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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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. 1-4748
RESORTS INTERNATIONAL, INC.
_______________________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 59-0763055
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1133 Boardwalk, Atlantic City, New Jersey 08401
_________________________________________ ______________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 609-344-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
__________________________________ _______________________
Series A Senior Secured Redeemable American Stock Exchange
Notes
Series B Senior Secured Redeemable American Stock Exchange
Notes
First Mortgage Non-Recourse American Stock Exchange
Pass-Through Notes
Common Stock American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
_______________________________________________________________________
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Exhibit Index is presented on pages 105 through 116.
Total No. of Pages 118
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of 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]
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
___________ ___________
Based on the closing price on the American Stock Exchange, on February
28, 1994 the aggregate market value of the registrant's common stock
held by nonaffiliates was $23,616,000.
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 Section 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, 1994 there were 20,157,234 shares of the
registrant's common stock outstanding.
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PART I
ITEM 1. BUSINESS
________________
(a) General Development of Business
_______________________________
Resorts International, Inc. ("RII") is a holding company which,
through its subsidiaries, is principally engaged in the ownership and
operation of Merv Griffin's Resorts Casino Hotel ("Resorts Casino
Hotel") in Atlantic City, New Jersey, and the Paradise Island Resort &
Casino, the Ocean Club Golf & Tennis Resort and the Paradise Paradise
Beach Resort, all located on Paradise Island, The Bahamas. RII was
incorporated in Delaware in 1958. The term "Company" as used herein
includes RII and/or one or more of its subsidiaries as the context may
require.
In Atlantic City, the Company owns and operates the Resorts
Casino Hotel, which has approximately 670 guest rooms, a 60,000 square
foot casino, an 8,000 square foot racetrack simulcast betting and
poker area and related facilities, located on the Boardwalk. Pursuant
to a major capital improvements program that began in 1989, virtually
all guest rooms and public areas at the Resorts Casino Hotel have been
refurbished. See "(c) Narrative Description of Business - Atlantic
City - Capital Improvements" below, and "ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."
Approximately 10 acres of Boardwalk property owned by the Company
is leased to Atlantic City Showboat, Inc. ("ACS") under a 99-year net
lease (the "Showboat Lease"). All lease payments due under the
Showboat Lease directly service the Company's interest obligations
under the Showboat Notes described under "(c) Narrative Description of
Business - Atlantic City - Showboat Lease" below. The leased acreage
is the site of the Showboat Casino Hotel (the "Showboat") which is
operated by ACS. The Company also owns other real estate in the
Atlantic City area, most of which consists of vacant land.
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"). The Company's current license was renewed in February
1994 through January 31, 1996 and is subject to certain financial
reporting and other conditions. See "Regulation and Gaming Taxes and
Fees - New Jersey" under "(c) Narrative Description of Business" below.
On Paradise Island, the Company operates a 30,000 square foot
casino and owns and operates resort and hotel facilities that include
a total of 1,357 guest rooms and related amenities. The Company owns
substantial undeveloped real estate in The Bahamas in addition to its
operating properties. See "Restructuring of Series Notes" below for a
description of a proposed restructuring (the "Restructuring") which
includes the disposition of the Company's Paradise Island operations
and properties.
Casino operations in The Bahamas are conducted under a casino
license which is subject to periodic review and renewal by the Gaming
Board of the Commonwealth of The Bahamas. The Company's current
license is subject to various conditions. See "Regulation and Gaming
Taxes and Fees - The Bahamas" under "(c) Narrative Description of
Business" below.
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Restructuring of Series Notes
_____________________________
Background
__________
The outstanding principal amount of RII's Senior Secured
Redeemable Notes due April 15, 1994 (the "Series Notes") is
$481,907,000. Including the interest due on the maturity date of
approximately $36,000,000, RII's total obligation at maturity will
amount to approximately $518,000,000.
The Company's ability to pay the principal balance due on the
Series Notes at maturity was premised on certain assumptions included
in RII's 1990 plan of reorganization (the "Old Plan"), the most
significant of which was the Company's ability to sell its Paradise
Island assets by December 31, 1991 at a price ranging from
$250,000,000 to $300,000,000. Other assumptions included the
Company's ability to generate substantial excess cash flow from its
operations and the Company's ability to sell its non-operating real
estate holdings in Atlantic City at acceptable prices. However, the
recession in the United States, and more specifically in the northeast
sector, the acute competition in Atlantic City and The Bahamas, the
unexpected increase in competition from other jurisdictions, the
unforeseen difficulty in selling the Paradise Island assets at the
projected price, and the adverse impact of the conflict in the Persian
Gulf in early 1991 on transportation and tourism, all adversely
affected the Company's ability to realize the assumptions in the Old
Plan.
Although the Company did not discontinue its efforts to sell the
Paradise Island assets, it experienced a very limited amount of
interest by prospective purchasers. The only offer the Company
received for its Paradise Island assets prior to the Restructuring
described below was made in August 1991. That offer would have netted
the Company approximately $150,000,000 if the transaction had been
consummated. This amount was inadequate to retire sufficient Series
Notes at par so as to permit the Company's then remaining Atlantic
City operations to service the debt that would have remained
outstanding. Subsequent discussions with the prospective purchaser
did not lead to a definitive agreement, and the discussions terminated
in early 1992.
As the possibilities of a sale of the Paradise Island assets at
other than a depressed price diminished and the Company was unable to
generate substantial excess cash flow from its operations, the
principal amount of the Series Notes (originally $325,000,000)
increased due to a payment-in-kind ("PIK") interest feature of the
Series Notes, which allowed the Company to satisfy interest
obligations on its Series Notes by the issuance of additional Series
Notes in lieu of making cash interest payments. Thus, it became
evident that in order for the Company to reduce its debt to a level
that could be supported by the cash flow reasonably anticipated on a
continuing basis, it had to develop financial alternatives other than,
or in conjunction with, a sale of its Paradise Island assets. The
Company has been working with its financial advisers on developing and
analyzing financial alternatives, as well as developing a long-term
financial plan, since late 1991. In this connection, management of
the Company, with the assistance of its legal and financial advisers,
commenced discussions with representatives of major holders of Series
- 4 -
Notes in the summer of 1992 in an effort to reach an agreement as to
the terms of a possible restructuring of the Series Notes. This
process resulted in the Restructuring described below.
Restructuring
_____________
On October 25, 1993 RII and three of its subsidiaries, Resorts
International Hotel, Inc. ("RIH"), Resorts International Hotel
Financing, Inc. ("RIHF") and P.I. Resorts Limited ("PIRL"), filed a
Form S-4 Registration Statement (No. 33-50733) with the Securities and
Exchange Commission. This Registration Statement describes in detail
the Restructuring which RII and GGRI, Inc. ("GGRI"), RII's subsidiary
which guaranteed the Series Notes, propose to accomplish through a
joint plan of reorganization (the "Plan") which was proposed and for
which acceptances were solicited before commencing cases under chapter
11 of title 11 of the United States Code (the "Bankruptcy Code").
This process is known as a "prepackaged bankruptcy." On February 1,
1994, after certain amendments, the Registration Statement was
declared effective. On February 5, 1994 the solicitation of
acceptances of the Plan commenced with the mailing of the Information
Statement/Prospectus for Solicitation of Votes on Prepackaged Plan of
Reorganization, ballots and other materials to holders of Series
Notes, RII's common stock (the "RII Common Stock") and stock options
(the "1990 Stock Options") issued pursuant to the RII Senior
Management Stock Option Plan (the "1990 Stock Option Plan"). Holders
of Series Notes, RII Common Stock and 1990 Stock Options as of January
10, 1994 (the "Voting Record Date") were entitled to vote on the
Plan. The solicitation period ended on March 15, 1994.
The Plan is the result of extensive negotiations among RII,
Fidelity Management & Research Company ("Fidelity") and TCW Special
Credits ("TCW"). Fidelity and TCW separately advise and manage
various funds and accounts that as of the Voting Record Date held in
the aggregate approximately 64% of the outstanding principal amount of
Series Notes. In addition, RII, Fidelity and TCW held discussions
with Sun International Investments Limited ("SIIL"), an unaffiliated
company, regarding the purchase of a 60% interest in the Company's
Paradise Island assets (the "SIHL Sale") through a subsidiary of SIIL,
Sun International Hotels Limited ("SIHL"), formed for that purpose.
The Restructuring contemplates, among other things, the exchange
of the Series Notes for: (i) $125,000,000 principal amount of 11%
Mortgage Notes due 2003 (the "RIHF Mortgage Notes") to be issued by
RIHF and guaranteed by RIH, RII's subsidiary that owns and operates
the Resorts Casino Hotel; (ii) $35,000,000 principal amount of 11.375%
Junior Mortgage Notes due 2004 (the "RIHF Junior Mortgage Notes") to
be issued by RIHF and guaranteed by RIH; (iii) 40% of the RII Common
Stock on a fully diluted basis (excluding 1990 Stock Options and
options to be issued under a newly proposed stock option plan (the
"1994 Stock Option Plan")); (iv) either (a) $65,000,000 in cash, plus
interest at an annual rate of 7.5% from January 1, 1994 through the
closing date of the SIHL Sale, plus 40% of the capital stock of SIHL,
representing the consideration received from the proposed SIHL Sale,
or, if the SIHL Sale is not consummated, (b) 100% of the equity of
PIRL, which was recently formed to be a holding company in the event
of the spin-off (the "PIRL Spin-Off") of 100% of the equity of RII's
Bahamian subsidiaries and, through subsidiaries, the assets of RII and
certain of its domestic subsidiaries which support the Company's
Bahamian operations, and related liabilities; (v) the Company's Excess
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Cash, as defined in the Plan, which is estimated to be at least
$30,000,000 and (vi) rights to receive distributions estimated to be
approximately $2,500,000 in respect of units of beneficial interest
(the "Litigation Trust Units") owned by RII in a litigation trust (the
"Litigation Trust") established pursuant to the Old Plan to pursue
certain claims against Donald Trump and certain of his affiliates.
Each $1,000 principal amount of RIHF Junior Mortgage Notes is to
be issued as part of a unit with one share of RII Class B Common Stock
(the "RII Class B Stock") and may not be transferred separately from
such share of RII Class B Stock. Holders of the RII Class B Stock are
to have certain voting rights only with respect to the election of
directors and are not to participate in any dividends which may be
declared by RII's Board of Directors. Holders of RII Class B Stock
will be entitled to elect one-third of RII's Board of Directors unless
on more than six occasions RIHF either makes PIK interest payments or
fails to make interest payments on the RIHF Junior Mortgage Notes (the
"Class B Triggering Event"). Upon the occurrence of the Class B
Triggering Event, holders of RII Class B Stock will be entitled to
elect the majority of RII's Board of Directors. RIHF may only make
PIK interest payments under certain circumstances provided for in the
indenture for the RIHF Junior Mortgage Notes.
The Restructuring also provides for certain funds or accounts
managed by Fidelity to enter into a senior credit facility with RIHF
(the "RIHF Senior Facility") which will allow RIHF to borrow up to
$20,000,000 through the issuance of notes. The RIHF Senior Facility
is to be available for a single borrowing during the one-year period
from the date the Plan becomes effective (the "Effective Date").
Notes issued pursuant to the RIHF Senior Facility will bear interest
at 11% per year and mature in 2002.
The following transactions, among others, are also to be
effected in connection with the Restructuring: (i) the initial
post-Restructuring directors of RII will be named to the RII Board of
Directors (see "ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT"); (ii) RII will issue warrants to purchase 10% of RII
Common Stock on a fully diluted basis (the "Griffin Warrants"), to The
Griffin Group, Inc. (the "Griffin Group"), a company controlled by
Merv Griffin, the Chairman of the Board of RII (see "Transactions with
Management and Others - Griffin Services Agreement" under "ITEM 11.
EXECUTIVE COMPENSATION - Compensation Committee Interlocks and Insider
Participation") and (iii) the 1990 Stock Option Plan will be
terminated, though existing holders of 1990 Stock Options will retain
their options, and the 1994 Stock Option Plan, which will allow for
the granting of options to purchase up to 5% of the outstanding RII
Common Stock, will be implemented.
Consummation of the Plan is subject to a number of conditions
including, but not limited to, confirmation by the Bankruptcy Court
and receipt of required regulatory approvals of the Casino Control
Commission and the Government of The Bahamas.
For the Plan to be confirmed by the Bankruptcy Court, the Plan
must comply with various requirements of the Bankruptcy Code. Also,
to confirm the Plan on a consensual basis, acceptances must be
received from (i) holders of Series Notes constituting at least 66
2/3% in principal amount and more than 50% in number of those voting
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and (ii) at least 66 2/3% each of RII Common Stock and 1990 Stock
Options voted. In addition to the vote required by the Bankruptcy
Code, a condition to confirmation of the Plan is the entry of an order
declaring that certain security documents (the "Security Documents")
under which the liens on the property securing the Series Notes were
granted or created shall be deemed released and terminated. To
effectuate such termination and release consensually, the record
holders of at least 66 2/3% in aggregate principal amount of the
outstanding Series Notes and the record holders of at least a majority
in aggregate principal amount of each series of the Series Notes must
consent to the termination of the Security Documents. There are
several other conditions to confirmation of the Plan which, subject to
the approval of Fidelity and TCW (in certain circumstances), may be
waived by RII and GGRI.
The solicitation agent has advised the Company that it has
received the requisite acceptances for confirmation of the Plan and
sufficient consents to release the Security Documents. The Company
intends to proceed with the filing of its prepackaged bankruptcy
cases; however, there can be no assurance as to whether or when the
Restructuring will be effected, or that any restructuring that may
ultimately be consummated will be on terms similar to those of the
Restructuring.
Event of Default
________________
As of September 30, 1993 RII was not in compliance with its
covenant contained in the indenture for the Series Notes (the "Series
Note Indenture") to maintain a Tangible Net Worth, as defined in the
Series Note Indenture, of at least $50,000,000. Since that date RII's
Tangible Net Worth has continued to decline. On February 2, 1994, 30
days after receiving notice of such default from the trustee for the
Series Notes (the "Series Note Trustee"), this default became an Event
of Default. Upon the occurrence of an Event of Default, the Series
Note Trustee may accelerate the maturity of the Series Notes by
declaring all unpaid principal of and accrued interest on the Series
Notes due and payable or may foreclose upon the collateral securing
the Series Notes. In addition, the holders of 40% in principal amount
of the Series Notes then outstanding may require the Series Note
Trustee to accelerate the maturity of the Series Notes.
If the Series Note Trustee accelerates the maturity of the Series
Notes or forecloses upon the collateral securing the Series Notes, RII
and GGRI, as guarantor of the Series Notes, and certain of their
subsidiaries whose assets are pledged to secure the Series Notes
(including RIH and Resorts International (Bahamas) 1984 Limited
("RIB"), RII's indirect subsidiary, which together with its
subsidiaries owns and operates the Company's Bahamian properties)
would be forced to seek immediate protection under the Bankruptcy
Code. If such events occur, there can be no assurance that the
Restructuring would be implemented, that a reorganization of RII and
GGRI rather than a liquidation would occur or that any reorganization
that might occur would be on terms as favorable to the holders of
Series Notes and holders of RII Common Stock as the terms of the Plan.
(b) Financial Information about Industry Segments
_____________________________________________
The information called for by this item is incorporated by
reference to the tables entitled "Revenues," "Contribution to
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Consolidated Loss Before Income Taxes" and "Identifiable Assets,
Depreciation and Capital Additions" in "ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."
(c) Narrative Description of Business
_________________________________
Atlantic City
_____________
Gaming Facilities
_________________
The Resorts Casino Hotel has a 60,000 square foot casino and a
racetrack simulcast betting and poker area of approximately 8,000
square feet. At December 31, 1993, these gaming areas contained 50
blackjack tables, 25 poker tables, 13 dice tables, 10 roulette tables,
2 baccarat tables, 2 mini-baccarat tables, 2 pai gow poker tables, 1
big six wheel, 1 sic bo table, 1,916 slot machines and nine betting
windows and customer-operated terminals for race book. As described
below under "Capital Improvements," the casino and hotel facilities at
the Resorts Casino Hotel have undergone extensive renovation and
remodeling pursuant to a major capital improvements program.
During 1993, the Company had total gaming revenues from its
Atlantic City casino of $244,116,000. This compares to total gross
win of $233,780,000 for 1992 and $218,881,000 for 1991. For 1993 this
amount includes simulcast commissions and poker revenue totaling
$5,745,000; the Company has offered simulcast betting and poker since
June 28, 1993.
Casino gaming in Atlantic City is highly competitive and is
strictly regulated under the New Jersey Casino Control Act and
regulations promulgated thereunder ("Casino Control Act"), which
affect virtually all aspects of the Company's Atlantic City casino
operations. See "Competition" and "Regulation and Gaming Taxes and
Fees - New Jersey" below.
Resort and Hotel Facilities
___________________________
The Resorts Casino Hotel commenced operations in May 1978 and was
the first casino/hotel opened in Atlantic City. This was accomplished
by the conversion of the former Haddon Hall Hotel, a classic hotel
structure originally built in the early 1900's, into a casino/hotel.
It is situated on approximately seven acres of land with approximately
310 feet of Boardwalk frontage overlooking the Atlantic Ocean. The
Resorts Casino Hotel consists of two hotel towers, the 15-story East
Tower and the nine-story North Tower. In addition to the casino
facilities described above, the casino/hotel complex includes
approximately 670 guest rooms and suites, the 1,400-seat Superstar
Theatre, eight restaurants, two cocktail and entertainment lounges, a
new VIP slot and table player lounge, an indoor swimming pool and
health club, and retail stores. The complex also has approximately
50,000 square feet of convention facilities, including eight large
meeting rooms and a 16,000 square foot ballroom.
The Company 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. The Company also
offers valet parking at nearby, uncovered leased lots that provide
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space for approximately 600 cars and has an additional leased lot
which provides self-parking for approximately 200 cars.
Consistent with industry practice, the Company reserves a portion
of its hotel rooms and suites as complimentary accommodations for
high-level casino wagerers. For 1993, 1992 and 1991 the average
occupancy rates, including complimentary rooms which were primarily
provided to casino patrons, were 92%, 93% and 90%, respectively. The
average occupancy rate and weighted average daily room rental,
excluding complimentary rooms, were 47% and $62, respectively, for
1993. This compares with 57% and $61, respectively, for 1992, and 51%
and $67, respectively, for 1991.
Capital Improvements
____________________
The Company has pursued a major capital improvements program
since 1989 in order to compete more effectively in the Atlantic City
market. During these five years capital additions at Resorts Casino
Hotel exceeded $100,000,000. In 1993 the Company converted certain
back-of-the-house space into a simulcast facility, which houses nine
betting windows and customer-operated terminals and approximately 80
seats for simulcast betting operations, as well as 25 poker tables,
various other table games and a bar with food service. Also, certain
casino renovations were completed, 280 slot machines were purchased,
most of which replaced older models, and the new VIP slot and table
player lounge, "Club Griffin," opened. In addition, guest room
refurbishments continued and a new centralized mobile communications
system was installed. During the years 1989 through 1992 improvements
included refurbishment of rooms in both the East Tower and the North
Tower, casino renovations, purchase of new slot machines and gaming
equipment, conversion of the parking garage from valet to
self-parking, restaurant remodeling and upgrading, renovation of
public areas, installation of new computer equipment and management
information systems, as well as improvements to the infrastructure
such as elevators, air conditioning, and exterior renovations and
painting. With the completion of the capital improvements program in
1993, management expects capital expenditures in 1994 to decline to
approximately $12,000,000 which will be primarily for maintenance of
existing facilities.
Marketing
_________
The Company continues to take advantage of the celebrity status
of Merv Griffin, who is actively engaged in the marketing of the
Resorts Casino Hotel. Mr. Griffin, who is Chairman of the Board of
RII, is featured in television commercials and in print
advertisements. Mr. Griffin also produced live at the Resorts Casino
Hotel "Merv Griffin's New Year's Eve Special 1993" which was broadcast
nationwide. Mr. Griffin is to continue to participate in the
operations and marketing of the Resorts Casino Hotel through the term
of a License and Services Agreement described in "Transactions with
Management and Others - Griffin Services Agreement" under "ITEM 11.
EXECUTIVE COMPENSATION - Compensation Committee Interlocks and Insider
Participation."
The Company's marketing strategy is designed to enhance the
appeal of the Resorts Casino Hotel to the mid and premium-level slot
and table game players. For slot players, in 1993 the Company (i)
introduced a new "cash-back" program which rewards players with cash
refunds or complimentaries based on their volume of play; (ii) expanded
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and upgraded "Hollywood Hills," its high-limit slot area; and (iii)
opened a VIP slot and table player lounge, "Club Griffin." Also, in
an effort to attract mid and premium table game players, the Company
has established customer development teams to increase opportunities
in this market area. The entertainment product has also been modified
to attract the mid and premium players through increased booking of
star headliners and, in 1993, changing the revue show more frequently
than in prior years.
New Convention Center
_____________________
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. The Company
understands that the new convention center will have 500,000 square
feet of exhibit space and an additional 104,200 square feet of meeting
rooms. Construction of the new convention center began in early 1993
and it is scheduled to be completed in the fall of 1996.
The convention center is part of a broader plan that includes an
additional expansion of the Atlantic City International Airport and
other improvements in Atlantic City. Officials have commented upon the
need for improved commercial air service into Atlantic City as a
factor in the success of the proposed convention center. See further
discussion under "Transportation Facilities" below. Also, in order to
spur construction of new hotel rooms and renovation of substandard
hotel rooms into deluxe accommodations to support the new convention
center, certain funds have been set aside by the Casino Reinvestment
Development Authority (the "CRDA"), a public authority created under
the Casino Control Act, to aid in financing such projects. Ten
casino/hotels have filed proposals to obtain financing for such
projects; however, plans for these projects are considered preliminary.
Although these developments are viewed as positive and favorable
to the future prospects of the Atlantic City gaming industry, the
Company, at this point, can make no representations as to whether, or
to what extent, its operations may be improved by the completion of
the new convention center, the proposed airport expansion projects and
the proposed increase in number of hotel rooms in the area.
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 the terminal at the Atlantic City International Airport (located
approximately 12 miles from Atlantic City) was expanded to handle
additional air carriers and large passenger jets, but scheduled
service to that airport from major cities by national air carriers
remains extremely limited. Also, in 1989 Amtrak express rail service
to Atlantic City commenced from Philadelphia, New York, Washington and
other major cities in the northeast. This was expected to improve
access to Atlantic City and expand the geographic size of the Atlantic
City casino industry's marketing base. However, 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
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destination resort. However, the Company understands that the South
Jersey Transportation Authority has begun work on a comprehensive
master plan for the future development of the airport which plan is
expected to be completed in 1994. Plans for expansion that would
approximately double the size of the existing passenger terminal have
already been announced. The Company understands that construction of
this project is to commence in the spring of 1994 and its completion
is scheduled for late in the summer of 1995.
The Company continues to utilize day-trip bus programs. A
non-exclusive easement enables the Resorts Casino Hotel to utilize a
bus tunnel under the adjacent Trump Taj Mahal Casino-Resort (the "Taj
Mahal"), which connects Pennsylvania and Virginia Avenues, and a
service road exit from the bus tunnel. This reduces congestion around
the Pennsylvania Avenue bus entrance to the Resorts Casino Hotel. To
comfortably accommodate its bus patrons, the Company has a waiting
facility which is located indoors, adjacent to the casino, and offers
various amenities.
