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, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 33-50733-02
RESORTS INTERNATIONAL HOTEL, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 21-0423320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1133 Boardwalk, Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
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 60 through 68.
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
As of February 28, 1997, 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
I(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
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 Sun
International North America, Inc. ("SINA"). SINA was known as Resorts
International, Inc. until June 30, 1995, and as Griffin Gaming &
Entertainment, Inc. from June 30, 1995 until February 6, 1997. "SINA"
is used herein to refer to that corporation for all periods. On
December 16, 1996, SINA became a wholly owned subsidiary of Sun
International Hotels Limited ("SIHL"), a corporation organized and
existing under the laws of the Commonwealth of The Bahamas, through a
merger transaction (the "Merger") approved by shareholders of SINA.
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.
Merger
The Merger is more fully described in SINA's proxy statement
dated November 1, 1996.
In connection with the Merger, SIHL filed an application for a
plenary casino license (the "Plenary License") with the Casino Control
Commission. On October 30, 1996, SIHL received an interim casino
authorization ("ICA") from the Casino Control Commission and the
Casino Control Commission approved the terms of an ICA trust document
and the selection of an ICA trustee. Pending final determination by
the Casino Control Commission with respect to SIHL's qualification for
a Plenary License, all shares of common stock of SINA (the "SINA
Common Stock") are held in a "stand by" trust (the "ICA Trust"). If
SIHL receives a Plenary License, the ICA Trust will be terminated and
the shares of SINA Common Stock will revert to SIHL. If the Casino
Control Commission determines that there is reasonable cause to
believe that SIHL should
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not be granted a Plenary License, the ICA Trust would be activated and
the ICA trustee would take control of SINA pending a final
determination by the Casino Control Commission with respect to SIHL's
application for a Plenary License. In the event SIHL's application
for a Plenary License were denied, the ICA trustee would be obligated
to dispose of the SINA Common Stock and SIHL would be entitled to
receive the lesser of (i) the fair market value or (ii) the price paid
by SIHL for the securities.
P u r suant to an accounting practice known as "push-down"
accounting, as of December 31, 1996, RIH adjusted its consolidated net
assets to reflect its portion of the cost of SIHL's investment in
SINA. Accordingly, RIH's consolidated assets and liabilities were
adjusted to their estimated fair values and its retained earnings were
eliminated. See Note 1 of Notes to Consolidated Financial Statements
for further discussion of this accounting treatment.
1994 Restructuring
In April 1994 the joint plan of reorganization (the "Plan")
proposed by SINA, GGRI, RIH and certain other of SINA's subsidiaries
was confirmed by the Bankruptcy Court for the District of Delaware and
on May 3, 1994 (the "Restructuring Date") the Plan became effective.
Pursuant to the Plan, certain of SINA'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
SINA, and are guaranteed by RIH. The Mortgage Notes are secured by a
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 promissory note made by RIH (the "RIH Junior
Promissory Note" and, together with the RIH Promissory Note, the "RIH
Notes"), the terms of which mirror the terms of the Junior Mortgage
Notes. Until recently (see "1997 Refinancing" below), the RIH Notes
and RIH's guarantees of the Mortgage Notes and the Junior Mortgage
Notes were secured by liens on RIH's fee and leasehold interests in
the Resorts Casino Hotel, the contiguous parking garage and property
and related personal property.
For a discussion of other effects of the Plan on RIH see Note 3
of Notes to Consolidated Financial Statements.
1997 Refinancing
In February 1997 RIHF mailed to each holder of Mortgage Notes and
Junior Mortgage Notes an Offer to Purchase and Consent Solicitation
Statement offering to purchase for cash (the "Offer") the outstanding
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Mortgage Notes and Junior Mortgage Notes and soliciting consents (the
"Solicitation") for amending the indentures pursuant to which these
securities were issued (the "Indentures") to, among other things,
release the collateral described above. Holders who validly tendered
their securities and consents by February 26, 1997 (the "Consent
Date") were entitled to receive the purchase price of 106.733% for the
Mortgage Notes and 107.447% for the Junior Mortgage Notes, accrued
interest through March 12, 1997, and an additional 2.5% consent
payment (the "Consent Payment"). Holders who tendered their
securities and consents subsequent to the Consent Date but prior to
the Offer's expiration on March 10, 1997, were entitled to the
purchase price and accrued interest, but not the Consent Payment.
$119,645,000 principal amount of Mortgage Notes and $21,001,000
principal amount of Junior Mortgage Notes were tendered. The purchase
price and Consent Payments for purchasing these tendered securities,
e x c luding accrued interest, totaled $153,712,000. $5,355,000
principal amount of Mortgage Notes and $1,100,000 principal amount of
Junior Mortgage Notes were not validly tendered and, therefore, not
purchased pursuant to the Offer. These securities remain outstanding
as unsecured obligations of RIHF and operate under the Indentures, as
amended.
In connection with the Offer and Solicitation, SIHL and SINA (the
"Issuers") issued $200,000,000 principal amount of 9% Senior
Subordinated Notes due 2007 (the "New Notes") in a private placement
which, after costs, resulted in net proceeds of approximately
194,000,000. These proceeds were loaned to RIH in exchange for a
$200,000,000 promissory note (the "New RIH Note") with terms that
mirror the terms of the New Notes, and RIH's guarantee of the New
Notes. RIH transferred to RIHF (i) the portion of the proceeds needed
to purchase the Mortgage Notes and Junior Mortgage Notes tendered to
RIHF pursuant to the Offer and (ii) $12,899,000 Junior Mortgage Notes
owned by RIH (see Note 8 of Notes to Consolidated Financial
Statements). In exchange for this, the RIH Notes will be canceled and
RIH will issue new promissory notes to RIHF in the amounts of, and
with terms that mirror, the remaining Mortgage Notes and Junior
Mortgage Notes. The remainder of the proceeds will be used for
general corporate purposes.
(b) Financial Information about Industry Segments
RIH operates in one business segment. See "ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA."
(c) Narrative Description of Business
Gaming Facilities
The Resorts Casino Hotel in Atlantic City, New Jersey, has a
70,000 square foot casino and a simulcast parimutuel betting and poker
area of approximately 8,000 square feet. At December 31, 1996, these
gaming areas contained 42 blackjack tables, 18 poker tables, 11
roulette
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tables, 10 dice tables, six Caribbean stud poker tables, four baccarat
tables, two let it ride poker tables, two three card poker tables, two
pai gow poker tables, two big six wheels, one sic bo table, one pai
gow table, 2,350 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 1996, RIH had total gaming revenues of $257,081,000. This
compares to total gaming revenues of $267,757,000 for 1995 and
$250,482,000 for 1994. In the last several years, approximately
twelve 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. With the
installation of more innovative slot machines and more aggressive
marketing, RIH's slot revenues have become a larger proportionate
share of total gaming revenues increasing from 51% in 1986 to 70% in
1996.
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 feet of Boardwalk frontage overlooking the Atlantic Ocean. The
Resorts Casino Hotel consists of two hotel towers, the 15-story East
Tower and the nine-story North Tower. In addition to the casino
facilities described above, the casino/hotel complex includes
approximately 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, a 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
(and has an option to purchase that lot) which provides valet parking
for approximately 200 cars. In June 1995 SINA acquired approximately
4.4 acres adjoining the Resorts Casino Hotel (the "Chalfonte Site")
which acreage currently provides additional uncovered self parking for
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approximately 140 cars and valet parking for approximately 430 cars.
This acreage was previously leased by RIH.
Consistent with industry practice, RIH reserves a portion of its
hotel rooms and suites as complimentary accommodations for high-level
casino wagerers. For 1996, 1995 and 1994 the average occupancy rates,
including complimentary rooms, which were primarily provided to casino
patrons, were 95%, 94% and 91%, respectively. The average occupancy
rate and weighted average daily room rental, excluding complimentary
rooms, were 52% and $54, respectively, for 1996. This compares with
51% and $59, respectively, for 1995, and 47% and $64, respectively,
for 1994.
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 eight years capital additions at Resorts Casino Hotel
exceeded $130,000,000 (excluding land acquisitions discussed below
under "Expansion Plans"). In 1996 RIH's capital expenditures at
Resorts Casino Hotel included computer system upgrades, the purchase
of 147 slot machines (replacements for older models) and other capital
maintenance projects. 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
public areas, including restaurants, as well as improves its
infrastructure such as elevators and air conditioning.
During 1997, RIH expects to begin enhancing the Resorts Casino
Hotel through the construction of additional parking, the renovation
of approximately 500 of the hotel rooms and various improvements to
the public areas. The planning for such renovation has just recently
begun, and the costs and schedule therefor have not yet been
determined. Thereafter, RIH intends to develop a significant addition
to the existing property, which is discussed below under "Expansion
Plans."
Expansion Plans
In June 1995, with SINA's purchase of the Chalfonte Site which
includes approximately 265 feet of Boardwalk frontage, SINA announced
its intention to expand the Resorts Casino Hotel by constructing hotel
rooms, casino space and a parking garage on this acreage. Since that
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time RIH entered into a five year lease with an option to purchase
approximately three acres to the north of the Resorts Casino Hotel,
purchased an adjacent parcel and was successful in vacating the
portion of North Carolina Avenue that lies between the Chalfonte Site
and the Resorts Casino Hotel. These parcels, together with the
Chalfonte Site, total more than nine acres, all of which are expected
to be utilized in RIH's expansion plans. With SINA's execution of the
agreement for the Merger, design activities on the project became very
limited, although RIH continued with the process of obtaining certain
permits.
Subsequent to closing the Merger, officials of SIHL announced
plans to transform Resorts Casino Hotel into a highly themed resort.
At present, the project is in the conceptual design stage and detailed
planning is expected to begin in 1998. The expansion is expected to
include additional hotel rooms and a highly themed casino and
entertainment complex. The new development would be integrated with
the existing Resorts Casino Hotel and, when completed during 2000,
management believes that it should be one of the first Las Vegas style
gaming entertainment complexes in Atlantic City. The size and scope
of the expansion depend, in part, upon the amount of additional land
RIH and SINA are able to acquire. In addition, RIH's ability to carry
out the expansion depends on a number of other factors, including
receipt of adequate financing and certain state and local approvals.
