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 year ended December 31, 1997
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: 609-340-7896
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
- continued-
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, 1998, 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 with
the reduced disclosure format permitted by that General Instruction.
RESORTS INTERNATIONAL HOTEL, INC.
INDEX TO FORM 10-K
ITEM PAGE
PART I
ITEM 1. Business 1
ITEM 2. Properties 12
ITEM 3. Legal Proceedings 12
ITEM 4. Submission of Matters to a Vote of Security Holders 12
PART II
ITEM 5. Market for the Registrant's Common Stock and Related
Stockholder Matters 13
ITEM 6. Selected Financial Data 14
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
ITEM 8. Financial Statements and Supplementary Data 20
ITEM 9. Changes and Disagreements with Accountants on
Accounting and Financial Disclosures 20
PART III
ITEM 10. Directors and Executive Officers 20
ITEM 11. Executive Compensation 20
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management 20
ITEM 13. Certain Relationships and Related Transactions 20
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 20
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 68,000 square foot casino, an
8,000 square foot simulcast pari-mutuel 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. See "Regulation and Gaming Taxes and Fees" under "(c) Narrative
Description of Business" below.
Merger
In connection with the Merger, SIHL filed an application for
qualification as a holding company of RIH with the Casino Control
Commission. On October 22, 1997, SIHL received approval as a qualifier.
Prior to qualification, SIHL held an interim casino authorization
("ICA") for the Casino Control Commission. Pending final determination
by the Casino Control Commission with respect to SIHL's qualification,
all shares of common stock of SINA (the "SINA Common Stock") were held
in a 'stand by' trust (the "ICA Trust"). When SIHL received qualification,
all SINA common stock was reverted to SIHL and the ICA Trust terminated.
Pursuant to an accounting practice known as "push-down" accounting,
as of December 31, 1996, RIH adjusted its net assets to reflect its
portion of the cost of SIHL's investment in SINA. Accordingly, RIH's
assets and liabilities were adjusted to their estimated fair values and
its retained earnings were eliminated. See Note 1 of Notes to Financial
Statements for further discussion of this accounting treatment.
1997 Refinancing
In February 1997, Resorts International Hotel Financing, Inc.
("RIHF"), a wholly owned subsidiary of SINA, offered (the "Offer") to
purchase its outstanding $125,000,000 principal amount of 11% Mortgage
Notes due 2003 (the "Mortgage Notes") and $35,000,000 principal amount
of 11.375% Junior Mortgage Notes due 2004 (the "Junior Mortgage Notes").
In connection with the Offer, RIHF sought the consent of the holders
(the "Consents") to amend the relevant indentures to, among other
things, release the collateral for the Mortgage Notes and Junior
Mortgage Notes. Pursuant to the Offer, RIHF acquired $119,645,000
principal amount of Mortgage Notes and $21,001,000 principal amount of
Junior Mortgage Notes, for a total purchase price (including payments
relating to the Consents) of $153,712,000. There remains outstanding
$5,355,000 principal amount of Mortgage Notes and $1,100,000 principal
amount of Junior Mortgage Notes, which, as a result of the amendments
to the indentures, are now unsecured obligations of RIHF. The remaining
Junior Mortgage Notes continue to trade as part of units consisting of
$1,000 principal amount of Junior Mortgage Notes and .1928 of an
ordinary share of SIHL.
In connection with the Offer, SIHL and SINA (the "Issuers") issued
$200,000,000 principal amount of 9% Senior Subordinated Notes due 2007
(the "Senior Notes") 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 Senior Notes, and RIH's guarantee of
the Senior Notes. On December 3, 1997, the Casino Control Commission
gave regulatory approval to RIH to become guarantor of the $100,000,000
8 5/8% Senior Subordinate Notes due 2007 issued by SIHL and SINA. RIH
transferred to RIHF (i) $153,712,000 in cash which RIHF used to pay the
purchase price, (including payments related to the Consents), excluding
accrued interest, for 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. In exchange for this, the $125,000,000 and
$35,000,000 promissory notes from RIH to RIHF (the "RIH Notes"), the
terms of which mirror the terms of the Mortgage Notes and Junior
Mortgage Notes, respectively, were canceled and RIH issued new
promissory notes to RIHF in the amounts of, and with terms that mirror,
the remaining Mortgage Notes and Junior Mortgage Notes. The excess of
the cash and carrying value of the Junior Mortgage Notes tendered by RIH
to RIHF over the net decrease in carrying value, excluding accrued
interest, of the affiliated notes from RIH to RIHF, plus estimated costs
of the Offer, which were borne by RIH, resulted in an extraordinary loss
of $5,000,000. RIH also recorded a deferred tax benefit of $2,043,000
related to this extraordinary item.
Interest on both the Senior Notes and the New RIH Note is payable
on March 15 and September 15 in each year. These payments commenced
September 15, 1997 with an interest payment of $9,550,000. The
indenture for the Senior Notes (the "Senior Indenture") contains certain
covenants, including limitations on the ability of the Issuers and the
Guarantors (including RIH) 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.
(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 68,000
square foot casino and a simulcast pari-mutuel betting and poker area
of approximately 8,000 square feet. At December 31, 1997, these gaming
areas contained approximately 99 table games that consisted of 44
blackjack tables, 18 poker tables, 10 roulette tables, 9 craps tables,
and 18 other specialty games that include Caribbean stud, Baccarat, Let
it ride, Three-card Poker, Pai Gow Poker, Big Six, Sic Bo, and Pai Gow.
There were also 2,254 slot machines and five betting windows and four
customer-operated terminals for simulcast pari-mutuel 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. Resorts Casino Hotel continuously monitors the configuration of
the casino floor and the games it offers to patrons with a view towards
making improvements. Resorts Casino Hotel's casino floor has clear,
large signs for the convenience of patrons. As new games have been
approved by the Casino Control Commission, management has integrated
such games into its casino operations to the extent it deems
appropriate.
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 9-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. In October 1996 and August
1997, RIH purchased additional adjacent properties consisting of
approximately 3.5 acres which were previously leased, and which provide
parking for approximately 350 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 approximately 130 cars and valet parking for
approximately 415 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 patrons. For 1997, 1996 and 1995 the average occupancy rates,
including complimentary rooms, which were primarily provided to casino
patrons, were 91%, 93% and 94%, respectively. The average occupancy
rate and weighted average daily room rate, excluding complimentary
rooms, were 41% and $62, respectively, for 1997. This compares with 50%
and $54, respectively, for 1996, and 51% and $59, respectively, for
1995.
Entertainment
Resorts Casino Hotel offers headline entertainment as part of its
strategy to attract high-level and other patrons. Resorts Casino Hotel
has entered into exclusive contracts with entertainers to perform at
Resorts Casino Hotel including the following who are scheduled for 1998:
Steve Lawrence and Eydie Gorme, Tony Danza, Englebert Humperdink, the
Temptations, and the Pointer Sisters. Resorts Casino Hotel currently
offers headline entertainment on a Wednesday through Monday schedule and
has plans to continue this schedule throughout 1998.