Competition
___________
Competition in the Atlantic City casino/hotel industry is
intense. Casino/hotels compete primarily on the basis of promotional
allowances, entertainment, advertising, services provided to patrons,
caliber of personnel, attractiveness of the hotel and casino areas and
related amenities, and parking facilities. The Resorts Casino Hotel
competes directly with 11 casino/hotels in Atlantic City which, in the
aggregate, contain approximately 786,000 square feet of gaming area,
including simulcast betting and poker rooms, and 8,700 hotel rooms.
The total amount of gaming area of these competing properties is
expected to increase as the Showboat has announced plans for a sizable
addition to its casino gaming floor and certain other casino/hotels
are expected to add simulcasting rooms which are permitted to house
other authorized table games. Unlike casino gaming floor area, which
is regulated based on the number of guest rooms at a particular
property, the size of simulcasting rooms is not limited.
The Resorts Casino Hotel is located at the eastern end of the
Boardwalk adjacent to the Taj Mahal, which is next to the Showboat.
These three properties have a total of more than 2,400 hotel rooms and
approximately 278,000 square feet of gaming space in close proximity
to each other. A 28-foot wide enclosed pedestrian bridge between the
Resorts Casino Hotel and the Taj Mahal allows patrons of both hotels
and guests for events being held at the Resorts Casino Hotel and at
the Taj Mahal to move between the facilities without exposure to the
weather. A similar enclosed pedestrian bridge connects the Showboat
to the Taj Mahal, allowing patrons to walk under cover among all three
casino/hotels. The remaining nine Atlantic City casino/hotels are
located approximately one-half mile to one and one-half miles to the
west on the Boardwalk or in the Marina area of Atlantic City.
All Atlantic City casino/hotels compete for customers with
casino/hotels located in Nevada, and in certain foreign resort areas,
including The Bahamas, particularly with respect to
destination-oriented business, including conventions. The Las Vegas
casino/hotel industry benefits from a favorable climate and nearby
airport facilities that serve most major domestic carriers.
- 11 -
Atlantic City casino/hotels also compete with casinos located in
other U.S. jurisdictions, particularly those close to New Jersey.
Colorado, Illinois, Iowa, Louisiana, Mississippi, Missouri and South
Dakota have legalized, and several other states, including
Pennsylvania, and the District of Columbia are currently considering
legalizing limited land-based and riverboat casino gaming.
Additionally, certain gaming operations are conducted or have been
proposed on Federal Indian reservations in a number of states. In
January 1993, a casino on an Indian reservation located in Connecticut
was authorized to operate slot machines and in September 1993 this
facility was expanded to house more than 3,000 slot machines.
Previously, this casino, which opened in early 1991, was only
authorized to conduct table gaming operations. In July 1993 the
Oneida Indians opened a casino near Syracuse, New York. In October
1993 approval was granted for the construction of a high stakes
gambling casino on the St. Regis Mohawk reservation in New York State
near the Canadian border, 50 miles southwest of Montreal. Under New
York state law, poker and slot machines currently are not permitted.
This rapid expansion of casino gaming, particularly that which has
been or may be introduced into jurisdictions in close proximity to
Atlantic City, may adversely affect the Company'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 24% of table game
volume at the Resorts Casino Hotel in 1993, 23% in 1992 and 24% in
1991. Gaming receivables, net of allowance for uncollectible amounts,
were $3,618,000, $4,503,000 and $5,586,000 as of December 31, 1993,
1992 and 1991, 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.
Showboat Lease
______________
The Showboat has approximately 515 guest rooms, a 60-lane bowling
center, a 65,000 square foot casino and a 15,000 square foot simulcast
betting and poker room. The Showboat is situated on approximately 10
acres which are owned by the Company and leased to ACS pursuant to the
Showboat Lease, a 99-year net lease dated October 26, 1983, as
amended. The Showboat Lease provided for an initial annual rental,
which commenced in March 1987, of $6,340,000, subject to future annual
adjustment based upon changes in the consumer price index. The annual
rental was $8,118,000 for the 1993 lease year and is expected to
approximate $8,300,000 for the 1994 lease year.
The Company's First Mortgage Non-Recourse Pass-Through Notes due
June 30, 2000 (the "Showboat Notes") are secured and serviced by the
Showboat Lease, and all lease payments are made to the Indenture
Trustee for the Showboat Notes to meet the Company's interest
obligations under those notes. See Note 11 of Notes to Consolidated
Financial Statements.
- 12 -
The Showboat Lease provides that if, under New Jersey law, the
Company is prohibited from acting as lessor, including any finding by
the Casino Control Commission that the Company is unsuitable, the
Company must appoint a trustee, acceptable to the Casino Control
Commission, to act for the Company and collect all lease payments on
the Company's behalf. In that event, the trustee also must proceed to
sell the Company's interest in the Showboat Lease and the leased
property to a buyer qualified to act as lessor. The net proceeds of
any such sale, together with any unremitted rentals, would be paid to
the Company. Also, if the Company is no longer able to act as a
lessor, as aforesaid, ACS would have an option to acquire ownership of
the 10 acres leased from the Company. The option would be exercisable
during a period of not more than three months. The purchase price
would be an amount equal to the greater of $66,000,000 or the fair
market value of the leased acreage, as defined, but in no event may
the purchase price be more than 11 times the rent being paid by ACS in
the year in which the option may become effective. If the fair market
value is not ascertained within the time required by the Casino
Control Commission, then the purchase price would be the lesser of
$66,000,000 or 11 times the rent being paid by ACS in the year the
option may become effective. In the event of any sale of the leased
property under the circumstances described above, the disposition of
the proceeds of such sale would be governed by the indenture for the
Showboat Notes.
Under the Casino Control Act, both the Company and ACS, because
of their lessor-lessee relationship, are jointly and severally liable
for the acts of the other with respect to any violations of the Casino
Control Act by the other. In order to limit the potential liability
that could result from this provision, ACS, its parent, Ocean
Showboat, Inc., and the Company have entered into an indemnity
agreement pursuant to which they agree to indemnify each other from
all liabilities and losses which may arise as a result of acts of the
other party that violate the Casino Control Act. The Casino Control
Commission could determine, however, that the party seeking
indemnification is not entitled to, or is barred from, such
indemnification.
Other Properties
________________
The Company owns in the aggregate approximately 90 acres of land
in Atlantic City at various sites which could be developed and are
available for sale. This acreage primarily consists of vacant land in
Great Island, Rum Point, the marina area and waterfront parcels in the
inlet section. See "ITEM 2. Properties."
The Bahamas
___________
General
_______
The Company, through Bahamian subsidiaries, owns and operates a
major destination resort on Paradise Island, The Bahamas. The
Company's facilities consist of three hotel complexes: The Paradise
Island Resort & Casino; the Ocean Club Golf & Tennis Resort; and the
Paradise Paradise Beach Resort. The Paradise Island Resort & Casino
includes two hotel towers totalling 1,186 guest rooms, the 30,000
square foot Paradise Island casino and related facilities. The Ocean
Club Golf & Tennis Resort is an exclusive 71-room hotel with premium
room rates. The Paradise Paradise Beach Resort is a 100-room hotel
complex that offers more moderately priced accommodations. The
- 13 -
Company also owns and operates convention facilities, shops,
restaurants, bars and lounges, an 18-hole golf course, tennis courts
and swimming pools. It owns approximately six miles of beach and
water frontage and other resort facilities on Paradise Island. Its
holdings on Paradise Island, including undeveloped real estate,
represent 562 acres, or almost 70% of the acreage of the entire
island. The Restructuring contemplates the disposition of the
Paradise Island operations.
Since 1990, given the Company's intention to sell its Paradise
Island assets and in light of the operating performance of those
properties (see "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS"), capital expenditures
there were essentially limited to maintenance of existing facilities.
It is anticipated that capital expenditures by the Company in 1994
will also be limited to maintenance projects.
Paradise Island is part of the Commonwealth of The Bahamas. It
is situated immediately across Nassau Harbour, north of the capital
city of Nassau, New Providence Island, and is connected to Nassau by a
two-lane toll bridge and ferry boat service. The entire island is 5.5
miles in length, two-thirds of a mile wide at its widest point, and
totals 826 acres.
Paradise Island Casino
______________________
The Paradise Island casino is the center of the Paradise Island
Resort & Casino complex. It is connected by arcades with shops to the
682-room Britannia Towers and the 504-room Paradise Towers. The
one-story and part-mezzanine casino building situated between the two
hotel towers contains nearly 165,000 square feet, including the 30,000
square foot casino gaming area. It also houses several restaurants
and bars; the Le Cabaret Theatre, which also serves meals; a central
commissary; employee cafeteria; shops; and casino offices.
At December 31, 1993, the Paradise Island casino gaming area
contained 58 blackjack tables, 10 dice tables, 10 roulette tables, 6
poker tables, 2 big six wheels, 2 baccarat tables and 800 slot
machines. During 1993, the Company's Paradise Island casino had a
total gross gaming win of $62,943,000, compared to $66,120,000 and
$61,003,000 in 1992 and 1991, respectively.
Paradise Island Resort and Hotel Facilities
___________________________________________
The Company's resort and hotel facilities on Paradise Island
include the Paradise Island Resort & Casino, the Ocean Club Golf &
Tennis Resort and the Paradise Paradise Beach Resort, with a total of
1,357 guest rooms, suites and villas, 15 restaurants, 13 bars and
lounges, 21 tennis courts, 4 swimming pools, an 18-hole golf course,
approximately six miles of beach and water frontage, and other resort
facilities and land holdings.
The Paradise Island Resort & Casino is the largest hotel complex
in The Bahamas. It includes a 1,186-room hotel and casino complex
with two swimming pools, restaurants, lounges, tennis courts,
convention facilities, ocean beach, shops and other resort
facilities. This complex includes the 682-room Britannia Towers and
the 504-room Paradise Towers. The total floor area of the two hotel
towers, villas, casino and restaurants exceeds 1,000,000 square feet.
- 14 -
The Ocean Club Golf & Tennis Resort is an exclusive, luxury
resort facility geared toward the affluent visitor. The complex
comprises 71 guest rooms including villas and cabanas, an 18-hole golf
course, tennis courts, a swimming pool, ocean beach and dining and
cocktail facilities.
The Paradise Paradise Beach Resort includes 100 guest rooms, a
restaurant, lounge, swimming pool and ocean beach. The complex
attracts value-conscious tourists.
Consistent with industry practice, the Company reserves a portion
of its hotel rooms and suites as complimentary accommodations for
high-level wagerers. During 1993, 1992 and 1991 the average occupancy
rates, including complimentary rooms which were primarily provided to
casino patrons, were 65%, 68% and 71%, respectively. The average
occupancy rate and weighted average daily room rental, excluding
complimentary rooms, were 50% and $111, respectively, for 1993. This
compares with 54% and $108, respectively, for 1992, and 58% and $111,
respectively, for 1991.
Marketing
_________
The Company's marketing strategy for the Paradise Island
properties continues to focus on the casino rather than primarily
promoting the hotels and related amenities. Through direct mailings
to those known to be casino players, both in the United States and
abroad, and increased casino promotional activities, the Company hopes
to attract more casino customers to Paradise Island. Also, in an
effort to attract the large number of families arriving in Nassau on
cruise ships, the Company has begun promoting its "Camp Paradise,"
which offers supervised activities for children. In addition, the
Paradise Island complex has well established ties with numerous tour
and travel wholesalers, as well as many repeat patrons.
Merv Griffin is involved in the development of marketing
campaigns promoting the Paradise Island facilities. During December
1993, Merv Griffin hosted his fifth annual "Star Sports Spectacular"
which featured celebrities from the entertainment and sports fields
who participated with the Company's casino guests in golf and tennis
tournaments. It is expected that Merv Griffin will not be associated
with the promotion of Paradise Island subsequent to the
Restructuring. See "Competition" below for information regarding the
Company's competitive position in The Bahamas.
Transportation Facilities
_________________________
Airline Transportation. Several major airlines provide regularly
______________________
scheduled service to Nassau International Airport. In March 1993 Jet
Shuttle began a new air shuttle service between Miami and Nassau. In
November 1993 a new Bahamian carrier, Trinity Air, began offering
flights between Nassau and south Florida. Also, from mid-November
1993 through early January 1994, Bahamasair, the national air carrier
of The Bahamas, changed the aircraft used for its south Florida-Nassau
flights to jets with a larger seating capacity. Although this
resulted in increased capacity during the fourth quarter of 1993, in
recent years overall air transportation to Nassau has been reduced
significantly. This has resulted from the failure of certain major
United States air carriers, financial difficulties experienced by
- 15 -
Bahamasair as well as the economic recession, particularly in the
northeastern United States. The reduction in airline service to
Nassau has adversely affected the Company's Bahamian operations.
Most patrons arriving by air use the Nassau International
Airport. However, the Company also owns and operates a short takeoff
and landing ("STOL") airport facility, including a 3,000-foot runway,
airport terminal and customs building, situated on 63 acres of land
located at the southeast corner of Paradise Island. Paradise Island
Airlines, Inc. ("PIA"), a subsidiary of RII, is currently the second
largest passenger carrier to The Bahamas. PIA provides scheduled
service between Paradise Island and Miami, Ft. Lauderdale and West
Palm Beach, Florida and offers a program of casino night flights to
and from Ft. Lauderdale, Florida; PIA operates one Company-owned and
four leased Dash 7 STOL aircraft. The Restructuring contemplates the
disposition of PIA.
Cruise Ships. The Company believes that a significant portion of
____________
the cruise ship tourists currently docking at New Providence Island
visit the Company's facilities on Paradise Island. The Bahamian
government operates 11 cruise ship berths in Nassau Harbour.
Competition
___________
The Company's Paradise Island facilities compete with other
hotels and resorts on Paradise Island, elsewhere in The Bahamas, the
southeastern United States, the Caribbean and Mexico, as well as
cruise ships serving these areas. As new hotels are constructed or
new cruise ships are introduced into service in these areas,
competition can be expected to increase.
The Company's properties principally compete with a casino/hotel
and resort complex on Cable Beach, New Providence Island, comprised of
the Crystal Palace Resort and Casino (the "Crystal Palace"), with 860
guest rooms, a 33,500 square foot casino, a show theatre and other
amenities owned by Carnival Cruise Lines, Inc. ("Carnival"), and the
Radisson Cable Beach Casino & Golf Resort (the "Radisson") with 679
guest rooms owned by The Hotel Corporation of The Bahamas ("HCB"), a
corporation owned by the Government of The Bahamas. Carnival had
operated the entire complex prior to February 1992, as until that time
Carnival leased the property now known as the Radisson from HCB. In
October 1993, Carnival announced that it had signed an agreement in
principle to sell an 81% interest in the Crystal Palace complex to a
group of German investors. This investor group has announced that it
plans to increase the marketing of the Crystal Palace complex in
Europe and will invest additional capital in the complex to establish
it as a high-end resort destination. Although there can be no
assurance that such sale will be completed, an upgraded Crystal Palace
complex may adversely affect the Company's operations in The Bahamas.
Carnival Air Lines, affiliated with Carnival, provides charter air
service from the continental United States to Nassau International
Airport.
In addition to the Crystal Palace casino, the Bahamian government
is obligated to facilitate the grant of a casino license to the
operators of the Ramada Resort located on the southwestern end of New
Providence Island. The Bahamian government is also obligated to
support a proposal for the operation of a slot casino at the Radisson
resort on Cable Beach.
- 16 -
There is a total of approximately 7,300 rooms for overnight
guests on New Providence Island and Paradise Island combined. Of such
rooms, approximately 3,100 are located in hotels on Paradise Island,
including 1,357 in hotels owned and operated by the Company. In
recent years the Company's Bahamian hotel and casino operations have
experienced increased competition from the new, larger cruise ships
which have begun serving this area as these cruise ships have
effectively provided more available rooms.
Also, the Company's Paradise Island casino competes with two
casinos on Grand Bahama Island, with casinos located on Caribbean
islands and, to a lesser extent, with Atlantic City and Las Vegas
casino/hotels. Plans for a new casino on Grand Bahama Island have
recently been announced.
Competition among hotels and resort properties is, in general,
based upon the attractiveness of the facilities and the relative
convenience of available transportation to destinations; the presence
of a casino; service; quality and price of rooms, food and beverages;
convention facilities; and entertainment. The Company believes that
its Paradise Island resort facilities, because of location, variety of
hotels and restaurants, beaches, available sports activities and
overall quality, compete strongly with other resort properties.
Certain Arrangements with the Government of The Bahamas
_______________________________________________________
The Company, through certain of its Bahamian subsidiaries, and
HCB have entered into various agreements, effective in 1978, pursuant
to which the Paradise Island casino facility is leased to HCB, and
Paradise Enterprises Limited ("PEL"), an indirect subsidiary of RII,
is retained by HCB to manage and operate the casino. These
agreements, as subsequently amended, are referred to herein as the
"Paradise Island Agreements."
Under the Paradise Island Agreements, the casino facility is
leased to HCB at an annual rental of $500,000 and PEL has an exclusive
right to manage and operate the casino through December 31, 1997,
subject to an annual finding of fitness. The lease of the casino
facility was extended to December 31, 1997 by a 1988 letter agreement
between RIB and HCB. In consideration of the right to manage and
operate the casino and to use the gaming facilities, PEL pays HCB an
annual operating fee of $5,000,000 plus 15% of gross revenues from
casino gaming in excess of $25,000,000. PEL also pays all gaming
taxes. However, pursuant to the Paradise Island Agreements any
increase in the rate of gaming tax is to result in a commensurate
reduction in the amounts otherwise payable to HCB under the management
agreement.
Pursuant to amendments of PEL's casino license, the Company,
among other things, is required to (i) continue its efforts to
achieve a prompt sale of its Paradise Island operations to a purchaser
satisfactory to the Government of The Bahamas and HCB; (ii) consult
with HCB in advance with respect to material aspects of any
contemplated disposition of the Paradise Island operations; (iii)
provide quarterly reports to HCB describing the progress made by the
Company in implementing plans for separating various functions
relating to its Bahamian operations from the Company's non-Bahamian
operations; (iv) provide to HCB various financial reports; and (v)
- 17 -
reimburse the Government of The Bahamas and HCB for legal and advisory
fees incurred by them relative to any restructuring of the Company.
Land and Other Assets
_____________________
The Company, through Bahamian subsidiaries, owns 562 acres on
Paradise Island. Of such land, 218 acres is not used in the Company's
operations and is available for future development. The Company has
prepared a master plan for the island, which includes properties
available for hotel, commercial, condominium and time-share land use.
The Company also owns roads and other land improvements on Paradise
Island and a water and sewage system which serves, at stated charges,
substantially all facilities on Paradise Island. The water and sewage
system is presently operating near full capacity and significant
additional development on the island will require expansion of the
system. The Company also owns approximately 1,555 acres of
undeveloped and 120 acres of partially developed land located on
Little Hawksbill Creek, several miles from Freeport, Grand Bahama
Island.
Approval by the Government of The Bahamas is required for foreign
ownership of real property in The Bahamas. In addition, any foreign
investment in The Bahamas requires exchange control approval by the
Central Bank of The Bahamas. No sale of any property located in The
Bahamas to non-Bahamian nationals may be completed until such
governmental approvals are obtained.
Security Controls
_________________
Gaming at the Atlantic City and Paradise Island casinos is
conducted by Company trained and supervised personnel. Prior to
employment in Atlantic City, all casino personnel must be licensed
under the Casino Control Act. In The Bahamas all casino personnel
must be cleared by the Bahamian Government. Security checks are made
to determine, among other matters, that job applicants for key
positions have had no criminal ties or associations. The Company
employs extensive security and internal controls at each of its
casinos. Security in both the Atlantic City and Paradise Island
casinos utilizes closed circuit video cameras to monitor the casino
floor and money counting areas. The count of monies from gaming is
observed daily by government representatives at each of the Company's
casinos.
Airline Operations
__________________
The Company's airline operations are entirely conducted by PIA
and are described under "The Bahamas - Transportation Facilities"
above.
Seasonal Factors
________________
The Company's business activities are strongly affected by
seasonal factors that influence the New Jersey beach and Bahamian
tourist trade. Higher revenues and earnings are typically realized
from the Company's Atlantic City operations during the middle third of
the year and from its operations in The Bahamas during the first
quarter of the year.
- 18 -
Employees
_________
During 1993, the Company had a maximum of approximately 7,400
employees, of whom approximately 4,000 were located in Atlantic City
and 3,000 were in The Bahamas. The Company believes that its employee
relations are satisfactory, with the exception of the Bahamian union
dispute described below.
In Atlantic City, approximately 1,600 of the Company's employees
are represented by unions. Of these employees, approximately 1,300
are represented by the Hotel Employees and Restaurant Employees
International Union Local 54, whose contract expires in September
1994. There are several union contracts covering other Atlantic City
union employees.
In The Bahamas, approximately 1,800 of the Company's employees
are represented by the Bahamas Catering and Allied Workers Union,
whose contract expires in January 1995. In light of the downturn in
business being experienced by hotels in the Paradise - New Providence
Island area, the Company, along with other affected operators in that
area, did not pay wage and pension increases scheduled for January
1993 as they were negotiating with the union for certain concessions
under the contract. Since then the union filed claims against the
employers and, after attempting to mediate the dispute, the Minister
of Labour referred it to arbitrators. The dispute remains unsettled,
negotiations among the parties continue and no work interruptions have
been experienced.
In Atlantic City, all of the Company's casino employees must be
licensed under the Casino Control Act. Casino employees are subject
to more stringent requirements than non-casino employees, including
hotel employees who must be registered with the Casino Control
Commission. Each casino employee must meet applicable standards
pertaining to such matters as financial responsibility, good
character, ability, casino training and experience, and New Jersey
residency.
In The Bahamas, all casino employees must also be licensed and
all non-Bahamian employees must apply for and receive work permits
issued by the Government of The Bahamas. From time to time this
requirement has created difficulties in hiring certain skilled
non-Bahamian employees. These work permits are generally subject to
renewal annually.
Foreign Operations
__________________
A significant portion of the Company's operating assets are
located in The Bahamas. See "(b) Financial Information about Industry
Segments." The Company believes that its business experience in The
Bahamas has been satisfactory. Changes in applicable taxes, duties,
immigration policies, exchange control regulations, policies
concerning investments, ownership and transfer of real estate, or
legislation could adversely affect the Company. In August 1992 a new
Prime Minister was elected in The Bahamas. The former Prime Minister
had been in office for 25 years. Management believes that the change
in government will favorably impact the tourism industry in The
Bahamas over the long term.
- 19 -
From time to time, Bahamian subsidiaries of the Company have
made, and in the future may make, legal political contributions in The
Bahamas solely for general goodwill purposes without any
understandings or agreements as to the receipt by the Company of any
favors, privileges or other special treatment in its dealings with the
Government of The Bahamas.
Regulation and Gaming Taxes and Fees
____________________________________
New Jersey
__________
General. The Company'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. These bodies
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, number of games, credit play, size and facilities
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 1993 and early 1994.