Marketing
In prior years RIH utilized the celebrity status of Merv Griffin
to market Resorts Casino Hotel. It is anticipated that in the future
such utilization will be substantially reduced as RIH s marketing plan
will be integrated into the SIHL corporate marketing plan whereby
marketing efforts among Resorts Casino Hotel and certain of SIHL's
other properties will be coordinated.
RIH's marketing strategy will continue to focus on enhancing 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 target 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
and the 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, from January 1996
until their conclusion in October 1996, they were further expanded to
include roulette players. RIH also has a
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VIP slot and table player lounge which serves complimentary food and
beverages.
As in prior years, RIH continues to rely heavily on its bus
program to supply a critical mass of low to mid-level slot players.
During the latter part of 1995 and throughout 1996, the subsidized
cost for attracting bus patrons increased substantially in the
Atlantic City casino market. See "Revenues" and "Earnings from
Operations" in "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - RESULTS OF OPERATIONS"
for a discussion of RIH's increased promotional costs. In addition to
the above, RIH continues to emphasize entertainment as an integral
part of its marketing program. The musical variety show "Funderful,"
created and produced by Merv Griffin, opened in September 1996 to
excellent reviews. This show will terminate in March 1997 and will be
replaced by mid-level headliners such as Melissa Manchester, Anthony
Newley and Freddie Roman. The entertainment schedule is supplemented
on a monthly basis with headliners who in 1996 included, among others,
Regis and Kathie Lee, Rosie O Donnell, Tony Danza, Wayne Newton, Tom
Jones and the Beach Boys.
New Convention Center and Casino/Hotel Expansions
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 its official opening is scheduled for May 1997.
The convention center is part of a broader plan that includes
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 86-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. In April 1996 construction
of the 500 room convention hotel commenced; this hotel is expected to
open in November 1997. To further spur construction of new hotel
rooms and renovation of substandard hotel rooms into deluxe
accommodations, a total of $175,000,000 has been set aside by the
Casino Reinvestment
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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
approximately $140,000,000. More than 1,300 new hotel rooms have
already opened and approximately 2,200 more may be added, in
connection with this financing. Applications are currently being
evaluated by the CRDA for use of the remaining monies. Also, Mirage
Resorts, Inc. ("Mirage"), 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 proposes to build a
$750,000,000, 2,000 room casino/hotel, Boyd Gaming Corp. proposes to
build a $500,000,000, 1,000 room casino/hotel and Circus Circus
Enterprises, Inc. proposes to build a $600,000,000, 2,000 room
casino/hotel on that tract. Management of RIH understands that the
State of New Jersey and Mirage have reached an agreement as to
financing the costs of constructing a tunnel and connector road link
between the Atlantic City Expressway and the Marina area, which
infrastructure improvements were considered requisite to the expansion
plans announced for the Marina area. The tunnel construction is
scheduled to start in mid-1998 and be completed by 2000. Mirage has
indicated that its proposed resort will open shortly after the roadway
is complete. MGM Grand Inc. has also announced plans for the
construction of a new casino/hotel in the South Inlet section of
Atlantic City.
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, to what extent or how these developments may affect RIH's
operations.
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.
A further expansion, which doubled the size of the terminal and added
departure gates, an improved baggage handling system and sheltered
walkways connecting the terminal and planes was completed in 1996.
However, scheduled service to that airport from major cities by
national air carriers remains extremely limited.
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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 Maryland 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.
In conjunction with a street beautification and housing project
that was recently given preliminary approval by the CRDA, that agency
is in the process of engaging consultants to explore the feasibility
of the beautification and widening of North Carolina Avenue which
would allow for improved traffic flow in a more appealing corridor
from Absecon Boulevard (Route 30) to the main entrance of Resorts
Casino Hotel. Also, as noted in "New Convention Center and
Casino/Hotel Expansions" above, construction of a tunnel and connector
road link between the Atlantic City Expressway and the Marina area is
proposed to start in mid-1998.
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 1,000,000 square feet of gaming area,
including simulcast betting and poker rooms, and 9,600 hotel rooms.
In 1996 two competing properties in Atlantic City opened significant
expansions which, combined, added approximately 1,100 hotel rooms and
approximately 85,000 square feet of gaming space. Significant
additional expansion is expected in the near future due to the
previously discussed expansion projects to be financed by the CRDA, as
well as the construction of new casino/hotels announced for the Marina
area and the South Inlet section.
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
approximately 2,600 hotel rooms and approximately 314,000 square feet
of gaming space in close proximity to each other. In 1996, the three
casino/hotels combined generated approximately 29% of the gross gaming
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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, almost every
state in the United States has some form of legalized gaming. Also,
The Bahamas and other destination resorts in the Caribbean and Canada
have increased the competition for gaming revenue. Directly competing
with Atlantic City for the day-trip patron are two gaming properties
on Indian reservations in Connecticut. One is a casino/hotel operated
by the Pequot Tribe which currently has more than 4,500 slot machines
and whose slot revenue for the year 1996 was almost $630,000,000,
which is more than twice the slot revenue of the largest casino/hotel
in Atlantic City. The other, the Mohegan Sun Casino which opened in
October 1996 and is co-managed by a subsidiary of SIHL, has more than
2,600 slot machines. In 1993 the Oneida Indians opened a casino near
Syracuse, New York, which they are now seeking to expand. Other
Indian tribes in the states of New York and Rhode Island are seeking
federal recognition in order to establish gaming operations which
would further increase the competition for day-trip patrons. In
addition, in late 1995 and during 1996, three racetracks in the State
of Delaware began operating slot machines.
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 1996, 19% in 1995 and 21% in
1994. The credit play percentage of table game volume for the
Atlantic City industry excluding RIH was 24% in 1996, 22% in 1995 and
23% in 1994. RIH's gaming receivables, net of allowance for
uncollectible amounts, were $3,823,000, $3,813,000 and $4,216,000 as
of December 31, 1996, 1995 and 1994, 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,
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although it is not clear whether other states will honor this policy
or enforce judgments rendered by the courts of New Jersey with respect
to such debts.
Security Controls
Gaming at the Resorts Casino Hotel is conducted by 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 1996
and RIH believes that its employee relations are satisfactory.
Approximately 1,600 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,
- 13 -<PAGE>
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 relating to the rules of games, type of games, credit
play, size of hotel and casino operations, hours of operation, persons
who may be employed, companies which may do business with casinos, the
maintenance of accounting and cash control procedures, security and
other aspects of the business.
There were significant regulatory changes in recent years. In
addition to the approval of new games, 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 cash flow 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. The Casino Control Commission may renew a casino
license for a period of 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.
- 14 -<PAGE>
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
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 SINA provides
that all securities of SINA 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, Junior Mortgage Notes and New Notes are all 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
- 15 -<PAGE>
a license is suspended for a period in excess of 120 days. If a
conservator is appointed, the suspended or former licensee is entitled
to a "fair rate of return out of net earnings, if any, during the
period of the conservatorship, taking into consideration that which
amounts to a fair rate of return in the casino or hotel industry."
Under certain circumstances, upon the revocation of a license or
failure to renew, the conservator, after approval by the Casino
Control Commission and consultation with the former licensee, may
sell, assign, convey or otherwise dispose of all of the property of
the casino/hotel. In such cases, the former licensee is entitled to a
summary review of such proposed sale by the Casino Control Commission
and creditors of the former licensee and other parties in interest are
entitled to prior written notice of sale.
License Fees, Taxes and Investment Obligations
The Casino Control Act provides for casino license renewal fees,
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 an 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,
taxes and contributions assessed upon RIH by the Casino Control
Commission.
- 16 -<PAGE>
For the Year
1996 1995 1994
Gaming tax $20,661,000 $21,402,000 $19,996,000
License, investigation,
inspection and other fees 3,672,000 3,917,000 4,218,000
Contribution to AC Fund 570,000 224,000
$24,903,000 $25,543,000 $24,214,000
The Casino Control Act, as originally adopted, required a
licensee to make investments equal to 2% of the licensee's gross
revenue (the "investment obligation") for each calendar year,
commencing in 1979, in which such gross revenue exceeded its
"cumulative investments" (as defined in the Casino Control Act). A
licensee had five years from the end of each calendar year to satisfy
this investment obligation or become liable for an "alternative tax"
in the same amount. In 1984 the New Jersey legislature amended the
Casino Control Act so that these provisions now apply only to
investment obligations for the years 1979 through 1983. As discussed
in Note 13 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.
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
1996, 1995 and 1994 amounted to $3,229,000, $3,348,000 and $3,124,000,
respectively, and, with the exception of minor credits received in
1995 and 1996 for making donations, have been satisfied by deposits
made with the CRDA. At December 31, 1996, RIH held $6,859,000 face
amount of bonds issued by the CRDA and had $19,701,000 on deposit with
the CRDA. The CRDA bonds issued through 1996 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.
- 17 -<PAGE>
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 leased the approximately 4.4 acre Chalfonte Site, which it
uses for parking, from SINA from the date SINA acquired the property
in June 1995 through the end of 1996. Prior thereto, RIH leased this
property from an unaffiliated party.
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 I of Form 10-K.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
There is no trading market for RIH's common stock, all of which
is owned by GGRI.
No dividends were paid on RIH stock during the last two fiscal
years.
The indentures pursuant to which the New Notes were issued
contain certain restrictions as to the payment of dividends by RIH.
