Statement in
Association, securing File No. 33-50733.
Guaranty of RIHF Mortgage
Notes.
(4)(b)(3) Form of Mortgage between Incorporated by reference
RIH and RIHF, securing to Exhibit 4.23 to
RIH Promissory Note. registrant's Form S-4
Registration Statement in
File No. 33-50733.
(4)(b)(4) Form of Assignment of Incorporated by reference
Agreements made by RIHF, to Exhibit 4.24 to
as Assignor, to State registrant's Form S-4
Street Bank and Trust Registration Statement in
Company of Connecticut, File No. 33-50733.
National Association, as
Assignee, regarding RIH
Promissory Note.
(4)(b)(5) Form of Assignment of Incorporated by reference
Leases and Rents made by to Exhibit 4.25 to
RIH, as Assignor, to registrant's Form S-4
RIHF, as Assignee, Registration Statement in
regarding RIH Promissory File No. 33-50733.
Note.
- 53 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(b)(6) Form of Assignment of Incorporated by reference
Leases and Rents made by to Exhibit 4.26 to
RIH, as Assignor, to registrant's Form S-4
State Street Bank and Registration Statement in
Trust Company of File No. 33-50733.
Connecticut, National
Association, as Assignee,
regarding Guaranty of
RIHF Mortgage Notes.
(4)(b)(7) Form of Assignment of Incorporated by reference
Operating Assets made by to Exhibit 4.28 to
RIH, as Assignor, to registrant's Form S-4
State Street Bank and Registration Statement in
Trust Company of File No. 33-50733.
Connecticut, National
Association, as Assignee,
regarding Guaranty of
RIHF Mortgage Notes.
(4)(b)(8) Form of Assignment of Incorporated by reference
Operating Assets made by to Exhibit 4.34 to
RIH, as Assignor, to registrant's Form S-4
RIHF, as Assignee, Registration Statement in
regarding RIH Promissory File No. 33-50733.
Note.
(4)(b)(9) Form of Amended and Incorporated by reference
Restated $125,000,000 RIH to Exhibit A to Exhibit
Promissory Note. (4)(b)(1) hereto.
(4)(c)(1) Form of Indenture between Incorporated by reference
RIHF, as issuer, RIH, as to Exhibit 4.05 to
guarantor, and U.S. Trust registrant's Form S-4
Company of California, Registration Statement in
N.A., as trustee, with File No. 33-50733.
respect to RIHF 11.375%
Junior Mortgage Notes due
2004.
- 54 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(c)(2) Form of Mortgage between Incorporated by reference
RIH and U.S. Trust to Exhibit 4.29 to
Company of California, registrant's Form S-4
N.A., securing Guaranty Registration Statement in
of RIHF Junior Mortgage File No. 33-50733.
Notes.
(4)(c)(3) Form of Mortgage between Incorporated by reference
RIH and RIHF, securing to Exhibit 4.30 to
RIH Junior Promissory registrant's Form S-4
Note. Registration Statement in
File No. 33-50733.
(4)(c)(4) Form of Assignment of Incorporated by reference
Agreements made by RIHF, to Exhibit 4.31 to
as Assignor, to U.S. registrant's Form S-4
Trust Company of Registration Statement in
California, N.A., as File No. 33-50733.
Assignee, regarding RIH
Junior Promissory Note.
(4)(c)(5) Form of Assignment of Incorporated by reference
Leases and Rents made by to Exhibit 4.32 to
RIH, as Assignor, to registrant's Form S-4
RIHF, as Assignee, Registration Statement in
regarding RIH Junior File No. 33-50733.
Promissory Note.
(4)(c)(6) Form of Assignment of Incorporated by reference
Leases and Rents made by to Exhibit 4.33 to
RIH, as Assignor, to U.S. registrant's Form S-4
Trust Company of Registration Statement in
California, N.A., as File No. 33-50733.
Assignee, regarding
Guaranty of RIHF Junior
Mortgage Notes.
- 55 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(c)(7) Form of Assignment of Incorporated by reference
Operating Assets made by to Exhibit 4.35 to
RIH, as Assignor, to U.S. registrant's Form S-4
Trust Company of Registration Statement in
California, N.A., as File No. 33-50733.
Assignee, regarding the
Guaranty of the RIHF
Junior Mortgage Notes.
(4)(c)(8) Form of Assignment of Incorporated by reference
Operating Assets made by to Exhibit 4.27 to
RIH, as Assignor, to registrant's Form S-4
RIHF, as Assignee, Registration Statement in
regarding RIH Junior File No. 33-50733.