The Casino Control Commission approved poker, which was implemented in
the summer of 1993, and keno, which is anticipated to be implemented
in the summer of 1994. Also, the Casino Control Act was amended to
allow casinos to expand their casino floors before building the
requisite number of hotel rooms, subject to approval of the Casino
Control Commission. This amendment was designed to encourage hotel
room construction by giving casino licensees an incentive and an added
ability to generate money to finance hotel construction. Further
legislation was passed allowing the Casino Control Commission to
approve increasing a casino's gaming space if a licensee rebuilds
existing hotel rooms as part of a neighborhood rehabilitation
program. Previous law only allowed for casino expansion if a casino
built new hotel rooms. In addition, recent legislation allows
gamblers to buy casino chips directly with credit cards.
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. Thereafter, a casino license is
renewed for a period of two 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 the Company's Atlantic City
casino. In February 1994, RIH's license was renewed until
- 20 -
January 31, 1996. RIH's renewed license is subject to several
conditions, including (i) the Company must provide certain periodic
reports and immediate notification of certain events related to RII's
public debt securities to the Casino Control Commission, (ii) no
material changes to the Restructuring may be implemented without prior
approval of the Casino Control Commission, (iii) the Company must
submit certain financial and other reports relative to the
Restructuring and certain other periodic financial reports to the
Casino Control Commission, (iv) certain payments from RIH to related
parties are subject to prior approval of the Casino Control
Commission, (v) if the prepackaged bankruptcy filing is not made, and
all elements of the Restructuring have not been reduced to final
executed agreements, by March 21, 1994, RIH must have petitioned the
Casino Control Commission for an extension of such deadline and (vi)
any borrowing under the RIHF Senior Facility is subject to prior
approval of the Casino Control Commission.
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 Restated Certificate of Incorporation of RII provides that all
securities of RII and any of its subsidiaries 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.
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.
- 21 -
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 and other fees
based upon the cost of maintaining control and regulatory activities,
and various work permits and license fees for the various classes of
employees. In addition, a 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.
The following table summarizes, for the periods shown, the fees
and taxes assessed upon the Company by the Casino Control Commission.
For the Year
_______________________________________
1993 1992 1991
___________ ___________ ___________
Gaming tax $19,545,000 $18,788,000 $17,384,000
License, investigation,
inspection and other fees 3,985,000 4,417,000 4,730,000
___________ ___________ ___________
$23,530,000 $23,205,000 $22,114,000
___________ ___________ ___________
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. Certain
issues have been raised concerning the satisfaction of the Company's
investment obligations for the years 1979 through 1983. See Note 15
of Notes to Consolidated Financial Statements for a discussion of
these issues.
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
- 22 -
alternative tax of 2.5% of gross revenue. Licensees are required to
make quarterly deposits with the CRDA against their current year
investment obligations. The Company's investment obligations for the
years 1993, 1992 and 1991 amounted to $3,054,000, $2,930,000, and
$2,706,000, respectively, and have been satisfied by deposits made
with the CRDA. At December 31, 1993, the Company held $4,873,000 face
amount of bonds issued by the CRDA and had $12,946,000 on deposit with
the CRDA. The CRDA bonds issued through 1993 have interest rates
ranging from 5.8% to 7% and have repayment terms of between 41 and 50
years.
The Bahamas
___________
Licensing. PEL is currently licensed to operate the Paradise
_________
Island casino under The Lotteries and Gaming Act, 1969, as amended
(the "Gaming Act"), of the Commonwealth of The Bahamas, which
regulates the operation of casinos in The Bahamas. The Gaming Act
established a Gaming Board which observes the count of all gaming
receipts, prescribes accounting and control procedures and regulates
personnel and security matters. Gaming licenses are renewable
annually. The Gaming Board also is empowered to revoke or suspend any
gaming license if a violation occurs.
PEL's gaming license is subject to a number of conditions
relating to PEL's activities and operations. Under the casino
license, PEL and its parent entities are required to observe certain
operating requirements and to provide certain financial and other
information to the Government of The Bahamas on a continuing basis.
See "The Bahamas - Certain Arrangements with the Government of The
Bahamas" above.
License Fees and Taxes. Currently, the Gaming Act provides for
______________________
an annual basic license fee of $200,000 plus a tax of 25% on all
gaming win up to $10,000,000, 20% on the next $6,000,000 of win, 10%
on the next $4,000,000 of win, and 5% on all win over $20,000,000,
with a minimum tax of $2,000,000 payable each year on gaming win.
The following table summarizes, for the periods shown, the taxes
and fees paid or accrued by the Company under the Gaming Act and the
Paradise Island Agreements.
For the Year
_______________________________________
1993 1992 1991
___________ ___________ ___________
Gaming tax $ 6,237,000 $ 6,411,000 $ 6,153,000
Basic license and operating
fees 10,830,000 11,382,000 10,610,000
___________ ___________ ___________
$17,067,000 $17,793,000 $16,763,000
___________ ___________ ___________
(d) Financial Information about Foreign and Domestic Operations
___________________________________________________________
and Export Sales
________________
See "(b) Financial Information about Industry Segments" and "The
Bahamas" and "Foreign Operations" under "(c) Narrative Description of
Business" above.
- 23 -
ITEM 2. PROPERTIES
___________________
The Company's casino, resort hotel and related properties in
Atlantic City and The Bahamas, together with certain other properties,
described above under "ITEM 1. BUSINESS," 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.
RII's office in North Miami, Florida, is located in a three-story
building owned by RII. The Restructuring contemplates the dispositon
of this office building through either the SIHL Sale or the PIRL
Spin-Off.
The Company's principal properties, including the Resorts Casino
Hotel, the Paradise Island Resort & Casino, the Ocean Club Golf &
Tennis Resort and the Paradise Paradise Beach Resort (but not the land
underlying the Showboat or the Showboat Lease), and, in each case, any
additions or improvements to those properties, together with all
related furniture, fixtures, machinery and equipment, directly or
indirectly comprise the collateral securing the Series Notes. The
Showboat Lease, including the land subject to the lease, secures the
payment of the Showboat Notes.
Atlantic City - Other Properties
________________________________
The Company owns various non-operating sites in Atlantic City
that could be developed and are available for sale. These sites
consist primarily of vacant land in Great Island, Brigantine Island
and the marina area, and waterfront parcels in the inlet section. In
view of the generally depressed state of the commercial real estate
market in Atlantic City and the condition of the economy generally,
the Company does not anticipate any significant real estate activity
in the foreseeable future.
RII is the owner of real property located at Brigantine Boulevard
on Brigantine Island that consists of approximately 40 acres ("Rum
Point"), of which only approximately 17 acres can potentially be
developed because the remaining portions constitute wetlands areas and
consequently are not available for development. Additional
environmental and coastal restrictions apply to the development of Rum
Point, though the Company currently is attempting to have the
restrictions modified to permit development.
RII owns in fee an approximately 552 acre parcel located in
Atlantic City on Blackhorse Pike (the "Great Island Property"), of
which approximately 500 acres are considered to be wetlands. The
Company owns in fee an eight acre parcel located in the marina area of
Atlantic City immediately adjacent to the Harrah's Casino Hotel. The
Company also owns in fee various individual parcels of property
located in the area of Atlantic City known as the South Inlet which in
the aggregate constitute approximately 10 acres and a parcel of land
in Atlantic City consisting of approximately seven acres and a
warehouse thereon. The Company is the owner of various additional
properties at scattered sites in Atlantic City. Principal among these
is the so-called "Trans Expo" site, a 2.3 acre parcel located near the
site of the new convention center.
The Bahamas - Other Properties
______________________________
The Company, through RIB, owns 562 acres on Paradise Island. RIB
has prepared a land use master plan for the island. See "The Bahamas
- 24 -
- - Land and Other Assets" under "ITEM 1. BUSINESS - (c) Narrative
Description of Business" for a description of the acreage available
for development and the preparation of a master plan for Paradise
Island. The Company does not anticipate any significant real estate
sales on Paradise Island while it is seeking to implement the
Restructuring.
The Company, through a subsidiary of RIB, also owns approximately
1,555 acres of undeveloped and 120 acres of partially developed land
located on Little Hawksbill Creek, several miles from Freeport, Grand
Bahama Island.
As previously indicated, approval by the Bahamian Government is
required for foreign ownership of real property in The Bahamas. In
addition, any foreign investment in The Bahamas requires exchange
control approval by the Central Bank of The Bahamas. No sale of any
property located in The Bahamas to non-Bahamian nationals may be
completed until such governmental approvals are obtained.
ITEM 3. LEGAL PROCEEDINGS
__________________________
New York Supreme Court - Friedman Derivative Action
___________________________________________________
RII has been named as the nominal defendant in an action (Arthur
M. Friedman suing derivatively on behalf of RII v. Merv Griffin et al.
and RII, Nominal Defendant) brought derivatively on its behalf by a
shareholder, Arthur Friedman. The complaint was filed in the Supreme
Court of the State of New York, New York County on January 27, 1994
and was amended in February 1994. The defendants in the action, as
amended, are Merv Griffin, Griffin Group, David P. Hanlon, who was
President, Chief Executive Officer and a director of RII through
October 31, 1993, and all of the other current directors of RII. The
complaint seeks to recover for the Company an unspecified sum of money
as compensatory damages for allegedly wrongful acts by the
defendants. The allegations include that the defendants improperly
(i) permitted defendant Griffin not to repay money he allegedly owed
to the Company and (ii) paid defendant Hanlon excessive compensation.
The defendants have until April 1, 1994 to respond to the complaint.
The Company anticipates that it will file its chapter 11 prepackaged
bankruptcy cases before that time and that the litigation will be
stayed by the Bankruptcy Court.
U.S. District Court Action - RII v. Lowenschuss
_______________________________________________
As previously reported, in October 1989 RII filed an action in
the U.S. District Court for the Eastern District of Pennsylvania to
recover certain sums paid to the defendant, as trustee for two
Individual Retirement Accounts, for RII stock in the 1988 merger, in
which RII was acquired by Merv Griffin. This action was transferred
to the Bankruptcy Court for the District of New Jersey. After the
transfer, the Bankruptcy Court granted RII's motion to amend its
complaint to allege two new claims for fraudulent conveyance against
the defendant.
In the Bankruptcy Court, RII filed a motion for summary judgment
and the defendant filed a motion to dismiss. The Bankruptcy Court
issued an opinion in February 1992 denying both parties' motions. In
August 1992, the defendant filed a petition in the Bankruptcy Court
- 25 -
for the District of Nevada, thus staying RII's action in New Jersey.
The Bankruptcy Court confirmed Lowenschuss' plan of reorganization in
October 1993. RII is currently appealing the confirmation order and
other orders of the Bankruptcy Court in the District of Nevada.
New Jersey Superior Court Action - Atlantic City Board of Education -
_____________________________________________________________________
Great Island
____________
In July 1984, the Atlantic City Board of Education enacted a
resolution which identified Great Island as the only suitable site for
a new high school and, consequently, called for its condemnation by
those agencies which have the power of eminent domain. In 1987, a
stringent environmental policy was adopted by the State of New Jersey
which significantly limited the development of Great Island. After
the adoption of this environmental program, and after receiving the
power of eminent domain, the Board formally condemned Great Island. A
condemnation commission determined that the value of the property was
$15,900,000 in 1984 and $10,360,000 in 1987. Both the Board of
Education and RII appealed the commission's decision to the Superior
Court of New Jersey, which held that a 1987 date of valuation was
appropriate, rather than, as claimed by RII, a 1984 date of
valuation. In December 1990, after a de novo inquiry into the value
of the property, a jury decided that the value of the property was
approximately $7,537,000. Of this amount, $5,720,000 had previously
been paid. The difference between the initial consideration offered
and the jury's valuation, plus interest thereon, was released to the
Company in November 1992.
The Company appealed to the Appellate Division the New Jersey
Superior Court's determination of the valuation date of the condemned
property. In July 1993 the Appellate Division affirmed the trial
court's determination of the valuation date. In August 1993 the
Company filed a notice of petition for certification with the Supreme
Court of the State of New Jersey. The certification was denied by the
Supreme Court in October 1993. The Company does not intend to pursue
this case any further.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
____________________________________________________________
Not applicable
- 26 -
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
_____________________________________________________________
STOCKHOLDER MATTERS
___________________
The principal market for RII Common Stock is the American Stock
Exchange. The high and low quarterly sales prices on the American
Stock Exchange of RII Common Stock in 1993 and 1992 were as follows:
1993 1992
_______________ ______________
Quarter High Low High Low
_______________________________________________________________________
First 1 1/8 13/16 2 3/4 1 1/4
Second 3 7/8 13/16 2 3/8 1
Third 2 3/4 1 9/16 1 1/4 3/4
Fourth 2 1/8 1 3/8 1 1/4 11/16
_______________________________________________________________________
No dividends were paid on RII Common Stock during the last two
fiscal years. The Series Notes contain certain restrictions on the
payment of cash dividends.
The number of holders of record of RII Common Stock on February
28, 1994 was 1,984.
- 27 -
ITEM 6. SELECTED FINANCIAL DATA
________________________________
The information presented below should be read in conjunction with the consolidated financial statements,
including notes thereto, presented under "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA."
(In Thousands of Dollars, except per share data)
For the Year Ended December 31,
____________________________________________________________________________
1990
_______________________
From Through
Operating Information (Note A) 1993 1992 1991 September 1 August 31 1989
_______________________________________________________________________________________________________________________
Operating revenues (Note B) $ 439,564 $436,934 $418,243 $129,591 $ 293,972 $ 451,254
_________ ________ ________ ________ _________ _________
Earnings (loss) from operations (Note B) $ 12,898 $ 21,502 $ 16,036 $ (1,214) $ 13,540 $ (7,850)
Recapitalization costs (Notes A and C) (8,789) (2,848) (187,018) (7,291)
Write-off of goodwill (181,311)
Net gain from purchases of subordinated
debentures (Note D) 4,149
Other income (deductions), net (Note E) (105,273) (73,456) (58,438) (12,317) 1,884 (114,286)
_________ ________ ________ ________ _________ _________
Loss before income taxes and
extraordinary item (101,164) (54,802) (42,402) (13,531) (171,594) (306,589)
Income tax benefit (expense) (Note F) (1,000) 1,348 831 3,700
_________ ________ ________ ________ _________ _________
Loss before extraordinary item (102,164) (53,454) (41,571) (13,531) (171,594) (302,889)
Extraordinary item (Notes F and G) 429,809
_________ ________ ________ ________ _________ _________
Net earnings (loss) $(102,164) $(53,454) $(41,571) $(13,531) $ 258,215 $(302,889)
_________ ________ ________ ________ _________ _________
Net loss per share of common stock
(Note H) $ (5.07) $ (2.65) $ (2.07) $ (.68)
_________ ________ ________ ________
_______________________________________________________________________________________________________________________
At December 31,
______________________________________________________________
Balance Sheet Information (Note A) 1993 1992 1991 1990 1989
_______________________________________________________________________________________________________________________
Total assets $ 575,785 $568,950 $567,890 $568,746 $ 745,976
Current maturities of long-term debt
(Note I) $ 466,336 $ 828 $ 1,571 $ 1,528 $ 1,269
Long-term debt, excluding current
maturities (Note I) $ 85,029 $460,712 $392,667 $341,069 $ 858,931
Shareholders' equity (deficit) $(113,744) $(17,262) $ 36,099 $ 77,041 $(260,641)
_______________________________________________________________________________________________________________________
- 28 -
Notes to Selected Financial Data
Note A: During 1989, RII and certain of its subsidiaries filed
______
consents to involuntary petitions or filed voluntary petitions for
relief under the Bankruptcy Code. The effects of the bankruptcy
proceedings reflected in the selected financial data for periods
during which the Company operated subject to the jurisdiction of the
Bankruptcy Court are (i) the Company stopped accruing interest on
its previously outstanding public debt issues in November and
December 1989, (ii) the Company stopped amortizing debt issuance
costs on the dates the respective interest accruals ceased, and
(iii) the Company included in long-term debt at December 31, 1989
sinking funds due in 1990 and accrued interest on public debt stayed
in bankruptcy proceedings.
In 1990 the Company emerged from bankruptcy proceedings
pursuant to the Old Plan. The reorganization was accounted for
using "fresh start" accounting. Accordingly, all assets and
liabilities were restated to reflect their estimated fair values and
the accumulated deficit was eliminated. The Company recorded the
effects of the reorganization as of August 31, 1990. The 1990
operating information is presented separately for the periods
"Through August 31" and "From September 1" due to the new basis of
accounting which resulted from the application of fresh start
accounting.
Changes in operations during the past five years include the
following: Amphibious airline operation was sold in December 1990.
Security consulting service operations were sold in 1990 and 1991.
Note B: Operating revenues for 1993 include the sale of a
______
residential lot in The Bahamas for net proceeds of $445,000.
Earnings from operations for 1993 include a net gain of $224,000 on
that sale.
Operating revenues for 1992 include the sale of a residential
lot in The Bahamas for net proceeds of $213,000. Earnings from
operations for 1992 include a net loss of $17,000 on that sale.
Operating revenues for 1990 include the sales of various
parcels of vacant land in The Bahamas for net proceeds of
$3,933,000. Earnings from operations for 1990 include gains of
$247,000 on those sales.
Operating revenues for 1989 include the sales of various
parcels of vacant land in Atlantic City and The Bahamas for net
proceeds of $5,053,000. Earnings from operations for 1989 include a
net loss of $317,000 on those sales.
Note C: See Note 1 of Notes to Consolidated Financial Statements
______
for a discussion of this item in 1993 and 1992.
Note D: The 1989 net gain from purchases of subordinated debentures
______
resulted from the Company's purchases of $13,528,000 of its
subordinated debentures to satisfy sinking fund requirements.
Note E: This item includes interest income, interest expense and
______
amortization of debt discount and issuance costs.
- 29 -
Note F: For the years 1989 through 1992 the Company accounted for
______
income taxes in accordance with Statement of Accounting Standards
No. 96 "Accounting for Income Taxes".
No tax provision was recorded for the two periods of 1990 due
to the generation of net operating losses for federal and state
income tax purposes. The gain on exchange of debt which is
reflected in the extraordinary item in 1990 was not taxable. A
deferred tax benefit resulted from the elimination of basis
differences on the previously outstanding public debt, and is
included in the extraordinary item.
For the year 1989 the Company had net operating losses for
purposes of federal and state income taxes. To the extent the
carryforward of these net operating losses reduced the existing
deferred tax liability, it resulted in a tax benefit for the year.
The write-off of goodwill in 1989 was a non-deductible item for
income tax purposes.
See Note 13 of Notes to Consolidated Financial Statements for
discussion of income taxes for 1993, 1992 and 1991.
Note G: The exchange of securities in connection with the
______
reorganization in 1990 resulted in a gain of $421,611,000 which,
together with the related deferred income tax benefit of $8,198,000,
was reported as an extraordinary item.
Note H: See Note 2 of Notes to Consolidated Financial Statements
______
for discussion of net loss per share of common stock. For 1989 and
the period through August 31, 1990 there was a sole shareholder of
RII. Accordingly, no per share data is disclosed for those periods.
Note I: These items are presented net of unamortized discounts.
______
Note J: RII has not paid any dividends on its capital stock during
______
the five years presented.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
____________________________________________________________________
AND RESULTS OF OPERATIONS
_________________________
FINANCIAL CONDITION
___________________
Liquidity
_________
At December 31, 1993, the Company's current liabilities
exceeded its current assets by $435,081,000 because the Series
Notes, which are due April 15, 1994 are classified as current
liabilities (due within one year). The Company's working capital at
December 31, 1993 included unrestricted cash and equivalents of
$62,546,000. A substantial amount of the unrestricted cash and
equivalents is required for day-to-day operations, including
approximately $15,000,000 of currency and coin on hand which amount
varies by days of the week, holidays and seasons, as well as
approximately $15,000,000 of additional cash balances necessary to
meet current working capital needs.
The principal amount of the Series Notes outstanding is
$481,907,000. Including the interest due on the maturity date of
approximately $36,000,000, the total obligation due on April 15, 1994
- 30 -
will approximate $518,000,000. See "ITEM 1. BUSINESS - (a) General
Development of Business - Restructuring of Series Notes" for a
description of the proposed Restructuring of the Series Notes.
There can be no assurance as to whether or when the Restructuring
will be effected, or that any restructuring that may ultimately be
consummated will be on terms similar to those of the Restructuring.
If the Restructuring is accomplished, management believes that,
although the Restructuring includes the disposition of the Paradise
Island properties and operations, the Restructuring will improve the
Company's long-term liquidity and enhance its ability to meet its
financial obligations as they become due. If the Restructuring had
occurred on December 31, 1993, the Company's working capital deficit
would have been reduced to a nominal amount, the net book value of the
Company's property and equipment would have been reduced to
approximately $275,000,000, the total outstanding principal amount of
the Company's public debt would have been reduced from $587,240,000 to
approximately $266,000,000, and the Company's shareholders' deficit
would have been reduced to a nominal amount.
Although the Restructuring will result in a significant reduction
in the Company's unrestricted cash and equivalents due to the
distribution of Excess Cash to holders of the Series Notes, the
Company will retain $20,000,000 of unrestricted cash and equivalents
and will have the $20,000,000 RIHF Senior Facility available for one
year from the Effective Date of the Restructuring should the Company
have unforeseen cash needs. The Company believes that the RIHF Senior
Facility will serve as a safeguard if an emergency arises from current
operations, or serve as a source of funds for a profitable investment
opportunity.
If the Restructuring is accomplished, there can be no assurance
that the Company will generate sufficient cash from operations to
repay, when due, the principal amount of the RIHF Mortgage Notes due
in 2003, the principal amount of the RIHF Junior Mortgage Notes due in
2004 or the principal amount of the Showboat Notes maturing in 2000.
As a result, the Company may be required to refinance such amounts as
they become due and payable. While the Company believes that it will
be able to refinance such amounts, there can be no assurance that any
such refinancing would be consummated or, if consummated, would be in
an amount sufficient to repay such obligations, particularly in light
of the Company's high level of debt that will continue after the
Restructuring.
Since the Company currently does not have the means to repay the
Series Notes, management is unable to predict the future liquidity of
the Company if the Restructuring is not accomplished.
See Note 1 of Notes to Consolidated Financial Statements for a
description of an Event of Default with respect to the Series Notes
and the possible impact on the Company and the Restructuring should
the Series Note Trustee accelerate the maturity of the Series Notes or
foreclose upon the collateral securing the Series Notes.
Capital Expenditures and Other Uses of Funds
____________________________________________
In recent years, capital expenditures have consistently been a
significant use of financial resources. See capital additions by
- 31 -
geographic and business segment in the table entitled "Identifiable
Assets, Depreciation and Capital Additions" below. Pursuant to a
capital expenditure program developed by the Company in 1989,
virtually all guest rooms and public areas at Resorts Casino Hotel
were refurbished by the end of 1993. Also pursuant to this program,
virtually all guest rooms in the Company's Paradise Island facilities
were refurbished by 1991.
Capital additions for Resorts Casino Hotel in 1991 amounted to
$22,734,000 as approximately 200 guest rooms in the East Tower were
refurbished and certain information systems were upgraded. In 1992,
capital additions amounted to $15,548,000 and included the conversion
of the parking garage from valet to self-parking, the construction of
a covered walkway from the garage to the Resorts Casino Hotel, the
continued renovation of guest rooms, the purchase of additional slot
machines and improvements to the building's infrastructure. Capital
additions in 1993 amounted to $21,618,000, as the Company converted
certain back-of-the-house space into an 8,000 square foot simulcast
facility which houses nine betting windows and customer-operated
terminals and approximately 80 seats for simulcast betting operations,
as well as 25 poker tables, various other table games and a full
service bar. Also, certain casino renovations were completed, 280
slot machines were purchased, most of which replaced older models, and
the new VIP slot and table player lounge, "Club Griffin," opened. In
addition, guest room refurbishment continued and a new centralized
mobile communications system was installed. With the completion of
the capital expenditure program in 1993, recurring capital
expenditures to keep existing facilities competitive can be expected
to approximate $12,000,000 per year for the Resorts Casino Hotel.