- 18 -<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) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Operating revenues $281,816 $293,226 $276,733 $ 271,479 $ 262,740
Earnings from operations $ 8,815 $ 26,346 $ 20,791 $ 12,068 $ 21,049
Recapitalization costs (Note B) (975) (2,727) (874)
Other income (deductions), net (Note C) (15,936) (15,806) (7,992) 7,422 7,181
Earnings (loss) before income taxes
and extraordinary item (7,121) 10,540 11,824 16,763 27,356
Income tax expense (Note D) (400) (10,942)
Earnings (loss) before extraordinary
item (7,121) 10,540 11,824 16,363 16,414
Extraordinary item (Note E) 4,008
Net earnings (loss) $ (7,121) $ 10,540 $ 15,832 $ 16,363 $ 16,414
At December 31,
Balance Sheet Information (Note A) 1996 1995 1994 1993 1992
Total assets $351,402 $224,397 $212,734 $ 264,164 $ 250,636
Current maturities of notes payable to
affiliate and other long-term debt
(Note F) $ 636 $ 589 $ 325,000 $ 643
Notes payable to affiliate and other
long-term debt, excluding current
maturities (Note F) $156,210 $127,680 $125,309 $ 325,904
Shareholder's equity (deficit) $118,083 $ 45,676 $ 35,136 $(147,995) $(164,358)
/TABLE
<PAGE>
Notes to Selected Financial Data
Note A: See Note 1 of Notes to Consolidated Financial Statements for
a discussion of the Merger in 1996 and the related change in basis of
accounting.
See Note 3 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 SINA's consolidated recapitalization costs.
Note C: This item includes interest income, interest expense and
amortization of debt discounts.
Note D: See Notes 2 and 11 of Notes to Consolidated Financial
Statements for discussion of income taxes for 1996, 1995 and 1994.
In August 1993 tax law changes were enacted which resulted in
an increase in RIH's federal income tax rate. This increase resulted
in a $400,000 increase in RIH's deferred income tax liability and a
deferred income tax provision of the same amount. In 1992 RIH had an
agreement with SINA 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 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 premiums
(discounts).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Liquidity
At December 31, 1996, RIH's current assets included unrestricted
cash and equivalents of $20,892,000. 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.
Although at December 31, 1996, RIH's current liabilities exceeded its
current assets by $8,993,000, with the financial support of SIHL,
management of RIH does not foresee any difficulty in meeting its
current obligations as they become due.
- 20 -<PAGE>
As described in Note 3 of Notes to Consolidated Financial
Statements, in 1994 SINA restructured certain of its previously
outstanding public debt pursuant to a prepackaged bankruptcy plan.
Pursuant to the Plan and since the Restructuring Date, through its
affiliated notes payable to RIHF, RIH has been the principal source of
funds for servicing the Mortgage Notes and the Junior Mortgage Notes.
In March 1997 SIHL and SINA loaned the approximately $194,000,000
of net proceeds, after costs, of the New Notes to RIH in exchange for
the $200,000,000 New RIH Note and RIH's guarantee of the New Notes.
RIH then transferred to RIHF (i) the portion of the proceeds
($153,712,000) needed to purchase the Mortgage Notes and the Junior
Mortgage Notes tendered to RIHF pursuant to the Offer and (ii)
$12,899,000 Junior Mortgage Notes owned by RIH. In exchange for this,
the RIH Notes will be canceled and RIH will issue new promissory notes
to RIHF in the amounts of $5,355,000 and $1,100,000 and with terms
that mirror the terms of the remaining Mortgage Notes and Junior
Mortgage Notes, respectively. The remaining proceeds will be used for
general corporate purposes. See Note 14 of Notes to Consolidated
Financial Statements for further discussion of these transactions.
Capital Expenditures and Other Uses of Funds
In recent years, capital expenditures have consistently been a
significant use of financial resources by RIH. Capital expenditures
in 1994 for 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 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. Expenditures for improvements at Resorts Casino Hotel
during 1996 totaled $8,252,000. These included computer system
upgrades, the purchase of 147 slot machines (replacements for older
models), carpeting and other maintenance projects. During 1997, RIH
expects to begin enhancing the Resorts Casino Hotel through the
construction of additional parking, the renovation of approximately
500 of the hotel rooms and various improvements to public areas. The
planning for such renovation has just recently begun, and the costs
and schedule therefor have not yet been determined.
- 21 -<PAGE>
In 1996 RIH entered into a five year lease with an option to
purchase approximately three acres to the north of Resorts Casino
Hotel. Also in 1996 RIH purchased an adjacent property and demolished
the improvements on it and the newly leased property at an aggregate
cost of approximately $4,900,000. In 1996 RIH was also successful in
vacating the portion of North Carolina Avenue that lies between the
Chalfonte Site and the Resorts Casino Hotel. In all, these parcels
total more than nine acres, which are expected to be utilized in RIH's
expansion plans. With the execution of the agreement for the Merger,
design activities on the project became very limited, although RIH
continued with the process of obtaining certain permits.
Subsequent to closing the Merger, officials of SIHL announced
plans to transform Resorts Casino Hotel into a highly themed resort.
At present, the project is in the conceptual design stage and detailed
planning is expected to begin in 1998. The expansion is expected to
include additional hotel rooms and a highly themed casino and
entertainment complex. The size and scope of the expansion depend, in
part, upon the amount of additional land RIH and SINA are able to
acquire. In addition, RIH's ability to carry out the expansion
depends on a number of other factors, including receipt of adequate
financing and certain state and local approvals.
Pursuant to the Plan, in May 1994, RIH distributed all of its
cash and cash equivalents in excess of $15,000,000 as of the
Restructuring Date, which amounted to $12,262,000, to GGRI. GGRI, in
turn, distributed such cash to SINA for its ultimate distribution to
certain of SINA's noteholders pursuant to the Plan.
In November 1994 RIH purchased $12,899,000 principal amount of
Junior Mortgage Notes 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.
Capital Resources and Other Sources of Funds
Although cash flow from operations suffered in 1996, operations
have typically 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.
RESULTS OF OPERATION
RIH operates in one business segment. Following is a discussion
of the results of operations for 1996 compared to 1995 and 1995
compared to 1994. The discussion should be read in conjunction with
the consolidated financial statements included herein.
- 22 -<PAGE>
Revenues
Casino revenues at RIH decreased by $10,676,000 in 1996 and
increased by $17,275,000 in 1995. In 1996 RIH's slot win decreased by
$7,050,000 due primarily to a decrease in hold percentage (ratio of
casino win to total amount wagered for slots or total amount of chips
purchased for table games), though the total amount wagered also
decreased. In 1996 RIH's table game win decreased by $3,183,000 as
the effects of a decrease in amounts wagered were partially offset by
the effects of an increased hold percentage.
Two factors negatively affected RIH's performance in 1996 -
heightened competition for patrons in the Atlantic City market and
severe weather conditions during the first quarter of 1996.
A s competition for patrons has intensified, promotions -
complimentary services (rooms, food and beverage provided to patrons
without charge), cash giveaways and events - have increased.
Commencing in late 1995, and escalating dramatically in 1996, certain
competitors increased complimentaries and cash giveaways. Although
RIH did increase its promotions somewhat in early 1996 and more
significantly during the second and third quarters, it has elected not
to keep pace with the industry's increased promotions due to the
belief that the resulting increase in gaming win would not be
sufficient to justify the incremental costs incurred. (In this
regard, see "Earnings from Operations" below for a discussion of RIH's
increased costs of promotions.) Consequently, RIH's market share of
revenues has suffered. Adding to the competition for patrons,
expansions at two competing Atlantic City properties opened in May
1996 which, combined, added approximately 1,100 hotel rooms and
approximately 85,000 square feet of gaming space. Several other
companies have announced plans to expand existing or construct new
casino/hotels in Atlantic City. See "New Convention Center and
Casino/Hotel Expansions" under "ITEM 1. BUSINESS - (c) Narrative
Description of Business" for related discussion. Management of RIH
can give no assurance that the increased cost of obtaining gaming
revenues will not continue in future periods.
As noted above, the severe weather experienced during the first
quarter of 1996 adversely affected operations in that period as the
principal means of transportation to Atlantic City is by automobile or
bus. The impact of inclement weather is more severe on the Resorts
Casino Hotel than on competing properties which are more accessible
from main thoroughfares and which currently have more covered parking
and covered terminals for bus patrons.
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. The increased
amounts wagered by slot patrons reflect the 10,000 square-foot casino
expansion during 1995, which enabled RIH to increase its number of
slot machines
- 23 -<PAGE>
by more than 15%, as well as increased emphasis on bus and junket air
programs.
Earnings from Operations
Casino, hotel and related operating results decreased by
$17,531,000 for 1996 due to a combination of decreased revenues
discussed above and a net increase in operating expenses. The most
significant variances in operating expenses were increases in casino
promotional costs ($7,600,000) and payroll and related expenses
($1,900,000) and decreases in the accrual for performance and
incentive bonuses ($1,700,000), depreciation expense ($1,100,000) and
casino win taxes ($700,000). Casino promotional costs increased
primarily due to cash giveaways to bus patrons as the cash giveaway
per person increased significantly, though RIH's number of bus
passengers was down slightly. The increase in payroll and related
costs was due to increased costs of union and other benefits and, to a
lesser extent, increased salary and wage rates; the average number of
employees was down slightly.
Casino, 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 an expanded junket air program as well as increases in the
amount of cash giveaway to bus patrons. Casino win tax increased
relative to the increase in casino revenues. Payroll and related
costs increased due to increased salary and wage rates, as the average
number of employees was down slightly for the year.
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)
RIH's interest expense before the Restructuring Date was limited
to minor amounts incurred on capitalized lease obligations. Since the
Restructuring 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 the $200,000,000 New Notes. See
Note 8 of Notes to Consolidated Financial Statements for the terms of
the Mortgage Notes and Junior Mortgage Notes and Note 14 for the terms
of the New RIH Note.
- 24 -<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 26
Consolidated Balance Sheets at December 31,
1996 and 1995 27
Consolidated Statements of Operations for the
years ended December 31, 1996, 1995 and 1994 29
Consolidated Statements of Cash Flows for the
years ended December 31, 1996, 1995 and 1994 30
Consolidated Statements of Changes in
Shareholder's Equity for the years ended
December 31, 1996, 1995 and 1994 31
Notes to Consolidated Financial Statements 32
Financial Statement Schedule:
Schedule II: Valuation Accounts for the
years ended December 31,
1996, 1995 and 1994 51
Supplementary Data
Selected Quarterly Financial Data (Unaudited) 52
- 25 -<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholder
Resorts International Hotel, Inc.