Promissory Note.
(4)(c)(9) Form of Amended and Incorporated by reference
Restated $35,000,000 RIH to Exhibit A to Exhibit
Junior Promissory Note. (4)(c)(1) hereto.
(10)(a)(1) Resorts Retirement Incorporated by reference
Savings Plan. to Exhibit (10)(c)(2) to
GGE's Form 10-K Annual
Report for the fiscal
year ended December 31,
1991, in File No. 1-4748.
(10)(a)(2) Resorts International, Incorporated by reference
Inc. Senior Management to Exhibit 8.5 to Exhibit
Stock Option Plan. 35 to GGE's Form 8
Amendment No. 1 to its
Form 8-K Current Report
dated August 30, 1990, in
File No. 1-4748.
- 56 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(10)(a)(3) Resorts International, Incorporated by reference
Inc. 1994 Stock Option to Exhibit (4)(b) to
Plan (as amended on June GGE s Form
27, 1995). 10-Q Quarterly Report for
the quarter ended June
30, 1995, in File No. 1-
4748.
10)(b)(1) License and Services Incorporated by reference
Agreement, dated as of to Exhibit 10.34(a) to
September 17, 1992, among registrant's Form S-4
Griffin Group, GGE and Registration Statement in
RIH. File No. 33-50733.
(10)(b)(2) Form of Amendment to Incorporated by reference
License and Services to Exhibit 10.34(b) to
Agreement, dated as of registrant's Form S-4
September 17, 1992, among Registration Statement in
Griffin Group, GGE and File No. 33-50733.
RIH.
(10)(c) Form of Intercreditor Incorporated by reference
Agreement by and among to Exhibit 10.64 to
RIHF, RIH, GGE, GGRI, registrant's Form S-4
State Street Bank and Registration Statement in
Trust Company of File No. 33-50733.
Connecticut, National
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
Agreement dated May 3, to Exhibit 10.65 to Form
1994, among RIHF, GGE and S-1 Registration
RIH, and certain funds Statement in File No. 33-
advised or managed by 53371.
Fidelity Management &
Research Company with
respect to issuance of
Senior Facility Notes.
- 57 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(10)(d)(2) Revised term sheet for Incorporated by reference
11.0% Senior Secured Loan to Exhibit 10.54 to
due 2002 with RIHF as registrant's Form S-4
issuer. Registration Statement in
File No. 33-50733.
(10)(d)(3) Letter agreement dated Incorporated by reference
February 27, 1995 to Exhibit (10)(n)(3) to
amending Exhibit GGE's Form 10-K Annual
(10)(d)(1) hereto. Report for the fiscal
year ended December 31,
1994, in File No. 1-4748.
(10)(e) Form of Registration Incorporated by reference
Rights Agreement dated as to Exhibit 10.66 to Form
of April 29, 1994, among S-1 Registration
GGE, RIHF, RIH, Fidelity Statement in File No. 33-
Management & Research 53371.
Company and The TCW
Group, Inc.
(10)(f) Form of Nominee Agreement Incorporated by reference
between RIHF and RIH. to Exhibit 10.57 to Form
S-1 Registration
Statement in File No. 33-
53371.
(27) Financial data schedule. Page 59.
- 58 -<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 YEAR ENDED DECEMBER 31, 1995, 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-31-1995
<PERIOD-END> DEC-31-1995
<CASH> $38,777<F1>
<SECURITIES> 0
<RECEIVABLES> $8,495
<ALLOWANCES> $3,570
<INVENTORY> $2,447
<CURRENT-ASSETS> $54,235
<PP&E> $219,414
<DEPRECIATION> $62,074
<TOTAL-ASSETS> $224,397
<CURRENT-LIABILITIES> $32,091
<BONDS> $127,680<F2>
<COMMON> $1,000
0
0
<OTHER-SE> $44,676
<TOTAL-LIABILITY-AND-EQUITY> $224,397
<SALES> 0
<TOTAL-REVENUES> $293,226
<CGS> 0
<TOTAL-COSTS> $208,179<F3>
<OTHER-EXPENSES> $13,415<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $18,192
<INCOME-PRETAX> $10,540
<INCOME-TAX> 0
<INCOME-CONTINUING> $10,540
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $10,540
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $22,334 AND
RESTRICTED CASH EQUIVALENTS OF $750.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F3>EXCLUDES DEPRECIATION EXPENSE.
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