Player Development/Casino Hosts/Junkets
Resorts Casino Hotel employs junket representatives, player
development representatives, and Asian marketing representatives to
promote Resorts Casino Hotel to prospective gaming patrons. RIH
currently employs junket representatives in New Jersey, New York,
Maryland, and other states around the country. RIH also employs player
development representatives and Asian Marketing representatives who work
out of Resorts Casino Hotel. Resorts Casino Hotel has casino hosts who
assist patrons on the casino floor, make room and dinner reservations
and provide general assistance. They also encourage Star Card
membership (the player identification card) sign-ups in order to
increase Resorts Casino Hotel's marketing base.
Promotional Activities
The Star Card, a player identification card, constitutes a key
element in Resorts Casino Hotel's direct marketing program. Slot
machine players are encouraged to register for and utilize their
personalized Star Card to earn various complimentaries based upon their
level of play. The Star Card is inserted during play into a card reader
attached to the slot machine for use in computerized rating systems.
These computer systems record data about the cardholder, including
playing preferences, frequency and denomination of play and the amount
of gaming revenues produced.
Resorts Casino Hotel designs promotional offers, conveyed via
direct mail and telemarketing, to patrons expected to provide revenues
based upon their historical gaming patterns. Such information is
gathered on slot wagering by the Star Card and on table game wagering
by the casino hosts. Resorts Casino Hotel also utilizes a special events
calendar (e.g., birthday parties, sweepstakes and special competitions)
to promote its gaming operations.
Resorts Casino Hotel conducts slot machine and table game
tournaments in which cash prizes are offered to a select group of
players invited to participate in the tournament based upon their
tendency to play. Such players tend to play at their own expense during
"off-hours" of the tournament. At times, tournament players are also
offered special dining and entertainment privileges that encourage them
to remain at Resorts Casino Hotel.
Capital Improvements
During 1997, RIH began enhancing the Resorts Casino Hotel through
the construction of additional parking and various improvements to the
public areas. Other capital expenditures included the purchase of 494
slot machines and computer equipment. 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. 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. RIH intends to develop a significant addition to the
existing property, which is discussed below under "Expansion Plans."
Expansion Plans
It is currently contemplated that the Resorts Casino Hotel
redevelopment will include the development of new public spaces, the
renovation of the existing guest rooms and the construction of a new
hotel tower. The development is in the planning process and the costs,
scope and schedule have not yet been finally determined. Any such
plans will be subject to regulatory and other approvals. As of December
31, 1997, RIH had spent $1.4 million on the expansion consisting
primarily of consulting and architectural fees.
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. Construction of
the new convention center began in early 1993 and it officially opened
in May 1997. The new convention center has 500,000 square feet of
continuous exhibit space, and an additional 109,000 square feet of
meeting rooms, making it the largest center from Atlanta to Boston.
The convention center is part of a broader plan that includes
expansion of the Atlantic City International Airport, a new 500-room
convention hotel, which opened in November 1997, and the transformation
of the main entryway into Atlantic City into a new corridor. Officials
have commented upon the need for improved commercial air service into
Atlantic City as a factor in the success of the convention center. See
further discussion under "Transportation Facilities" below. In 1997 a
new corridor which links the new convention center and hotel with the
Boardwalk was completed. In all, six blocks were transformed into an
expansive park with extensive landscaping, night-time lighting, and a
large fountain and pool with an 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 November 1997, the new 500-room
convention hotel opened. To further spur construction of new hotel
rooms and renovation of substandard hotel rooms into deluxe
accommodations, a total of $175 million has been set aside by the Casino
Reinvestment Development Authority (the "CRDA"), a public authority, to
aid in financing such projects. To date, the CRDA has authorized
financing in the amount of $105 million which has resulted in the
construction of approximately 2,680 new hotel rooms and has reserved
funding in the amount of $70 million to four casinos, including Resorts,
for the construction of up to 3,770 additional hotel rooms. Resorts'
share of the funding has been reserved by the CRDA at $27.3 million to
construct up to 1,500 rooms. 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 H-Tract (the "H-Tract"). Mirage originally proposed to
build a $750,000,000, 2,000-room casino/hotel, Boyd Gaming Corp.
("Boyd") proposed to build a $500,000,000, 1,000-room casino/hotel, and
Circus Circus Enterprises, Inc. ("Circus") proposed to build a
$600,000,000, 2,000-room casino/hotel on that tract. Contractual and
legal issues have arisen that have delayed the development of these
properties. Mirage has announced that it is terminating its
relationship with Boyd and Circus and that it intends to develop a 4,000
room hotel casino on the H-Tract by itself. 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 to 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.
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 given approval by the CRDA, that agency has engaged 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 1,173,000 square feet of gaming area, including
simulcast betting and poker rooms, and 11,218 hotel rooms. Adding to the
competition for patrons, expansions at two competing Atlantic City
properties opened in mid-1996 which, combined, added approximately 1,100
hotel rooms and approximately 85,000 square feet of gaming space. In
July 1997 a competitor added approximately 75,000 square feet of casino
space which includes approximately 1,766 slot machines and 58 table
games. Also, a competitor added a new hotel tower with 620 rooms and
plans to open more casino space in 1998. 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 northern 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 2,700 hotel rooms and approximately 325,000 square feet
of gaming space in close proximity to each other. In 1997, the three
casino/hotels, combined, generated approximately 29% of the gross gaming
revenue of Atlantic City. A 28-foot wide enclosed pedestrian bridge
between the Resorts Casino Hotel and the Taj Mahal allows patrons of
both hotels and guests for events being held at the Resorts Casino Hotel
and at the Taj Mahal to move between the facilities without exposure to
the weather. A similar enclosed pedestrian bridge connects the Showboat
to the Taj Mahal, allowing patrons to walk under cover among all three
casino/hotels. The remaining nine Atlantic City casino/hotels are
located approximately one-half mile to one and one-half miles to the
south 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 5,000 slot machines and
for the year 1997 had slot revenue of approximately $603 million, 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 SINA, has more than
3,000 slot machines and had slot revenue of approximately $333 million
in 1997. In 1993 the Oneida Indians opened a casino near Syracuse, New
York. Other Indian tribes in the states of New York, Rhode Island, and
Connecticut 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. A recent
amendment to Delaware State law will allow the three racetracks to
expand to 2,000 slot machines each.
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 18% of table game volume
at the Resorts Casino Hotel in 1997, 19% in 1996 and 19% in 1995. The
credit play percentage of table game volume for the Atlantic City
industry was 25% in 1997, 24% in 1996, and 22% in 1995. RIH's gaming
receivables, net of allowance for uncollectible amounts, were
$3,429,000, $3,823,000 and $3,813,000 as of December 31, 1997, 1996 and
1995, respectively. The collectibility of gaming receivables has an
effect on results of operations, and management believes that overall
collections have been satisfactory. Atlantic City gaming debts are
enforceable under the laws of New Jersey and certain other states,
although it is not clear whether other states will honor this policy or
enforce judgments rendered by the courts of New Jersey with respect to
such debts.
