<PAGE>
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 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 number 1-12802
--------
HARVEYS CASINO RESORTS
(Exact Name of Registrant as Specified in its Charter)
Nevada 88-0066882
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 50 & Stateline Avenue
P.O. Box 128
Lake Tahoe, Nevada 89449
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 588-2411
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 __
On July 7, 1997 the registrant had outstanding 9,833,484 shares of its $.01
par value,common stock.<PAGE>
<PAGE>
HARVEYS CASINO RESORTS
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets,
May 31, 1997 and November 30, 1996 3
Condensed Consolidated Statements of
Operations For the Three Months Ended
and the Six Months Ended May 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash
Flows For the Six Months Ended May 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HARVEYS CASINO RESORTS
CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
ASSETS May 31, November 30,
1997 1996
-------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 21,949 $ 21,121
Accounts and notes receivable, net 4,972 8,760
Prepaid expenses 5,189 3,992
Other current assets 7,227 7,275
-------- -------
Total current assets 39,337 41,148
Property and equipment (net of
accumulated depreciation
of $119,202 and $112,977) 321,081 314,908
Notes receivable 2,164 4,868
Other assets 17,589 17,607
Investment in unconsolidated affiliate 16,194 15,237
------- --------
Total assets $396,365 $393,768
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 1,935 $ 2,753
Accounts and contracts payable 8,368 9,542
Accrued expenses 19,072 17,140
-------- --------
Total current liabilities 29,375 29,435
Long-term debt, net of current portion 179,832 181,354
Deferred income taxes 19,339 19,339
Other liabilities 14,745 13,877
-------- --------
Total liabilities 243,291 244,005
Stockholders' equity
Common stock, $.01 par value;
30,000,000 shares authorized;
shares issued 9,829,204 and 9,818,322 98 98
Additional paid-in capital and other 38,394 38,058
Retained earnings 114,582 111,607
-------- --------
Total stockholders' equity 153,074 149,763
-------- --------
Total liabilities and stockholders' equity $396,365 $393,768
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
HARVEYS CASINO RESORTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended May 31, Ended May 31,
------------- --------------
1997 1996 1997 1996
----- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Casino $ 55,252 $ 45,339 $ 99,249 $ 82,274
Lodging 7,515 6,195 14,461 12,259
Food and beverage 10,811 9,016 19,971 17,445
Other 1,571 1,417 3,168 2,959
Management fees and joint venture 1,676 1,508 2,670 2,568
Less: Casino promotional
allowances (5,116) (4,095) (9,695) (8,651
-------- --------- --------- ---------
Total net revenues 71,709 59,380 129,824 108,854
-------- --------- --------- ---------
Costs and expenses
Casino 25,679 21,854 47,581 41,616
Lodging 3,432 2,786 6,549 5,073
Food and beverage 7,363 4,735 14,361 9,081
Other operating 675 67 1,338 1,324
Selling, general and
administrative 18,477 16,785 34,892 31,172
Depreciation and amortization 4,523 3,887 8,944 7,448
Pre-opening expenses - 508 - 4,098
-------- ------- -------- --------
Total costs and expenses 60,149 51,233 113,665 99,812
-------- ------- -------- --------
Operating income 11,560 8,147 16,159 9,042
-------- ------- -------- --------
Other income(expense)
Interest income 120 194 163 392
Interest expense (4,896) (2,908) (9,847) (5,059)
Other, net (101) (384) 215 (221)
-------- -------- -------- --------
(4,877) (3,098) (9,469) (4,888)
-------- -------- -------- --------
Income before income taxes and
extraordinary item 6,683 5,049 6,690 4,154
Income tax provision (2,705) (1,905) (2,708) (1,585)
-------- -------- -------- ---------
Income before extraordinary item 3,978 3,144 3,982 2,569
Extraordinary item-loss on early
retirement of debt, net of income
tax benefit - (141) - (141)
-------- -------- ------- --------
Net income $ 3,978 $ 3,003 $ 3,982 $ 2,428
======== ======= ====== ========
Income per common share
Income before extraordinary
item $ 0.40 $ 0.33 $ 0.41 $ 0.27
Extraordinary item-loss on early
retirement of debt, net of income
tax benefit $ - $ (0.02) $ - $ 0.02)
---------- --------- ---------- ---------
Net income per common share $ 0.40 $ 0.31 $ 0.41 $ 0.25
========== ========= ========== ========
Weighted average shares used in
calculating income per common
share 9,829,885 9,623,421 9,829,204 9,537,912
========== ========== ========== =========
Dividends declared per common
share $ 0.05 $ 0.04 $ 0.10 $ 0.08
========== ========== ========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> HARVEYS CASINO RESORTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended May 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities
Net income $ 3,982 $ 2,428
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 8,944 7,448
Other, net 3,199 11,595
---------- ----------
Net cash provided by operating activities 16,125 21,471
---------- ----------
Cash flows from investing activities
Capital expenditures (15,638) (48,556)
Proceeds from disposition of assets 3,603 -
Other, net (109) 245
---------- ---------
Net cash used in investing activities (12,144) (48,311)
---------- ---------
Cash flows from financing activities
Purchase of notes and accrued interest
in consolidated subsidiary - (6,000)
Principal payments on long-term debt (12,028) (171,274)
Dividends paid (982) (768)
Proceeds from long-term debt 9,688 74,000
Proceeds from public debt offering - 150,000
Debt issuance costs - (5,683)
Other, net 169 (59)
---------- ---------
Net cash provided by (used in) financing activities (3,153) 40,216
---------- ---------
Increase in cash and cash equivalents 828 13,376
Cash and cash equivalents at beginning of period 21,121 10,493
---------- ---------
Cash and cash equivalents at end of period $ 21,949 $ 23,869
========== ==========
Supplemental cash flows disclosure
Cash paid for interest, net of amounts capitalized $ 9,372 $ 6,820
Cash paid for income taxes 663 302
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> HARVEYS CASINO RESORTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Consolidation - Harveys Casino Resorts, a Nevada
corporation, (the Company') is engaged in the casino entertainment
industry. The Company owns and operates Harveys Resort Hotel/Casino on the
south shore of Lake Tahoe, Nevada.