We have audited the accompanying consolidated balance sheet of
Resorts International Hotel, Inc. as of December 31, 1996 (post-
acquisition basis). We have also audited the accompanying
consolidated balance sheet as of December 31, 1995, 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, 1996 (pre-acquisition basis). Resorts International
Hotel, Inc. is an indirect wholly owned subsidiary of Sun
International Hotels Limited. 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, 1996 (post-acquisition basis), and at December 31, 1995, and the
consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1996 (pre-acquisition
basis), 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 14, 1997,
except for Note 14, as to which the date is
March 17, 1997
- 26 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
December 31,
1996
Assets (Note 1) 1995
Current assets:
Cash (including cash equivalents
of $3,553 and $22,334) $ 20,892 $ 38,027
Restricted cash equivalents 750 750
Receivables, net 5,936 6,933
Inventories 1,194 2,447
Prepaid expenses 1,844 6,078
Total current assets 30,616 54,235
Property and equipment:
Land and land rights 72,254 53,060
Land improvements 932 158
Hotels and other buildings 122,314 115,960
Furniture, machinery and equipment 13,726 50,036
Construction in progress 200
209,226 219,414
Less accumulated depreciation (62,074)
Net property and equipment 209,226 157,340
Deferred charges and other assets 12,637 12,822
Goodwill 98,923
$351,402 $224,397
See Notes to Consolidated Financial Statements.
- 27 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousand of Dollars, except par value)
December 31,
Liabilities and Shareholder's 1996
Equity (Note 1) 1995
Current liabilities:
Current maturities of long-term debt $ 636 $ 589
Accounts payable and accrued
liabilities 32,307 26,044
Interest payable to affiliate 4,244 4,244
Due to SINA 2,422 1,214
Total current liabilities 39,609 32,091
Notes payable to affiliate, net
of unamortized premiums (discounts) 155,927 126,761
Other long-term debt 283 919
Deferred income taxes 37,500 18,950
Commitments and contingencies
(Note 13)
Shareholder's equity:
Common stock - $1 par value
- 1,000,000 shares outstanding 1,000 1,000
Capital in excess of par 117,083 21,366
Retained earnings 23,310
Total shareholder's equity 118,083 45,676
$351,402 $224,397
See Notes to Consolidated Financial Statements.
- 28 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
For the Year Ended December 31,
1996 1995 1994
Revenues:
Casino $257,081 $267,757 $250,482
Rooms 6,547 6,978 7,134
Food and beverage 13,044 12,704 14,609
Other casino/hotel revenues 5,144 5,787 4,508
281,816 293,226 276,733
Expenses:
Casino 163,785 156,091 143,748
Rooms 3,592 3,698 3,243
Food and beverage 14,985 14,235 15,823
Other casino/hotel operating
expenses 33,784 34,155 34,759
Selling, general and
administrative 35,147 35,635 36,101
SINA parent services fee 9,363 9,651 9,082
Depreciation 12,345 13,415 13,186
273,001 266,880 255,942
Earnings from operations 8,815 26,346 20,791
Other income (deductions):
Interest income 2,293 2,386 3,623
Interest expense (16,702) (16,740) (10,858)
Amortization of debt discounts (1,527) (1,452) (757)
Recapitalization costs (975)
Earnings (loss) before
extraordinary item (7,121) 10,540 11,824
Extraordinary item 4,008
Net earnings (loss) $ (7,121) $ 10,540 $ 15,832
See Notes to Consolidated Financial Statements.
- 29 -<PAGE>
<TABLE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
<CAPTION>
For the Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 280,445 $ 291,573 $ 274,467
Cash paid to suppliers and employees (266,634) (247,048) (242,154)
Cash flow from operations before interest and income taxes 13,811 44,525 32,313
Interest received 2,307 2,308 1,296
Interest paid (16,702) (16,609) (6,745)
Income taxes paid to SINA (450)
Net cash provided by (used in) operating activities (584) 29,774 26,864
Cash flows from investing activities:
Payments for property and equipment (13,126) (13,019) (7,744)
Purchase of $12,899,000 principal amount of Junior Mortgage
Notes (6,740)
CRDA deposits and bond purchases (3,070) (3,152) (3,044)
Proceeds from sale of property and equipment 116
Net cash used in investing activities (16,196) (16,171) (17,412)
Cash flows from financing activities:
Payments of Merger costs (974)
Proceeds from borrowing 1,815
Distribution to GGRI (12,262)
Advances from (repayments to) SINA 1,208 (3,197) 4,788
Recapitalization costs paid to SINA (975)
Repayments of non-affiliated debt (589) (320) (74)
Net cash used in financing activities (355) (1,702) (8,523)
Net increase (decrease) in cash and cash equivalents (17,135) 11,901 929
Cash and cash equivalents at beginning of period 38,777 26,876 25,947
Cash and cash equivalents at end of period $ 21,642 $ 38,777 $ 26,876
See Notes to Consolidated Financial Statements.
/TABLE
<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
over assets at
Common August 31, 1990 Retained
Stock reorganization) earnings
Balance at December 31, 1993 $ -0- $(198,829) $ 50,834
Distribution of RIH
Promissory Note and RIH
Junior Promissory Note
to SINA (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
Net loss for year 1996 (7,121)
Transactions relating to
Merger:
Eliminate pre-Merger
retained earnings 16,189 (16,189)
Fair value adjustments 79,528
Balance at December 31, 1996
(Note 1) $1,000 $ 117,083 $ -0-
See Notes to Consolidated Financial Statements.
- 31 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - MERGER AND BASIS OF ACCOUNTING
Resorts International Hotel, Inc. ("RIH") owns and operates
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 Sun International North America,
Inc. ("SINA"). SINA was known as Resorts International, Inc. until
June 30, 1995, and as Griffin Gaming & Entertainment, Inc. from June
30, 1995 until February 6, 1997. "SINA" is used herein to refer to
that corporation for all periods.
On December 16, 1996 (the "Effective Time"), SINA became a wholly
owned subsidiary of Sun International Hotels Limited ("SIHL"), a
corporation organized under the laws of the Commonwealth of The
Bahamas, through a merger transaction (the "Merger") approved by
shareholders of SINA.
The Merger was accounted for as a purchase and, according to an
accounting practice known as "push-down" accounting, RIH adjusted its
consolidated net assets to reflect its portion of the cost of SIHL s
investment in SINA. In doing so, RIH s consolidated assets and
liabilities were adjusted to their estimated fair values based on
independent appraisals, evaluations, estimations and other studies.
As such appraisals and other valuations are incomplete at this time,
the fair value adjustments reflected herein are management s
preliminary determination of such values based on information
currently available. Once all appraisals and valuations are complete,
it is possible that additional valuation adjustments may be required.
All of SINA's consolidated goodwill, which results from the excess of
SIHL's investment in SINA over the fair value of SINA's net assets,
was attributed to RIH, SINA's only subsidiary with significant
operations. The allocation of the excess of RIH s portion of SIHL s
investment in SINA over RIH s net book value was as follows:
- 32 -<PAGE>
(In Thousands of Dollars)
Decrease in current assets $(13,285)
Increase in property and equipment 51,140
Decrease in deferred charges and other
assets (6,160)
Increase in goodwill 98,923
Increase in current liabilities (4,901)
Increase in notes payable to affiliate (27,639)
Increase in deferred tax liability (18,550)
$ 79,528
Goodwill will be amortized on the straight-line basis over 40
years. The appraisals and other valuation methods used to establish
fair values of certain of RIH s property and equipment also provided
revised estimates of remaining depreciable lives of such assets which,
particularly for hotels and other buildings, were greater than those
previously used by RIH.
Because the impact of the basis adjustments on RIH s consolidated
statement of operations for the period between the Effective Time and
December 31, 1996 was immaterial, RIH recorded the basis adjustments
as of December 31, 1996. The impact on RIH s operations will be
reflected in RIH s consolidated statements of operations commencing
January 1, 1997.
Pro Forma Information (Unaudited)
The following unaudited pro forma information reflects the
results of RIH s operations as though the Merger had occurred at the
beginning of each year presented and includes (i) adjustments for
amortization of goodwill, (ii) changes in amortization of debt
discounts (premiums) and depreciation due to basis adjustments and
(iii) tax effects. The pro forma information is not necessarily
indicative of future results or what RIH s results of operations would
actually have been had the Merger occurred at the beginning of each
year.
(In Thousands of Dollars) 1996 1995
Operating revenues $281,816 $293,226
Net earnings (loss) $ (4,996) $ 6,120
- 33 -<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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
$30,267,000, $28,494,000 and $26,074,000 for the years 1996, 1995 and
1994, respectively. The rooms, food and beverage, and other
casino/hotel operations departments allocate a percentage of their
total operating expenses to the casino department for complimentary
services provided to casino patrons. These allocations do not
necessarily represent the incremental cost of providing such
complimentary services to casino patrons. Amounts allocated to the
casino department from the other operating departments were as
follows:
(In Thousands of Dollars) 1996 1995 1994
Rooms $ 5,190 $ 4,813 $ 4,016
Food and beverage 17,035 16,846 14,547
Other casino/hotel operations 6,586 6,403 7,404
Total allocated to casino $28,811 $28,062 $25,967
- 34 -<PAGE>
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
For the periods presented herein, property and equipment have
been depreciated over their estimated useful lives reported below
using the straight-line method for financial reporting purposes.
Land improvements 10 years
Hotels and other buildings 22 - 28 years
Furniture, machinery and equipment 4 - 5 years
In conjunction with the Merger, certain estimated useful lives
have been revised and will be used to depreciate property and
equipment for financial reporting purposes commencing in 1997.
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.
- 35 -<PAGE>
Income Taxes
RIH and SINA's other domestic subsidiaries file consolidated
federal income tax returns with SINA.
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 8 provide for a tax sharing
agreement between RIH and SINA which limits RIH's tax payments to SINA
to reimbursements of cash payments made by SINA for income or
alternative minimum taxes arising from the earnings or operations of
RIH.