Security Controls
Gaming at the Resorts Casino Hotel is conducted by 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 moneys 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 3,700 employees during 1997, and
RIH believes that its employee relations are satisfactory.
Approximately 1,450 of RIH's employees are represented by unions. Of
these employees, approximately 1,110 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 certain of its hotel employees
must be licensed under the Casino Control Act. Casino employees are
those employees whose work requires access to the casino, the casino
simulcasting facility or restricted casino areas. Each casino and
certain hotel employee must meet applicable standards pertaining to such
matters as financial responsibility, good character, ability, casino
training and experience and New Jersey residency. Certain hotel
employees are no longer required to be registered with the Casino
Control Commission.
Regulation and Gaming Taxes and Fees
General
RIH's operations in Atlantic City are subject to regulation under
the Casino Control Act, which authorizes the establishment of casinos
in Atlantic City, provides for licensing, regulation and taxation of
casinos and created the Casino Control Commission and the Division of
Gaming Enforcement to administer the Casino Control Act. In general,
the provisions of the Casino Control Act concern: the ability, character
and financial stability and integrity of casino operators, their
officers, directors and employees and others financially interested in
a casino; the nature and suitability of hotel and casino facilities,
operating methods and conditions; and financial and accounting
practices. Gaming operations are subject to a number of restrictions
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.
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 Senior 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
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 $57.3 million, 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.
For the Year Ended December 31,
1997 1996 1995
Gaming tax $19,581,000 $20,661,000 $21,402,000
License, investigation,
inspection and other fees 3,453,000 3,672,000 3,917,000
Contribution to AC Fund 392,000 570,000 224,000
$23,426,000 $24,903,000 $25,543,000
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. Issues were raised concerning the satisfaction of RIH's
investment obligations for the years 1979 through 1983. On September
30, 1997 RIH, the CRDA and the State of New Jersey Department of the
Treasury reached a settlement on this issue. The settlement called for
RIH to donate land with an appraised value of $4.8 million to the CRDA,
contribute $5.6 million of funds on deposit with the CRDA, which were
allocated to purchase Atlantic City Housing Bonds, and establish a $3.0
million mortgage guarantee program for purchases of residential, owner-
occupied property in the City of Atlantic City. RIH has satisfied the
requirements of the Settlement Agreement.
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 1997, 1996, and 1995 amounted to
$3,065,000, $3,229,000, and $3,348,000, 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, 1997, RIH held $10,474,000 face amount of bonds issued by
the CRDA and had $13,608,000 on deposit with the CRDA. The CRDA bonds
issued through 1997 have interest rates ranging from 3.9% to 7% and have
repayment terms of between 20 and 50 years.
(d) Financial Information about Foreign and Domestic Operations
and Export Sales
Virtually all of RIH's operations are conducted in Atlantic City,
New Jersey. See "(c) Narrative Description of Business" above.
ITEM 2. PROPERTIES
RIH's casino, resort hotel and related properties in Atlantic City
are owned in fee, except for approximately 1.2 acres of the Resorts
Casino Hotel site which are leased pursuant to ground leases expiring
from 2056 through 2067.
RIH 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
RIH is a defendant in certain litigation incurred in the normal
course of business. In the opinion of management, based on the advice
of counsel, the aggregate liability, if any, arising from such
litigation will not have a material adverse effect on RIH's financial
position or results of operations.
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 SINA.
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.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The information presented below should be read in conjunction with
the financial statements, including notes thereto, presented under "ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA."
(In Thousands of Dollars)
<CAPTION>
Successor Predecessor
For the Year Ended December 31,
Operating Information (Note A) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Gross operating revenues $299,099 $312,083 $321,721 $302,807 $297,040
Less: promotional allowances (28,465) (26,272) (26,187) (24,733) (23,687)
Net Revenues $270,634 $285,811 $295,534 $278,074 $273,353
Earnings from operations $12,581 $8,815 $ 26,346 $ 20,791 $ 12,068
Recapitalization costs (Note B) - - - (975) (2,727)
Other income (deductions), net
(Note C) (15,509) (15,936) (15,806) (7,992) 7,422
Earnings (loss) before income
taxes and extraordinary
item (2,928) (7,121) 10,540 11,824 16,763
Income tax expense (Note D) - - - - (400)
Earnings (loss) before
extraordinary item (2,928) (7,121) 10,540 11,824 16,363
Extraordinary item (Note E) (2,957) - - 4,008 -
Net earnings (loss) $(5,885) $(7,121) $10,540 $ 15,832 $ 16,363
At December 31,
Balance Sheet Information
(Note A) 1997 1996 1995 1994 1993
Total assets $391,589 $351,402 $224,397 $212,734 $264,164
Current maturities of notes
payable to affiliate and
other long-term debt (Note F) $ 282 $ 636 $ 589 - $325,000
Notes payable to affiliate and
other long-term debt,
excluding current
maturities (Note F) $205,925 $156,210 $127,680 $125,309 -
Shareholder's equity (deficit) $119,148 $118,083 $45,676 $ 35,136 $(147,995)
</TABLE>
Notes to Selected Financial Data
Note A: See Note 1 of Notes to Financial Statements for a discussion of
the Merger in 1996 and the related change in basis of accounting.
Note B: Recapitalization costs in 1993 and 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 and premiums.
Note D: See Notes 2 and 10 of Notes to Financial Statements for
discussion of income taxes for 1997, 1996 and 1995.
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: Costs to tender the
Mortgage Notes and the Junior Mortgage Notes resulted in an
extraordinary loss of $5,000,000. RIH also recorded a deferred tax
benefit of $2,043,000 related to this extraordinary item.
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
Certain Forward-Looking Statements
Certain information included in this form 10-K and other materials
filed or to be filed by RIH with the Securities and Exchange Commission
(as well as information included in oral statements or other written
statements made or to be made by RIH) contain forward-looking
statements, within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Such statements include information relating to plans
for future expansion and other business development activities as well
as other capital spending, financing sources and the effects of
regulation (including gaming and tax regulation) and competition. Such
forward-looking information involves important risks and uncertainties
that could significantly affect anticipated results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of RIH. These risks and
uncertainties include, but are not limited to, those relating to
development and construction activities, dependence on existing
management, leverage and debt service, domestic or global economic
conditions, pending litigation, changes in federal tax laws or the
administration of such laws, changes in gaming laws or regulation
(including the legalization of gaming in certain jurisdictions), the
competitive nature of the gaming industry, increases in the number of
competitors in the market in which RIH operates, and seasonality of the
industry.
Year 2000 Compliance
Many computer systems and applications currently use two-digit date
fields to designate a year. As the century date change occurs, date-
sensitive systems will recognize the year 2000 as 1900, or not at all.
This inability to recognize or properly treat the year 2000 may cause
systems to process critical financial and operational information
incorrectly. RIH, like many companies, is expected to incur
expenditures over the next few years to address this issue. RIH has
assessed and continues to assess the impact of the year 2000 issue on
its operations and expects any costs associated with this issue to be
minimal.