Until April 30, 1996, the Company, through its wholly-owned subsidiary,
Harveys C. C. Management Company, Inc. ( HCCMC') owned 70% of the equity
interest in Harveys Wagon Wheel Casino Limited Liability Company ( HWW')
which owns Harveys Wagon Wheel Hotel/Casino in Central City Colorado.
On April 30, 1996, the Company acquired all of the 30% minority interest in
HWW in exchange for common stock of the Company. HCCMC has a contract to
manage the Central City hotel and casino. Through its wholly-owned
subsidiary, Harveys L. V. Management Company, Inc. ( HLVMC'), the Company
owns 40% of the equity interest in Hard Rock Hotel, Inc. ( HRHC'), which
owns the Hard Rock Hotel and Casino in Las Vegas, Nevada. HLVMC has a
contract to manage the Las Vegas hotel and casino which opened for business
on March 9, 1995 (see Note 8). Additionally, the Company's wholly-owned
subsidiary, Harveys Iowa Management Company, Inc. ( HIMC') is the owner
and operator of Harveys Casino Hotel, a riverboat casino, hotel and
convention center complex in Council Bluffs, Iowa. The riverboat casino
portion of the complex opened for business on January 1, 1996 and the
land-based hotel opened for business on May 24, 1996.
The condensed consolidated financial statements include the accounts of
Harveys Casino Resorts and its majority and wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated.
Investments in unconsolidated affiliates are stated at cost adjusted by
equity in undistributed earnings or losses.
The condensed consolidated balance sheet as of November 30, 1996 has been
prepared from the audited financial statements at that date. The
accompanying condensed consolidated financial statements have been prepared
by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of financial
condition, results of operations and cash flows have been included. The
results of operations for the interim periods should not be considered
indicative of results for a full fiscal year.
These financial statements should be read in conjunction with the financial
statements, and notes thereto, in the Company's Annual Report on Form 10-K
for the year ended November 30, 1996.
<PAGE>
<PAGE>
2. Net Income Per Common Share - Net income per share is computed based on the
weighted average number of shares of common stock and dilutive common stock
equivalents outstanding during the period. Fully diluted per share
amounts are the same as primary per share amounts for all periods
presented.
3. Pre-opening Expenses - Pre-opening expenses are associated with the
acquisition, development and opening of the Company's new casino resorts.
These amounts are expensed when the resort commences operations and include
items that were capitalized as incurred prior to opening and items that are
directly related to the opening of the property and are non-recurring in
nature. Approximately $3.6 million of pre-opening expenses were expensed in
the first quarter of 1996 in connection with the Company's opening of
HIMC's riverboat casino in Council Bluffs, Iowa on January 1, 1996 and an
additional $0.5 million of pre-opening expenses were expensed in the
second quarter of 1996 coincident with the opening of the land-based
facilities in Council Bluffs on May 24, 1996.
4. Recently Adopted Accounting Standards - The Financial Accounting Standards
Board ( FASB') issued Statement of Financial Accounting Standards ( SFAS')
No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, in March 1995. This statement was
adopted by the Company for the fiscal year beginning December 1, 1996 and
requires that long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS No. 121 did not have an effect on the
financial position or results of operations of the Company.
The FASB issued SFAS No. 123, Accounting for Stock-Based Compensation, in
October 1995. This statement was adopted by the Company for the fiscal year
beginning December 1, 1996 and requires certain disclosures about the
impact on results of operations of the fair value of stock-based employee
compensation arrangements. Management intends to continue to account for
stock-based employee compensation arrangements in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and accordingly adoption of SFAS No. 123 did not have a
significant effect on the financial position or results of operations of
the Company. The Company will include the pro forma effects of this
statement in its notes to financial statements for the fiscal year ending
November 30, 1997.
5. Recently Issued Accounting Standards - The FASB has issued SFAS No. 128,
Earnings Per Share, which (a) simplifies current standards by eliminating
the presentation of primary earnings per share ( EPS') and requiring the
presentation of basic EPS, which includes no potential common shares and
thus no dilution, (b) requires companies with complex capital structures to
present basic and diluted EPS on the face of the income statement and,
(c) eliminates the modified treasury stock method of computing potential
shares. SFAS No. 128 will be effective for the Company beginning December
1, 1997, including interim periods ending after that date. On adoption,
restatement of all prior-period EPS data presented will be required. The
Company has not yet determined what effect, if any, the adoption of SFAS
No. 128 will have on the Company's EPS.
<PAGE>
<PAGE>
6. Commitments - The Company has completed construction of a parking facility
adjacent to Harveys Wagon Wheel Hotel/Casino in Central City, Colorado.
The facility will accommodate approximately 530 automobiles and was
completed in June 1997. The Company has entered into various contracts or
agreements relative to the construction of the parking facility. The cost
of the project is estimated to be approximately $10.8 million. Through
May 31, 1997, the Company had expended approximately $8.4 million.
7. Summarized Financial Information of Subsidiaries - The 10 5/8% Senior
Subordinated Notes due 2006, (the Senior Subordinated Notes'), issued by
the Company are guaranteed by all direct and indirect subsidiaries of the
Company except for subsidiaries which are inconsequential. The guarantees
are full and unconditional and are joint and several. The following
unaudited summarized combined financial information of the guarantor
subsidiaries includes the accounts of HCCMC, HWW (which became wholly owned
on April 30, 1996), HLVMC and HIMC (which commenced operations January 1,
1996). Full separate financial statements of the guarantor subsidiaries
have not been included because management has determined they are not
material to investors.