Capital additions in 1991 for Paradise Island properties amounted
to $3,726,000 as new carpeting was installed in the casino, a new
casino management system was implemented and certain kitchen areas and
guest rooms were renovated. Capital additions for 1992 totalled
$4,317,000, and included the installation of 37 new slot machines,
expansion of the Paradise Island Airport parking lot, upgrading
existing computer equipment and restaurant renovations. In 1993 the
Company expended $3,747,000 which included the purchase of 110 new
slot machines as replacements for older models as well as various
maintenance projects. The expenditures for 1991, 1992 and 1993 were
somewhat curtailed from those originally planned, in response to the
operating performance of the Company's facilities on Paradise Island.
The Company's capital expenditures on Paradise Island in 1994 are
expected to be limited to maintenance projects.
The Company continually monitors its capital expenditure plan and
considers both the timing and the scope of certain projects to be
flexible. Thus, economic developments and other factors may cause the
Company to deviate from its present capital expenditure plans.
Another significant use of funds in recent years has been
recapitalization costs. Payments of legal, financial and other
advisory fees and costs amounted to $8,095,000 and $2,460,000 in 1993
and 1992, respectively, in contemplation of a restructuring of the
Series Notes and payments of $237,000, $2,954,000 and $5,883,000 in
1993, 1992 and 1991, respectively, for costs associated with the Old
Plan.
- 32 -
Capital Resources and Other Sources of Funds
____________________________________________
Since 1991, operations have been the most significant source of
funds to the Company.
In 1993 Merv Griffin, the Chairman of the Board of RII, made a
partial payment of $3,477,000 of principal on his note payable to RII
(the "Griffin Note"). As described in Note 10 of Notes to
Consolidated Financial Statements, the Griffin Note was then cancelled
and a new note (the "Group Note") from Griffin Group was substituted
therefor. Griffin Group now owes the Company $5,318,000 under the
Group Note. Pursuant to the Restructuring, the next payment the
Company is required to make to Griffin Group under its License and
Services Agreement (the "New Griffin Services Agreement," also
described in Note 10), $2,310,000, is to be applied to reduce the
balance due under the Group Note. The then remaining balance of the
Group Note is to be collected by RII and distributed to holders of
Series Notes as part of Excess Cash.
As part of the Restructuring, the Company will have the
$20,000,000 RIHF Senior Facility available for one year from the
Effective Date for the Company's working capital and general corporate
purposes. The Company believes that the RIHF Senior Facility will
serve as a safeguard if an emergency arises from current operations,
or serve as a source of funds for a profitable investment opportunity.
RESULTS OF OPERATIONS
_____________________
General
_______
The following discussion addresses certain operations the
disposition of which is contemplated in the Restructuring. They
include the Paradise Island portion of the casino/hotel segment, the
Paradise Island portion of the real estate related segment and the
airline segment.
- 33 -
Revenues
________
For the Year Ended December 31,
__________________________________
(In Thousands of Dollars) 1993 1992 1991
_______________________________________________________________________
Casino/hotel:
Atlantic City, New Jersey:
Casino $244,116 $233,780 $218,881
Rooms 6,974 8,766 8,074
Food and beverage 15,926 16,056 16,406
Other casino/hotel 4,463 4,138 4,113
________ ________ ________
271,479 262,740 247,474
________ ________ ________
Paradise Island, The Bahamas:
Casino 62,943 66,120 61,003
Rooms 28,734 30,235 33,173
Food and beverage 30,917 32,851 36,053
Other casino/hotel 18,867 17,890 17,563
________ ________ ________
141,461 147,096 147,792
________ ________ ________
Total casino/hotel 412,940 409,836 395,266
________ ________ ________
Real estate related:
Atlantic City, New Jersey 8,057 7,813 7,542
Paradise Island, The Bahamas 445 213
________ ________ ________
8,502 8,026 7,542
________ ________ ________
Airline 21,802 22,483 18,234
Other segments 115 162 97
Intersegment eliminations (3,795) (3,573) (2,896)
________ ________ ________
Revenues from operations $439,564 $436,934 $418,243
________ ________ ________
_______________________________________________________________________
Casino/hotel - Atlantic City, New Jersey
________________________________________
Casino revenues from the Company's Atlantic City casino/hotel
increased by $10,336,000 in 1993 and $14,899,000 in 1992.
Disregarding casino revenues derived from poker and simulcasting,
which activities commenced on June 28, 1993, the increase in table and
slot win was $4,591,000, or a 2% increase over 1992. The Atlantic
City casino industry had a net increase in table and slot win of 2%
over 1992, while the average increase over the previous four years was
4.2%. The Company believes that the increased competition from other
newly opened or expanded jurisdictions which permit gaming has slowed
the growth of gaming revenue in Atlantic City and, for the Company in
1993, has significantly increased the cost of obtaining additional
revenue.
For both years the Company's increased casino revenues resulted
primarily from increased slot revenues. The improvement in slot
revenues resulted from the effect of increases in amounts wagered by
patrons, while the hold percentage (ratio of casino win to total
amount wagered for slots or total amount of chips purchased for table
games) declined. This reflects management's decision to decrease the
slot hold percentage in order to attract more slot players and to
encourage increased slot wagering per player, as well as marketing
programs which targeted slot players.
In 1993 and 1992 the Company's table game revenues declined, as
did the entire Atlantic City casino industry's. In 1993 the Company's
decline of 3.3%, as compared to the industry's decline of 3.1%, was
- 34 -
due to a lower hold percentage, while the amounts wagered on table
games did not fluctuate significantly from the prior year. In 1992,
the Company's decline of 6.5%, as compared to the industry's decline
of 3.3%, was due to a decrease in amounts wagered and, to a lesser
extent, a decrease in the table game hold percentage.
Although total occupancy was relatively flat in 1993 compared to
1992, the number of complimentary rooms provided to casino patrons
increased. The reduced occupancy from rooms sold resulted in lower
room revenues during 1993 and contributed to the decrease in food and
beverage revenues.
Casino/hotel - Paradise Island, The Bahamas
___________________________________________
Revenues from the Company's Paradise Island casino/hotel
operations decreased by $5,635,000 in 1993 and by $696,000 in 1992.
In 1993 casino revenues decreased $3,177,000 primarily due to the
effect of a decrease in table game hold percentage from 16.5% in 1992
to 14.4% in 1993. The Company's average table game hold percentage
over the four years ended 1992 was 17.2%. The effect of this decrease
was partially offset by the effect of an increase in table game drop
and improved slot win. Room revenues and food and beverage revenues
also were lower in 1993 due to lower occupancy, net of complimentary
rooms. Although total air arrivals to the Paradise Island - New
Providence Island area increased by 5% in 1993, the Company lost
market share as it did not continue to reduce room rates in response
to significant rate reductions by competitors.
In 1992 increased casino revenue was more than offset by
decreased room revenue and food and beverage revenue. Casino revenue
was up due to increases in both slot win and table game win. The
increase in table game revenue reflected an increase in drop (amount
of chips purchased), the favorable effect of which more than offset
the impact of a decline in the table game hold percentage. The
decrease in room revenue was due to reduced room rates and occupancy,
net of complimentary rooms. The reduction in occupancy also had an
adverse effect on food and beverage revenue. Total air arrivals to
the Paradise Island - New Providence Island area were down in 1992 by
10%, which management of the Company attributed to the continuing
economic recession and reduced air service available. In addition,
the Company's competitors reduced room rates in 1992 and the Company,
in an effort to maintain occupancy, did the same.
The Restructuring contemplates the disposition of the Paradise
Island assets and operations.
Real Estate Related
___________________
Atlantic City real estate related revenues in 1993, 1992 and 1991
represent rent from ACS pursuant to the Showboat Lease. Such rent
receipts are restricted for the payment of interest on the Showboat
Notes. See Note 7 of Notes to Consolidated Financial Statements.
The Paradise Island real estate related revenues in 1993 and
1992 resulted from the sale of residential lots on Paradise Island.
- 35 -
Airline
_______
Airline revenues decreased by $681,000 in 1993 due primarily to a
decrease in passenger revenues during the fourth quarter of the year,
as competition from the south Florida-Nassau routes increased. In
addition to the new Jet Shuttle service that began operations earlier
in the year, during the fourth quarter of 1993 Trinity Air, a Bahamian
carrier, commenced operations offering jet service at lower fares than
those offered by the Company on its south Florida-Paradise Island
routes and by other carriers on their south Florida-Nassau routes.
Also, from mid-November 1993 through early January 1994, Bahamasair
changed the aircraft used for its south Florida-Nassau flights to jets
with a larger seating capacity. Also affecting airline revenues in
1993 was a decrease in revenues from contract training, flight and
maintenance work for non-affiliated parties.
Airline revenues increased by $4,249,000 in 1992 due primarily to
an increase in number of passengers flown as other airlines ceased
their flights or reduced the frequency of their flights to The Bahamas
and the Company expanded its flight schedule. Also, 1992 includes
revenues from contracted training, flight and maintenance work for
non-affiliated parties.
The Restructuring contemplates the disposition of the airline
operations.
Contribution to Consolidated Loss
_________________________________
Before Income Taxes
___________________
For the Year Ended December 31,
___________________________________
(In Thousands of Dollars) 1993 1992 1991
_______________________________________________________________________
Casino/hotel:
Atlantic City, New Jersey $ 12,069 $ 21,051 $ 14,817
Paradise Island, The Bahamas* (9,979) (5,592) (5,707)
_________ ________ ________
2,090 15,459 9,110
_________ ________ ________
Real estate related:
Atlantic City, New Jersey 6,654 6,425 5,911
Paradise Island, The Bahamas 224 (17)
_________ ________ ________
6,878 6,408 5,911
_________ ________ ________
Airline* (14) 77 83
Other segments (122) (70) (148)
Unallocated corporate expense 4,066 (372) 1,080
_________ ________ ________
Earnings from operations 12,898 21,502 16,036
Other income (deductions):
Interest income 3,174 4,969 4,824
Interest expense (57,244) (40,856) (31,157)
Amortization of debt discount (51,203) (37,569) (32,105)
Recapitalization costs (8,789) (2,848)
_________ ________ ________
Loss before income taxes $(101,164) $(54,802) $(42,402)
_________ ________ ________
* The Paradise Island casino/hotel segment subsidized the operation
of PIA in the amount of $3,329,000 and $760,000 for the years 1993 and
1991, respectively.
_______________________________________________________________________
- 36 -
Casino/hotel - Atlantic City, New Jersey
________________________________________
Casino, hotel and related operating results decreased by
$8,982,000 for 1993 as increased revenues described above were offset
by a net increase in operating expenses. The most significant
increases in operating expenses were casino promotional costs
($7,700,000), payroll and related costs ($6,000,000), other casino
operating expenses ($2,600,000), depreciation ($2,300,000), fees to
Griffin Group for services rendered under the New Griffin Services
Agreement described in Note 10 of Notes to Consolidated Financial
Statements ($2,200,000) and entertainers fees and accomodations
($1,000,000). The increase in casino promotional costs was due
primarily to a new program in 1993 which rewards slot players by
giving cash back to patrons based on their level of play. Since the
introduction of the "cash-back" program the Company has reduced cash
giveaways to bus patrons and through other promotional mailings. The
majority of the increase in payroll and related costs was due to merit
and union increases in salary and wage rates. The remaining increase
in payroll and related costs and a significant portion of the casino
operating costs increase were associated with the new simulcast and
poker facility. The increase in entertainment costs resulted from a
return to offering more headliner shows in 1993. The most significant
cost reductions in 1993 were in the performance and incentive bonus
($3,300,000) and in food and beverage costs ($1,400,000).
Casino, hotel and related operating results improved by
$6,234,000 for 1992 as increased revenues discussed above were
partially offset by a net increase in operating expenses. The most
significant increases in operating expenses were payroll and related
costs ($3,500,000), depreciation ($2,300,000), casino win tax
($1,400,000) and performance incentive bonuses ($1,200,000). The
increase in payroll and related costs was due to increases in wages,
payroll taxes and union benefits. For 1992 the most significant
decrease in net operating expenses was the provision for doubtful
receivables ($2,100,000).
For a discussion of competition in the Atlantic City casino/hotel
industry see "Atlantic City - Competition" under "ITEM 1. BUSINESS -
(c) Narrative Description of Business."
Casino/hotel - Paradise Island, The Bahamas
___________________________________________
Casino, hotel and related operating results declined by
$4,387,000 for 1993 as decreased revenues discussed above were
partially offset by a net decrease in operating expenses. These
operations suffered, generally, as management's attention was diverted
by the impending disposition of the Paradise Island operations
contemplated in the Restructuring and the Company experienced the loss
of certain key management personnel.
The most significant reductions in operating expenses for 1993
were in sales and marketing ($1,000,000), food and beverage and other
direct costs ($900,000) and gaming taxes and fees ($700,000). The
reduction in sales and marketing costs resulted primarily from
reductions in advertising during 1993. Gaming taxes and fees declined
relative to the decrease in casino revenue. A reduction in occupancy
resulted in decreased food, beverage and other direct costs as well as
reduced staffing levels and overall operating costs throughout the
- 37 -
facility. The most significant increase in operating expenses was the
subsidy of PIA ($3,329,000), RII's subsidiary which provides air
service between south Florida and the Company's Paradise Island
Airport, which increased as PIA's operating results declined. See
"Airline" below.
Casino, hotel and related operating results improved by $115,000
for 1992 as decreased revenues discussed above were more than offset
by net decreased operating expenses. The most significant reductions
in operating expenses were food, beverage and other direct costs
($1,000,000), depreciation ($800,000), payroll and related costs
($800,000) and the subsidy of PIA ($760,000). The reduced occupancy
level and the reduction in number of visitors to the area contributed
to an overall reduction in operating costs throughout the facility.
The subsidy of PIA decreased as PIA's operating results improved. See
"Airline" below. For 1992 the most significant increases in operating
expenses were marketing and promotional costs ($1,400,000) and gaming
taxes and fees ($1,000,000). The Company increased its marketing and
promotional efforts over the prior year in an effort to attract a
greater number of patrons to its facilities.
For a discussion of competition in The Bahamas, see "The Bahamas
- - Competition" under "ITEM 1. BUSINESS - (c) Narrative Description of
Business."
Real Estate Related
___________________
The comparison of earnings from Atlantic City real estate related
activities is affected by increases in rental income under the
Showboat Lease described above.
The Paradise Island real estate related earnings represent the
net gain in 1993 and net loss in 1992 on the sales of residential lots
on Paradise Island mentioned above.
Airline
_______
Airline operating results before the subsidy from the Paradise
Island casino/hotel segment decreased by $3,420,000 in 1993 and
increased by $754,000 in 1992. For 1993 the decrease resulted
primarily from an increase in maintenance costs and, to a lesser
extent, the decrease in passenger revenues discussed above.
For 1992 the increase resulted primarily from the contract work
for non-affiliated parties noted above.
Unallocated Corporate Expense
_____________________________
Unallocated corporate expense decreased by $4,438,000 in 1993 and
increased by $1,452,000 in 1992. These variances resulted primarily
from charges recorded in 1992 of approximately $2,900,000 in
connection with the start-up, management and subsequent termination of
an agreement to manage a casino located in Black Hawk, Colorado. Also
affecting corporate expense for 1993 is a reduction in corporate
payroll and related costs ($800,000). Also affecting corporate
expense for 1992 was a reduction in certain corporate insurance costs
($600,000) and an increase in the amount of overhead expense allocated
from corporate to certain operations ($600,000).
- 38 -
The Environmental Protection Agency ("EPA") has named a
predecessor to RII as a potentially responsible party in the Bay Drums
hazardous waste site (the "Site") in Tampa, Florida which the EPA has
listed on the National Priorities List. No formal action has
commenced against RII and RII intends to dispute any claims of this
nature, if asserted. Although it may ultimately be determined that
RII is one of several hundred parties that are jointly and severally
liable for the costs of Site remediation and for damages to natural
resources at the Site caused by hazardous wastes, the extent of any
such liability, if any, cannot be determined at this time.
Other Income (Deductions)
_________________________
The increase in interest expense in 1993 and 1992 was due to a
combination of (i) an increase in the stated interest rates of the
Series Notes; (ii) increased principal amounts of debt outstanding due
to PIK interest on the Series Notes; and (iii) changes in the market
value of the Series Notes as, through October 15, 1993, the Company
recorded interest at the estimated market value of additional Series
Notes to be issued in satisfaction of its interest obligations.
Subsequent to October 15, 1993 the Company's option to PIK interest on
the Series Notes is no longer available. Thus, effective October 16,
1993 the Company began recording interest expense on the Series Notes
at the stated rate in lieu of a discounted rate to reflect market
value. Amortization of debt discount increased in 1993 and 1992
primarily due to the additional discounts associated with Series Notes
issued in satisfaction of interest obligations.
If the Restructuring is accomplished, the Company's interest
expense and amortization of debt discount are expected to be
significantly less after the Restructuring.
Recapitalization costs in 1993 and 1992 include costs of
financial advisers retained to assist in the development and analysis
of financial alternatives which would enable the Company to reduce its
future debt service requirements and other legal and advisory fees
incurred in connection with the currently proposed Restructuring.
Income Taxes
____________
See Note 13 of Notes to Consolidated Financial Statements for an
explanation of changes in the Company's effective income tax rate
during the years 1991 through 1993.
- 39 -
Identifiable Assets, Depreciation and Capital Additions
(In Thousands of Dollars)
Identifiable assets
__________________________________________
Less accumulated
depreciation and
valuation Capital
Gross assets allowances Net assets Depreciation additions
____________ ________________ __________ ____________ _________
December 31, 1993 For the Year Ended December 31, 1993
__________________________________________ ____________________________________
Casino/hotel:
Atlantic City, New Jersey $241,544 $(40,326) $201,218 $13,654 $21,618
Paradise Island, The Bahamas 207,003 (46,398) 160,605 13,325 3,747
________ ________ ________ _______ _______
448,547 (86,724) 361,823 26,979 25,365
________ ________ ________ _______ _______
Real estate related:
Atlantic City, New Jersey 110,781 (97) 110,684 29
Paradise Island, The Bahamas 33,114 33,114
________ ________ ________ _______
143,895 (97) 143,798 29
________ ________ ________ _______
Airline 12,887 (2,750) 10,137 831 445
Other segments 1,546 (47) 1,499 13 2
Corporate (A) 58,883 (355) 58,528 72 101
________ ________ ________ _______ _______
$665,758 $(89,973) $575,785 $27,924 $25,913
________ ________ ________ _______ _______
December 31, 1992 For the Year Ended December 31, 1992
__________________________________________ ____________________________________
Casino/hotel:
Atlantic City, New Jersey $212,668 $(26,644) $186,024 $11,392 $15,548
Paradise Island, The Bahamas 208,899 (33,899) 175,000 12,973 4,317
________ ________ ________ _______ _______
421,567 (60,543) 361,024 24,365 19,865
________ ________ ________ _______ _______
Real estate related:
Atlantic City, New Jersey 110,824 (68) 110,756 29
Paradise Island, The Bahamas 33,414 33,414
________ ________ ________ _______
144,238 (68) 144,170 29
________ ________ ________ _______
Airline 12,923 (1,995) 10,928 805 4
Other segments 1,542 (34) 1,508 13
Corporate (A) 51,605 (285) 51,320 110 16
________ ________ ________ _______ _______
$631,875 $(62,925) $568,950 $25,322 $19,885
________ ________ ________ _______ _______
- 40 -
Identifiable Assets, Depreciation and Capital Additions
(In Thousands of Dollars)
Identifiable assets
__________________________________________
Less accumulated
depreciation and
valuation Capital
Gross assets allowances Net assets Depreciation additions
____________ ________________ __________ ____________ _________
December 31, 1991 For the Year Ended December 31, 1991
__________________________________________ ____________________________________
Casino/hotel:
Atlantic City, New Jersey $196,022 $(16,680) $179,342 $ 9,084 $22,734
Paradise Island, The Bahamas 207,924 (21,684) 186,240 13,782 3,726
________ ________ ________ _______ _______
403,946 (38,364) 365,582 22,866 26,460
________ ________ ________ _______ _______
Real estate related:
Atlantic City, New Jersey 112,900 (26) 112,874 19
Paradise Island, The Bahamas 33,400 33,400
________ ________ ________ _______
146,300 (26) 146,274 19
________ ________ ________ _______
Airline 12,934 (1,163) 11,771 809 280
Other segments 1,549 (20) 1,529 14
Corporate (A) 42,909 (175) 42,734 106 10
________ ________ ________ _______ _______
$607,638 $(39,748) $567,890 $23,814 $26,750
________ ________ ________ _______ _______
(A) Includes cash equivalents, restricted cash equivalents not pledged for operations, and other corporate assets.
- 41 -
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
____________________________________________________
The Company's consolidated financial statements and supplementary
data are presented on the following pages:
Page
Financial Statements References
____________________ __________
Report of Independent Auditors 43
Consolidated Balance Sheets at December 31, 1993
and 1992 45
Consolidated Statements of Operations for the
years ended December 31, 1993, 1992 and 1991 47
Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991 48
Consolidated Statements of Changes in Shareholders'
Equity (Deficit) for the years ended December 31,
1993, 1992 and 1991 49
Notes to Consolidated Financial Statements 50
Financial Statement Schedules:
Schedule II: Amounts Receivable from Related
Parties for the years ended
December 31, 1993, 1992 and 1991 69
Schedule V: Property and Equipment for the
years ended December 31, 1993, 1992
and 1991 70
Schedule VI: Accumulated Depreciation of Property
and Equipment for the years ended
December 31, 1993, 1992 and 1991 72
Schedule VIII: Valuation Accounts for the years
ended December 31, 1993, 1992 and
1991 73
Schedule X: Supplementary Statements of
Operations Information for the
years ended December 31, 1993,
1992 and 1991 74
Supplementary Data
__________________
Selected Quarterly Financial Data (Unaudited) 75
- 42 -
REPORT OF INDEPENDENT AUDITORS
______________________________
The Board of Directors and Shareholders
Resorts International, Inc.
We have audited the accompanying consolidated balance sheets of
Resorts International, Inc. as of December 31, 1993 and 1992, and the
related consolidated statements of operations, changes in
shareholders' equity (deficit), and cash flows for each of the three
years in the period ended December 31, 1993. Our audits also included
the financial statement schedules listed in the Index at Item 14(a).
These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Resorts International, Inc. at December 31, 1993
and 1992, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31,
1993, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedules, when
considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set
forth therein.
As explained in Notes 1 and 7, the Series Notes become due and
payable in April 1994. It presently appears unlikely the Company has
the ability to redeem the Series Notes at maturity. In addition, the
Company is not in compliance with a covenant contained in the
indenture for the Series Notes and therefore an event of default has
occurred. As a result of such default the trustee may accelerate the
maturity of the Series Notes or may allow foreclosure upon the
collateral securing the Series Notes. The Company proposes to
restructure the Series Notes and anticipates filing a prepackaged
bankruptcy plan of reorganization as part of such restructuring.