NOTE 3 - 1994 RESTRUCTURING
In April 1994 the joint plan of reorganization (the "Plan")
proposed by SINA, GGRI, RIH and certain other of SINA's subsidiaries
was confirmed by the Bankruptcy Court for the District of Delaware and
on May 3, 1994 (the "Restructuring Date") the Plan became effective.
Pursuant to the Plan, certain of SINA'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 SINA, 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,
RIH's guarantees of the Mortgage Notes and the Junior Mortgage
Notes and related collateral are described further in Note 8.
- 36 -<PAGE>
See also Note 14 for discussion of certain financing transactions in
early 1997.
The Plan also prescribed the following transactions between RIH
and its affiliates:
- RIH issued the RIH Promissory Note and the RIH Junior Promissory
N o te in repayment of RIH's balance due to SINA on the
Restructuring Date with the remainder a distribution to SINA.
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.
- SINA contributed to GGRI the 100 shares of common stock of RIH
which SINA owned. This resulted in RIH's becoming a wholly owned
subsidiary of GGRI and an indirect subsidiary of SINA. 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 Restructuring Date to GGRI. GGRI
distributed such cash to SINA so that SINA, in turn, could
distribute cash to holders of its previously outstanding debt.
NOTE 4 - CASH EQUIVALENTS
RIH's cash equivalents at December 31, 1996 included reverse
repurchase agreements (federal government securities purchased under
agreements to resell those securities) under which RIH had not taken
delivery of the underlying securities and investments in a money
market fund which invests exclusively in U.S. Treasury obligations.
Restricted cash equivalents at December 31, 1996 represent a
certificate of deposit which is pledged as collateral for a letter of
credit.
- 37 -<PAGE>
NOTE 5 - RECEIVABLES
Components of receivables at December 31 were as follows:
(In Thousands of Dollars) 1996 1995
Gaming $ 7,449 $ 7,332
Less allowance for doubtful accounts (3,626) (3,519)
3,823 3,813
Non-gaming:
Hotel and related 802 1,163
Other 1,443 2,008
2,245 3,171
Less allowance for doubtful accounts (132) (51)
2,113 3,120
$ 5,936 $ 6,933
NOTE 6 - 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.
The CRDA bonds have interest rates ranging from 3.9% to 7% and
have repayment terms of between 20 and 50 years. 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 1996, 1995 and 1994
for discounts on obligations arising in those years were $1,505,000,
$1,567,000 and $1,461,000, respectively.
- 38 -<PAGE>
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, 1996, RIH had $6,859,000 face value of bonds
issued by the CRDA and had $19,701,000 on deposit with the CRDA.
These bonds and deposits, net of an estimated discount charged to
expense to reflect the below-market interest rate payable on the
bonds, are included in other assets in RIH's Consolidated Balance
Sheet.
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of accounts payable and accrued liabilities at
December 31 were as follows:
(In Thousands of Dollars) 1996 1995
Accrued payroll and related taxes
and benefits $ 8,907 $ 9,763
Accrued gaming taxes, fees and
related assessments 6,705 7,211
Accrued Merger and related costs 4,179
Trade payables 2,679 2,148
Customer deposits and unearned
revenues 1,685 2,081
Other accrued liabilities 8,152 4,841
$32,307 $26,044
NOTE 8 - NOTES PAYABLE TO AFFILIATE
As described in Note 3, RIHF issued the Mortgage Notes and the
Junior Mortgage Notes and RIH issued the RIH Promissory Note and the
RIH Junior Promissory Note (collectively, the "RIH Notes") in
connection with the Plan. RIH issued the RIH Notes to SINA. SINA
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
indenture pursuant to which the Mortgage Notes were issued permits the
liens securing the Mortgage Notes to be subordinated to a lien
securing a working capital facility of up to $20,000,000.
- 39 -<PAGE>
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 are subordinated to the liens securing the
Mortgage Notes. Also, the indenture pursuant to which the Junior
Mortgage Notes were issued permits the liens securing the Junior
Mortgage Notes to be subordinated to a lien securing a working capital
facility of up to $20,000,000.
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, 1996 no dividends 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 SINA not in excess of $1,000,000 in
the aggregate at any time outstanding and (y) loans to SINA from the
proceeds of a senior working capital facility of up to $20,000,000
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 a senior working capital facility of
up to $20,000,000, the 1992 License Agreement described in Note 9, the
parent services agreement with SINA which provides for the payment of
the three percent services fee described in Note 9, and a tax sharing
agreement with SINA which limits RIH's tax payments to SINA to
reimbursements of cash payments made by SINA 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 at a price of $6,740,000. The resulting gain of
$4,008,000 was reported as an extraordinary item.
See Note 14 for discussion of certain financing transactions in
early 1997.
The carrying value and fair value by component of notes payable
to affiliate at December 31 were as follows:
- 40 -<PAGE>
1996 1995
Carrying Fair Carrying Fair
(In Thousands of Dollars) Value Value Value Value
RIH Promissory Note $125,000 $134,375 $125,000 $115,313
Unamortized premium
(discount) 7,500 (16,872)
132,500 108,128
RIH Junior Promissory
Note 35,000 35,000
Less principal amount
of Junior Mortgage
Notes held by RIH (12,899) (12,899)
22,101 23,869 22,101 20,333
Unamortized premium
(discount) 1,326 (3,468)
23,427 18,633
$155,927 $158,244 $126,761 $135,646
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 during the three years ended
December 31, 1996 were as follows: RIH Promissory Note - 14.1% and
RIH Junior Promissory Note - 14.8%. The effective interest rates
after the basis adjustments recorded at December 31, 1996 were as
follows: RIH Promissory Note - 9.9% and RIH Junior Promissory Note -
10.4%.
NOTE 9 - RELATED PARTY TRANSACTIONS
RIH recorded the following income and expenses from SINA and its
other subsidiaries:
- 41 -<PAGE>
(In Thousands of Dollars) 1996 1995 1994
Interest income from a former
Bahamian affiliate $ 2,250
Expenses:
Interest and amortization of
discounts on notes payable
to RIHF $18,062 $18,071 $11,604
Parent services fee to SINA 9,363 9,651 9,082
Property rentals to SINA 1,249 810 325
Billboard rental to affiliate 50 50
$28,724 $28,582 $21,011
SINA 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 SINA's consolidated
recapitalization costs. See also Note 11 for a discussion of
alternative minimum taxes allocated to RIH by SINA.
License and Services Agreements
In connection with the Merger, SINA and RIH entered into a
license and services agreement (the "License and Services Agreement")
with The Griffin Group, Inc. (the "Griffin Group"), a corporation
controlled by Merv Griffin, Chairman of the Board of SINA until the
Effective Time. The License and Services Agreement grants to SINA and
RIH a non-exclusive license to use the name and likeness of Merv
Griffin to advertise and promote the Resorts Casino Hotel as well as
SIHL's other properties in Connecticut and The Bahamas (the "Casino
Properties"). SINA and RIH also have the non-exclusive right to use
certain shows and gaming concepts set forth therein and the non-
exclusive right to services provided by Mr. Griffin, on a pay or play
basis, as marketing consultant and as host, producer, presenter and
featured performer in various shows to be presented at the Casino
Properties.
As compensation under the License and Services Agreement, at the
Effective Time, RIH paid Griffin Group fees totaling $10,973,000 for
the license and services through September 16, 2001. Also, all
business, travel and other expenses incurred by Griffin Group in
connection with providing requested services are to be paid by RIH and
SINA as such expenses are incurred.
- 42 -<PAGE>
The License and Services Agreement is to continue until September
16, 2001 and provides for earlier termination by either SINA and RIH
or Griffin Group under certain circumstances. Upon any termination of
the agreement, Griffin Group is entitled to retain all monies paid to
it and is entitled to be paid all amounts owing to it as of the date
of termination. Additionally, in the event of any sale or other
disposition of any of the Casino Properties, the use of the name and
likeness of Mr. Griffin must cease with respect to such property.
In the License and Services Agreement SINA 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.
The License and Services Agreement terminated the previously
existing license and services agreement among the same parties (the
"1992 License Agreement"), which otherwise would have expired on
September 16, 1997. However, the License and Services Agreement
provides for the continuation of the license and services for the
remaining period of the 1992 License Agreement and calls for no
additional compensation for the period ending September 16, 1997 and
no repayments of amounts prepaid under the 1992 License Agreement. In
the 1992 License Agreement, Griffin Group granted SINA and RIH a
non-exclusive license to use the name and likeness of Merv Griffin to
advertise and promote SINA's and RIH's facilities and operations.
Also pursuant to the 1992 License Agreement, Mr. Griffin was to
provide certain services to SINA and RIH, including serving as
Chairman of the Board of SINA 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 1992 License Agreement provided for annual payments on
September 17, each representing a prepayment for the year ending two
years hence. In lieu of paying in cash, at SINA's option, SINA could
satisfy its obligation to make any of the payments required under the
1992 License Agreement by reducing the amount of a note payable to
SINA by Griffin Group (the "Group Note"). Compensation for the year
ended September 16, 1994 was $2,100,000. In September 1993 SINA
notified Griffin Group that it would satisfy its obligation to make
the $2,205,000 payment for the year ended September 16, 1995 by
reducing the Group Note by that amount. In May 1994, as part of the
Plan, SINA reduced the Group Note by $2,310,000 in satisfaction of the
payment due in September 1994 for the year ended September 16, 1996.
The final payment required under the 1992 License Agreement,
$2,425,000, was to be due in September 1995. On August 1, 1994,
following review and approval by the independent members of SINA's
Board of Directors, SINA agreed to issue 388,000 shares of common
stock of SINA to an affiliate of Griffin Group in satisfaction of this
final payment obligation. The closing price of common stock of SINA
on the date of the agreement was $5.3125 per share. (The number of
shares and closing price stated herein were
- 43 -<PAGE>
adjusted to reflect a one-for-five reverse stock split of common stock
of SINA which occurred on June 30, 1995.)