<TABLE>
<CAPTION> May 31, 1997 November 30, 1996
<S> <C> <C>
Balance Sheet Data (in thousands)
Assets
Current assets $ 17,062 $ 13,952
Noncurrent assets 199,988 191,279
---------- ----------
Total assets $ 217,050 $ 205,231
========== ==========
Liabilities and Stockholder's Equity
Current liabilities $ 37,749 $ 35,203
Noncurrent liabilities 124,380 122,414
Minority interest in subsidiary 2,315 2,098
Stockholder's equity 52,606 45,516
----------- ----------
Total liabilities and stockholder's
equity $ 217,050 $ 205,231
============ ==========
Three Months Six Months
Ended May 31, Ended May 31,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
Statement of Operations Data
(in thousands)
Net revenues $ 39,925 $ 29,160 $ 73,805 $ 50,775
Cost and expenses (30,407) (22,103) (58,214) (42,643)
Other expense (301) (2,448) (332) (3,827)
Income tax provision (3,730) (1739) (6,176) (1,644)
--------- --------- --------- ---------
Net income $ 5,487 $ 2,870 $ 9,083 $ 2,661
========= ========= ========= =========
</TABLE>
<PAGE>
7.Summarized Financial Information of Subsidiaries (continued)
<TABLE>
<CAPTION>
<S> <C> <C>
Statement of Cash Flows Data
(in thousands)
Net cash provided by operating activities $ 10,674 $ 11,624
Net cash used in investing activities (11,453 (42,667)
Net cash provided by financing activities 2,541 40,006
--------- ---------
Increase in cash and cash equivalents $ 1,762 $ 8,963
========= =========
</TABLE>
8. Subsequent Event - On July 1, 1997 the Company entered into a Stock
Purchase and Management Buyout Agreement ( the Stock Purchase Agreement')
with HRHC, Lily Pond Investments, Inc. ( Lily Pond') and HLVMC. Pursuant to
the Stock Purchase Agreement, among other things, HRHC will repurchase from
the Company all the capital stock of HRHC held by the Company, representing
40% of the currently outstanding capital stock of HRHC, and the Company's
management agreement will be terminated. The Company will continue to
manage the Hard Rock Hotel and Casino until the closing of the transaction.
The consummation of the transaction is subject to certain conditions and
approvals, including approval by Nevada gaming authorities. Upon closing,
the management agreement currently in effect between HRHC and HLVMC relating
to the management and operations of HRHC will terminate, and the
stockholders agreement among the Company, HRHC and Lily Pond will be
canceled. The total consideration to be paid to the Company upon closing
is $45 million cash.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
The Company currently owns and operates Harveys Resort Hotel/Casino on the
south shore of Lake Tahoe, Nevada, Harveys Wagon Wheel Hotel/Casino in Central
City, Colorado and Harveys Casino Hotel in Council Bluffs, Iowa. Additionally,
the Company owns a 40% equity interest in and manages the Hard Rock Hotel and
Casino in Las Vegas.
On July 1, 1997 the Company entered into an agreement whereby HRHC will
purchase the Company's interests in HRHC for $45 million in cash. The
consummation of the transaction is subject to certain conditions and approvals,
including approval by Nevada gaming authorities. Until the transaction closes,
the Company will continue to manage the operations of the Hard Rock Hotel and
Casino and will continue to recognize management fee income and equity in the
earnings from the Hard Rock Hotel and Casino. Upon closing, the management
agreement currently in effect will terminate and the Company will no longer
hold an equity interest in HRHC.
The following table presents certain operating results for the Company's
properties. The operating results for Harveys Resort Hotel/Casino have been
presented excluding the effects of corporate and new business development
expenses. Those expenses have been presented under the caption Corporate and
Development'. On April 30, 1996, the Company acquired the 30% minority
interest in HWW. As a result of the acquisition, Harveys Wagon Wheel
Hotel/Casino and HWW became wholly owned by the Company. The riverboat casino
portion of Harveys Casino Hotel opened on January 1, 1996 and the land-based
facilities opened on May 24, 1996. The operating results of Harveys L. V.
Management Company consist of fees earned by such entity for managing the
operations of the Hard Rock Hotel and Casino and the 40% equity interest in the
income of the Hard Rock Hotel and Casino.
<TABLE>
<CAPTION>
Three Months Six Months
Ended May 31, Ended May 31,
1997 1996 1997 1996
(dollars in thousands)
<S> <C> <C> <C> <C>
Net Revenues
Harveys Resort Hotel/Casino $ 31,784 $30,220 $ 56,019 $ 58,078
Harveys Wagon Wheel Hotel/Casino 12,149 11,720 22,431 21,404
Harveys Casino Hotel - Iowa 26,100 15,932 48,704 26,804
Harveys L. V. Management Compan 1,676 1,508 2,670 2,568
Operating Income (Loss)
Harveys Resort Hotel/ Casino $ 5,158 $ 4,143 $ 6,352 $ 6,529
Harveys Wagon Wheel Hotel/Casino 2,792 2,687 4,362 3,990
Harveys Casino Hotel - Iowa (1) 5,105 2,917 8,670 1,687
Harveys L. V. Management Company 1,621 1,453 2,559 2,455
Corporate and Development (3,116) (3,053) (5,784) (5,619)
EBITDA (2)
Harveys Resort Hotel/ Casino $ 7,147 $ 6,290 $ 10,329 $ 10,895
Harveys Wagon Wheel Hotel/Casino 3,548 3,411 5,868 5,484
Harveys Casino Hotel - Iowa 6,655 4,375 11,750 7,251
Harveys L. V. Management Company 1,676 1,508 2,670 2,566
Corporate and Development (2,943) (3,042 (5,514) (5,608)
/TABLE
<PAGE>
<PAGE>
Notes to the operating results
(1) The riverboat casino portion of Harveys Casino Hotel - Iowa commenced
casino operations on January 1, 1996, and the land- based hotel facilities
opened on May 24, 1996. The operating results for the three months and six
months ended May 31, 1996 include approximately $0.5 million and $4.1 million
of pre-opening expenses, respectively.
(2) EBITDA (operating income plus depreciation and amortization) should not be
construed as an indicator of the Company's operating performance, or as an
alternative to cash flows from operating activities as a measure of liquidity.
The Company has presented EBITDA solely as supplemental disclosure because the
Company believes that it enhances the understanding of the financial
performance of companies with substantial depreciation and amortization. For
the three months and six months ended May 31, 1996, Harveys Casino Hotel-Iowa's
EBITDA excludes approximately $0.5 million and $4.1 million of pre-opening
expenses, respectively.
COMPARISON OF THE SECOND QUARTERS ENDED MAY 31, 1997 AND MAY 31, 1996
The Company's consolidated net revenues for the second quarter of fiscal 1997
amounted to approximately $71.7 million, a new record for the Company's second
quarter and an increase of $12.3 million, or 20.8%, over net revenues recorded
in the second quarter of fiscal 1996. The improvement was attributable to the
$10.2 million increase in net revenues produced by Harveys Casino Hotel. The
increase in net revenues generated during the current year second quarter at
the Company's Lake Tahoe property amounted to approximately $1.6 million.