SFAS No. 130, "Reporting Comprehensive Income" was issued in June
1997. This statement is effective for the RIH's year ending December
31, 1998. This statement addresses the reporting and displaying of
comprehensive income and its components. Adoption of SFAS No. 130
relates to disclosure within the financial statements and is not
expected to have a material effect on the RIH's financial statements.
SFAS No. 131, "Disclosures about Segments of and Enterprise and
Related Information" was issued in June 1997. This statement is
effective for the RIH's year ending December 31, 1998. This statement
changes the way public companies report information about segments of
their business in their annual financial statements and requires them
to report selected segment information in their quarterly reports.
Adoption of SFAS No. 130 relates to disclosure within the financial
statements and is not expected to have a material effect on the RIH's
financial statements.
Liquidity, Capital Expenditures and Resources
Cash flows from operating activities are RIH's principal source of
liquidity. As of December 31, 1997 cash provided by operating
activities (as shown in the Statement of Cash Flows) was approximately
$15.0 million. At December 31, 1997 RIH had working capital of $20.4
million including $43.3 million of unrestricted cash and cash
equivalents.
In March 1997 SIHL and SINA loaned the net proceeds of the Senior
Notes which, after costs, approximated $194,000,000, to RIH in exchange
for the $200,000,000 New RIH Note and RIH's guarantee of the Senior
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 were canceled and RIH issued 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. See Note 7 for further discussion of these transactions.
RIH, through cash flows from operations, is the principal source of
funds for servicing the $200,000,000 principal amount of Senior Notes,
the $5,355,000 principal amount of Mortgage Notes and the $1,100,000
principal amount of Junior Mortgage Notes. Interest on these notes
amounted to approximately $18.7 million.
RIH expended approximately $19.7 million for capital expenditures for
the year ended December 31, 1997. For the year ended December 31, 1998
RIH expects its capital expenditures will range between $10.0 million
and $12.0 million excluding amounts expended on the construction and
redevelopment of Resorts Casino Hotel.
It is currently contemplated that the Resorts Casino Hotel
redevelopment will include the development of new public spaces, the
renovation of the existing guest rooms and the construction of a new
hotel tower. The development is in the planning process and the costs,
scope and schedule have not yet been finally determined. Any such
plans will be subject to regulatory and other approvals. As of December
31, 1997, RIH had spent $1.4 million on the expansion consisting
primarily of consulting and architectural fees.
In October 1996 and August 1997, RIH purchased approximately 3.5 acres
of land adjacent to Resorts Casino Hotel for approximately $14 million.
This land is currently being used for parking, although the site, along
with other land owned by SINA, could be used for future expansion.
Management believes that existing cash balances and operating cash
flows will provide RIH with sufficient resources to meet its existing
debt obligations and foreseeable capital expenditure requirements with
respect to current operations for at least the next 12 months.
Competition for Atlantic City casino patrons remains intense. Adding
to the competition for patrons, expansions at two competing Atlantic
City properties opened in mid-1996 which, combined, added approximately
1,100 hotel rooms and approximately 85,000 square feet of gaming space.
In July 1997 a competitor added approximately 75,000 square feet of
casino space which includes approximately 1,766 slot machines and 58
table games. Also, a competitor added a new hotel tower with 620 rooms
and plans to open more casino space in 1998. Several other companies
have announced plans to expand existing or construct new casino/hotels
in Atlantic City.
RESULTS OF OPERATIONS - Comparison of Years ended December 31, 1997 and
1996
Gaming revenues were $244.2 million for the year ended December 31,
1997, a decrease of $14.5 million or 5.6% from gaming revenues of $258.7
million for the comparable period in 1996. This decrease in gaming
revenues consisted of a reduction in both table games and slot revenues.
Slot revenues were $170.0 million for the year ended December 31,
1997, a decrease of $10.4 million or 5.8% from $180.4 million for the
comparable period in 1996. This decrease was due to a decrease in slot
handle (dollar amounts wagered) of $102.6 million or 5.0% to $1.9
billion for the year ended December 31, 1997. This was in part assisted
by a decrease in cash promotional expenses (amount of coin coupons and
cash back to patrons) of approximately $4.5 million or 12.1% associated
with the shifting of marketing programs that contribute marginal returns
and are reflected as revenue. Management is continuing the process of
upgrading its slot product and in September 1997 completed an upgrade
consisting of 35% of its $0.25 denomination slot product to include more
popular machines and in December 1997 finalized an agreement to include
new high tech slot products as part of the slot mix that could be
replaced at no cost with new product if customer demand should change
at any time.
Table games revenues were $69.0 million for the year ended December
31, 1997, a decrease of $2.6 million or 3.6% from $71.6 million for the
comparable period in 1996. This decrease was due to a combination of
a reduction in table games drop (the dollar amount of chips purchased)
of $12.3 million or 2.6% to $458.6 million for the year ended December
31, 1997 from $470.9 million for the comparable period in 1996, and a
reduction in hold percentage (ratio of casino win to total amount of
chips purchased) of 0.2 percentage points to 15.0% for the year ended
December 31, 1997 from 15.2% for the comparable period in 1996.
Additionally, management has eliminated table game market segments that
it determined had not provided incremental profit.
Poker, Simulcast and Keno revenues were $5.2 million for the year
ended December 31, 1997, a decrease of $1.5 million or 22.4% from $6.7
million for the comparable period in 1996. Management significantly
reduced the hours of operations for these gaming activities because of
unfavorable returns, and in March 1998 elected to eliminate both poker
and keno as a result of less than desired operating results.
Other revenues were $54.9 million for the year ended December 31,
1997, an increase of $1.5 million or 2.8% from other revenues of $53.4
million for the comparable period of 1996. Other revenues include
revenues from rooms, food and beverage, and miscellaneous items. The
increase is primarily attributable to management's decision to introduce
more entertainers on a more frequent basis while eliminating its revue
act, which contributed to a $1.7 million or 32.7% increase in total
entertainment headliner revenues to $6.9 million for the year ended
December 31, 1997 from $5.2 million for the comparable period in 1996.
This is partially offset by a $782,000 decrease in food and beverage
revenues due to a $0.54 or 4.5% decrease in the average check from 1996.
Gaming costs and expenses were $154.6 million for the year ended
December 31, 1997, a decrease of $10.4 million or 6.3% from expenses of
$165.0 million for the comparable period in 1996. This represents costs
and expenses associated with table games, slot operations, win
contribution expense, and promotional items and services provided to
patrons. The decrease is primarily due to management's implementation
of various cost containment efforts, and a discontinuance of marketing
efforts towards certain unprofitable segments.
Selling, general and administrative costs were $29.0 million for the
year ended December 31, 1997, a decrease of $5.7 million or 16.4% from
expenses of $34.7 million for the comparable period in 1996. The
decrease is primarily due to management's implementation of various
efficiency programs and the consolidation of its management
organizational structure.
Income from operations was $12.6 million for the year ended December
31, 1997, an increase of $3.8 million or 43.2% from income of $8.8
million for the comparable period in 1996. Current year depreciation
and amortization expense includes changes in estimated useful lives of
assets as well as charges for amortization of goodwill.