Because of recent and expected changes in RIH's marketing
strategy, the significant reduction recently in Mr. Griffin's
participation in activities related to RIH's and SINA's business and
uncertainties as to Mr. Griffin's providing future services to RIH and
SINA, all prepaid fees under the License and Services Agreement and
the 1992 License Agreement were written off in the process of
restating RIH's assets and liabilities at fair value in connection
with the Merger.
Other
RIH reimbursed Griffin Group $80,000, $183,000 and $207,000 for
charter air services related to RIH business rendered in 1996, 1995
and 1994, respectively.
NOTE 10 - 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 SINA make contributions to the
plan based on a percentage of eligible employee contributions. RIH's
pension expense for this plan was $714,000, $641,000 and $637,000 for
the years 1996, 1995 and 1994, 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 $1,051,000,
$881,000 and $842,000 for the years 1996, 1995 and 1994, respectively.
NOTE 11 - INCOME TAXES
In 1995 RIH was allocated $450,000 of SINA'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 1996 net operating losses ("NOLs") were generated for federal
and state tax purposes for which no benefits were recognized.
In each of 1995 and 1994 RIH had current federal provisions of
$1,100,000. These were offset by deferred federal tax benefits of the
same amounts resulting from the recognition of the carryback of future
deductible amounts. No state tax provision was recorded in 1995 or
1994 due to the utilization of state NOL carryforwards.
- 44 -<PAGE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. With the application of push-down accounting in connection
with the Merger, RIH's consolidated assets and liabilities were
adjusted to their estimated fair values for financial reporting
purposes. Such revaluation is not permitted for income tax purposes.
This accounts for the majority of the changes in components of RIH's
net deferred tax liability shown below as of December 31.
(In Thousands of Dollars) 1996 1995
Deferred tax liabilities:
Basis differences on property and
equipment $(43,500) $(21,400)
Other (2,600)
Total deferred tax liabilities (46,100) (21,400)
Deferred tax assets:
NOL carryforwards 67,200 65,400
Book reserves not yet deductible
for tax 21,400 11,100
Basis differences on notes payable
to affiliate 11,300
Tax credit carryforwards 800 800
Other 5,600 2,100
Total deferred tax assets 106,300 79,400
Valuation allowance for deferred
tax assets (97,700) (76,950)
Deferred tax assets, net of
valuation allowance 8,600 2,450
Net deferred tax liabilities $(37,500) $(18,950)
The effective income tax rate on earnings (loss) before
extraordinary item varies from the statutory federal income tax rate
as a result of the following factors:
- 45 -<PAGE>
1996 1995 1994
Statutory federal income tax
rate (35.0%) 35.0% 35.0%
NOLs and temporary differences
for which no taxes were provided
or benefits recognized 34.7% (38.9%) (38.1%)
Other .3% 3.9% 3.1%
Effective tax rate 0.0% 0.0% 0.0%
F o r federal tax purposes RIH had NOL carryforwards of
approximately $192,000,000 at December 31, 1996 which expire as
follows: $40,000,000 in 2003, $50,000,000 in 2004, $96,000,000 in
2005, $1,000,000 in 2009 and 5,000,000 in 2011. These NOL
carryforwards were produced prior to a change in ownership of the
consolidated group of which RIH is a part; therefore, these loss
carryforwards are limited in their availability to offset future
taxable income. For federal tax purposes, this limitation is
considered to be owned by a common parent and would not be available
to RIH unless the parent made an affirmative election to allocate some
of the limitation to RIH. Such election would not be made until such
time as RIH ceases to be a member of the group.
For financial reporting purposes, in years when RIH has taxable
income, the tax provision is 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 SINA and SINA's other subsidiaries, it is able to utilize the
current period losses and NOL carryforwards of the entire group; thus,
in years when RIH generates taxable income, its usage of its own NOLs
is substantially less than the taxable income it generates.
At December 31, 1996, RIH had approximately $117,000,000 of NOL
carryforwards in New Jersey which expire as follows: $111,000,000 in
1997, $1,000,000 in 2001 and $5,000,000 in 2003.
Also at December 31, 1996, RIH had federal income tax credit
carryforwards of approximately $400,000, which are restricted as to
use and expire $100,000 per year between 2006 and 2009, and federal
AMT tax credits of approximately $400,000 which carry forward
indefinitely.
- 46 -<PAGE>
NOTE 12 - 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) 1996 1995 1994
Reconciliation of net earnings
(loss) to net cash provided by
operating activities:
Net earnings (loss) $(7,121) $10,540 $15,832
Adjustments to reconcile net
earnings (loss) to net cash
provided by (used in)
operating activities:
Extraordinary item (4,008)
Depreciation 12,345 13,415 13,186
Provision for discount on
CRDA obligations, net of
amortization 1,497 1,561 1,456
Amortization of debt discounts 1,527 1,452 757
Provision for doubtful
receivables 1,417 925 297
Deferred tax benefit (450)
Recapitalization costs 975
Net loss on dispositions of
property and equipment 35 18 8
Net increase in receivables (467) (1,879) (1,415)
Net increase in interest
receivable from affiliate (2,250)
Net (increase) decrease in
inventories and prepaid
expenses (7,752) 1,834 (2,963)
Net (increase) decrease in
deferred charges and other
assets (1,435) 530 1,164
Net increase in interest
payable to affiliate 131 4,113
Net increase (decrease) in
accounts payable and
accrued liabilities (630) 1,697 (288)
Net cash provided by (used in)
operating activities $ (584) $29,774 $26,864
- 47 -<PAGE>
(In Thousands of Dollars) 1996 1995 1994
Non-cash investing and financing
transactions:
Adjustments to consolidated
net assets to reflect RIH's
portion of SIHL's investment
in SINA $79,528
Distribution of RIH Promissory
Note and RIH Junior Promissory
Note as:
Repayment of advances
from SINA $ 43,236
Distribution to SINA 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
NOTE 13 - COMMITMENTS AND CONTINGENCIES
Land Lease/Option
RIH and SINA entered into a five year lease effective August 1,
1996 (the "Lease Agreement"), pursuant to which RIH is leasing
approximately 3 acres to the north of Resorts Casino Hotel and SINA is
leasing an additional .6 acres nearby (the "Leased Property"). In
accordance with the Lease Agreement (i) RIH and SINA (collectively,
the "Lessees") are required to pay rent of $825,000 per year plus
related real estate taxes, (ii) the Lessees have an option to purchase
the Leased Property for $12,000,000 on July 31, 1997 and every
consecutive July 31 until and including the expiration date of the
lease, July 31, 2001, and (iii) the lessor has an option to require
the Lessees to purchase the Leased Property for $12,000,000 upon the
expiration date of the lease.
CRDA
Certain issues have been raised by the CRDA and the State of New
Jersey Department of the Treasury (the "Treasury") concerning the
- 48 -<PAGE>
satisfaction of RIH's investment obligations for the years 1979
through 1983 (see Note 6). These matters were dormant for an
extensive period of time until late 1995 when RIH was contacted by the
CRDA. CRDA legal representatives have recently indicated that
Treasury may take a position that RIH owes additional investment
alternative taxes including interest and possible penalties. If these
issues are determined adversely, RIH could be required to pay the
relevant amount in cash. Management intends to contest these issues
and believes a negotiated settlement with an insignificant monetary
cost to RIH is possible.
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.
NOTE 14 - 1997 REFINANCING
In February 1997 RIHF mailed to each holder of Mortgage Notes and
Junior Mortgage Notes an Offer to Purchase and Consent Solicitation
Statement offering to purchase for cash (the "Offer") the outstanding
Mortgage Notes and Junior Mortgage Notes and soliciting consents (the
"Solicitation") for amending the Indentures to, among other things,
release the collateral for these securities which is described in Note
8. Holders who validly tendered their securities and consents by
February 26, 1997 (the "Consent Date") were entitled to receive the
purchase price of 106.733% for the Mortgage Notes and 107.447% for the
Junior Mortgage Notes, accrued interest through March 12, 1997, and an
additional 2.5% consent payment (the "Consent Payment"). Holders who
tendered their securities and consents subsequent to the Consent Date
but prior to the Offer's expiration on March 10, 1997, were entitled
to the purchase price and accrued interest, but not the Consent
Payment. $119,645,000 principal amount of Mortgage Notes and
$21,001,000 principal amount of Junior Mortgage Notes were tendered.
The purchase price and Consent Payments for purchasing these tendered
securities, excluding accrued interest, totaled $153,712,000.
$5,355,000 principal amount of Mortgage Notes and $1,100,000 principal
amount of Junior Mortgage Notes were not validly tendered and,
therefore, not purchased pursuant to the Offer. These securities
remain outstanding as unsecured obligations of RIHF and operate under
the Indentures, as amended. Under the amended Indentures, the
repayment terms, interest payment terms and redemption provisions for
the remaining Mortgage Notes and Junior Mortgage Notes are unchanged;
however, many of the restrictive covenants as to payment of dividends
and incurring additional indebtedness, as disclosed in Note 8, have
been deleted. See discussion below for certain restrictions related
to the New Notes.
In connection with the Offer and Solicitation, SIHL and SINA (the
"Issuers") issued $200,000,000 principal amount of 9% Senior
- 49 -<PAGE>
Subordinated Notes due 2007 (the "New Notes") in a private placement
which, after costs, resulted in net proceeds of approximately
$194,000,000. These proceeds were loaned to RIH in exchange for a
$200,000,000 promissory note (the "New RIH Note") with terms that
mirror the terms of the New Notes, and RIH's guarantee of the New
Notes. RIH transferred to RIHF (i) the portion of the proceeds needed
to purchase the Mortgage Notes and Junior Mortgage Notes tendered to
RIHF pursuant to the Offer and (ii) $12,899,000 Junior Mortgage Notes
owned by RIH (see Note 8). In exchange for this, the RIH Notes will
be canceled and RIH will issue new promissory notes to RIHF in the
amounts of, and with terms that mirror, the remaining Mortgage Notes
and Junior Mortgage Notes. The remainder of the proceeds will be used
for general corporate purposes. The New Notes, which are unsecured
obligations, are unconditionally guaranteed by RIH, GGRI and certain
of SIHL's subsidiaries (the "Guarantors"). RIH's guarantee of the New
Notes is senior to its guarantee of the Mortgage Notes and Junior
Mortgage Notes. Interest on the New Notes and the New RIH Note is
payable on March 15 and September 15 in each year, commencing
September 15, 1997. The indenture for the New Notes contains certain
covenants, including limitations on the ability of the Issuers and the
Guarantors to, among other things: (i) incur additional indebtedness,
(ii) incur certain liens, (iii) engage in certain transactions with
affiliates and (iv) pay dividends and make certain other restricted
payments.