Harveys Wagon Wheel Hotel Casino experienced a 3.7% increase in net revenues,
up $0.4 million comparing fiscal year 1997 second quarter amounts to those
generated at the Central City, Colorado property's second quarter of operations
in fiscal 1996. The Hard Rock Hotel and Casino contributed an increase of
approximately $0.2 million to the Company's net revenues in the second quarter
of fiscal 1997, by way of management fees and equity in the joint venture
income.
Casino revenue for the second quarter of fiscal 1997 amounted to approximately
$55.3 million, an improvement of $9.9 million over the comparable quarter of
the prior year. The second quarter of gaming activity at the Company's Council
Bluffs facility produced approximately $22.8 million of casino revenue
accounting for approximately $7.4 million of the quarter-over-quarter increase.
The Company's Lake Tahoe and Colorado properties contributed $1.6 million and
$0.9 million, respectively, to the increase in casino revenues. Casino costs
and expenses increased for the comparable quarterly periods, up $3.8 million
to $25.7 million for the current year period. The Council Bluffs casino
accounted for $3.1 million of the increase while the Lake Tahoe and Colorado
operations accounted for approximately $0.1 million and $0.6 million of the
increase, respectively, Over $2.1 million of the increase in casino costs and
expenses was attributable to gaming taxes and licenses, a consequence of the
increase in casino revenues. The balance of the increase was primarily
due to promotional expenses at the Council Bluffs property.
Lodging revenues for the fiscal 1997 second quarter improved by approximately
$1.3 million over the prior year second quarter and amounted to $7.5 million.
The hotel facility in Council Bluffs, open for the full three months of the
second quarter of fiscal 1997 compared to one week of operations in the second
quarter of fiscal 1996, contributed $1.2 million of the increase, accounting
for the majority of the quarter-over-quarter growth. Lodging profits improved
by approximately $0.7 million.
Food and beverage revenues for the current fiscal year second quarter amounted
to $10.8 million, an improvement of nearly $1.8 million, or 19.9%, over the
prior year second quarter. Food and beverage revenue from the Council Bluffs
property, which included revenues from the land-based facilities in 1997,
contributed an increase of approximately $2.4 million. That increase was
offset by declines at the Central City property as the result of outsourcing,
during the second quarter of fiscal 1996, the food service and a portion of the
beverage service to an unaffiliated management company whose facilities at
the property include a Tony Roma's Famous For Ribs restaurant and a Tony Roma's
Express, and to declines at the Lake Tahoe property. Food and beverage profits
and margins declined for the quarter-to-quarter comparison primarily as a
result of the decision to attractively price the food and beverage offerings at
the Council Bluffs property to attract local customers.
<PAGE>
Other revenues and the $1.7 million contribution from management fees and
equity in the earnings from the Hard Rock Hotel and Casino for the fiscal 1997
second quarter amounted to $3.2 million, an improvement of $0.3 million over
the prior year second quarter.
Selling, general and administrative expenses increased by approximately $1.7
million, or 10.1%, to $18.5 million for the current fiscal year second quarter.
The operation of the expanded facility in Council Bluffs for the second quarter
of fiscal 1997 accounted for approximately $1.3 million of the increase. The
Lake Tahoe and Central City properties recognized increases in overall selling,
general and administrative expenses of approximately $0.3 million and $0.2
million, respectively, while corporate expenses declined by approximately $0.1
million. Depreciation and amortization expenses increased by approximately
$0.6 million. The increase was associated with the expanded facilities in
Council Bluffs.
With the opening of the Council Bluffs land-based facilities in the second
quarter of fiscal 1996, the Company recognized approximately $0.5 million of
pre-opening expenses. These charges had previously been incurred in connection
with the development of the property and deferred until operations commenced.
Interest expense, net of interest income and interest capitalized, increased by
approximately $2.1 million to $4.8 million for the second quarter of fiscal
1997. The increase was attributable to the $150 million of Senior
Subordinated Notes which were issued in May 1996, and to the effect of
capitalizing approximately $1.3 million of interest in the second quarter of
fiscal 1996 in connection with the construction of the Council Bluffs
facilities compared to the effect of capitalizing approximately $0.2 million of
interest in the current year second quarter in connection with the construction
of the parking facility at Harveys Wagon Wheel Hotel/Casino in Central City.
In May 1996, the Company expensed the remaining unamortized debt issuance costs
related to a $10 million note payable to a private investor that was retired
before maturity. This item was reflected in the 1996 operating results as an
extraordinary loss of approximately $141,000 which was net of an income tax
benefit of approximately $85,000.
Net income for the fiscal 1997 second quarter amounted to approximately $4.0
million compared to $3.0 million for the prior fiscal year second quarter. If
pre-opening expenses, net of taxes, were excluded from the prior period
results, and, if the extraordinary loss on early retirement of debt was
excluded from the prior year period, the results would have been net
income of approximately $3.5 million for the prior year period.
COMPARISON OF THE SIX MONTH PERIODS ENDED MAY 31, 1997 AND MAY 31, 1996
The Company's consolidated net revenues through the six months ended May 31,
1997 amounted to approximately $129.8 million, an increase of $21.0 million, or
19.3%, over net revenues recorded in the same period of fiscal 1996. The
improvement was attributable to the $21.9 million increase in net revenues
produced by Harveys Casino Hotel. Net revenues for fiscal 1997 from the
Council Bluffs, Iowa property were provided by a full six months of operations
of the complete facility while fiscal 1996 provided five months of revenues
from the riverboat casino. Net revenues from the Company's Lake Tahoe property
declined by approximately $2.1 million, or 3.5%, the result of adverse first
quarter weather conditions and severe flooding in northern Nevada and in many
of the northern California communities that provide many of the Lake Tahoe
property's customers. Mud slides triggered by the inclement weather closed
U. S. Highway 50, the major link between the south shore of Lake Tahoe and
northern California, for 42 days of the first quarter. Harveys Wagon Wheel
Hotel/Casino experienced a 4.8% increase in net revenues, up $1.0 million,
while the revenue contribution from the management fees and equity in earnings
from the Hard Rock Hotel and Casino increased approximately $0.1 million.