Consummation of the plan of reorganization would be subject to a
number of conditions including regulatory and governmental approvals
and confirmation by the bankruptcy court. There can be no assurance
as to whether or when the restructuring will be effected. These
conditions and events raise substantial doubt about the Company's
- 43 -
ability to continue as a going concern. The financial statements and
schedules do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the
outcome of this uncertainty.
ERNST & YOUNG
Philadelphia, Pennsylvania
February 18, 1994 except for
paragraph 8 of Note 1, as to
which the date is March 17, 1994
- 44 -
Resorts International, Inc.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
December 31,
_____________________
Assets 1993 1992
_____________________________________________________________________
Current assets:
Cash (including cash equivalents
of $41,273 and $36,344) $ 62,546 $ 56,818
Restricted cash equivalents 14,248 10,069
Receivables, net 19,297 25,457
Inventories 8,664 8,531
Prepaid expenses 10,664 7,062
________ ________
Total current assets 115,419 107,937
________ ________
Property and equipment:
Land and land rights, including
land held for investment,
development and resale 243,336 243,900
Land improvements and utilities 22,891 22,519
Hotels and other buildings 182,011 170,250
Furniture, machinery and equipment 80,424 67,693
Construction in progress 1,277 1,215
________ ________
529,939 505,577
Less accumulated depreciation (82,099) (54,761)
________ ________
Net property and equipment 447,840 450,816
Deferred charges and other assets 12,526 10,197
________ ________
$575,785 $568,950
________ ________
_____________________________________________________________________
See Notes to Consolidated Financial Statements.
- 45 -
Resorts International, Inc.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
December 31,
______________________
Liabilities and Shareholders' Deficit 1993 1992
______________________________________________________________________
Current liabilities:
Current maturities of long-term debt, net
of unamortized discount $ 466,336 $ 828
Accounts payable and accrued liabilities 84,164 71,672
_________ _________
Total current liabilities 550,500 72,500
_________ _________
Long-term debt, net of unamortized
discount 85,029 460,712
_________ _________
Deferred income taxes 54,000 53,000
_________ _________
Commitments and contingencies (Note 15)
Shareholders' deficit:
Common stock - 20,157,234 shares
outstanding - $.01 par value 202 202
Capital in excess of par 102,092 102,092
Accumulated deficit (210,720) (108,556)
_________ _________
(108,426) (6,262)
Note receivable from related party (5,318) (11,000)
_________ _________
Total shareholders' deficit (113,744) (17,262)
_________ _________
$ 575,785 $ 568,950
_________ _________
______________________________________________________________________
See Notes to Consolidated Financial Statements.
- 46 -
Resorts International, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
For the Year Ended December 31,
_____________________________________
1993 1992 1991
_______________________________________________________________________
Revenues:
Casino $ 307,059 $299,900 $279,884
Rooms 35,708 39,001 41,247
Food and beverage 46,843 48,907 52,459
Other casino/hotel revenues 23,330 22,028 21,676
Other operating revenues 18,122 19,072 15,435
Real estate related 8,502 8,026 7,542
_________ ________ ________
439,564 436,934 418,243
_________ ________ ________
Expenses:
Casino 189,304 176,119 166,133
Rooms 10,906 11,799 12,112
Food and beverage 41,859 42,819 45,508
Other casino/hotel operating
expenses 69,918 64,654 64,054
Other operating expenses 14,697 15,549 12,055
Selling, general and
administrative 71,700 73,262 71,732
Provision for doubtful
receivables 2,889 4,047 6,373
Depreciation 27,924 25,322 23,814
Real estate related 1,605 1,599 1,612
Unallocated corporate expense (4,136) 262 (1,186)
_________ ________ ________
426,666 415,432 402,207
_________ ________ ________
Earnings from operations 12,898 21,502 16,036
Other income (deductions):
Interest income 3,174 4,969 4,824
Interest expense (57,244) (40,856) (31,157)
Amortization of debt discount (51,203) (37,569) (32,105)
Recapitalization costs (8,789) (2,848)
_________ ________ ________
Loss before income taxes (101,164) (54,802) (42,402)
Income tax benefit (expense) (1,000) 1,348 831
_________ ________ ________
Net loss $(102,164) $(53,454) $(41,571)
_________ ________ ________
Net loss per share of common
stock $ (5.07) $ (2.65) $ (2.07)
_________ ________ ________
Weighted average number of
shares outstanding 20,157 20,146 20,092
_________ ________ ________
_______________________________________________________________________
See Notes to Consolidated Financial Statements.
- 47 -
Resorts International, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
For the Year Ended December 31,
________________________________
1993 1992 1991
______________________________________________________________________
Cash flows from operating
activities:
Cash received from customers $ 441,354 $ 432,212 $ 411,456
Cash paid to suppliers and
employees (393,013) (390,012) (378,312)
_________ _________ _________
Cash flow from operations before
interest and income taxes 48,341 42,200 33,144
Interest received 3,809 5,211 4,014
Interest paid (8,440) (8,463) (9,228)
Income taxes refunded, net of
payments 306 1,484 729
_________ _________ _________
Net cash provided by operating
activities 44,016 40,432 28,659
_________ _________ _________
Cash flows from investing
activities:
Payments for property and
equipment (25,308) (19,832) (25,587)
Proceeds from sales of property
and equipment 445 213 147
Proceeds from prior year sales of
property and equipment 2,484 1,676
CRDA deposits and bond purchases (3,025) (2,871) (2,689)
Proceeds from sales of
short-term money market
securities with maturities
greater than three months 1,377 2,083
Purchases of short-term
money market securities
with maturities greater than
three months (492) (1,768)
_________ _________ _________
Net cash used in investing
activities (27,003) (19,691) (26,453)
_________ _________ _________
Cash flows from financing
activities:
Collection on note receivable
from shareholder 3,477
Payments of recapitalization costs (8,332) (5,414) (5,883)
Repayments of non-public debt (2,251) (1,619) (2,064)
_________ _________ _________
Net cash used in financing
activities (7,106) (7,033) (7,947)
_________ _________ _________
Net increase (decrease) in cash
and cash equivalents 9,907 13,708 (5,741)
Cash and cash equivalents at
beginning of period 66,887 53,179 58,920
_________ _________ _________
Cash and cash equivalents at
end of period $ 76,794 $ 66,887 $ 53,179
_________ _________ _________
______________________________________________________________________
See Notes to Consolidated Financial Statements.
- 48 -
Resorts International, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(In Thousands of Dollars)
Capital in
Common excess of Accumulated Note
stock par deficit receivable
__________________________________________________________________________
Balance at December 31, 1990 $ 200 $101,372 $ (13,531) $(11,000)
Settlement of Other Class
3C Claims 1 594
Stock awards 34
Net loss for year 1991 (41,571)
______ ________ _________ ________
Balance at December 31, 1991 201 102,000 (55,102) (11,000)
Settlement of Other Class
3C Claims 1 92
Net loss for year 1992 (53,454)
______ ________ _________ ________
Balance at December 31, 1992 202 102,092 (108,556) (11,000)
Collection on note
receivable from shareholder 3,477
Cancellation of note
receivable from shareholder 7,523
Issuance of note receivable
from Griffin Group (7,523)
Reduction of note receivable
from Griffin Group applied
to prepaid services 2,205
Net loss for year 1993 (102,164)
______ ________ _________ ________
Balance at December 31, 1993 $ 202 $102,092 $(210,720) $ (5,318)
______ ________ _________ ________
__________________________________________________________________________
See Notes to Consolidated Financial Statements.
- 49 -
Resorts International, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - RESTRUCTURING OF SERIES NOTES
______________________________________
The term "Company" as used herein includes Resorts International,
Inc. ("RII") and/or one or more of its subsidiaries, as the context
may require.
The outstanding principal amount of RII's Senior Secured
Redeemable Notes due April 15, 1994 (the "Series Notes") is
$481,907,000. Including the interest due on the maturity date of
approximately $36,000,000, RII's total obligation at maturity will
amount to approximately $518,000,000. Sources of repayment or
refinancing at maturity have been uncertain for some time; the Company
has been working with its financial advisers on developing and
analyzing financial alternatives, as well as developing a long-term
financial plan, since late 1991.
In this connection, management of the Company, with the
assistance of its legal and financial advisers, engaged in discussions
with representatives ("Fidelity" and "TCW") of major holders of Series
Notes in an effort to reach an agreement as to the terms of a possible
restructuring of the Series Notes. Further negotiations were
conducted among the Company, Fidelity, TCW and an unrelated party
("SIIL") regarding SIIL's acquisition of a 60% interest in the
Company's Paradise Island assets (the "SIHL Sale") through a
subsidiary of SIIL ("SIHL") formed for that purpose. This process
resulted in the filing by RII and certain of its subsidiaries on
October 25, 1993 of a Form S-4 Registration Statement with the
Securities and Exchange Commission. This Registration Statement
describes in detail the restructuring (the "Restructuring") which RII
and GGRI, Inc. ("GGRI"), RII's subsidiary which guaranteed the Series
Notes, propose to accomplish through a prepackaged bankruptcy joint
plan of reorganization (the "Plan"). On February 1, 1994, after
certain amendments, the Registration Statement was declared
effective. On February 5, 1994 the solicitation of acceptances of the
Plan commenced with the mailing of the Information
Statement/Prospectus for Solicitation of Votes on Prepackaged Plan of
Reorganization, ballots and other materials to holders of Series Notes
and equity interests in RII.
The Restructuring contemplates, among other things, the exchange
of the Series Notes for: (i) $125,000,000 principal amount of 11%
Mortgage Notes due 2003 (the "RIHF Mortgage Notes") to be issued by
Resorts International Hotel Financing, Inc. ("RIHF"), a newly formed
subsidiary of RII, and guaranteed by Resorts International Hotel, Inc.
("RIH"), RII's subsidiary that owns and operates Merv Griffin's
Resorts Casino Hotel in Atlantic City (the "Resorts Casino Hotel");
(ii) $35,000,000 principal amount of 11.375% Junior Mortgage Notes due
2004 (the "RIHF Junior Mortgage Notes") to be issued by RIHF and
guaranteed by RIH; (iii) 40% of RII's common stock on a fully diluted
basis (excluding certain stock options); (iv) either (a) $65,000,000
in cash, plus interest at an annual rate of 7.5% from January 1, 1994
through the closing date of the SIHL Sale, plus 40% of the capital
stock of SIHL, representing the consideration received from the
proposed SIHL Sale, or, if the SIHL Sale is not consummated, (b) 100%
of the equity of P.I. Resorts Limited ("PIRL"), a subsidiary of RII
- 50 -
which was recently formed to be a holding company in the event of the
spin-off (the "PIRL Spin-Off") of 100% of the equity of RII's Bahamian
subsidiaries and, through subsidiaries, the assets of RII and certain
of its domestic subsidiaries which support the Company's Bahamian
operations, and related liabilities; (v) the Company's Excess Cash, as
defined in the Plan, which is estimated to be at least $30,000,000 and
(vi) rights to receive distributions in respect of units of beneficial
interest owned by RII in a litigation trust (the "Litigation Trust")
established pursuant to RII's 1990 plan of reorganization.
The Restructuring also provides for certain funds or accounts
managed by Fidelity to enter into a senior credit facility with RIHF
(the "RIHF Senior Facility") which will allow RIHF to borrow up to
$20,000,000 through the issuance of notes. The RIHF Senior Facility
is to be available for a single borrowing during the one-year period
from the date the Plan becomes effective. Notes issued pursuant to
the RIHF Senior Facility will bear interest at 11% per year and mature
in 2002.
Consummation of the Plan is subject to a number of conditions
including, but not limited to, confirmation by the Bankruptcy Court
and receipt of required regulatory approvals of the New Jersey Casino
Control Commission (the "Casino Control Commission") and the
Government of The Bahamas.
For the Plan to be confirmed by the Bankruptcy Court, the Plan
must comply with various requirements of the Bankruptcy Code. Also,
to confirm the Plan on a consensual basis, acceptances must be
received from (i) holders of Series Notes constituting at least 66
2/3% in principal amount and more than 50% in number of those voting
and (ii) at least 66 2/3% each of RII's common stock and outstanding
stock options voted. In addition to the vote required by the
Bankruptcy Code, a condition to confirmation of the Plan is the entry
of an order declaring that certain security documents (the "Security
Documents") under which the liens on the property securing the Series
Notes were granted or created shall be deemed released and
terminated. To effectuate such termination and release consensually,
the record holders of at least 66 2/3% in aggregate principal amount
of the outstanding Series Notes and the record holders of at least a
majority in aggregate principal amount of each series of the Series
Notes must consent to the termination of the Security Documents.
There are several other conditions to confirmation of the Plan which,
subject to the approval of Fidelity and TCW (in certain
circumstances), may be waived by RII and GGRI.
The solicitation period ended on March 15, 1994. The
solicitation agent has advised the Company that it has received the
requisite acceptances for confirmation of the Plan and sufficient
consents to release the Security Documents. The Company intends to
proceed with the filing of its prepackaged bankruptcy cases; however,
there can be no assurance as to whether or when the Restructuring will
be effected, or that any restructuring that may ultimately be
consummated will be on terms similar to those of the Restructuring.
For information as to revenues and contribution to consolidated
loss before income taxes of the operations to be disposed of pursuant
to the Restructuring (through either the SIHL Sale or the PIRL
Spin-Off) see the segment tables included in "ITEM 7. MANAGEMENT'S
- 51 -
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS." Operations to be disposed of include the Paradise
Islandportion of the casino/hotel segment, the Paradise Island portion
of the real estate related segment and the airline segment.
Recapitalization costs in 1993 and 1992 include costs of
financial advisers retained to assist in the development and analysis
of financial alternatives which would enable the Company to reduce its
future debt service requirements and other legal and advisory fees
incurred in connection with the currently proposed Restructuring.
Event of Default
________________
As of September 30, 1993, RII was not in compliance with its
covenant contained in the indenture for the Series Notes (the "Series
Note Indenture") to maintain a Tangible Net Worth, as defined in the
Series Note Indenture, of at least $50,000,000. Since that date RII's
Tangible Net Worth has continued to decline. On February 2, 1994, 30
days after receiving notice of such default from the trustee for the
Series Notes (the "Series Note Trustee"), this default became an Event
of Default. Upon the occurrence of an Event of Default, the Series
Note Trustee may accelerate the maturity of the Series Notes by
declaring all unpaid principal of and accrued interest on the Series
Notes due and payable or may foreclose upon the collateral securing
the Series Notes (the "Collateral"). (See Note 7 for a description of
the Collateral.) In addition, the holders of 40% in principal amount
of the Series Notes then outstanding may require the Series Note
Trustee to accelerate the maturity of the Series Notes.
If the Series Note Trustee accelerates the maturity of the Series
Notes or forecloses upon the Collateral, RII and GGRI, as guarantor of
the Series Notes, and certain of their subsidiaries whose assets are
pledged to secure the Series Notes (including RIH and Resorts
International (Bahamas) 1984 Limited ("RIB"), RII's indirect
subsidiary, which together with its subsidiaries owns and operates the
Company's Bahamian properties) would be forced to seek immediate
protection under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code"). If such events occur, there can be no assurance
that the Restructuring would be implemented, that a reorganization of
RII and GGRI rather than a liquidation would occur or that any
reorganization that might occur would be on terms as favorable to the
holders of Series Notes and holders of RII's common stock as the terms
of the Plan.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
___________________________________________________
Principles of Consolidation
___________________________
The consolidated financial statements include the accounts of RII
and all significant subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation. The
accounts of foreign subsidiaries are maintained in U.S. dollars.
Revenue Recognition
___________________
The Company records as revenue the win from casino gaming
activities which represents the difference between amounts wagered and
amounts won by patrons. Revenues from hotel and related services and
from theatre ticket sales are recognized at the time the related
service is performed.
- 52 -
Complimentary Services
______________________
The Consolidated Statements of Operations reflect each category
of operating revenues excluding the retail value of complimentary
services provided to casino patrons without charge. The 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) 1993 1992 1991
______________________________________________________________________
Rooms $ 4,470 $ 3,738 $ 3,563
Food and beverage 20,353 20,805 19,254
Other casino/hotel operations 7,412 6,408 5,839
_______ _______ _______
Total allocated to casino $32,235 $30,951 $28,656
_______ _______ _______
______________________________________________________________________
Cash Equivalents
________________
The Company considers all of its short-term money market
securities purchased with maturities of three months or less to be
cash equivalents. The carrying value of cash equivalents approximates
fair value due to the short maturity of these instruments.
Inventories
___________
Inventories of provisions, supplies and spare parts are carried
at the lower of cost (first-in, first-out) or market.
Property and Equipment
______________________
Property and equipment are depreciated over their estimated
useful lives using the straight-line method for financial reporting
purposes.
Casino Reinvestment Development Authority ("CRDA") Obligations
______________________________________________________________
Under the New Jersey Casino Control Act ("Casino Control Act"),
the Company is obligated to purchase CRDA bonds, which will bear a
below-market interest rate, or make an alternative qualifying
investment. The Company 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 the Company 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.
Payment-In-Kind ("PIK") Interest Accrual
________________________________________
When the Company elects to satisfy its interest obligations
- 53 -
through PIK instead of cash interest payments, for financial statement
purposes, such interest is accrued at the estimated market value of
the notes to be issued. The discount resulting from the difference
between face value and estimated market value of the additional notes
decreases interest expense of the current period and is amortized to
expense over the remaining life of the issue.
Income Taxes
____________
RII and all of its domestic subsidiaries file consolidated U.S.
federal income tax returns.
For the years 1991 and 1992, the Company accounted for income
taxes under the liability method prescribed by Statement of Financial
Accounting Standards No. 96 ("SFAS 96"), "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. The deferred tax liability is reduced by cumulative tax
credits and losses being carried forward for tax purposes, subject to
applicable limitations.
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for
Income Taxes." SFAS 109 supersedes SFAS 96 but retains the liability
method of accounting for income taxes. Among other changes, SFAS 109
changed the recognition and measurement criteria for deferred tax
assets included in SFAS 96.
There are no income taxes in The Bahamas and the income of RII's
subsidiaries in The Bahamas is generally not subject to U.S. federal
income taxation until it is distributed to a U.S. parent. Deferred
federal income taxes are provided on the undistributed earnings of
Bahamian subsidiaries.
Per Share Data
______________
Per share data was computed using the weighted average number of
shares of common stock outstanding.
NOTE 3 - CASH EQUIVALENTS
_________________________
Cash equivalents and restricted cash equivalents at December 31,
1993 included reverse repurchase agreements (federal government
securities purchased under agreements to resell those securities) with
the institutions listed in the following table under which the Company
had not taken delivery of the underlying securities. These agreements
matured January 3, 1994 except for $596,000 with City National Bank of
Florida which matured January 31, 1994.
- 54 -
(In Thousands of Dollars)
_______________________________________________________________________
City National Bank of Florida $14,634
National Westminster Bank NJ $ 5,945
First Fidelity Bank N.A., South Jersey $ 4,780
Summit Trust Company $ 4,278
_______________________________________________________________________
The Company's cash equivalents at December 31, 1993 also included
U.S. Treasury Bills and bank time deposits.
NOTE 4 - RESTRICTED CASH EQUIVALENTS
____________________________________
Components of restricted cash equivalents at December 31 were as
follows:
(In Thousands of Dollars) 1993 1992
_______________________________________________________________________
Amount, including interest earned,
on deposit with trustee for
Litigation Trust $ 4,278 $ 4,969
Escrow for the SIHL Sale 4,000
Showboat Lease payments
and interest earned thereon
held by trustee (see Note 11) 3,405 3,303
Collateral account for Series Notes 1,220 1,183
Cash equivalents securing letters
of credit and other guarantees 1,345 614
_______ _______
$14,248 $10,069
_______ _______
_______________________________________________________________________
If the agreement for the SIHL Sale is terminated, under certain
circumstances RII may be required to reimburse certain of SIHL's
expenses. Escrow for the SIHL Sale represents funds set aside for
that purpose pursuant to a related escrow agreement.
- 55 -
NOTE 5 - RECEIVABLES
____________________
Components of receivables at December 31 were as follows:
(In Thousands of Dollars) 1993 1992
_______________________________________________________________________
Gaming $15,566 $19,476
Less allowance for doubtful accounts (6,598) (6,952)
_______ _______
8,968 12,524
_______ _______
Non-gaming:
Hotel and related 6,131 5,850
Other trade 2,560 2,970
Interest on note receivable from
related party 271 927
Contracts and notes 212 211
Bahamian duty refunds receivable 48 719
Refundable state income taxes 36 499
Other 2,347 2,969
_______ _______
11,605 14,145
Less allowance for doubtful accounts (1,276) (1,212)
_______ _______
10,329 12,933
_______ _______
$19,297 $25,457
_______ _______
_______________________________________________________________________
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
_________________________________________________
Components of accounts payable and accrued liabilities at
December 31 were as follows:
(In Thousands of Dollars) 1993 1992
_______________________________________________________________________
Accrued interest $18,464 $ 9,928
Accrued payroll and related taxes and
benefits 16,277 16,178
Customer deposits and unearned revenues 9,768 7,976
Trade payables 8,524 6,701
Accrued gaming taxes, fees and related
assessments 7,719 8,166
Litigation Trust and related expenses 3,513 4,327
Accrued costs of recapitalization 3,510 2,372
Other accrued liabilities 16,389 16,024
_______ _______
$84,164 $71,672
_______ _______
_______________________________________________________________________
NOTE 7 - LONG-TERM DEBT
_______________________
Pursuant to the Company's 1990 plan of reorganization, RII issued
the Series Notes, consisting of the Series A Notes and the Series B
Notes, and the First Mortgage Non-Recourse Pass-Through Notes due June
30, 2000 (the "Showboat Notes").
- 56 -
The carrying value and fair value by component of long-term debt
at December 31 were as follows:
1993 1992
____________________ ____________________
Carrying Fair Carrying Fair
(In Thousands of Dollars) Value Value Value Value
_______________________________________________________________________
Series A Notes $ 262,531 $ 176,552 $230,410 $131,334
Less unamortized discount (8,331) (24,636)
_________ ________
254,200 205,774
_________ ________
Series B Notes 219,376 147,530 190,182 107,453
Less unamortized discount (7,447) (19,265)
_________ ________
211,929 170,917
_________ ________
Showboat Notes 105,333 94,800 105,333 88,480
Less unamortized discount (20,452) (22,485)
_________ ________
84,881 82,848
Capitalized leases 355 355 2,001 2,001
_________ _________ ________ ________
551,365 419,237 461,540 329,268
Less due within one year (466,336) (324,289) (828) (828)
_________ _________ ________ ________
$ 85,029 $ 94,948 $460,712 $328,440
_________ _________ ________ ________
_______________________________________________________________________
The fair value presented above for the Company's long-term debt
is based on December 31 closing market prices for publicly traded debt
and carrying value for capitalized leases, because capitalized leases
are not considered material to the total.
The Series Notes are guaranteed as to payment of principal and
interest by GGRI, the subsidiary of RII which, through its Bahamian
subsidiaries, owns and operates the Company's Bahamian properties, and
are secured by the Collateral described below. The Series A Notes and
the Series B Notes will rank pari passu with respect to amounts
realized upon any sale or other disposition of the Collateral.