- 50 -<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, 1996:
Allowance for doubtful receivables:
Gaming $3,519 $1,317 $(1,210) $3,626
Other 51 100 (19) 132
$3,570 $1,417 $(1,229) $3,758
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
(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 1996 and 1995.
<CAPTION>
1996 1995
For the Quarter First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $64,009 $74,556 $78,838 $64,413 $67,680 $74,560 $83,456 $67,530
Earnings (loss) from
operations $ (417) $ 5,590 $ 7,042 $(3,400) $ 2,819 $ 7,440 $12,947 $ 3,140
Other income (deductions),
net (a) (3,931) (3,923) (3,957) (4,125) (3,998) (3,927) (3,948) (3,933)
Net earnings (loss) $(4,348) $ 1,667 $ 3,085 $(7,525) $(1,179) $ 3,513 $ 8,999 $ (793)
(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 I 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
(3)(a)(1) Restated Certificate of Incorporation of RIH.
(Incorporated by reference to Exhibit 3.03 to
registrant's Form S-1 Registration Statement in File No.
33-23063.)
(3)(a)(2) Certificate of Amendment to the Certificate of
Incorporation of RIH. (Incorporated by reference to
Exhibit 3.05 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
- 53 -<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) Form of Indenture among RIHF, as issuer, RIH, as
guarantor, and State Street Bank and Trust Company of
Connecticut, National Association, as trustee, with
respect to RIHF 11% Mortgage Notes due 2003.
(Incorporated by reference to Exhibit 4.04 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(b)(2) Form of Mortgage between RIH and State Street Bank and
Trust Company of Connecticut, National Association,
securing Guaranty of RIHF Mortgage Notes. (Incorporated
by reference to Exhibit 4.22 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(4)(b)(3) Form of Mortgage between RIH and RIHF, securing RIH
Promissory Note. (Incorporated by reference to Exhibit
4.23 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(b)(4) Form of Assignment of Agreements made by RIHF, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
RIH Promissory Note. (Incorporated by reference to
Exhibit 4.24 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(4)(b)(5) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Promissory
Note. (Incorporated by reference to Exhibit 4.25 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(b)(6) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
Guaranty of RIHF Mortgage Notes. (Incorporated by
reference to Exhibit 4.26 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
- 54 -<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)(b)(10) Form of First Supplemental Indenture dated as of March 5,
1997, 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)(b)(10) to SINA's Form 10-K for the year ended
December 31, 1996 in File No. 1-4748.)
(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.)
- 55 -<PAGE>
(4)(c)(5) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Junior
Promissory Note. (Incorporated by reference to Exhibit
4.32 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(6) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding Guaranty of RIHF Junior Mortgage
Notes. (Incorporated by reference to Exhibit 4.33 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(c)(7) Form of Assignment of Operating Assets made by RIH, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding the Guaranty of the RIHF Junior
Mortgage Notes. (Incorporated by reference to Exhibit
4.35 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(8) Form of Assignment of Operating Assets made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Junior
Promissory Note. (Incorporated by reference to Exhibit
4.27 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(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.)
(4)(c)(10) Form of First Supplemental Indenture dated as of March 5,
1997, 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)(c)(10) to
SINA's Form 10-K for the year ended December 31, 1996 in
File No. 1-4748.)
(4)(d)(1) Form of Purchase Agreement for $200,000,000 principal
amount of 9% Senior Subordinated Notes due 2007 dated
March 5, 1997, among SIHL and SINA, as issuers, Bear,
Stearns & Co. Inc., Societe Generale Securities
Corporation and Scotia Capital Markets (USA) Inc., as
purchasers, and various subsidiaries of SIHL, including
RIH and GGRI, as guarantors. (Incorporated by reference
to Exhibit (4)(e)(1) to SINA's Form 10-K for the year
ended December 31, 1996 in File No. 1-4748.)
- 56 -<PAGE>
(4)(d)(2) Form of Indenture dated as of March 10, 1997, between
SIHL and SINA, as issuers, various subsidiaries of SIHL,
including RIH and GGRI, as guarantors, and The Bank of
New York, as trustee, with respect to $200,000,000
principal amount of 9% Senior Subordinated Notes due
2007, and exhibits thereto. (Incorporated by reference
to Exhibit (4)(e)(2) to SINA's Form 10-K for the year
ended December 31, 1996 in File No. 1-4748.)
(4)(d)(3) Form of Registration Rights Agreement dated as of March
5, 1997, by and among SIHL and SINA, as issuers, various
subsidiaries of SIHL, including RIH and GGRI, as
guarantors, and Bear, Stearns & Co. Inc., Societe
Generale Securities Corporation and Scotia Capital
Markets (USA) Inc., as purchasers. (Incorporated by
reference to Exhibit (4)(e)(3) to SINA's Form 10-K for
the year ended December 31, 1996 in File No. 1-4748.)
(4)(d)(4) Form of RIH $200,000,000 Promissory Note dated as of
March 10, 1997.
(10)(a)* Resorts Retirement Savings Plan. (Incorporated by
reference to Exhibit (10)(c)(2) to SINA's Form 10-K
Annual Report for the fiscal year ended December 31,
1991, in File No. 1-4748.)
(10)(b)(1)* License and Services Agreement, dated as of September 17,
1992, among Griffin Group, SINA 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, SINA
and RIH. (Incorporated by reference to Exhibit 10.34(b)
to registrant's Form S-4 Registration Statement in File
No. 33-50733.)
(10)(b)(3) Form of License and Services Agreement among Griffin
Group, SINA and RIH. (Incorporated by reference to Annex
VI to SINA's Definitive Proxy Statement dated November 1,
1996 on Schedule 14A in File No. 1-4748.)
(10)(c) Form of Intercreditor Agreement by and among RIHF, RIH,
SINA, 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.)
- 57 -<PAGE>
(10)(d) 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
A Current Report on Form 8-K dated December 16, 1996, was filed
by RIH to report the change in control of RIH as a result of the
Merger. No amendments to previously filed Forms 8-K were filed during
the fourth quarter of 1996.
(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-X
The financial statement schedule required by Regulation S-X is
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA."
- 58 -<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 21, 1997 By /s/ Daniel A. Cassella
Daniel A. Cassella
President and Chief Executive
Officer
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 21, 1997
Matthew B. Kearney
Director and Executive Vice President
(Principal Financial and Accounting
Officer)
By /s/ Daniel A. Cassella March 21, 1997
Daniel A. Cassella
President
(Principal Executive Officer)
SUPPLEMENTAL INFORMATION
Because it is an indirect wholly owned subsidiary of SIHL, 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.
- 59 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this Form 10-K
(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.
- 60 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this 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 RIH to Exhibit 4.23 to
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.
- 61 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this Form 10-K
(4)(b)(5) Form of Assignment of Incorporated by reference
Leases and Rents made by to Exhibit 4.25 to
RIH, as Assignor, to RIHF, registrant's Form S-4
as Assignee, regarding RIH Registration Statement in
Promissory Note. File No. 33-50733.
(4)(b)(6) Form of Assignment of Incorporated by reference
Leases and Rents made by to Exhibit 4.26 to
RIH, 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
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 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
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 RIHF, registrant's Form S-4
as Assignee, regarding RIH Registration Statement in
Promissory Note. File No. 33-50733.
(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.
- 62 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this Form 10-K
(4)(b)(10) Form of First Supplemental Incorporated by reference
Indenture dated as of to Exhibit (4)(b)(10) to
March 5, 1997, among RIHF, SINA's Form 10-K for the
as issuer, RIH, as year ended December 31,
guarantor, and State 1996 in File No. 1-4748.
Street Bank and Trust
Company of Connecticut,
National Association, as
trustee, with respect to
RIHF 11% Mortgage Notes
due 2003.
(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.
(4)(c)(2) Form of Mortgage between Incorporated by reference
RIH and U.S. Trust Company to Exhibit 4.29 to
of California, N.A., registrant's Form S-4
securing Guaranty of RIHF Registration Statement in
Junior Mortgage Notes. File No. 33-50733.
(4)(c)(3) Form of Mortgage between Incorporated by reference
RIH and RIHF, securing RIH to Exhibit 4.30 to
Junior Promissory Note. registrant's Form S-4
Registration Statement in
File No. 33-50733.
- 63 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this Form 10-K
(4)(c)(4) Form of Assignment of Incorporated by reference
Agreements made by RIHF, to Exhibit 4.31 to
as Assignor, to U.S. Trust registrant's Form S-4
Company of California, Registration Statement in
N.A., as Assignee, File No. 33-50733.
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 RIHF, registrant's Form S-4
as Assignee, regarding RIH Registration Statement in
Junior Promissory Note. File No. 33-50733.
(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.
(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.
- 64 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this Form 10-K
(4)(c)(8) Form of Assignment of Incorporated by reference
Operating Assets made by to Exhibit 4.27 to
RIH, as Assignor, to RIHF, registrant's Form S-4
as Assignee, regarding RIH Registration Statement in
Junior Promissory Note. File No. 33-50733.
(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.
(4)(c)(10) Form of First Supplemental Incorporated by reference
Indenture dated as of to Exhibit (4)(c)(10) to
March 5, 1997, between SINA's Form 10-K for the
RIHF, as issuer, RIH, as year ended December 31,
guarantor, and U.S. Trust 1996 in File No. 1-4748.
Company of California,
N.A., as trustee, with
respect to RIHF 11.375%
Junior Mortgage Notes due
2004.