<PAGE>
Casino revenues for the first half of fiscal 1997, enhanced by a full six
months of casino operations in Council Bluffs compared to five months of casino
operations in the prior year, amounted to approximately $99.2 million, an
improvement of $17.0 million over the comparable prior year period. The six
months of gaming activity in Iowa produced an increase of approximately $16.4
million in casino revenues compared to those produced at the Council
Bluffs property during the first half of fiscal 1996. The Company's Lake Tahoe
property suffered a decline in casino revenues of approximately $1.4 million,
or 3.8%, as a result of the adverse weather and road conditions experienced in
the first quarter. Harveys Wagon Wheel Hotel/Casino produced an increase of
approximately $1.9 million in casino revenue over the prior year comparable
period. Casino costs and expenses increased for the comparable periods, up
$6.0 million to $47.6 million for the current year period. The Council Bluffs
casino accounted for $5.8 million of the increase while the Colorado operations
accounted for approximately $1.3 million of the increase. The Lake Tahoe
operations produced a $1.1 million improvement in casino costs due to lower
payroll and related costs and the reduction of other operating costs in
reaction to the lower casino volume resulting from the impact of the first
quarter's adverse weather conditions.
Lodging revenues for the fiscal 1997 six month period improved by approximately
$2.2 million over the prior year comparable period and amounted to $14.5
million. The hotel facility in Council Bluffs, which opened at the end of May
1996, contributed $2.3 million in lodging revenues during the 1997 six month
period, accounting for all of the lodging revenues improvement. Lodging
profits improved by approximately $0.7 million. The decline in lodging profit
margins was the result of the contribution from the Council Bluffs hotel, which
has a lower profit margin than the Lake Tahoe hotel, becoming a more
significant part of lodging profits and of the increase in promotional costs at
the Lake Tahoe hotel.
Food and beverage revenues for the current fiscal year period amounted to $20.0
million, an improvement of approximately $2.5 million over the 1996 period.
Food and beverage revenue from the Council Bluffs property, which included
revenues from the land-based facilities in 1997, contributed an increase of
approximately $4.8 million. That increase was offset by declines at Lake
Tahoe, precipitated by the effects of adverse weather, and declines at
Central City as the result of outsourcing, during the second quarter of fiscal
1996, the food service and a portion of the beverage service. Food and
beverage profits and margins declined for the period-to-period comparison
primarily as a result of the decision to attractively price the food and
beverage offerings at the Council Bluffs property to attract local customers.
Other revenues and the $2.7 million contribution from management fees and
equity in the earnings from the Hard Rock Hotel and Casino improved by
approximately $0.3 million.
Selling, general and administrative expenses increased by approximately $3.7
million, or 11.9%, to $34.9 million for the current fiscal year period. The
operations in Council Bluffs experienced an increase of approximately $4.1
million in selling, general and administrative expenses. The Lake Tahoe
operations recognized an improvement in overall selling, general and
administrative expenses of approximately $0.6 million from the fiscal 1996
period to the current fiscal year, while these expenses increased by $0.3
million at the Central City property. Depreciation and amortization expenses
increased by $1.5 million. The increase was associated with the expanded
facilities in Council Bluffs.
With the opening of the Council Bluffs casino in January 1996 and the opening
of land-based facilities in May 1996, the Company recognized approximately $4.1
million of pre-opening expenses. These charges had previously been incurred in
connection with the development of the property and deferred until operations
commenced.
Interest expense, net of interest income and interest capitalized, increased by
approximately $5.0 million to $9.7 million for the first six months of fiscal
1997. The increase was attributable to the Senior Subordinated Notes which
were issued in May 1996, and to the effect of capitalizing approximately $2.4
million of interest in fiscal 1996 in connection with the construction of the
Council Bluffs facilities compared to the effect of capitalizing approximately
$0.3 million of interest in the current year in connection with the
construction of the parking facility in Central City.
<PAGE>
In May 1996, the Company expensed the remaining unamortized debt issuance costs
related to a $10 million note payable that was retired before maturity. This
item was reflected in he 1996 operating results as an extraordinary loss of
approximately $141,000 which was net of an income tax benefit of approximately
$85,000.
Net income for the first six months of fiscal 1997 amounted to approximately
$4.0 million compared to $2.4 million for the prior fiscal year period. If
pre-opening expenses, net of taxes, were excluded from the prior fiscal period
results, and if the extraordinary loss on early retirement of debt was excluded
from the prior year, the results would have been net income of approximately
$5.1 million for the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity and capital resources during the
first six months of fiscal year 1997 have been cash flow of approximately $16.1
million from operations and the net proceeds of approximately $3.5 million from
the sale of the Company's note receivable from an unrelated party and the sale
of the Company's airplane.
At May 31, 1997, the Company had approximately $ 21.9 million of cash and cash
equivalents and a maximum of approximately $84.3 million available under a
reducing revolving credit agreement with a consortium of banks ( the Credit
Facility'), subject to compliance with certain financial covenants.
During the first half of fiscal 1997, the Company expended approximately $1.4
million in cash relative to construction payables and retentions associated
with the construction of the hotel and convention center portion of Harveys
Casino Hotel in Council Bluffs and expended approximately $6.2 million in cash
relative to the construction of a parking garage at Harveys Wagon Wheel Hotel/
Casino in Central City, Colorado. Additionally, the Company made cash payments
for dividends of approximately $1.0 million during the period, incurred
additional cash expenditures of approximately $8.1 million in connection with
capital improvements and replacements and made net cash payments of
approximately $2.3 million reducing the Company's outstanding borrowings.
The Company expects that its primary capital needs for the remainder of fiscal
year 1997 will include (a) approximately $1.6 million for the payment of
construction retentions relative to the hotel and convention center portion of
Harveys Casino Hotel in Council Bluffs, (b) approximately $2.4 million for the
satisfaction of payables and construction retention relative to the
construction of the parking garage adjacent to Harveys Wagon Wheel Hotel/Casino
which was completed in June 1997, (c) approximately $11.0 million of capital
expenditures at the Company's current facilities, and (d) dividend payments and
debt service.