The Collateral consists of:
(i) RII's fee and leasehold interests in substantially all of its
real properties other than the 99-year net lease of a 10 acre site
underlying the Showboat Casino Hotel in Atlantic City (the "Showboat
Lease") and the real property that is subject to the Showboat Lease;
(ii) the fee and leasehold interests in the real and personal
property of Resorts Casino Hotel and the contiguous parking garage
which interests are owned by RIH,
(iii) all of the outstanding capital stock of RIH and GGRI and
all of RII's other direct and indirect domestic subsidiaries;
(iv) promissory notes made by RIH in the aggregate principal
amount of $325,000,000;
(v) 66% of the outstanding voting stock and 100% of the
non-voting stock of RIB, the Bahamian subsidiary of GGRI which
together with its subsidiaries owns and operates the Company's
Bahamian properties; and
- 57 -
(vi) a $50,000,000 promissory note made by RIB and guarantees
thereof by certain of RIB's subsidiaries.
The Collateral described above consists of substantially all of
the assets of the Company other than the Showboat Lease and the real
property that is subject to the Showboat Lease.
The Series Notes bear interest as follows:
Series A Series B
_______________________________________________________________________
April 11, 1990 through April 15, 1991 6%
May 8, 1990 through April 15, 1991 11%
Year ended April 15, 1992 9% 15%
Year ended April 15, 1993 12% 15%
Year ending April 15, 1994 15% 15%
_______________________________________________________________________
Interest on the Series Notes is payable semi-annually on April 15
and October 15 in each year. The Series Note Indenture allowed RII to
satisfy all or any portion of interest accruing on the Series Notes to
date by making PIK payments.
On each interest payment date through October 15, 1993, the
Company elected to make PIK payments. The cumulative principal
amounts of Series A and Series B Notes issued to satisfy such interest
obligations were $75,031,000 and $80,626,000, respectively.
In accordance with the Company's 1990 plan of reorganization,
$1,250,000 principal amount of Series B Notes were issued through
December 31, 1993 in settlement of certain claims ("Other Class 3C
Claims") against RII and certain of its subsidiaries which were
outstanding as of the date the Company filed for relief under the
Bankruptcy Code. Additional Series B Notes may be issued in the
future in settlement of Other Class 3C Claims.
The Series Note Indenture contains certain restrictive covenants
on the part of RII, including restrictions on (i) the payment of cash
dividends or redemptions of capital stock by RII; (ii) the repurchase
of any Series Notes other than at par, unless certain conditions are
met; (iii) the incurrence of additional indebtedness, with certain
exceptions; (iv) mergers and consolidations with entities other than
affiliates of RII; and (v) the ability of RII and its subsidiaries to
sell their assets.
As discussed in Note 1, an Event of Default has occurred with
respect to the Series Notes. Also as discussed in Note 1, the Company
intends to restructure the Series Notes as proposed in the
Restructuring; however, there can be no assurance as to whether or
when such Restructuring will be effected.
The Showboat Notes are non-recourse notes, secured by a mortgage
encumbering the real property which is subject to the Showboat Lease,
by a collateral assignment of the Showboat Lease, and by a pledge of
any proceeds of the sale of such mortgage and collateral assignment.
- 58 -
Interest on the Showboat Notes consists of a pass-through
(subject to certain adjustments) of the lease payments received under
the Showboat Lease. See Note 11 for a description of the Showboat
Lease. Interest is payable semi-annually on January 15 and July 15.
The weighted average effective interest rates on RII's publicly
held debt at December 31, 1993 were as follows: Series A Notes -
27.7%; Series B Notes - 28.7%; and Showboat Notes - 11.1%.
Minimum principal payments of long-term debt outstanding as of
December 31, 1993, for the five years thereafter are as follows: 1994
- - $482,114,000; 1995 - $140,000; 1996 - $8,000; 1997 - None; 1998 -
None.
NOTE 8 - SHAREHOLDERS' DEFICIT
______________________________
RII is authorized to issue 50,000,000 shares of common stock. Of
the 20,157,234 outstanding at December 31, 1993, 20,000,000 were
issued in 1990 as the Company emerged from bankruptcy proceedings,
20,000 were awarded to certain members of RII's Board of Directors in
1991, and 137,234 were issued in settlement of Other Class 3C Claims.
Additional shares of RII's common stock may be issued in the future in
settlement of Other Class 3C Claims.
See Note 10 for a description of notes receivable from related
parties.
NOTE 9 - STOCK OPTION PLAN
__________________________
The Resorts International, Inc. Senior Management Stock Option
Plan (the "1990 Stock Option Plan") authorizes the grant of stock
options to members of the Company's management. The number of shares
which may be granted under the 1990 Stock Option Plan may not exceed
10% of the shares of Common Stock Outstanding, as defined in the 1990
Stock Option Plan, subject to adjustment. Pursuant to the 1990 Stock
Option Plan, options to purchase up to 5% of the shares of Common
Stock Outstanding could be granted to David P. Hanlon, who was the
President and Chief Executive Officer of RII until October 31, 1993;
the remaining options could be granted to other eligible employees at
the discretion of a committee appointed by the Board of Directors of
RII.
In 1991 the Company granted an option to Mr. Hanlon to purchase
5% of the Common Stock Outstanding at an exercise price of $1.875 per
share, the fair market value on the date of grant. Although Mr.
Hanlon's employment with the Company terminated effective October 31,
1993, pursuant to an agreement dated September 27, 1993 between RII
and Mr. Hanlon, Mr. Hanlon is to retain his option until its
expiration on October 31, 1997. This option was fully exercisable at
December 31, 1993.
- 59 -
In addition to Mr. Hanlon's option, options to purchase the
following shares of RII's common stock were outstanding at December
31, 1993:
Exercise Options Options
Price Outstanding Exercisable
_______________________________________________________________________
$1.875 634,000 627,000
$1.75 30,000 10,000
_______ _______
664,000 637,000
_______ _______
_______________________________________________________________________
No shares were issued in connection with the exercise of stock
options during 1991, 1992 or 1993.
NOTE 10 - RELATED PARTY TRANSACTIONS
____________________________________
License and Services Agreements
_______________________________
Pursuant to the Company's 1990 plan of reorganization, Merv
Griffin, Chairman of RII's Board of Directors, The Griffin Group, Inc.
(the "Griffin Group"), a corporation owned by Mr. Griffin, and RII
entered into a License and Services Agreement. Pursuant to this
agreement, for the two years ended September 16, 1992, RII was granted
a non-exclusive license to use Mr. Griffin's name and likeness to
promote its facilities and operations and Mr. Griffin agreed to act as
Chairman of the Board of RII and to provide certain other services
without compensation, subject to certain conditions relating
principally to the continuation of his control of the Company.
In April 1993, RII, RIH and Griffin Group entered into a License
and Services Agreement (the "New Griffin Services Agreement")
effective as of September 17, 1992. Pursuant to this agreement,
Griffin Group granted RII and RIH a non-exclusive license to use the
name and likeness of Merv Griffin to advertise and promote the
Company's facilities and operations. Also pursuant to the New Griffin
Services Agreement, Mr. Griffin is to provide certain services to the
Company, including serving as Chairman of the Board of RII and as a
host, producer and featured performer in various shows to be presented
in Resorts Casino Hotel, and furnishing marketing and consulting
services.
The New Griffin Services Agreement is to continue until the later
of September 17, 1996 or the fourth anniversary of the consummation of
a Reorganization (as defined, which would include a restructuring such
as that discussed in Note 1) of RII; but in no event shall the term
extend beyond September 17, 1997. If a Reorganization has not been
consummated by September 17, 1996, the New Griffin Services Agreement
shall terminate on that date. The New Griffin Services Agreement
provides for earlier termination under certain circumstances
including, among others, a change of control (as defined) of the
Company and Mr. Griffin ceasing to serve as Chairman of the Board of
RII. The Restructuring described in Note 1 contemplates that the New
Griffin Services Agreement will remain in place.
The New Griffin Services Agreement provides for compensation to
Griffin Group in the amount of $2,000,000 for the year ended September
16, 1993, and in specified amounts for each of the following years,
which increase at approximately 5% per year. In accordance with the
- 60 -
New Griffin Services Agreement, upon signing, the Company paid Griffin
Group $4,100,000, representing compensation for the first two years.
Thereafter, the New Griffin Services Agreement calls for annual
payments on September 17, each representing a prepayment for the year
ending two years hence. In lieu of paying in cash, at the Company's
option, it may satisfy its obligation to make any of the payments
required under the New Griffin Services Agreement by reducing the
amount of the Group Note described below. In September 1993 the
Company notified Griffin Group that it would satisfy its obligation to
make the $2,205,000 payment for the year ending September 16, 1995 by
reducing the Group Note by that amount. In the event of an early
termination of the New Griffin Services Agreement, and depending on
the circumstances of such early termination, all or a portion of the
compensation paid to Griffin Group in respect of the period subsequent
to the date of termination may be required to be repaid to the Company.
The New Griffin Services Agreement also provides for the issuance
to Griffin Group, on the effective date of a Reorganization of RII, of
warrants (the "Griffin Warrants") to purchase 10% of the common stock
of the reorganized entity on a fully diluted basis. In connection
with the events described in Note 1, RII's Board of Directors
subsequently approved certain revisions to the exercise price of the
Griffin Warrants. The Griffin Warrants are to be exercisable at the
lesser of (i) the average market price of RII's common stock for the
20 trading days following the effective date of a Reorganization and
(ii) $1.875.
The Company agreed to indemnify, defend and hold harmless Griffin
Group and Mr. Griffin against certain claims, losses and costs, and to
maintain certain insurance coverage with Mr. Griffin and Griffin Group
as named insureds.
Notes Receivable from Related Parties
_____________________________________
Pursuant to the Company's 1990 plan of reorganization, in
September 1990 RII received $12,345,000 in cash and an $11,000,000
promissory note (the "Griffin Note") from Merv Griffin for certain
shares of RII common stock purchased by him. In April 1993, in
accordance with the New Griffin Services Agreement, Mr. Griffin made a
partial payment of $4,100,000 on this note comprised of $3,477,000
principal and $623,000 accrued interest. The Griffin Note, which then
had a remaining balance of $7,523,000, was cancelled and a new note
from Griffin Group (the "Group Note") in the amount of $7,523,000 was
substituted therefor. As noted above, in September 1993 the balance
of the Group Note was reduced by $2,205,000. The Group Note, which is
unconditionally guaranteed as to principal and interest by Mr.
Griffin, due on demand and bears interest at the rate of 3% per annum,
comprises the note receivable from related party reflected on the
accompanying Consolidated Balance Sheet as of December 31, 1993.
Other
_____
The Company reimbursed Griffin Group $181,000, $396,000, and
$358,000 for charter air services related to Company business rendered
in 1993, 1992 and 1991, respectively.
In 1993 and 1992 the Company agreed to pay $100,000 and provided
certain facilities, labor and accommodations to subsidiaries of
January Enterprises, Inc. ("January Enterprises"), of which Merv
- 61 -
Griffin is Chief Executive Officer, in connection with the production
of the live television broadcast of "Merv Griffin's New Year's Eve
Special" from Resorts Casino Hotel. In 1991 "Merv Griffin's New
Year's Eve Special" was broadcast from Resorts Casino Hotel by another
subsidiary of January Enterprises. The Company provided facilities,
labor and accommodations relative to that production as well. Also,
in 1991 the Company paid $235,000 and provided certain facilities and
personnel to a subsidiary of January Enterprises for the production of
the "Ruckus Game Show" in the Company's facilities. The Company
received certain promotional considerations in connection with the
television broadcast of these shows.
Antonio C. Alvarez II, a shareholder of Alvarez & Marsal, Inc.,
has been a member of the Board of Directors of RII since September
1990. The Company paid Alvarez & Marsal, Inc. $300,000 and $241,000
for financial advisory services rendered in 1992 and 1991,
respectively.
Warren Cowan, who was Chairman of Rogers & Cowan, Inc. until July
1992, has been a member of the Board of Directors of RII since
September 1990. The Company paid Rogers & Cowan, Inc. $128,000 and
$147,000 for public relations services rendered for the Company's
Atlantic City and Paradise Island properties in 1992 and 1991,
respectively.
NOTE 11 - SHOWBOAT LEASE
________________________
The Company leases to a subsidiary ("ACS") of Showboat, Inc., a
resort and casino operator, approximately 10 acres of land adjacent to
the Boardwalk in Atlantic City. Under the 99-year net lease, lease
payments are payable in equal monthly installments on the first day of
each month. The annual lease payment for the lease year ending March
31, 1994, is $8,118,000. The lease payment is to be adjusted
annually, as of April 1, for changes in the consumer price index.
Pursuant to the lease agreement, the Company is unable to
transfer its interest in the lease, other than to an affiliate,
without giving ACS the opportunity to purchase such interest at terms
no less favorable than agreed to by any other party.
As described in Note 7, the Showboat Notes are secured by a
mortgage encumbering the real property which is subject to the
Showboat Lease, by a collateral assignment of the Showboat Lease, and
by a pledge of any proceeds of the sale of such mortgage and
collateral assignment. Lease payments under the Showboat Lease are
required to be passed-through to holders of the Showboat Notes.
NOTE 12 - RETIREMENT PLANS
__________________________
RII and certain of its subsidiaries participate in a defined
contribution plan covering substantially all of their non-union,
full-time employees. The Company makes contributions to this plan
based on a percentage of eligible employee contributions. Total
pension expense for this plan was $804,000, $767,000 and $740,000 in
1993, 1992 and 1991, respectively.
In 1991 the Company recorded a gain of $344,000 resulting from
the settlement of a defined benefit plan which was terminated in
1989. Net periodic pension income for this plan for 1991 amounted to
$121,000.
- 62 -
In addition to the plans described above, union and certain other
employees of several subsidiary companies are covered by
multi-employer defined benefit pension plans to which subsidiaries
make contributions. Such contributions totalled $1,392,000,
$1,403,000 and $2,404,000 in 1993, 1992 and 1991, respectively.
NOTE 13 - INCOME TAXES
______________________
As discussed in Note 2, the Company adopted SFAS 109 effective
January 1, 1993. There was no effect on the accompanying Consolidated
Statements of Operations nor was there a cumulative effect of adopting
SFAS 109.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax
liabilities and assets as of December 31, 1993 were as follows:
(In Thousands of Dollars)
_______________________________________________________________________
Deferred tax liabilities:
Basis differences on property and equipment $ (85,200)
Other (3,100)
_________
Total deferred tax liabilities (88,300)
_________
Deferred tax assets:
Net operating loss carryforwards 259,900
Basis differences on debt 15,100
Book reserves not yet deductible for tax 17,100
Tax credit carryforwards 2,900
Other 5,300
_________
Total deferred tax assets 300,300
Valuation allowance for deferred tax assets (266,000)
_________
Deferred tax assets, net of valuation allowance 34,300
_________
Net deferred tax liabilities $ (54,000)
_________
_______________________________________________________________________
In August 1993 tax law changes were enacted which resulted in an
increase in the Company's federal income tax rate. The increase
resulted in a $1,000,000 increase in the Company's deferred income tax
liability and a deferred income tax provision of the same amount.
During 1992 the Company received federal income tax refunds of
$1,348,000 when the audit of the Company's 1981 and 1982 tax returns
was completed. Such amount was recorded as a federal income tax
benefit in 1992. During 1991 the Company received a federal income
tax refund of $831,000. The refund related to the carryback of
certain 1983 credits to 1980 and was issued when the examination of
the Company's 1983 tax return was waived. Such amount was recorded as
a federal income tax benefit in 1991.
Net operating losses were generated for federal tax purposes in
1993, 1992 and 1991, so no current federal tax provision was recorded
in those years. No state tax provision was recorded in those years
due to the utilization of state net operating loss carryforwards in
states where the Company generated taxable income.
- 63 -
The effective income tax rate on the loss before income taxes
varies from the statutory federal income tax rate as a result of the
following factors:
1993 1992 1991
_______________________________________________________________________
Statutory federal income
tax rate (35.0%) (34.0%) (34.0%)
Net operating losses for
which no tax benefit
was recognized 34.7% 33.6% 33.4%
Income taxes refunded (2.5%) (2.0%)
Other, including impact
of increase in tax rate
in 1993 1.3% .4% .6%
_______ _______ _______
Effective tax expense
(benefit) rate 1.0% (2.5%) (2.0%)
_______ _______ _______
_______________________________________________________________________
The Company provides deferred taxes on the unremitted earnings of
its Bahamian subsidiaries by allowing for the sale of the Bahamian
assets in the SFAS 109/SFAS 96 computations as it is the intention of
the Company to sell its Bahamian assets. The Company anticipates that
taxes on any such sale will be offset by net operating loss
carryforwards under the provisions of the Internal Revenue Code for
gains existing as of the date of change in ownership.
For federal tax purposes the Company had net operating loss
carryforwards of approximately $742,000,000 at December 31, 1993. Of
this amount, approximately $260,000,000 is not limited as to use and
expires from 2005 through 2008. Due to a change of ownership of RII
in 1990, the balance of the tax loss carryforward which expires from
1999 through 2005 is limited in its availability to offset future
taxable income of the Company. Though otherwise limited, such loss
carryforwards would be available to offset gains on sales of assets
owned at the date of change in ownership of the Company which are sold
within five years of that date.
At December 31, 1993 RII and its subsidiaries had significant net
operating loss carryforwards in New Jersey, which expire from 1994
through 1999, and in Florida, which expire from 1994 through 2008.
Also, for federal tax purposes, the Company had tax credit
carryforwards of $2,900,000 at December 31, 1993 which expire from
1998 through 2008.
The source of loss before income taxes was as follows:
(In Thousands of Dollars) 1993 1992 1991
_______________________________________________________________________
U.S. source loss $ (81,542) $(41,526) $(30,095)
Foreign source loss (19,622) (13,276) (12,307)
_________ ________ ________
Loss before income taxes $(101,164) $(54,802) $(42,402)
_________ ________ ________
_______________________________________________________________________
- 64 -
NOTE 14 - 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) 1993 1992 1991
_______________________________________________________________________
Reconciliation of net loss to net
cash provided by operating
activities:
Net loss $(102,164) $(53,454) $(41,571)
Adjustments to reconcile net
loss to net cash provided
by operating activities:
Depreciation 27,924 25,322 23,814
Amortization (principally debt
discount) 51,251 37,565 32,415
Interest expense settled by
issuance of long-term debt 40,268 31,165 19,584
Provision for doubtful
receivables 2,889 4,047 6,373
Provision for discount on
CRDA obligations 1,541 1,451 1,574
Deferred tax provision 1,000
Recapitalization costs 8,789 2,848
Stock awards 34
Net loss on sales of
property and equipment 220 113 533
Net (increase) decrease in
accounts receivable 2,236 2,744 (9,719)
Net (increase) decrease in
inventories and prepaids (849) 429 (433)
Net (increase) decrease in
deferred charges and other assets (416) (1,499) 296
Net increase (decrease) in
accounts payable and accrued
liabilities 11,327 (10,299) (4,241)
_________ ________ ________
Net cash provided by operating
activities $ 44,016 $ 40,432 $ 28,659
_________ ________ ________
Non-cash investing and financing
transactions:
Exchange of note receivable from
shareholder for note receivable
from Griffin Group $ 7,523
Reduction in note receivable from
Griffin Group applied to prepaid
services $ 2,205
Increase in liabilities for
additions to property and
equipment and other assets $ 632 $ 112 $ 1,180
Reclassifications to other
assets from receivables
and property and equipment $ 450 $ 337 $ 674
Other Class 3C Claims settled for
common stock and Series B Notes $ 227 $ 1,448
______________________________________________________________________
- 65 -
NOTE 15 - COMMITMENTS AND CONTINGENCIES
_______________________________________
CRDA
____
The Casino Control Act, as originally adopted, required a
licensee to make investments equal to 2% of the licensee's gross
revenue (as defined under the Casino Control Act) (the "investment
obligation") for each calendar year, commencing in 1979, in which such
gross revenue exceeded its "cumulative investments" (as defined in the
Casino Control Act). A licensee had five years from the end of each
calendar year to satisfy this investment obligation or become liable
for an "alternative tax" in the same amount. In 1984 the New Jersey
legislature amended the Casino Control Act so that these provisions
now apply only to investment obligations for the years 1979 through
1983.
Effective for 1984 and subsequent years, the amended Casino
Control Act requires a licensee to satisfy its investment obligation
by purchasing bonds to be issued by the CRDA, or by making other
investments authorized by the CRDA, in an amount equal to 1.25% of a
licensee's gross revenue. If the investment obligation is not
satisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of gross revenue. Since 1985, a licensee has
been required to make quarterly deposits with the CRDA against its
current year investment obligation.
An analysis of RIH's investment obligations under the Casino
Control Act and RIH's means of settlement since 1979 follows:
(In Thousand of Dollars) 1979-1983 1984-1993 Total
_______________________________________________________________________
Investment obligations $(21,637) $(29,172) $(50,809)
Means of settlement:
Housing related
investments under
audit 13,104 13,104
Housing related
investments
previously approved 1,000 1,000
CRDA deposits/bond
purchases 7,533 28,479 36,012
________ ________ ________
Remaining investment
obligation at
December 31, 1993,
which was deposited
in January 1994 $ -0- $ (693) $ (693)
________ ________ ________
_______________________________________________________________________
With regard to the housing related investments under audit, in
January 1988 the CRDA notified the Company of its interpretation as to
the periods of time during which expenditures could be made to satisfy
investment obligations. CRDA's interpretation differs from RIH's and
if found to be correct would decrease the amount of RIH's qualifying
expenditures by approximately $5,000,000 to $6,000,000. RIH believes
that its interpretation is correct and intends to contest this issue.
- 66 -
RIH also received a letter dated November 9, 1989, from the
State of New Jersey Department of the Treasury (the "Treasury")
stating that the housing related investments made by RIH were not
sufficient to meet its investment obligation for the years 1979
through 1983. The letter also stated that alternative tax in the
amount of $21,637,000 was due for those years, in addition to
penalties and interest thereon which amounted to $12,514,000 as of
the date of the letter. As set forth in the table above, the
Company believes that $8,533,000 of such obligations have been
settled; $7,533,000 in cash and $1,000,000 by previously approved
housing related investments. Also, the Company has received audit
reports issued by an agency acting on behalf of the Treasury
identifying $10,165,000 of project development costs available for
investment credit towards the investment obligation. This leaves a
total of $2,939,000 of housing related investments under audit in
question. The Company has notified the Treasury that it takes
exception to the Treasury's computation of amounts due. Further,
the Company believes that the $2,939,000 of housing related
investments in question will be found, under further audit, to have
been satisfied.
Although these matters have been dormant for some time, the
Company was recently verbally contacted by the Treasury and expects
further communication regarding the Treasury's proposal for a
resolution of these matters in the near future. If the CRDA's
interpretation as to the periods of time during which qualifying
expenditures can be made is found to be correct, or if the
Treasury's issue is determined adversely, RIH could be required to
pay the relevant amount in cash to the CRDA. In the opinion of
management, based upon advice of counsel, the aggregate liability,
if any, arising from these issues will not have a material adverse
effect on the accompanying consolidated financial statements.
As reflected in the table above, through December 31, 1993, RIH
had made CRDA deposits/bond purchases totalling $36,012,000.