(4)(d)(1) Form of Purchase Agreement Incorporated by reference
for $200,000,000 principal to Exhibit (4)(e)(1) to
amount of 9% Senior SINA's Form 10-K for the
Subordinated Notes due year ended December 31,
2007 dated March 5, 1997, 1996 in File No. 1-4748.
among SIHL and SINA, as
issuers, Bear, Stearns &
Co. Inc., Societe Generale
Securities Corporation and
Scotia Capital Markets
(USA) Inc., as purchasers,
and various subsidiaries
of SIHL, including RIH and
GGRI, as guarantors.
- 65 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this Form 10-K
(4)(d)(2) Form of Indenture dated as Incorporated by reference
of March 10, 1997, between to Exhibit (4)(e)(2) to
SIHL and SINA, as issuers, SINA's Form 10-K for the
various subsidiaries of year ended December 31,
SIHL, including RIH and 1996 in File No. 1-4748.
GGRI, as guarantors, and
The Bank of New York, as
trustee, with respect to
$200,000,000 principal
amount of 9% Senior
Subordinated Notes due
2007, and exhibits
thereto.
(4)(d)(3) Form of Registration Incorporated by reference
Rights Agreement dated as to Exhibit (4)(e)(3) to
of March 5, 1997, by and SINA's Form 10-K for the
among SIHL and SINA, as year ended December 31,
issuers, various 1996 in File No. 1-4748.
subsidiaries of SIHL,
including RIH and GGRI, as
guarantors, and Bear,
Stearns & Co. Inc.,
Societe Generale
Securities Corporation and
Scotia Capital Markets
(USA) Inc., as purchasers.
(4)(d)(4) Form of RIH $200,000,000 Filed herewith.
Promissory Note dated as
of March 10, 1997.
- 66 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this Form 10-K
(10)(a) Resorts Retirement Savings Incorporated by reference
Plan. to Exhibit (10)(c)(2) to
SINA's Form 10-K Annual
Report for the fiscal
year ended December 31,
1991, 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, SINA 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, SINA and File No. 33-50733.
RIH.
(10)(b)(3) Form of License and Incorporated by reference
Services Agreement among to Annex VI to SINA's
Griffin Group, SINA and Definitive Proxy
RIH. Statement dated November
1, 1996 on Schedule 14A
in File No. 1-4748.
- 67 -<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Exhibit Reference to previous
Number Exhibit filing or this Form 10-K
(10)(c) Form of Intercreditor Incorporated by reference
Agreement by and among to Exhibit 10.64 to
RIHF, RIH, SINA, 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) 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. Filed herewith.
- 68 -<PAGE>
EXHIBIT (4)(d)(4)
PROMISSORY NOTE
$200,000,000 March 10, 1997
WHEREAS, Resorts International Hotel, Inc.
("RIH"), a wholly owned subsidiary of Sun International
North America, Inc. ("SINA"), plans to use a portion of the
proceeds from the offering of the 9% Senior Subordinated
Notes (the "SINA Notes") issued by SINA and Sun
International Hotels Limited, an international business
company organized under the laws of the Commonwealth of
The Bahamas ("Sun"), under an Indenture dated as of
March 10, 1997 (the "Indenture") to repay a portion of its
obligations under its loans from Resorts International Hotel
Financing, Inc. ("RIHF") in order to permit RIHF to
consummate its tender offer for all its outstanding 11%
Mortgage Notes due 2003 and 11-3/8% Junior Mortgage Notes
due 2004; and
WHEREAS, SINA intends to loan a portion of the
proceeds of its offering of the SINA Notes to RIH for such
purpose;
NOW, THEREFORE, the parties thereto hereby agree
as follows:
RIH, for value received hereby promises to pay to
the order of SINA (SINA and any subsequent holder of this
Note being herein referred to as the "Payee"), the principal
sum of $200 million, or such other principal sum as shall be
outstanding hereunder, on March 15, 2007. In accordance
with the provisions hereof, interest on such principal sum
from time to time outstanding, computed from March 10, 1997,
shall be payable in semi-annual installments of interest on
March 15 and September 15 of each year, commencing initially
on September 15, 1997, at a rate of 9% per annum on the
unpaid balance hereof, until the principal hereof is paid in
full. Payments of principal and interest on this Note shall
be made at the principal executive offices of the Payee, or
at such other address as the Payee may designate in writing.
Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Principal and interest
shall be paid in money of the United States that at the time
of payment is legal tender for public and private debts.
1. (a) This Note shall be prepaid (i) in
connection with, but only to the extent of, any redemption
of the SINA Notes (all prepayments of this Note are
hereinafter referred to as "Prepayments"), and/or (ii) by
the surrender to the Trustee of the principal amount of any
SINA Notes purchased or otherwise acquired by SINA or Sun
other than pursuant to the redemption provisions of the SINA
Notes and surrendered to the Trustee for cancellation in
accordance with the provisions of the <PAGE>
2
SINA Notes or the Indenture (it being expressly understood
that the same SINA Notes shall reduce the principal amount
of this Note only once). Each Prepayment under clause
(i) above shall be made at the time that payment is
required or permitted to be made by SINA or Sun to the
Trustee under the Indenture in respect of any redemption of
SINA Notes. Each Prepayment under clause (ii) above shall
be made at the time of surrender of such SINA Notes for
cancellation. Each Prepayment pursuant to clause (i) above
shall be in an amount equal to the aggregate amount paid to
holders of SINA Notes on account of the redemption thereof
(other than interest), together with accrued and unpaid
interest on the amount of the reduction in the principal
amount of this Note as a result of such Prepayment. The
principal amount of this Note shall be reduced as a result
of such prepayment in an amount equal to the aggregate
principal amount of the SINA Notes so redeemed or
surrendered.
(b) Except as set forth in Section 1(a), this Note
may not be prepaid in whole or in part.
(c) RIH shall pay interest on overdue principal
and interest at the rate specified in this Note compounded
semi-annually, to the extent lawful.
(d) If an Event of Default shall have occurred and
be continuing under the Indenture and any amounts due under
the SINA Notes have been accelerated as a result thereof,
SINA may declare the entire amount of this Note and all
accrued and unpaid interest thereon and all sums due under
Section 2 hereof to become immediately due and payable.
2. RIH hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest
of this Note and agrees to pay all costs of collection when
incurred, including reasonable attorneys' fees, which costs
may be added to the amount due under this Note and be
receivable therewith, and to perform and comply with each of
the terms, covenants and provisions contained in this Note
on the part of RIH to be observed or performed. Except as
expressly provided herein, no extension of time for payment
of this Note, or any installment hereof, and no alteration,
amendment or waiver of any provision of this Note shall
release, discharge, modify, change or affect the liability
of RIH under this Note.
3. RIH covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit
or advantage of, any usury, stay or extension law or any
other law which would prohibit or forgive RIH from paying
all or any portion of the interest on this Note, wherever
enacted, nor or at any time hereafter in force, or which may
otherwise affect the covenants or the performance of this
Note and RIH (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any<PAGE>
3
such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the
Payee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
4. This Note shall be deemed to be a contract
under the laws of the State of New York and shall be
construed in accordance with and governed by the internal
laws of the State of New York.
5. This Note may not be changed or terminated
orally, but only by an agreement in writing signed by the
party against whom enforcement of such change or termination
is sought.
6. RIH shall not claim any credit or deduction
from the interest or principal due hereunder by reason of
payment of any tax assessed upon any property.
7. Whenever the provisions of this Note and the
provisions of the Indenture shall be inconsistent, the
provisions of the Indenture shall govern.
8. This Note is subject to and shall be enforced
in compliance with the provisions of the New Jersey Casino
Control Act. This Note shall not be transferred, assigned
or amended without the prior approval of the New Jersey
Casino Control Commission.
9. Whenever used herein, the singular number
shall include the plural, the plural the singular, and the
words "Payee" and "RIH" shall include their respective
successors and assigns.
IN WITNESS WHEREOF, RIH has duly executed this
Note as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC.,
by
Name:
Title:<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this [ ] day of
[ ], 1997, before me, the subscriber, a Notary
public of the State of New York, personally appeared
[ ], [ ] of RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he
acknowledged that he signed, sealed and delivered the same
as his voluntary act and deed and the act and deed of said
RESORTS INTERNATIONAL HOTEL, INC., and that he received a
true copy of the within instrument on behalf of said
corporation.
Notary Public of the State of
New York
[SEAL]<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, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
PLEASE SEE FOOTNOTE 5 RELATING TO INFORMATION IN THIS FDS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> $21,642<F1>
<SECURITIES> 0
<RECEIVABLES> $8,251
<ALLOWANCES> $3,758
<INVENTORY> $1,194
<CURRENT-ASSETS> $30,616
<PP&E> $209,226
<DEPRECIATION> 0
<TOTAL-ASSETS> $351,402
<CURRENT-LIABILITIES> $39,609
<BONDS> $156,210<F2>
<COMMON> $1,000
0
0
<OTHER-SE> $117,083
<TOTAL-LIABILITY-AND-EQUITY> $351,402
<SALES> 0
<TOTAL-REVENUES> $281,816
<CGS> 0
<TOTAL-COSTS> $216,146<F3>
<OTHER-EXPENSES> $12,345<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $18,229
<INCOME-PRETAX> $(7,121)
<INCOME-TAX> 0
<INCOME-CONTINUING> $(7,121)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $(7,121)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $3,553 AND
RESTRICTED CASH EQUIVALENTS OF $750.
<F2>INCLUDING UNAMORTIZED PREMIUMS.
<F3>EXCLUDES DEPRECIATION EXPENSE.
<F4>DEPRECIATION EXPENSE.
<F5>SEE NOTE 1 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN RESORTS
INTERNATIONAL HOTEL, INC.'S ("RIH") FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996 FOR DISCUSSION OF A MERGER IN DECEMBER 1996 OF SUN
INTERNATIONAL NORTH AMERICA, INC., RIH'S FORMER ULTIMATE PARENT, AND
THE RELATED CHANGE IN RIH'S BASIS OF ACCOUNTING.
</FN>
</TABLE>