The Company's debt at May 31, 1997, including the current portion of
approximately $1.9 million, amounted to $181.8 million and consisted of $150
million of Senior Subordinated Notes, $29.5 million outstanding under the
Credit Facility, $2.1 million outstanding under HWW's equipment financing notes
payable to a financing company and approximately $230,000 of other debt.
The equipment financing agreement entered into by HWW allowed for the financing
of up to $7.5 million of gaming and associated equipment. Under the terms of
the agreement, repayments of principal and interest are due in 36 monthly
installments. The equipment financing agreement is secured by all of the
gaming and associated equipment financed under the agreement. The obligation
under the financing agreement is guaranteed by the Company.
The maximum available principal balance under the Credit Facility at May 31,
1997 was $115 million, reduced by outstanding borrowings and letter of credit
exposure. At May 31, 1997 the outstanding borrowings under the Credit Facility
amounted to $29.5 million, the letters of credit exposure was $1.2 million and
the maximum amount available was approximately $84.3 million, subject to
compliance with financial covenants.
<PAGE>
There are no required repayments of principal under the Credit Facility in
fiscal 1997. The Credit Facility is secured by all of the real and personal
property of (a) Harveys Resort Hotel/Casino, (b) HIMC, and (c) HWW, as well as
all of the contracts the Company has entered into in connection with its
ownership and operation of (i) Harveys Resort Hotel/Casino, (ii) HIMC, and
(iii) HWW. Additional security is provided by a pledge of the stock of the
following subsidiaries of the Company: HLVMC, HCCMC, HIMC and Reno Projects,
Inc., a Nevada corporation, which is wholly owned by the Company. Interest on
borrowings outstanding under the Credit Facility is payable, at the Company's
option, at either the London Inter-Bank Offering Rate ( LIBOR') or the prime
rate of Wells Fargo Bank, National Association ( Wells Fargo'), in each case
plus an applicable margin. The applicable margin is determined with reference
to the Company's funded debt to EBITDA ratio. The applicable margins as of
May 31, 1997 were 2.25% with respect to the LIBOR-based interest rate, and
0.75% with respect to the Wells Fargo prime-rate interest rate.
The Credit Facility contains certain financial and other covenants. The
financial covenants prevent the Company from making any investments in or
advances to affiliates without the prior written consent of the lenders under
the Credit Facility. The covenants allow the declaration and payment of
dividends without the prior written consent of the lenders if certain fixed
charge coverage ratios are maintained. The covenants require the Company to
maintain certain set standards with respect to (a) minimum tangible net worth,
(b) fixed charge coverage ratios, and (c) minimum annual capital expenditures.
The financial covenants also limit the Company's ability to incur additional
indebtedness. The Company was in compliance with these covenants at May 31,
1997.
The Senior Subordinated Notes are governed by an indenture ( the Indenture')
and are general unsecured obligations of the Company, subordinated in right of
payment to all existing and future Senior Debt of the Company (as defined in
the Indenture). The Senior Subordinated Notes are guaranteed by each of the
Restricted Subsidiaries of the Company (as defined in the Indenture).
Each guarantee is a general unsecured obligation of the guaranteeing Restricted
Subsidiary, subordinated in right of payment to all existing and future Senior
Debt of each guaranteeing Restricted Subsidiary. At May 31, 1997, the
guaranteeing Restricted Subsidiaries were
HCCMC, HWW, HIMC and HLVMC.
Interest on the Senior Subordinated Notes is payable semi-annually on June 1
and December 1 of each year. The Senior Subordinated Notes will mature on June
1, 2006. The Senior Subordinated Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after June 1, 2001 at prices
ranging from 105.313% of the principal amount plus accrued and unpaid interest,
to 100% of the principal amount plus accrued and unpaid interest beginning June
1, 2004 and thereafter. Upon a Change of Control (as defined in the
Indenture) each holder of the senior Subordinated Notes will have the right to
require the Company to repurchase such holder's Senior Subordinated Notes at
101% of the principal amount plus accrued and unpaid interest to the repurchase
date.
The Indenture contains certain covenants that impose limitation on, among other
things, (a) the incurrance of additional indebtedness by the Company or any
Restricted Subsidiary, (b) the payment of dividends, (c) the repurchase of
capital stock and the making of certain other Restricted Payments and
Restricted Investments (as defined in the Indenture) by the Company or any
Restricted Subsidiary, (d) mergers, consolidations and sales of assets by the
Company or any Restricted Subsidiary, (e) the creation or incurrance of liens
on the assets of the Company or any Restricted Subsidiary, and (f) transactions
by the Company or any of its subsidiaries with Affiliates ( as defined in the
Indenture). These limitations are subject to a number of qualifications and
exceptions as described in the Indenture. The Company was in compliance with
these covenants at May 31, 1997.
The Company believes that its existing cash and cash equivalents, cash flows
from operations and its borrowing capacity under the Credit Facility are
sufficient to meet the cash requirements of its existing operations for the
next twelve months, including (a) final payments for construction of the
Council Bluffs project, (b) capital improvements and replacements at the
operating properties, (c) the construction of a parking garage adjacent to
Harveys Wagon Wheel Hotel/Casino, and (d) dividend and debt service
requirements.
<PAGE>
On July 1, 1997, the Company entered into an agreement whereby HRHC will
purchase the Company's interests in HRHC for $45 million in cash. The
consummation of the transaction is subject to certain conditions and approvals,
including approval by Nevada gaming authorities. The Company believes the
requisite conditions will be met and the necessary approvals will be obtained,
within four to six months, and intends to use the proceeds from the sale to
reduce outstanding debt under the Credit Facility.
The existing sources of cash, and the possibility of $45 million in proceeds
for the expected sale of the Company's interests in HRHC, provide the Company
some flexibility in potential expansion of current operations or in its pursuit
of new gaming opportunities in existing and emerging jurisdictions. The
realization of such expansion opportunities may require capital investments in
excess of current resources and additional financing may be required. The
Company believes that additional funds could be obtained through additional
debt or equity financing. However, no assurance can be made that such
financing would be available at terms acceptable to the Company, if at all.