However, in August 1989 RIH donated $12,048,000 to the CRDA in
exchange for which RIH was relieved of its obligation to purchase
CRDA bonds of $18,193,000. Because RIH already had the $18,193,000
for bond purchases on deposit with the CRDA, the difference between
this amount and the amount of the donation, or $6,145,000, was
refunded to RIH in August 1989. Thus, at December 31, 1993, RIH had
a remaining balance of $4,873,000 face value of bonds issued by the
CRDA and had $12,946,000 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, were recorded
as other assets in the Company's Consolidated Balance Sheets.
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 1993, 1992 and 1991 for discounts on
obligations arising in those years were $1,541,000, $1,451,000 and
$1,574,000, respectively.
- 67 -
Litigation
__________
RII and certain of its subsidiaries are defendants in certain
litigation. In the opinion of management, based upon advice of
counsel, the aggregate liability, if any, arising from such
litigation will not have a material adverse effect on the
accompanying consolidated financial statements.
NOTE 16 - GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION
_____________________________________________________
Schedules of geographic and business segment information
relating to (i) revenues, (ii) contribution to consolidated loss
before income taxes and (iii) identifiable assets, depreciation and
capital additions are included in "ITEM 7. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
- 68 -
SCHEDULE II
___________
Resorts International, Inc. and Subsidiaries
AMOUNTS RECEIVABLE FROM RELATED PARTIES
(In Thousands of Dollars)
Balance at Deductions Balance at
____________________
beginning Amounts end of period
_____________________
of period Additions Collected Other Current Not current
__________ _________ __________ _______ _______ ___________
For the year ended
December 31, 1993:
Merv Griffin (A) $11,000 $(3,477) $(7,523) -0-
Griffin Group (B) $7,523 $(2,205) $ 5,318
For the year ended
December 31, 1992:
Merv Griffin (A) $11,000 $11,000
For the year ended
December 31, 1991:
Merv Griffin (A) $11,000 $11,000
(A) Pursuant to the Old Plan, the Company received cash and this promissory note from Merv Griffin
for the purchase of RII Common Stock. This note was due on demand after September 17, 1991 and
bore interest at the rate of 8% per annum. In April 1993, the Company received a payment from
Mr. Griffin which reduced the principal balance by $3,477,000. The remaining principal balance
of $7,523,000 was cancelled and a new promissory note for this amount from the Griffin Group was
substituted therefor. See (B) below.
(B) This promissory note from Griffin Group was dated as of September 17, 1992, is unconditionally
guaranteed as to principal and interest by Merv Griffin, is due on demand and bears interest at
the rate of 3% per annum. In September 1993, this note was reduced by $2,205,000 as this amount
was applied towards prepaid services pursuant to the New Griffin Services Agreement.
- 69 -
SCHEDULE V
__________
Resorts International, Inc. and Subsidiaries
PROPERTY AND EQUIPMENT
(In Thousands of Dollars)
Balance at Balance at
beginning Additions Retirements end of
of period at cost or sales Other period
__________ _________ ___________ _________ __________
For the year ended December 31, 1993:
Land and land rights $243,900 $ (564) $243,336
Land improvements and utilities 22,519 $ 14 $ 358 (A) 22,891
Hotels and other buildings 170,250 768 (368) 11,361 (A) 182,011
Furniture, machinery and equipment 67,693 4,328 (619) 9,022 (A) 80,424
Construction in progress 1,215 20,803 (20,741)(A) 1,277
________ _______ _______ ________ ________
$505,577 $25,913 $(1,551) $ -0- $529,939
________ _______ _______ ________ ________
For the year ended December 31, 1992:
Land and land rights $246,520 $ (136) $ (2,484)(B) $243,900
Land improvements and utilities 21,942 $ 240 (94) 431 (A) 22,519
Hotels and other buildings 157,312 3,892 (8) 9,084 (A) 170,250
(30)(C)
Furniture, machinery and equipment 60,700 4,315 (451) 3,436 (A) 67,693
(307)(C)
Construction in progress 2,796 11,438 (12,951)(A) 1,215
(68)(C)
________ _______ _______ ________ ________
$489,270 $19,885 $ (689) $ (2,889) $505,577
________ _______ _______ ________ ________
- 70 -
SCHEDULE V
__________
Resorts International, Inc. and Subsidiaries
PROPERTY AND EQUIPMENT
(In Thousands of Dollars)
Balance at Balance at
beginning Additions Retirements end of
of period at cost or sales Other period
__________ _________ ___________ _________ __________
For the year ended December 31, 1991:
Land and land rights $246,610 $ (90) $246,520
Land improvements and utilities 21,467 $ 15 $ 460 (A) 21,942
Hotels and other buildings 146,309 4,382 (486) 7,129 (A) 157,312
(22)(C)
Furniture, machinery and equipment 43,224 8,190 (206) 10,144 (A) 60,700
(652)(C)
Construction in progress 6,366 14,163 (17,733)(A) 2,796
________ _______ _______ ________ ________
$463,976 $26,750 $ (782) $ (674) $489,270
________ _______ _______ ________ ________
(A) Transfer of completed projects out of construction in progress.
(B) Basis adjustment.
(C) Reclassification out of property and equipment.
- 71 -
SCHEDULE VI
___________
Resorts International, Inc. and Subsidiaries
ACCUMULATED DEPRECIATION
OF PROPERTY AND EQUIPMENT
(In Thousands of Dollars)
Balance at Additions Balance at
beginning charged to Retirements end of
of period expenses or sales period
__________ __________ ___________ __________
For the year ended December 31, 1993:
Land improvements and utilities $ 4,543 $ 1,867 $ 6,410
Hotels and other buildings 20,719 9,895 $ (57) 30,557
Furniture, machinery and equipment 29,499 16,162 (529) 45,132
_______ _______ _____ _______
$54,761 $27,924 $(586) $82,099
_______ _______ _____ _______
For the year ended December 31, 1992:
Land improvements and utilities $ 2,746 $ 1,797 $ 4,543
Hotels and other buildings 11,448 9,271 20,719
Furniture, machinery and equipment 15,676 14,254 $(431) 29,499
_______ _______ _____ _______
$29,870 $25,322 $(431) $54,761
_______ _______ _____ _______
For the year ended December 31, 1991:
Land improvements and utilities $ 651 $ 2,095 $ 2,746
Hotels and other buildings 2,561 8,898 $ (11) 11,448
Furniture, machinery and equipment 2,946 12,821 (91) 15,676
_______ _______ _____ _______
$ 6,158 $23,814 $(102) $29,870
_______ _______ _____ _______
- 72 -
SCHEDULE VIII
_____________
Resorts International, Inc. and Subsidiaries
VALUATION ACCOUNTS
(In Thousands of Dollars)
Balance at Additions Balance at
beginning charged to end of
of period expenses Deductions (A) period
__________ __________ ______________ __________
For the year ended December 31, 1993:
Allowance for doubtful
receivables:
Gaming $ 6,952 $2,336 $(2,690) $6,598
Other 1,212 553 (489) 1,276
_______ ______ _______ ______
$ 8,164 $2,889 $(3,179) $7,874
_______ ______ _______ ______
For the year ended December 31, 1992:
Allowance for doubtful
receivables:
Gaming $ 8,169 $3,098 $(4,315) $6,952
Other 1,709 949 (1,446) 1,212
_______ ______ _______ ______
$ 9,878 $4,047 $(5,761) $8,164
_______ ______ _______ ______
For the year ended December 31, 1991:
Allowance for doubtful
receivables:
Gaming $ 8,397 $5,397 $(5,625) $8,169
Other 1,881 976 (1,148) 1,709
_______ ______ _______ ______
$10,278 $6,373 $(6,773) $9,878
_______ ______ _______ ______
(A) Write-off of uncollectible accounts, net of recoveries.
- 73 -
SCHEDULE X
__________
Resorts International, Inc. and Subsidiaries
SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION
(In Thousands of Dollars)
For the Year Ended December 31,
__________________________________
1993 1992 1991
_____________________________________________________________________
Maintenance and repairs $23,439 $20,843 $18,845
Gaming taxes $26,704 $26,053 $24,376
Property taxes $ 9,392 $ 9,279 $ 9,193
Advertising $ 8,900 $10,086 $11,370
_____________________________________________________________________
- 74 -
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(In Thousands of Dollars, except per share data)
The table below reflects selected quarterly financial data for the years 1993 and 1992.
1993 1992
_________________________________________ _________________________________________
For the Quarter First Second Third Fourth First Second Third Fourth
_______________ ________ ________ ________ ________ ________ ________ ________ ________
Operating revenues $114,154 $106,697 $117,007 $101,706 $111,631 $106,246 $112,377 $106,680
________ ________ ________ ________ ________ ________ ________ ________
Earnings (loss) from
operations $ 9,106 $ 1,791 $ 9,783 $ (7,782) $ 5,789 $ 4,847 $ 9,471 $ 1,395
Recapitalization costs (593) (1,156) (3,130) (3,910) (300) (1,043) (994) (511)
Other income (deductions),
net (A) (21,411) (26,003) (25,757) (32,102) (18,501) (18,748) (17,744) (18,463)
________ ________ ________ ________ ________ ________ ________ ________
Loss before income taxes (12,898) (25,368) (19,104) (43,794) (13,012) (14,944) (9,267) (17,579)
Income tax benefit
(expense) (1,000) 1,348
________ ________ ________ ________ ________ ________ ________ ________
Net loss $(12,898) $(25,368) $(20,104) $(43,794) $(13,012) $(14,944) $ (9,267) $(16,231)
________ ________ ________ ________ ________ ________ ________ ________
Net loss per share
of common stock $ (.64) $ (1.26) $ (1.00) $ (2.17) $ (.65) $ (.74) $ (.46) $ (.80)
________ ________ ________ ________ ________ ________ ________ ________
(A) Includes interest income, interest expense and amortization of debt discount.
- 75 -
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
____________________________________________________________________
AND FINANCIAL DISCLOSURE
________________________
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
____________________________________________________________
The directors of RII are:
Director
Name Age Since
____ ___ ________
Merv Griffin 68 1988
Chairman of the Board of Directors
Antonio C. Alvarez II 45 1990
Warren Cowan 73 1990
Thomas E. Gallagher(1) 49 1993
Joseph G. Kordsmeier 54 1991
Paul C. Sheeline 72 1990
____________________________
(1) Mr. Gallagher was elected by remaining members of RII's Board of
Directors to replace David P. Hanlon who resigned as of October
31, 1993.
Pursuant to the Company's Restated Certificate of Incorporation,
the total number of directors is fixed at six. The Board of Directors
is divided into three equal classes, Class I, Class II, and Class III,
which have staggered three year terms. Notwithstanding the foregoing,
each director shall serve until his successor is elected and qualified
or until his earlier death, resignation or removal. Messrs.
Kordsmeier and Sheeline comprise Class I, Messrs. Alvarez and
Gallagher comprise Class II, and Messrs. Griffin and Cowan comprise
Class III.
If the Restructuring is effected, a new classified Board of
Directors of RII will be named. Pursuant to the Plan, on the
Effective Date the initial post-Restructuring Board of Directors of
RII will be composed of directors designated by RII. After the
Restructuring, the holders of RII Common Stock, voting as a class,
will be entitled to elect four directors of RII and the holders of RII
Class B Stock, voting as a class, will be entitled to elect two
directors of RII (the "Class B Directors"). See "Restructuring of
Series Notes - Restructuring" under "ITEM 1. BUSINESS - (a) General
Development of Business" for a description of the Class B Triggering
Event which would entitle holders of RII Class B Stock to elect a
majority of RII's Board of Directors. The initial post-Restructuring
Board of Directors of RII will consist of Merv Griffin, Thomas E.
Gallagher, Jay M. Green (age 46), William Fallon (age 40) and, as
Class B Directors, Charles Masson (age 40) and Vincent J. Naimoli (age
56).
- 76 -
The Audit Committee consists of two independent directors,
Messrs. Kordsmeier and Sheeline. Messrs. Griffin, Gallagher and
Sheeline are members of the Executive Committee of the Board of
Directors, which was formed in November 1993.
The executive officers of RII are:
Executive
Officer
Name Age Since
____ ___ _________
Merv Griffin 68 1988
Chairman of the Board of Directors
Christopher D. Whitney 49 1988
Office of the President, Executive
Vice President, Chief of Staff,
General Counsel and Secretary
Matthew B. Kearney 54 1982
Office of the President, Executive
Vice President-Finance, Chief
Financial Officer and Treasurer
David G. Bowden 53 1979
Vice President-Controller, Chief
Accounting Officer, Assistant
Secretary and Assistant Treasurer
_______________________
RII's officers serve at the pleasure of the Board of Directors.
Pursuant to an agreement dated as of September 27, 1993 between
RII and David P. Hanlon (the "Hanlon Termination Agreement"), David P.
Hanlon resigned as of October 31, 1993, from his positions as
President, Chief Executive Officer and a director of RII. Pending
completion of its restructuring, RII will be managed by an Office of
the President comprised of Messrs. Whitney and Kearney.
Business Experience
___________________
The principal occupations and business experience for the last
five years or more of the directors, nominees and executive officers
of RII are as follows:
Merv Griffin - Chairman of the Board of RII since November
____________
1988; Chairman of Griffco Resorts Holding, Inc. ("Griffco," a
Company which through September 1990 was owned by Mr. Griffin and
from November 1988 through September 1990 was RII's parent) from
its incorporation in May 1986 to September 1990; President of
Griffco from September 1988 to September 1990; Chairman of
Griffin Group since its incorporation in September 1988; Chairman
of January Enterprises, Inc. ("January Enterprises"), a
television production and holding company doing business as Merv
Griffin Enterprises, from 1964 to May 1986, and Chief Executive
- 77 -
Officer since 1964; director of Hollywood Park Operating Company
from 1987 to June 1991; television and radio producer since
1945. Mr. Griffin created and produced the nationally syndicated
television game shows, "Wheel of Fortune" and "Jeopardy." For
21 years, through 1986, Mr. Griffin hosted "The Merv Griffin
Show," a nationally syndicated talk show. In 1986, Mr. Griffin
sold January Enterprises to The Coca Cola Company, but he
continues to act as Chief Executive Officer of January
Enterprises, presently a wholly-owned indirect subsidiary of Sony
Pictures Entertainment, Inc.
Antonio C. Alvarez II - Chief Executive Officer of Phar-Mor Inc.,
_____________________
a discount drugstore chain, since February 1993; President and
Chief Operating Officer of Phar-Mor Inc. from September 1992 to
February 1993; Chairman of Alvarez & Marsal, Inc. ("Alvarez &
Marsal"), a financial advisory firm, since September 1983; Vice
President and Controller of Norton Simon Inc. from December 1981
to September 1983; prior thereto, Partner, Coopers & Lybrand.
Warren Cowan - Public relations consultant since July 1992;
____________
Chairman of Rogers & Cowan, Inc., a public relations firm, from
1986 until July 1992; President of Rogers & Cowan, Inc. from 1964
until 1986.
Thomas E. Gallagher - President and Chief Executive Officer of
___________________
Griffin Group since April 1992 and a director of Players
International, Inc., a riverboat gaming company, since December
1992. For the preceeding 15 years, Mr. Gallagher was a partner
of the law firm of Gibson, Dunn & Crutcher.
Joseph G. Kordsmeier - President and sole owner of Kordsmeier
____________________
Company, consultants to the lodging industry, since 1982; Senior
Vice President of Sales and Marketing Worldwide and other
positions with Hyatt Hotels from 1972 to 1982; Mr. Kordsmeier
also serves on the Advisory Board to Language Line, a division of
AT&T.
Paul C. Sheeline - Chairman of Vale Petroleum Corporation from
________________
1989 to 1991; Consultant to Intercontinental Hotels Corporation
("Intercontinental") from 1986 to June 1990; Chief Executive
Officer of Intercontinental from 1971 to 1985. In addition, Mr.
Sheeline was Of Counsel to the Washington, D.C. law firm of
Verner, Liipfert, Bernhard, McPherson and Hand from 1985 through
March 1993.
William Fallon - Executive Vice President of R.M. Bradley & Co.
______________
Inc. ("Bradley"), a real estate brokerage and management company,
since March 1994; Senior Vice President of Bradley from 1988 to
March 1994; other positions with Bradley from 1979 to 1988;
director of Massachusetts Certified Development Corporation, a
small business development company, from 1987 to present.
Jay M. Green - Executive Vice President Finance and
____________
Administration and Treasurer of Culbro Corporation, a diversified
consumer and industrial products company since 1988; Chairman of
the Board of The Eli Witt Company, a Culbro subsidiary, since
February 1993; prior to 1988, Vice President and Controller of
Columbia Pictures Entertainment, Inc.
- 78 -
Charles Masson - President of McCloud Partners, a private
______________
advisory firm, since June 1993; director of Salomon Brothers Inc
from 1991 through May 1993; Vice President of Salomon Brothers
Inc from 1983 through 1990.
Vincent J. Naimoli - Chairman, President and Chief Executive
__________________
Officer of Harvard Industries, Inc. since 1993; Chairman and
Chief Executive Officer of Doehler-Jarvis Corporation since 1991;
Chairman, President and Chief Executive Officer of Ladish
Company, Inc. since 1993; Managing General Partner of the Tampa
Bay Baseball Ownership Group since 1992; Chairman, President and
Chief Executive Officer of Anchor Industries International, Inc.,
an operating and holding company, since 1989; director of
Lincoln Foodservice Products, Inc. since 1991; director of
Simplicity Pattern Company since 1990; Chairman, President and
Chief Executive Officer of Anchor Glass Container Corporation
from 1983 through 1989.
Christopher D. Whitney - Office of the President of RII since
______________________
November 1993; Executive Vice President of RII since December
1989; General Counsel to and Secretary of RII since February
1989; Chief of Staff of RII since December 1988; Senior Vice
President of RII from December 1988 to December 1989; Senior Vice
President, Law & Government and General Counsel of Harrah's East,
Inc. from November 1984 to December 1988; Vice President, General
Counsel and Secretary of Harrah's, the western branch of the
casino subsidiary of Holiday Corporation ("Holiday") located in
Reno, Nevada, from June 1983 to November 1984; Vice President,
General Counsel and Secretary of Perkins Restaurants, Inc.,
Holiday's restaurant group subsidiary then located in
Minneapolis, Minnesota from November 1981 to June 1983; Vice
President & Associate General Counsel (Litigation) of Holiday in
Memphis, Tennessee from January 1979 to November 1981.
Matthew B. Kearney - Office of the President of RII since
__________________
November 1993; Executive Vice President - Finance of RII since
September 1993; Chief Financial Officer of RII since 1982; Vice
President-Finance of RII from 1982 through September 1993.
David G. Bowden - Vice President-Controller and Chief Accounting
_______________
Officer of RII since 1979.
- 79 -
ITEM 11. EXECUTIVE COMPENSATION
________________________________
Summary Compensation Table
__________________________
The following table (the "Summary Compensation Table") sets forth information concerning compensation earned by, paid
to or awarded to each individual serving as RII's Chief Executive Officer or acting in a similar capacity during 1993 and
to each of the other executive officers of RII who were serving as executive officers at December 31, 1993 for services
rendered in all capacities to RII and its subsidiaries.
Long Term
Annual Compensation Compensation -
_________________________________________
Other Annual Number of Stock All Other
Name and Principal Position Year Salary Bonus Compensation Options Granted Compensation
___________________________ ____ ________ __________ ____________ _______________ _______________
David P. Hanlon 1993 $677,103 $ 719,661 (2) $2,682,714 (7)
President and Chief 1992 $764,231 $1,206,435 (3) $177,776 (5) $36,738
Executive Officer (1) 1991 $750,000 $1,325,000 (3) 1,094,800 (6)
Christopher D. Whitney 1993 $300,000 $ 100,000 (4) $13,379 (7)
Office of the President, 1992 $300,000 $ 125,000 (2) $14,592
Executive Vice President 1991 $283,269 $ 150,000 (2) 100,000
and Chief of Staff
Matthew B. Kearney 1993 $281,712 $ 100,000 (4) $26,419 (7)
Office of the President, 1992 $275,000 $ 125,000 (2) $16,074
Executive Vice President-Finance 1991 $266,635 $ 125,000 (2) 87,500
and Chief Financial Officer
David G. Bowden 1993 $135,000 $31,303 (7)
Vice President - Controller 1992 $135,000 $ 40,000 (2) $ 8,126
and Chief Accounting Officer 1991 $131,654 $ 35,000 (2) 25,000
- 80 -
Notes to Summary Compensation Table
(1) Mr. Hanlon resigned from all positions with RII and its
subsidiaries as of October 31, 1993.
(2) Represents performance bonus for year in which presented.
(3) Includes $375,000 in each of 1992 and 1991 for special incentive
bonus payments in satisfaction of a guaranteed bonus in
connection with Mr. Hanlon's agreement to enter into employment
with the Company. Also includes performance bonuses of $831,435
for 1992 and $950,000 for 1991.
(4) Represents bonus in recognition of efforts relative to the
Restructuring.
(5) Includes $157,776 for legal fees and expenses incurred in
connection with the preparation and negotiation of the Hanlon
Employment Agreement (defined below under "Employment Contracts
and Termination of Employment and Change in Control Arrangements
- David P. Hanlon").
(6) The 1990 Stock Option Plan provided for the grant to Mr. Hanlon
of options to purchase 5% of the shares of Common Stock
Outstanding, as defined, which amount by its definition is
subject to adjustment. The amount reflected here is based on
Common Stock Outstanding at December 31, 1993. Due to the
expiration of certain 1990 Stock Options in connection with
certain employee terminations, since that date the number of
shares under option to Mr. Hanlon has decreased. As of February
28, 1994, Mr. Hanlon had options to purchase 1,089,275 shares.
(7) Includes $2,648,656 for Mr. Hanlon pursuant to the Hanlon
Termination Agreement (see "Employment Contracts and Termination
of Employment and Change in Control Arrangements - David P.
Hanlon" below); the cost of group life and health insurance: Mr.
Hanlon - $16,109, Mr. Whitney - $7,379, Mr. Kearney - $20,794 and
Mr. Bowden - $28,603; the Company's contribution to a defined
contribution group retirement plan: Mr. Hanlon - $10,000, Mr.
Whitney - $6,000, Mr. Kearney - $5,625 and Mr. Bowden - $2,700;
and the cost of additional disability coverage for Mr. Hanlon -
$7,949.
See also the description of the New Griffin Services Agreement
under "Compensation Committee Interlocks and Insider Participation -
Transactions with Management and Others - Griffin Services Agreement"
below for a description of compensation to Griffin Group for certain
services rendered by Mr. Griffin.
Option Grant Table
__________________
No options were granted in 1993 to the executive officers named
in the Summary Compensation Table. Accordingly, no "Option Grant
Table" is presented herein.
Fiscal Year End Option Value Table
__________________________________
The following table sets forth information as of December 31,
1993, concerning the unexercised options held by executive officers
- 81 -
named in the Summary Compensation Table, none of whom exercised
options in 1993. No options held by those executive officers were
in-the-money at December 31, 1993. Options are "in-the-money" when
the fair market value of underlying common stock exceeds the exercise
price of the option. All options held by the named executives have an
exercise price of $1.875 per share. The closing price of RII Common
Stock on December 31, 1993, was $1.625 per share.
Number of Unexercised Options at
December 31, 1993, all of which were
Name Exercisable
____ ____________________________________
David P. Hanlon 1,094,800 (1)
Christopher D. Whitney 100,000
Matthew B. Kearney 87,500
David G. Bowden 25,000
________________________
(1) This amount was based on Common Stock Outstanding, as defined, as
of December 31, 1993. See Note (6) of Notes to Summary Compensation
Table above.