Interest expense, net of amortization, was $18.6 million for the year
ended December 31, 1997, an increase of $400,000 or 2.2% from interest
expense of $18.2 million for the comparable period in 1996. This
currently represents interest expense associated with the Senior Notes
as well as the remaining Mortgage Notes and Junior Mortgage Notes.
Interest income and other income were $3.1 million for the year ended
December 31, 1997, an increase of $800,000 or 34.8% from income of $2.3
million for the comparable period in 1996. The increase is directly
attributable to increased interest income attributable to increased cash
flows as a result of improved operating results and the implementation
of new cash management procedures.
RESULTS OF OPERATIONS - Comparison of Years ended December 31, 1996 and
1995
Gaming revenues were $258.7 million for the year ended December 31,
1996, a decrease of $9.5 million or 3.5% from gaming revenues of $268.2
million for the comparable period in 1995. This decrease in gaming
revenues consisted of a reduction in both table games and slot revenues.
Slot revenues were $180.4 million for the year ended December 31,
1996, a decrease of $7.0 million or 3.7% from $187.4 million for the
comparable period in 1995. This decrease was due to a decrease in slot
handle (dollar amounts wagered) of $12.9 million or 0.6% to $2.0 billion
for the year ended December 31, 1996 from $2.0 billion for the
comparable period in 1995.
Table games revenues were $71.6 million for the year ended December
31, 1996, a decrease of $2.1 million or 2.8% from $73.7 million for the
comparable period in 1995. This decrease was primarily due to a
decrease in table games drop (the dollar amount of chips purchased) of
$28.4 million or 5.7% to $470.9 million for the year ended December 31,
1996 from $499.3 million for the comparable period in 1995, partially
offset by a hold percentage (ratio of casino win to total amount of
chips purchased) increase of 0.4 percentage points to 15.2% for the year
ended December 31, 1996 from 14.8% for the comparable period in 1995.
Poker, Simulcast and Keno revenues were $6.7 million for the year
ended December 31, 1996, a decrease of $400,000 or 5.6% from $7.1
million for the comparable period in 1995.
Other revenues were $53.4 million for the year ended December 31,
1996, a decrease of $86,000 or 0.2% from other revenues of $53.5 million
for the comparable period of 1995. Other revenues include revenues from
rooms, food and beverage, and miscellaneous items.
Gaming costs and expenses were $165.0 million for the year ended
December 31, 1996, a decrease of $8.7 million or 5.6% from expenses of
$156.3 million for the comparable period in 1995. This represents costs
and expenses associated with table games, slot operations, win
contribution expense, and promotional items and services provided to
patrons.
Selling, general and administrative costs were $34.7 million for the
year ended December 31, 1996, a decrease of $800,000 or 2.3% from
expenses of $35.5 million for the comparable period in 1995.
Income from operations was $8.8 million for the year ended December
31, 1996, a decrease of $17.5 million or 66.5% from income of $26.3
million for the comparable period in 1995.
Interest expense, net of amortization, was $18.2 million for the year
ended December 31, 1996 and for the comparable period in 1995.
Interest income and other income were $2.3 million for the year ended
December 31, 1996, a decrease of $100,000 or 4.2% from income of $2.4
million for the comparable period in 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
An index to the financial statements and required financial
statement schedules is set forth at Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
SINA filed a Current Report on Form 8-K on August 11, 1997 to
report the change in RIH's independent public accountants.
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 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.)
(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.)
(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.)
(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.)
(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.)
(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)(a) Financial data schedule for the period ended December 31, 1997.
(27)(b) Restated financial data schedule for the period ended
December 31, 1996.
_________________
* 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 long-term debt.
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by RIH during the fourth
quarter of 1997.
(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."
RESORTS INTERNATIONAL HOTEL, INC.
INDEX TO FINANCIAL STATEMENTS
Page
Financial Statements Reference
Report of Independent Public Accountants F-1
Balance Sheets at December 31, 1997 and 1996 F-3
Statements of Operations for the years ended
December 31, 1997, 1996 and 1995 F-4
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 F-5
Statements of Changes in Shareholder's Equity
for the years ended December 31, 1997, 1996 and 1995 F-6
Notes to Financial Statements F-7
Financial Statement Schedule:
Schedule II: Valuation Accounts for the years ended
December 31, 1997, 1996 and 1995 F-18
Supplementary Data
Selected Quarterly Financial Data (Unaudited) F-19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholder
Resorts International Hotel, Inc.:
We have audited the accompanying balance sheet of Resorts
International Hotel, Inc. (a New Jersey corporation) as of December
31, 1997, and the related statements of operations, accumulated
deficit and cash flows for the year then ended. These financial
statements and the schedule referred to below are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audit.
We conducted our audit 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 audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Resorts International Hotel, Inc. as of December 31, 1997, and the
results of its operations and its cash flows for the year then ended,
in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed in
the index to the financial statements is presented for the purpose of
complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in our audit of the basic
financial statements, and in our opinion, fairly states in all
material respects the financial data required to be set forth therein
in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
February 9, 1998
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Shareholder
Resorts International Hotel, Inc.:
We have audited the accompanying balance sheet of Resorts
International Hotel, Inc. as of December 31, 1996 (post-acquisition
basis). We have also audited the accompanying balance sheet as of
December 31, 1995, and the related statements of operations, changes in
shareholder's equity, and cash flows for each of the two 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 financial statements referred to above present
fairly, in all material respects, the financial position of Resorts
International Hotel, Inc. at December 31, 1996 (post-acquisition basis),
and at December 31, 1995, and the results of its operations and its
cash flows for each of the two 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.
Ernst & Young LLP
Philadelphia, Pennsylvania
February 14, 1997
RESORTS INTERNATIONAL HOTEL, INC.
BALANCE SHEETS
(In thousands, except par value)
December 31, December 31,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents (Note 3) $ 43,250 $20,892
Restricted cash - 750
Receivables, net of allowance for doubtful
accounts of $3,023 and $3,758 respectively
(Note 4) 4,832 5,936
Inventories 1,730 1,194
Prepaid expenses 1,600 1,844
Total current assets 51,412 30,616
Property and equipment (Note 2):
Land and land rights 83,147 72,254
Land improvements 1,001 932
Hotels and other buildings 122,885 122,314
Furniture, machinery and equipment 20,139 13,726
Construction in progress 1,743 -
228,915 209,226
Less accumulated depreciation (10,934) -
Net property and equipment 217,981 209,226
Deferred charges and other assets 18,796 12,637
Goodwill, net of amortization of $2,473 and
$0 respectively 103,400 98,923
Total assets $391,589 $351,402
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 282 $ 636
Accounts payable 4,014 3,064
Accrued payroll 7,724 9,077
Interest payable to affiliate 5,483 4,244
Accrued expenses (Note 6) 9,074 18,211
Other current liabilities (Note 6) 2,089 1,955
Due to SINA 2,393 2,422
Total current liabilities 31,059 39,609
Notes payable to affiliate, including
unamortized (discounts) premiums of ($525)
and $8,826 respectively (Note 7) 205,925 155,927
Other long-term debt - 283
Deferred income taxes 35,457 37,500
Shareholder's equity:
Common stock - $1 par value 1,000 1,000
Capital in excess of par 124,033 117,083
Accumulated deficit (5,885) -
Total shareholder's equity 119,148 118,083
Total liabilities and shareholder's
equity $391,589 $351,402
The accompanying notes are an integral part of these financial statements.