<PAGE>
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR' PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
This document includes various forward-looking statements' within the meaning
of Section 27A of the securities Act of 1933, as amended, and Sections 21E of
the Securities Exchange Act of 1934, as amended, which represent the Company's
expectations or beliefs concerning future events. Statements containing
expressions such as believes', anticipates', or expects' used in the
Company's press releases and periodic reports on Forms 10-K and 10-Q
filed with the Securities and Exchange Commission are intended to identify
forward-looking statements. All forward-looking statements involve risks and
uncertainties. Although the Company believes its expectations are based upon
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurances that actual results will not materially
differ from expected results. The Company cautions that these and similar
statements included in this report and in previously filed periodic reports,
including reports filed on Forms 10-K and 10-Q, are further qualified by
important factors that could cause actual results to differ materially from
those in the forward-looking statements. Such factors include, without
limitation, the following; increased competition in existing markets or the
opening of new gaming jurisdictions; a decline in the public acceptance of
gaming; the limitation, conditioning or suspension of any of the Company's
gaming licenses; increases in or new taxes imposed on gaming revenues or gaming
devices; a finding of unsuitability by regulatory authorities with respect to
the Company's officers, directors or key employees; loss or retirement of key
executives; significant increases in fuel or transportation prices; adverse
economic conditions in the company's key markets; severe and unusual weather in
the Company's key markets; adverse results of significant litigation matters.
Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date thereof. The Company undertakes no
obligation to publicly release any revision to such forward-looking statements
to reflect events or circumstances after the date thereof.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable
Item 2. Changes in Securities.
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Company's annual meeting was held on May 1, 1997.
Matters voted upon at the meeting were the election of three
directors, each to a three year term. In respect to the election of
directors the following results were tabulated: Charles W. Scharer,
9,494,812 votes for, 27,956 votes withheld, 299,441 abstentions or
broker non-votes; Luther Mack, Jr., 9,494,799 votes for, 27,969
votes withheld, 299,441 abstentions or broker non-votes; Ronald R.
Zideck, 9,494,835 votes for, 27,933 votes withheld, 299,441
abstentions or broker non-votes.
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See attached Exhibit Index
(b) Reports on Form 8-K
None
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARVEYS CASINO RESORTS
Registrant
Date: July 14, 1997 /S/ John J. McLaughlin
-----------------------
John J. McLaughlin,
Senior Vice President,
Chief Financial Officer and Treasurer
(Authorized Officer and Principal Financial Officer)
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
- ------- ---------------------------------------------------------- ------
3.1 Restated Articles of Incorporation of the Registrant (1)
3.2 Sixth Amended Bylaws of the Registrant (2)
4.1 Form of Stock Certificate of the Registrant (1)
4.2 Indenture, dated as of April 30, 1996 between the Registrant and
IBJ Schroder Bank and Trust, as Trustee ( including form of
Note) (3)
4.3 Indenture, dated as of May 15, 1996 by and among the Registrant
( the Issuer') Harveys Wagon Wheel Casino Limited Liability
Company, Harveys C. C. Management Company, Inc., Harveys Iowa
Management Company, Inc. and Harveys L. V. Management Company,
Inc. ( the Guarantors') and IBJ Schroder Bank & Trust Company
as Trustee ( including form of Note) (4)
4.4 First Supplemental Indenture, dated as of June 5, 1996,
supplementing the Indenture as of May 15, 1996 among the
Registrant (the Issuer'), Harveys Wagon Wheel Casino Limited
Liability Company, Harveys C. C. Management Company, Inc.,
Harveys Iowa Management Company, Inc. and Harveys L.V.
Management Company, Inc. (the Guarantors'), and IBJ Schroder
Bank and Trust Company as Trustees (5)
10.1 Addendum to Employment Agreement, dated March 7, 1997 between
Thomas M. Yturbide and the Registrant (6)
10.2 Extension of Employment Agreement, date January 30, 1997 between
Edward B. Barraco and the Registrant (6)
27 Financial Data Schedule (6)
------------------------------------------------
(1) Incorporated herein by reference to Registration Statement No.
33-70670.
(2) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q for the period ended May 31, 1996.
(3) Incorporated herein by reference to the Registration Statement No.
333-616.
(4) Incorporated herein by reference to Registration Statement No.
333-3576.
(5) Incorporated herein by reference to Registrant's Current Report of
Form 8-K filed June 14, 1996.
(6) Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> MAY-31-1997
<CASH> 21,949
<SECURITIES> 477
<RECEIVABLES> 5,349
<ALLOWANCES> 378
<INVENTORY> 3,266
<CURRENT-ASSETS> 39,337
<PP&E> 440,283
<DEPRECIATION> 119,202
<TOTAL-ASSETS> 396,365
<CURRENT-LIABILITIES> 29,375
<BONDS> 179,832
0
0
<COMMON> 98
<OTHER-SE> 152,976
<TOTAL-LIABILITY-AND-EQUITY> 396,365
<SALES> 23,139
<TOTAL-REVENUES> 129,824
<CGS> 9,243
<TOTAL-COSTS> 69,829
<OTHER-EXPENSES> 43,836
<LOSS-PROVISION> 308
<INTEREST-EXPENSE> 9,847
<INCOME-PRETAX> 6,690
<INCOME-TAX> 2,708
<INCOME-CONTINUING> 3,982
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,982
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 7th day of March, 1997, by and
between HARVEYS CASINO RESORTS, a Nevada corporation, hereinafter referred to
as HARVEYS', and/or EMPLOYER', and THOMAS M. YTURBIDE, hereinafter referred
to as EMPLOYEE', as follows:
WITNESSETH:
WHEREAS, EMPLOYER and EMPLOYEE did enter into that Employment Agreement date
December 1,1995(the Employment Agreement'); and
WHEREAS, EMPLOYER and EMPLOYEE have agreed that following the execution hereof
EMPLOYEE shall not seek nor allow his nomination to HARVEYS Board of Directors,
and further will not seek to serve as Chairman of said Board of Directors; and
WHEREAS, the parties have agreed that EMPLOYEE shall continue to serve as an
employee in a consultant capacity to the Chief Executive Officer of HARVEYS;
and
WHEREAS, the parties hereto desire to amend the Employment Agreement so as to
expressly provide for the EMPLOYEE to receive certain benefits and provide
certain services; and
WHEREAS, the parties do mutually agree where not inconsistent herewith the
remaining terms and conditions of the Employment Agreement remain in full force
and effect for the balance of the term thereof.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, together with other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
do agree to amend the Employment Agreement as follows:
I. NATURE OF EMPLOYMENT AND DUTIES OF EMPLOYEE
A. Section 2.01 is hereby deleted and the following inserted therein:
2.01 EMPLOYEE shall continue, for the term of this Agreement, to serve in a \
part-time consulting capacity of the Chief Executive Officer of EMPLOYER.