RESORTS INTERNATIONAL HOTEL, INC.
STATEMENTS OF OPERATIONS
(In thousands)
For the Year Ended December 31,
1997 1996 1995
Successor Predecessor Predecessor
REVENUES:
Gaming $244,156 $258,672 $268,224
Food and beverage 27,085 27,867 27,769
Rooms 16,514 16,010 16,066
Other 11,344 9,534 9,662
Gross revenues 299,099 312,083 321,721
Less - Promotional allowances (28,465) (26,272) (26,187)
Net revenues 270,634 285,811 295,534
COST AND EXPENSES:
Gaming 154,554 165,017 156,321
Food and beverage 15,973 16,747 15,603
Rooms 3,036 3,604 3,703
General and administration 29,017 34,727 35,471
Depreciation and amortization 13,457 12,345 13,415
Management fee (Note 8) 8,971 9,363 9,651
Other 33,045 35,193 35,024
Total costs and expenses 258,053 276,996 269,188
Income from operations 12,581 8,815 26,346
OTHER INCOME AND (EXPENSES):
Interest and other income 3,130 2,293 2,386
Interest expense (18,428) (16,702) (16,740)
Amortization of debt premiums,
discounts and issue costs (211) (1,527) (1,452)
(Loss) Income before extraordinary
item (2,928) (7,121) 10,540
Extraordinary item - loss on
extinguishment of debt (net of
income tax benefit of $2,043) (2,957) - -
Net (loss) income $(5,885) $(7,121) $ 10,540
The accompanying notes are an integral part of these financial statements.
<TABLE>
RESORTS INTERNATIONAL HOTEL, INC.
STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
For the Year Ended December 31,
1997 1996 1995
Successor Predecessor Predecessor
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Reconciliation of net (loss) income to
net cash provided by (used in) operating
activities:
Net (loss) income $(5,885) $(7,121) $10,540
Adjustments to reconcile net (loss) income
to net cash provided by (used in) operating
activities:
Extraordinary loss on extinguishment of
debt, net of income tax benefit 2,957 - -
Depreciation and amortization 13,457 12,345 13,415
Amortization of debt premiums, discounts
and issue costs 211 1,527 1,452
Provision for doubtful receivables 786 1,417 925
Provision for discount on CRDA obligations,
net of amortization 987 1,497 1,561
Deferred tax benefit - - (450)
Net loss on dispositions of property and
equipment - 35 18
Net decrease (increase) in receivables 318 (467) (1,879)
Net (increase) decrease in inventories
and prepaid expenses (292) (7,752) 1,834
Net decrease (increase) in deferred
charges and other assets 2,005 (1,435) 530
Net (decrease) increase in accounts
payable and accrued
liabilities (816) (630) 1,697
Net increase in interest payable to
affiliates 1,239 - 131
Net cash provided by (used in) operating
activities 14,967 (584) 29,774
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (19,739) (13,126) (13,019)
CRDA deposits and bond purchases
(Note 5) (3,122) (3,070) (3,152)
Net cash used in investing activities (22,861) (16,196) (16,171)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of borrowings from affiliates 199,084 - 1,815
Payments to secure borrowings (6,460) - -
Repayments of affiliated notes (153,712) - -
Advances from (repayments to) SINA (6,740) 1,208 (3,197)
Payments of merger costs (2,027) (974) -
Other debt repayments (643) (589) (320)
Net cash provided by (used in)
financing activities 29,502 (355) (1,702)
Net increase (decrease) in cash and
cash equivalents 21,608 (17,135) 11,901
Cash and cash equivalents at beginning
of period 21,642 38,777 26,876
Cash and cash equivalents at end of
period $43,250 $21,642 $38,777
The accompanying notes are an integral part of these financial statements.
</TABLE>
RESORTS INTERNATIONAL HOTEL, INC.
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(In thousands)
Common Capital in Accumulated
Stock excess of par Deficit
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 (Note 1):
Eliminate pre-Merger
retained earnings 16,189 (16,189)
Fair value adjustments 79,528
Balance at December 31,1996 1,000 117,083
Net loss for year 1997 (5,885)
Additional Merger related
items 6,950
Balance at December 31,
1997 $1,000 $124,033 $(5,885)
The accompanying notes are an integral part of these financial
statements.
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO 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 Date"), 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
net assets to reflect its portion of the cost of SIHL's investment in
SINA. In doing so, RIH's 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
were incomplete at that time, the fair value adjustments reflected
herein were management's preliminary determination of such values based
on information currently available. Valuation adjustments were made in
1997 as additional information became available that allowed for more
accurate valuations. These adjustments resulted in an increase to
goodwill and capital in excess of par of $6,950,000. All of SINA's
consolidated goodwill, which resulted 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 as
of the Effective Date.
Goodwill is being 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 statement of
operations for the period between the Effective Date and December 31,
1996 was immaterial, RIH recorded the basis adjustments as of December
31, 1996. The impact on RIH's operations is reflected in RIH's
statements of operations commencing January 1, 1997.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassifications
Certain reclassifications have been made to the previous years'
balances to conform with the current year presentation.
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.
RIH provides allowances for doubtful accounts arising from casino,
hotel and other services which are based upon a specific review of
certain outstanding receivables. In determining the amounts of the
allowances, RIH is required to make certain estimates and assumptions
and actual results may differ from those assumptions.
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.
Promotional Allowances
The Statements of Operations reflect each category of operating
revenues including the retail value of complimentary services provided
to casino patrons without charge. The rooms, food and beverage, and
other casino/hotel operations departments allocate a percentage of their
total operating expenses to the casino department 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) 1997 1996 1995
Rooms $ 5,092 $ 5,207 $ 4,820
Food and beverage 15,042 15,274 15,479
Other casino/hotel operations 5,192 5,258 5,417
$ 25,326 $ 25,739 $ 25,716
Cash Equivalents
RIH considers all of its short-term money market securities
purchased with original 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 14 years
Building and building improvements 40 years
Furniture, fixtures and equipment 2 - 5 years
In conjunction with the Merger, certain estimated useful lives were
revised and were used to depreciate property and equipment for financial
reporting purposes commencing in 1997.
The provisions of Statement of Financial Accounting Standards No.
121 "Accounting for the Impairment of Long-Lived Assets" requires, among
other things, that an entity review its long-lived assets and certain
related intangibles for impairment whenever changes in circumstances
indicate that the carrying amount of an asset may not be fully
recoverable. As a result of its review, the Company does not believe
that any such changes in circumstances have occurred.
Casino Reinvestment Development Authority ("CRDA") Obligations
Under the New Jersey Casino Control Act ("Casino Control Act"), RIH
is obligated to purchase CRDA bonds, which will bear a below-market
interest rate, or make an alternative qualifying investment. RIH
charges to expense an estimated discount related to CRDA investment
obligations as of the date the obligation arises based on fair market
interest rates of similar quality bonds in existence as of that date.
On the date RIH actually purchases the CRDA bond, the estimated discount
previously recorded is adjusted to reflect the actual terms of the bonds
issued and the then existing fair market interest rate for similar
quality bonds.
The discount on CRDA bonds purchased is amortized to interest
income over the life of the bonds using the effective interest rate
method.
Income Taxes
RIH and 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 "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. 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. Note 10 gives components of RIH's deferred tax liability.
Although RIH is a member of a consolidated group for federal income tax
purposes, RIH applies SFAS 109 on a separate return basis for financial
reporting purposes.
Certain indentures described in Note 7 provide for a tax sharing
agreement between RIH and 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 - CASH EQUIVALENTS
RIH's cash equivalents at December 31, 1997 included reverse
repurchase agreements (federal government securities purchased under
agreements to resell those securities) of $31,775,000, under which RIH
had not taken delivery of the underlying securities.
NOTE 4 - RECEIVABLES
Components of receivables at December 31 were as follows:
(In Thousands of Dollars) 1997 1996
Gaming $ 6,440 $ 7,449
Less allowance for doubtful accounts (3,011) (3,626)
3,429 3,823
Non-gaming:
Hotel and related 535 802
Other 880 1,443
1,415 2,245
Less allowance for doubtful accounts (12) (132)
1,403 2,113
$ 4,832 $ 5,936
NOTE 5 - CRDA OBLIGATORY INVESTMENTS
The Casino Control Act, as amended, requires a licensee to
purchase bonds issued by the CRDA or make other investments authorized
by the CRDA, in an amount equal to 1.25% of a licensee's gross gaming
revenue, as defined.
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 1997, 1996, and 1995 for
discounts on obligations arising in those years were $995,000,
$1,505,000, and $1,567,000, respectively.
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, 1997, RIH had $10,474,000 face value of bonds
issued by the CRDA and had $13,608,000 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 deferred charges and other assets in RIH's Balance Sheet.
NOTE 6 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Components of other accrued expenses and other current liabilities
at December 31 were as follows:
(In Thousands of Dollars) 1997 1996
Accrued expenses
Utilities $ 523 $ 536
Merger and related costs - 4,179
CRDA liabilities 1,742 5,721
Legal and related costs 1,955 2,639
Insurance and related costs 1,321 1,692
Other 3,533 3,444
$ 9,074 $18,211
Other current liabilities
Unredeemed chip liability $ 1,611 $ 1,248
Customer deposits 178 212
Other 300 495
$ 2,089 $ 1,955
NOTE 7 - NOTES PAYABLE TO AFFILIATE
The components of notes payable to affiliate at December 31 were as
follows:
(In Thousands of Dollars) 1997 1996
11% Mortgage Notes, due 2003 $ 5,354 $125,000
Unamortized premium 285 7,500
5,639 132,500
11.375% Junior Mortgage Notes, due 2004 1,095 35,000
Less principal amount of Junior Mortgage
Notes held by RIH - (12,899)
1,095 22,101
Unamortized premium 60 1,326
1,155 23,427
9% Senior Notes, due 2007 200,000 -
Unamortized discount (869) -
199,131 -
$205,925 $155,927
Due to the interest rates and terms thereof, the carrying values of
the long-term debt at December 31, 1997 and 1996 approximates its fair
values.
Resorts International Hotel Financing, Inc. ("RIHF"), a wholly
owned financing subsidiary of SINA, issued $125 million of 11% Mortgage
Notes due 2003 (the "Mortgage Notes") and $35 million of 11.375% Junior
Mortgage Notes due 2004 (the "Junior Mortgage Notes") and RIH issued the
RIH Promissory Note and the RIH Junior Promissory Note (collectively,
the "RIH Notes"). 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, and RIH amended and restated the RIH Notes
making them payable to RIHF.
In February 1997, RIHF offered (the "Offer") to purchase its
outstanding Mortgage Notes and Junior Mortgage Notes. In connection with
the Offer, RIHF sought the consent of the holders (the "Consents") to
amend the relevant indentures to, among other things, release the
collateral for the Mortgage Notes and Junior Mortgage Notes. Pursuant
to the Offer, RIHF acquired $119,645,000 principal amount of Mortgage
Notes and $21,001,000 principal amount of Junior Mortgage Notes, for a
total purchase price (including payments relating to the Consents) of
$153,712,000. There remains outstanding $5,355,000 principal amount of
Mortgage Notes and $1,100,000 principal amount of Junior Mortgage Notes,
which, as a result of the amendments to the indentures, are now
unsecured obligations of RIHF. The remaining Junior Mortgage Notes
continue to trade as part of units consisting of $1,000 principal amount
of Junior Mortgage Notes and .1928 of an ordinary share of SIHL.
In connection with the Offer, SIHL and SINA (the "Issuers") issued
$200,000,000 principal amount of 9% Senior Subordinated Notes due 2007
(the "Senior Notes") 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 Senior Notes, and RIH's guarantee of
the Senior Notes. RIH transferred to RIHF (i) $153,712,000 in cash
which RIHF used to pay the purchase price, (including payments related
to the Consents), excluding accrued interest, for 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. In exchange for this,
the $125,000,000 and $35,000,000 promissory notes from RIH to RIHF (the
"RIH Notes"), the terms of which mirror the terms of the Mortgage Notes
and Junior Mortgage Notes, respectively, were canceled and RIH issued
new promissory notes to RIHF in the amounts of, and with terms that
mirror, the remaining Mortgage Notes and Junior Mortgage Notes. The
excess of the cash and carrying value of the Junior Mortgage Notes
tendered by RIH to RIHF over the net decrease in carrying value,
excluding accrued interest, of the affiliated notes from RIH to RIHF,
plus estimated costs of the Offer, which were borne by RIH, resulted in
an extraordinary loss of $5,000,000. RIH also recorded a deferred tax
benefit of $2,043,000 related to this extraordinary item.
Interest on both the Senior Notes and the New RIH Note is payable
on March 15 and September 15 in each year. These payments commenced
September 15, 1997 with an interest payment of $9,550,000. The
indenture for the Senior Notes (the "Senior Indenture") contains certain
covenants, including limitations on the ability of the Issuers and the
Guarantors (including RIH) 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.
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.
No principal payments are due on the RIH Notes during the next five
years.
The effective interest rates during the three years ended December
31, 1997, 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 8 - RELATED PARTY TRANSACTIONS
RIH recorded the following expenses from SINA and its other
subsidiaries:
(In Thousands of Dollars) 1997 1996 1995
Expenses:
Interest and amortization of
discounts on notes payable
to SINA $ 14,596 $ - $ -
Interest and amortization of
premiums on notes payable to
RIHF 3,587 18,062 18,071
Management fee 8,971 9,363 9,651
Amortization of debt issuance
costs 368 - -
Property rentals to SINA 325 1,249 810
Billboard rental to affiliate 50 50 50
Other charges from affiliates 75 - -
$ 27,972 $ 28,724 $ 28,582
SINA charges RIH a 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. See also Note 10 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 Date.