EMPLOYEE and EMPLOYER agree that EMPLOYEE shall not be obligated to continue to
serve as Chairman of the Board of Directors after the Annual Meeting of
Shareholders in 1997. EMPLOYEE shall continue to do and perform all services,
acts, or things necessary or advisable to consult with the Chief Executive
Officer in the management and conduct of the business of EMPLOYER, subject
always to the policies as set forth by the Board of Directors.
B. Section 2.02 is hereby deleted and the following inserted therein:
2.02 EMPLOYEE shall be available, on an as needed' basis, to furnish
consulting services to the President and Chief Executive Officer of EMPLOYER,
and shall have no further responsibilities or obligations to serve in any
capacity as Chairman or Director for the Board of Directors of EMPLOYER
following the Annual Meeting of Shareholders in 1997.
C. Section 2.06 is hereby deleted and the following inserted therein:
2.06 The parties expressly agree that during the balance of the term of the
Employment Agreement, EMPLOYEE shall not be obligated to allow his nomination
to HARVEYS' Board of Directors and, will not seek reelection, nor will he serve
as an active member thereof in any subcommittees thereof. EMPLOYEE further
shall not seek nomination or reelection as Chairman of the Board of Directors
of HARVEYS for the remaining term of the Employment Agreement. The parties
hereto expressly agree that the Employment Agreement shall not
terminate, but rather EMPLOYEE shall continue his consulting services as set
forth in this Addendum and in Sections 2.01 and 2.02 of the Employment
Agreement as modified hereby and EMPLOYEE shall continue to receive the
compensation as provided for in Article VII and the other perquisites provided
<PAGE>
for in Articles VIII and IX of the Employment Agreement and as may be modified
herein. It is further agreed that said compensation, benefits, and
perquisites shall continue to include an annual salary to EMPLOYEE of Four
Hundred Thousand Dollars ($400,000.00). Any and all stock options which shall
continue to vest as set forth in Section 7.02 of the Employment Agreement which
options shall continue to have a term of ten (10) years from the date of their
granting and shall continue to survive EMPLOYEE's termination, retirement,
death or disability. EMPLOYEE shall also be entitled to continue
to receive a Class One category automobile from EMPLOYER during the remaining
term of EMPLOYEE's Agreement, as well as participate in EMPLOYER's 401(k) Plan,
complimentary Level I privileges, medical, vision and dental insurance
benefits, working facilities and tax planning, long term incentive programs, as
well as convertible term and group life insurance all as set forth in Articles
VII, VIII and IX of the Employment Agreement.
II. TERM OF EMPLOYMENT
A. Section 3.02 is hereby deleted and the following inserted therein:
3.02 It is expressly agreed upon termination of this Agreement as provided for
in Section 3.01 that EMPLOYEE will retire and his retirement date will be
effective June 1, 1998. Notwithstanding the foregoing, EMPLOYEE shall be
entitled to receive all compensation, benefits and perquisites that he would be
entitled to at full retirement age (65) under EMPLOYER's compensation,
benefits and perquisite packages and plans in which EMPLOYEE is a
participant at the time of termination of the Employment Agreement.
Specifically, EMPLOYEE shall be entitled to receive full retirement age
( sixty-five (65) years) benefits under EMPLOYER's Supplemental Executive
Retirement Plan (S.E.R.P.) which shall include health insurance and life
insurance. Notwithstanding the retirement provisions of the OMNIBUS Plan
any stock options owned by EMPLOYEE will continue to have a term of ten (10)
years from the date of their grant which shall survive any termination of
employment, retirement, death or disability.
III. SUCCESSORS
A. Section 10.03 is hereby deleted and the following inserted therein:
10.03 This Agreement, and any written addendum or written modification thereof,
and all of the terms and conditions hereof shall bind EMPLOYER and its
successors and assigns and shall bind the EMPLOYEE and his heirs, executors and
administrators. No transfer or assignment of this Agreement, or any written
addendum of modification thereto shall release EMPLOYER from any obligation to
EMPLOYEE hereunder.
IV. REPUBLICATION
Where not inconsistent herewith, the parties hereto republish the remaining
terms and conditions of the Employment Agreement as if set forth herein
verbatim.
DATED this 7th day of March, 1997.
EMPLOYEE: Thomas M. Yturbide
EMPLOYER: Harveys Casino Resorts, a Nevada corporation
Charles W. Scharer, Chief Executive Officer
APPROVED: William B. Ledbetter, Secretary and Vice Chairman
Board of Directors.
<PAGE>
EXTENSION OF EMPLOYMENT AGREEMENT
THIS EXTENSION AGREEMENT is made and entered into this 30th day of January,
1997, by and between HARVEYS CASINO RESORTS, a Nevada corporation, hereinafter
referred to as Harveys', and EDWARD B. BARRACO, hereinafter referred to as
Employee', as follows:
WITNESSETH:
WHEREAS, Harveys and Employee did, on the 24th day of August, 1995, enter into
an Employment Agreement (the Agreement');and
WHEREAS, pursuant to Paragraph 3.01 of the Agreement, Employee agreed to be
employed by Harveys for an initial period of at least two (2) years commencing
on the 19th day of July, 1995, and terminating on the 18th day of July, 1997;
and
WHEREAS, Harveys and Employee desire to extend the term of employment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, receipt whereof is hereby
acknowledged, the parties hereto agree to extend the term of employment for an
additional two (2) years commencing on the 19th day of July, 1997, to and
including the 18th day of July, 1999.
DATED this 30th day of January, 1997
EMPLOYEE: Edward B. Barraco
EMPLOYER: Harveys Casino Resorts, a Nevada corporation
Charles W. Scharer, Chief Executive Officer