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 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 Date, RIH paid Griffin Group fees totaling $11 million for the
license and services through September 16, 2001.
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 moneys paid to it and
is entitled to be paid all amounts owing to it as of the date of
termination.
Because of changes in RIH's marketing strategy, the significant
reduction 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 as having indeterminable future value in connection with
restating RIH's assets and liabilities as of December 31, 1996.
NOTE 9 - RETIREMENT PLANS
RIH has a defined contribution plan in which substantially all
non-union employees are eligible to participate. Employees of certain
other affiliated companies are also eligible to participate in this
plan. RIH and other subsidiaries of SINA make contributions to the plan
based on a percentage of eligible employee contributions. RIH's pension
expense for this plan was $730,000, $714,000 and $641,000 for the years
1997, 1996 and 1995, 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, $1,051,000 and
$881,000 for the years 1997, 1996 and 1995, respectively.
NOTE 10 - INCOME TAXES
RIH recorded income tax provisions as follows from continuing
operations:
(In Thousands of Dollars) 1997 1996 1995
Current:
Federal $ - $ - $1,100,000
State - - -
- - 1,100,000
Deferred:
Federal $ - $ - $ -
State - - -
- - -
$ - $ - $1,100,000
In 1997, RIH also recorded $1,593,000 and $450,000 in current
federal and state benefits resulting from an extraordinary loss.
The components of the deferred tax liabilities are as follows:
(In Thousands of Dollars) 1997 1996
Deferred tax liabilities:
Basis differences on property and
equipment $ (43,900) $(43,500)
Other (2,600) (2,600)
Total deferred tax liabilities (46,500) (46,100)
Deferred tax assets:
NOL carryforwards 81,300 67,200
Book reserves not yet deductible for
tax 15,600 21,400
Basis differences on notes payable to
affiliate 500 11,300
Tax credit carryforwards 800 800
Other 5,000 5,600
Total deferred tax assets 103,200 106,300
Valuation allowance for deferred tax
assets (92,157) (97,700)
Deferred tax assets, net of valuation
allowance 11,043 8,600
Net deferred tax liabilities $ (35,457) $(37,500)
The effective income tax rate on income (loss) before extraordinary
item varies from the statutory federal income tax rate as a result of
the following factors:
1997 1996 1995
Statutory federal income tax rate (35.0%) (35.0%) 35.0%
NOLs and temporary differences for
which no taxes were provided or
benefits recognized (13.5%) 34.7% (38.9%)
Nondeductible provisions & expenses 44.3% - -
Other 4.2% 0.3% 3.9%
Effective tax rate 0.0% 0.0% 0.0%
For federal tax purposes RIH had NOL carryforwards of approximately
$232,000,000 at December 31, 1997 which expire as follows: $40,000,000
in 2003, $50,000,000 in 2004, $96,000,000 in 2005, $1,000,000 in 2009,
$6,000,000 in 2011, and $39,000,000 in 2012. $193,000,000 of 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, 1997, RIH had approximately $47,000,000 of NOL
carryforwards in the state of New Jersey which expire as follows:
$1,000,000 in 2001, and $5,000,000 in 2003 and $41,000,000 in 2004.
Also at December 31, 1997, 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.
NOTE 11 - 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) 1997 1996 1995
Non-cash investing and financing
transactions:
Revaluation adjustments resulting
from Merger $ 6,950 - -
Adjustments to net assets
to reflect RIH's portion of SIHL's
investment in SINA - $79,528 -
NOTE 12 - COMMITMENTS AND CONTINGENCIES
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 financial statements.
<TABLE>
SCHEDULE II
RESORTS INTERNATIONAL HOTEL, INC.
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, 1997:
Allowance for doubtful
receivables:
Gaming $ 3,626 $ 836 $(1,451) $ 3,011
Other 132 (50) (70) 12
$ 3,758 $ 786 $(1,521) $ 3,023
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
(a) Write-off of uncollectible accounts, net of recoveries.
</TABLE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(In Thousands of Dollars)
The table below reflects selected quarterly financial data for the years 1997
and 1996.
<CAPTION>
1997 1996
For the Quarter First Second Third Fourth First Second Third Fourth
Successor Predecessor
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $65,166 $71,568 $74,402 $59,498 $64,588 $75,359 $80,141 $65,723
Earnings (loss) from
operations 905 5,208 8,350 (1,882) (417) 5,590 7,042 (3,400)
Other income (deductions),
net (a) (3,634) (3,886) (3,973) (4,016) (3,931) (3,923) (3,957) (4,125)
Net earnings (loss) $(5,686) $1,322 $4,377 $(5,898) $(4,348) $ 1,667 $ 3,085 $(7,525)
(a) Includes interest income, interest expense and amortization of debt discounts.
</TABLE>
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 27, 1998 /s/ George T. Papanier
George T. Papanier
Executive Vice President and
Chief Operating 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.
/s/ David R. Hughes March 27, 1998
David R. Hughes
Senior Vice President of Finance
(Authorized Officer of Registrant
and Chief Financial Officer)
/s/ George T. Papanier March 27, 1998
George T. Papanier
Executive Vice President
(Authorized Officer of Registrant
and Chief Operating 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.
<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, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> $43,250<F1>
<SECURITIES> 0
<RECEIVABLES> $6,969
<ALLOWANCES> $3,023
<INVENTORY> $1,730
<CURRENT-ASSETS> $51,412
<PP&E> $228,915
<DEPRECIATION> $10,934
<TOTAL-ASSETS> $391,589
<CURRENT-LIABILITIES> $31,059
<BONDS> $205,925<F2>
<COMMON> $1,000
0
0
<OTHER-SE> $118,148
<TOTAL-LIABILITY-AND-EQUITY> $391,589
<SALES> 0
<TOTAL-REVENUES> $270,634
<CGS> 0
<TOTAL-COSTS> $206,608
<OTHER-EXPENSES> $13,457<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $18,639
<INCOME-PRETAX> $(2,928)
<INCOME-TAX> 0
<INCOME-CONTINUING> $(2,928)
<DISCONTINUED> 0
<EXTRAORDINARY> $(2,957)
<CHANGES> 0
<NET-INCOME> $(5,885)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $31,721.
<F2>NET OF UNAMORTIZED (DISCOUNTS) PREMIUMS.
<F3>INCLUDES DEPRECIATION EXPENSE OF $10,984 AND AMORTIZATION OF $2,473.
</FN>
</TABLE>
<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.
</LEGEND>
<RESTATED>
<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> $285,811<F3>
<CGS> 0
<TOTAL-COSTS> $220,561<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>CERTAIN RECLASSIFICATIONS HAVE BEEN MADE TO THE 1996 BALANCES
TO CONFORM WITH CURRENT YEAR PRESENTATION.
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