Compensation of Directors
_________________________
RII's non-employee directors are each entitled to receive $35,000
annually as compensation for serving as a director, $500 for each
Board meeting attended and $500 for each Committee meeting attended
when such Committee meeting is not held on the same day as a Board
meeting or another Committee meeting. No compensation was paid to Mr.
Griffin or Mr. Hanlon for their services as directors of RII in 1993.
However, Griffin Group was compensated for certain services provided
by Mr. Griffin, including Mr. Griffin's serving as Chairman of the
Board of RII. See the description of the New Griffin Services
Agreement under "Compensation Committee Interlocks and Insider
Participation - Transactions with Management and Others - Griffin
Services Agreement" below.
Messrs. Alvarez, Cowan, Gallagher, Kordsmeier and Sheeline
received $41,500, $ 42,000, $6,333, $43,000 and $42,500, respectively,
for their services as directors during 1993.
Employment Contracts and Termination of Employment and Change in
________________________________________________________________
Control Arrangements
____________________
David P. Hanlon. Pursuant to the Hanlon Termination Agreement,
_______________
RII and Mr. Hanlon mutually agreed to the termination, as of October
31, 1993, of the employment agreement (the "Hanlon Employment
Agreement") between RII and Mr. Hanlon dated as of September 17, 1992
pursuant to which Mr. Hanlon served as President and Chief Executive
Officer of RII.
- 82 -
Pursuant to the Hanlon Termination Agreement, Mr. Hanlon received
a $719,661 performance bonus for 1993 that was earned pursuant to the
Hanlon Employment Agreement but not yet paid as of October 31, 1993.
In addition, pursuant to the Hanlon Termination Agreement, Mr. Hanlon
is entitled to receive the present value of future base salary
pursuant to the Hanlon Employment Agreement as determined under the
Hanlon Termination Agreement in the sum of $1,303,076 and $1,345,580
in respect of the performance bonuses for fiscal years ending 1994 and
1995 payable under the Hanlon Employment Agreement, half of which was
paid on October 31, 1993 and half of which will be paid upon the
earlier of (i) the acceptance of a reorganization or recapitalization
of RII by the requisite number and amount of RII's creditors voting on
such restructuring or reorganization and (ii) April 15, 1995. In
addition, Mr. Hanlon will receive a bonus from RII in the amount of
$325,000 in connection with the reorganization or recapitalization of
RII, payable prior to any bankruptcy filing by RII. Finally, Mr.
Hanlon will receive a bonus of $300,000 upon the disposition of the
Paradise Island operations. Accordingly, Mr. Hanlon would receive a
total of $625,000 in connection with the Restructuring. The payment
to be made to Mr. Hanlon with respect to the disposition of the
Paradise Island operations may be subject to the approval of the
Bankruptcy Court. Mr. Hanlon is also entitled to participate in all
of RII's benefit plans through and including September 16, 1995,
unless Mr. Hanlon receives a comparable benefit in connection with
subsequent employment. Mr. Hanlon will retain all 1990 Stock Options
previously granted to him.
Christopher D. Whitney and Matthew B. Kearney. The Company has
_____________________________________________
employment agreements with Messrs. Whitney and Kearney, both dated as
of May 3, 1991, which were extended to May 1995. The respective terms
of employment will each renew automatically for another year unless
either party to the agreement notifies the other that the term is not
to be renewed. Mr. Whitney's agreement provides for an annual salary
of $300,000 and Mr. Kearney's agreement was recently amended to
provide for an annual salary of $300,000. If the Company terminates
the executive's employment without cause, as defined, the executive
will be entitled to receive base salary payments through the end of
his term of employment. If such a termination of his employment
follows a change in control, as defined, the executive will receive a
lump-sum payment equal to the present value of such base salary
payments.
Compensation Committee Interlocks and Insider Participation
___________________________________________________________
Messrs. Alvarez, Griffin and Sheeline serve as members of the
Compensation Committee of the Board of Directors of RII. Mr. Griffin
also serves as an officer of RII.
Transactions with Management and Others
_______________________________________
Griffin Services Agreement. In April 1993 RII and RIH entered
__________________________
into a License and Services Agreement with Griffin Group, the New
Griffin Services Agreement, dated and effective as of September 17,
1992 to replace the previous License and Services Agreement among RII,
Merv Griffin and Griffin Group upon its expiration. Pursuant to the
New Griffin Services Agreement, Griffin Group granted RII and RIH a
non-exclusive license to use the name and likeness of Merv Griffin, in
certain advertising media and limited merchandising, for the sole
- 83 -
purpose of advertising and promoting the Resorts Casino Hotel and the
Paradise Island operations. In connection with such license, Griffin
Group will not grant any similar license to any casino/hotel located
in either Atlantic City or The Bahamas during the term of the New
Griffin Services Agreement, so long as RII and RIH own or operate
casino and hotel facilities in such locations. It is expected that
Merv Griffin will not be associated with the Paradise Island
operations subsequent to the Restructuring.
Pursuant to the New Griffin Services Agreement, Griffin Group
agreed to provide to RII and RIH, for the term of the New Griffin
Services Agreement, the non-exclusive services of Merv Griffin,
subject to the performance by RII and RIH of its obligations under the
New Griffin Services Agreement, (i) as Chairman of the Board of
Directors of RII, (ii) as host, producer, presenter and featured
performer relative to certain shows to be presented at the Resorts
Casino Hotel, (iii) as consultant and marketing adviser, (iv) in
certain capacities, as spokeperson for RII and RIH and (v) as
participant in certain radio, television and print advertisements.
The New Griffin Services Agreement is to continue in force until
the later of September 17, 1996, or the fourth anniversary of the
effective date of any restructuring of RII's outstanding debt or any
reorganization of RII under the Bankruptcy Code. If no such
restructuring or reorganization has been consummated as of September
17, 1996, the New Griffin Services Agreement shall terminate as of
that date. Additionally, in no event shall the New Griffin Services
Agreement extend beyond September 17, 1997. The New Griffin Services
Agreement provides for earlier termination under certain circumstances
including, among others, a change of control (as defined) of the
Company and Mr. Griffin ceasing to serve as Chairman of the Board of
RII. The Restructuring contemplates that the New Griffin Services
Agreement will remain in place.
Under the New Griffin Services Agreement, Griffin Group was
entitled to receive from RII and RIH $4,100,000 upon execution of such
agreement, as compensation for the first two years of services.
Thereafter, the agreement calls for annual payments on September 17,
each representing a prepayment for the year ending two years hence.
These required payments are in the amounts of $2,205,000 and
$2,310,000 for services during the third and fourth years,
respectively, of the term of the New Griffin Services Agreement.
Thereafter, should the New Griffin Services Agreement remain in force
for another full year, RII and RIH will pay Griffin Group additional
compensation in the amount of $2,425,000 or, if the New Griffin
Services Agreement remains in force for less than a full year, a
prorated portion of such amount. In lieu of paying in cash, at the
Company's option, it may satisfy its obligation to make any of the
payments required under the New Griffin Services Agreement by reducing
the amount of the Group Note described below under "Indebtedness of
Management."
RIH made the $4,100,000 payment for the first two years under the
New Griffin Services Agreement in April 1993. In September 1993, RII
satisfied the Company's obligation to make the $2,205,000 payment for
the year ending September 16, 1995 by reducing the Group Note by that
amount. The Restructuring contemplates that on or prior to the
Effective Date RII will satisfy the Company's $2,310,000 obligation to
- 84 -
Griffin Group for the fourth year of the New Griffin Services
Agreement by reducing the principal amount of the Group Note in an
equal amount.
The New Griffin Services Agreement also provides that, as
additional compensation, RII will issue to Griffin Group, on the
effective date of a reorganization of RII, the Griffin Warrants to
purchase 10% of the common stock of the reorganized entity. The
Griffin Warrants are to be exercisable at the lesser of (i) the
average market price of RII's common stock for the 20 trading days
following the effective date of a reorganization and (ii) $1.875.
RII and RIH also have agreed to indemnify Merv Griffin and
Griffin Group for certain costs and liabilities arising in connection
with the New Griffin Services Agreement or Merv Griffin's services, or
the service of any employee of Griffin Group, as a director or officer
of RII or any subsidiary thereof.
Pursuant to the New Griffin Services Agreement, RII and RIH have
agreed to maintain for at least four years comprehensive public
liability, personal injury and umbrella insurance coverage in
specified amounts for both Griffin Group and Merv Griffin,
individually.
RII and RIH also have agreed to reimburse Griffin Group for
certain expenses incurred by Griffin Group and Merv Griffin in
connection with the license and services agreed to under the New
Griffin Services Agreement. If Griffin Group fails to perform its
obligations pursuant to the New Griffin Services Agreement, all
unearned advance payments to Griffin Group will be repaid to the
Company.
Indemnity Agreement. RII agreed to indemnify Merv Griffin
___________________
pursuant to an Indemnity Agreement (the "Indemnity Agreement"),
executed on September 19, 1990, against any and all losses by reason
of, arising from, in connection with, or relating to the Acquisition
Claims (as defined in the Indemnity Agreement). The Acquisition
Claims relate to all claims asserted against Mr. Griffin in connection
with the acquisition of RII by Griffco in November 1988, and all
transactions consummated in connection therewith, including the sale
of the Taj Mahal to certain affiliates of Donald Trump and the
issuance of certain debt securities by GGRI. RII also agreed to
reimburse Mr. Griffin for any out-of-pocket expenses (including
counsel fees) incurred by him in connection with the enforcement of,
or preservation of any rights under, the Indemnity Agreement.
Other Transactions. The Company reimbursed Griffin Group
__________________
$181,000 for charter air services rendered in 1993 to Mr. Griffin as
well as other directors and officers of RII for travel related to
Company business.
In 1993 the Company agreed to pay a subsidiary of January
Enterprises, of which Merv Griffin is Chief Executive Officer,
$100,000 and provided certain facilities, labor and accommodations in
connection with the production of the live television broadcast of
"Merv Griffin's New Year's Eve Special 1993" from Resorts Casino
Hotel. The Company received certain promotional considerations in
connection with the television broadcast of this show.
- 85 -
In early 1992, RII entered into an agreement with Alvarez &
Marsal pursuant to which it was to provide financial advisory services
in connection with the development and analysis of financial
alternatives available to the Company, and the development of a
long-term financial plan. According to an amendment to this
agreement, RII paid no fees to Alvarez & Marsal during 1993; however,
the agreement, as amended, provides for a fee of $250,000 and 125,000
shares of RII Common Stock upon consummation of an out-of-court
restructuring or upon receipt of a number and amount of consents
sufficient to confirm a prepackaged plan of reorganization. Mr.
Alvarez, a shareholder of Alvarez & Marsal, has been a member of the
Board of Directors of RII since September 1990.
Certain Business Relationships
______________________________
The Company retained Verner, Liipfert, Bernhard, McPherson and
Hand during 1993 for certain legal services. Mr. Sheeline, who was Of
Counsel to this law firm through March 1993, has been a director of
RII since 1990.
Indebtedness of Management
__________________________
In September 1990, Merv Griffin, Chairman of the Board of RII,
purchased 4,400,000 shares of RII Common Stock for which RII received
$12,345,000 in cash and an $11,000,000 promissory note, the Griffin
Note. The Griffin Note was secured by a letter of credit issued by a
bank, bore interest at 8% per year and was due upon demand. In April
1993, simultaneous with RIH's payment to Griffin Group of $4,100,000
for the first two years of service under the New Griffin Services
Agreement described above under "Transactions with Management and
Others - Griffin Services Agreement," Mr. Griffin made a partial
payment of principal and interest in the amount of $4,100,000 on the
Griffin Note, resulting in a remaining balance of $7,523,333. The
Griffin Note was then cancelled and a new note from Griffin Group, the
Group Note, in the amount of $7,523,333 was substituted therefor. The
Group Note is payable on demand and bears interest at the rate of 3%
per year. Merv Griffin has personally guaranteed payment of the Group
Note. As noted above, RII satisfied the Company's September 1993
obligation of $2,205,000 under the New Griffin Services Agreement by
reducing the Group Note by that amount. Also, the Restructuring
contemplates that (i) on or prior to the Effective Date RII will
satisfy the Company's $2,310,000 obligation to Griffin Group for the
fourth year of the New Griffin Services Agreement by reducing the
principal amount of the Group Note in an equal amount and (ii)
thereafter, but no later than the Effective Date, Griffin Group will
pay RII the then remaining balance of the Group Note plus accrued
interest, which proceeds will be included in the Company's Excess Cash
to be distributed to holders of the Series Notes.
- 86 -
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
_____________________________________________________________
MANAGEMENT
__________
Security Ownership of Certain Beneficial Owners
_______________________________________________
The following table sets forth information as to the beneficial
ownership of RII Common Stock as of February 28, 1994, by persons
known by RII to be holders of 5% or more of such common stock.
Information as to the number of shares beneficially owned has been
furnished by the persons named in the table.
Amount and
Name and Address Nature of
of Beneficial Beneficial Percent
Owner Ownership of Class
________________ __________ ________
Merv Griffin 4,398,115 21.82%
c/o The Griffin Group, Inc.
780 Third Avenue, Suite 1801
New York, NY 10017
David P. Hanlon 1,089,275 (1) 5.13%
P.O. Box 486
Oceanville, NJ 08231
_______________________
(1) Ownership represents shares issuable upon exercise of 1990 Stock
Options. Related percentage shown gives effect to the exercise
of options for such shares. See Note (6) of Notes to Summary
Compensation Table in "ITEM 11. EXECUTIVE COMPENSATION - Summary
Compensation Table."
- 87 -
Security Ownership of Management
________________________________
The following table sets forth information as to the beneficial
ownership of RII Common Stock as of February 28, 1994 by each
director, each nominee for director and each executive officer named
in the Summary Compensation Table and by all directors and executive
officers as a group.
Amount and
Nature of
Name of Beneficial Percent
Beneficial Owner Ownership of Class
________________ __________ ________
Merv Griffin 4,398,115 21.82%
Antonio C. Alvarez II 5,000 .02%
Warren Cowan 5,000 .02%
Thomas E. Gallagher None None
Joseph G. Kordsmeier None None
Paul C. Sheeline 5,000 .02%
Christopher D. Whitney 100,000 (1) .49%
Matthew B. Kearney 87,500 (1) .43%
David G. Bowden 25,000 (1) .12%
Directors and executive officers
as a group (9 persons) 4,625,615 (2) 22.71%
William Fallon None None
Jay M. Green None None
Charles Masson None None
Vincent J. Naimoli None None
_______________________
(1) Ownership represents shares issuable upon exercise of 1990 Stock
Options. Related percentages shown give effect to the exercise
of the options.
(2) Includes 212,500 shares which are issuable upon exercise of 1990
Stock Options. Related percentage shown gives effect to the
exercise of all such options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
________________________________________________________
Messrs. Alvarez, Griffin and Sheeline serve as members of the
Compensation Committee of the Board of Directors of RII. See "ITEM
11. EXECUTIVE COMPENSATION - Compensation Committee Interlocks and
Insider Participation" for information regarding certain relationships
and related transactions involving these directors.
- 88 -
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
________________________________________________________________
FORM 8-K.
________
(a) Documents Filed as Part of This Report
______________________________________
1. The financial statement index required herein is incorporated by
reference to "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA."
2. The index of financial statement schedules required herein is
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA." Financial statement schedules not included
have been omitted because they are either not applicable or the
required information is shown in the consolidated financial
statements or notes thereto.
3. The following exhibits are filed herewith or incorporated by
reference:
Exhibit
Numbers Exhibit
_______ _______
(2)(a) Second Amended Joint Plan of Reorganization of Resorts
International, Inc., Resorts International Financing,
Inc., Griffin Resorts Inc. (now GGRI), and Griffin Resorts
Holding Inc., dated as of May 31, 1990. (Incorporated by
reference to Exhibit 35 to registrant's Form 8 Amendment
No. 1 to its Form 8-K Current Report dated August 30,
1990, in File No. 1-4748.)
(2)(b) Joint Plan of Reorganization Proposed by Resorts
International, Inc., GGRI, Inc., Resorts International
Hotel, Inc., Resorts International Hotel Financing, Inc.
and P.I. Resorts Limited. (Incorporated by reference to
Appendix A of the Information Statement/Prospectus
included in Amendment No. 3, dated February 1, 1994, to
the Form S-4 Registration Statement in File No. 33-50733.)
(3)(a) Restated Certificate of Incorporation of the registrant.
(Incorporated by reference to Exhibit (3)(a) to
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1990, in File No. 1-4748.)
(3)(b) By-laws, as amended, of the registrant. (Incorporated by
reference to Exhibit (4)(d) to registrant's Form 10-Q
Quarterly Report for the quarter ended September 30, 1990,
in File No. 1-4748.)
(4)(a)(1) See Exhibits (3)(a) and (3)(b) as to the rights of holders
of registrant's common stock.
- 89 -
(4)(a)(2) Indenture dated as of September 14, 1990, between the
registrant and Chemical Bank (successor to Manufacturers
Hanover Trust Company), as Trustee, with respect to
registrant's Senior Secured Redeemable Notes due April 15,
1994, with Exhibits as executed. (Incorporated by
reference to Exhibit (4)(a)(1) to registrant's Form 10-Q
Quarterly Report for the quarter ended September 30, 1990,
in File No. 1-4748.)
(4)(a)(3) Amended and Restated RIH $200,000,000 Senior Note.
(Incorporated by reference to Exhibit (4)(a)(2) to
registrant's Form 10-Q Quarterly Report for the quarter
ended September 30, 1990, in File No. 1-4748.)
(4)(a)(4) Amended and Restated RIH $125,000,000 Senior Note.
(Incorporated by reference to Exhibit (4)(a)(3) to
registrant's Form 10-Q Quarterly Report for the quarter
ended September 30, 1990, in File No. 1-4748.)
(4)(a)(5) RII Pledge Agreement. (Incorporated by reference to
Exhibit Q to registrant's Form 8-A Registration Statement
dated July 19, 1990, in File No. 1-4748.)
(4)(a)(6) Assignment of Leases and Rents, RII as Assignor.
(Incorporated by reference to Exhibit U to registrant's
Form 8-A Registration Statement dated July 19, 1990, in
File No. 1-4748.)
(4)(a)(7) RIB $50,000,000 Promissory Note to RIH. (Incorporated by
reference to Exhibit V to registrant's Form 8-A
Registration Statement dated July 19, 1990, in File No.
1-4748.)
(4)(a)(8) Indenture of Mortgage from Paradise Island Limited.
(Incorporated by reference to Exhibit W to registrant's
Form 8-A Registration Statement dated July 19, 1990, in
File No. 1-4748.)
(4)(a)(9) Guaranty by Paradise Island Limited. (Incorporated by
reference to Exhibit X to registrant's Form 8-A
Registration Statement dated July 19, 1990, in File No.
1-4748.)
(4)(a)(10) Indenture of Mortgage from Paradise Beach Inn Limited.
(Incorporated by reference to Exhibit Y to registrant's
Form 8-A Registration Statement dated July 19, 1990, in
File No. 1-4748.)
(4)(a)(11) Guaranty by Paradise Beach Inn Limited. (Incorporated by
reference to Exhibit Z to registrant's Form 8-A
Registration Statement dated July 19, 1990, in File No.
1-4748.)
(4)(a)(12) Indenture of Mortgage from Island Hotel Company Limited.
(Incorporated by reference to Exhibit AA to registrant's
Form 8-A Registration Statement dated July 19, 1990, in
File No. 1-4748.)
- 90 -
(4)(a)(13) Guaranty by Island Hotel Company Limited. (Incorporated by
reference to Exhibit BB to registrant's Form 8-A
Registration Statement dated July 19, 1990, in File No.
1-4748.)
(4)(a)(14) RIB Collateral Assignment Agreement among RIH, GRI (now
GGRI), RIB, Paradise Island Limited, Island Hotel Company
Limited, Paradise Beach Inn Limited, and The Bank of New
York. (Incorporated by reference to Exhibit CC to
registrant's Form 8-A Registration Statement dated July
19, 1990, in File No. 1-4748.)
(4)(a)(15) RII Security Agreement. (Incorporated by reference to
Exhibit P to registrant's Form 8-A Registration Statement
dated July 19, 1990, in File No. 1-4748.)
(4)(b) Indenture dated as of September 14, 1990, between the
registrant and The Bank of New York, as Trustee, with
respect to registrant's First Mortgage Non-Recourse
Pass-Through Notes due June 30, 2000, with Exhibits as
executed. (Incorporated by reference to Exhibit (4)(b) to
registrant's Form 10-Q Quarterly Report for the quarter
ended September 30, 1990, in File No. 1-4748.)
(4)(c)* Resorts International, Inc. Senior Management Stock Option
Plan. (Incorporated by reference to Exhibit 8.5 to
Exhibit 35 to registrant's Form 8 Amendment No. 1 to its
Form 8-K Current Report dated August 30, 1990, in File No.
1-4748.)
(10)(a)(1) Agreement, dated May 23, l978, between HCB and Paradise
Enterprises Limited. (Incorporated by reference to
Exhibit (10)(b)(i) to registrant's Form 10-K Annual Report
for the fiscal year ended December 31, 1988, in File No.
1-4748.)
(10)(a)(2) Letter, dated July 2, 1985, from HCB to the registrant
amending Exhibit (10)(a)(1) hereto. (Incorporated by
reference to the exhibit to registrant's Form 8-K Current
Report dated July 9, 1985, in File No. 1-4748.)
(10)(a)(3) Agreement, dated May 23, 1978, between HCB and Paradise
Realty Limited (now RIB). (Incorporated by reference to
Exhibit 10.01 to GRI's Form S-1 Registration Statement
filed July 13, 1988, in File No. 33-23063.)
(10)(a)(4) Letter, dated September 26, 1988, from HCB to RIB
extending Exhibit (10)(a)(3) hereto. (Incorporated by
reference to Exhibit (10)(b)(iv) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1988,
in File No. 1-4748.)
(10)(a)(5) Supplement, dated February 21, 1990, to license granted
March 30, 1978 to Paradise Enterprises Limited.
(Incorporated by reference to Exhibit (10)(b)(v) to
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1989, in File No. 1-4748.)
________________________
* Management contract or compensatory plan.
- 91 -
(10)(a)(6) Supplement, dated September 7, 1990, to license granted
March 30, 1978 to Paradise Enterprises Limited.
(Incorporated by reference to Exhibit (10)(b)(6) to
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1990, in File No. 1-4748.)
(10)(a)(7) Supplement, dated January 15, 1991, to license granted
March 30, 1978 to Paradise Enterprises Limited.
(Incorporated by reference to Exhibit (10)(b)(7) to
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1990, in File No. 1-4748.)
(10)(a)(8) Supplement, dated February 13, 1992, to license granted
March 30, 1978 to Paradise Enterprises Limited.
(Incorporated by reference to Exhibit (10)(a)(8) to the
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1992, in File No. 1-4748.)
(10)(a)(9) Supplement, dated December 30, 1992, to license granted
March 30, 1978 to Paradise Enterprises Limited.
(Incorporated by reference to Exhibit (10)(a)(9) to the
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1992, in File 1-4748.)
(10)(b)(1) Lease Agreement, dated October 26, 1983, between the
registrant and Ocean Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(i) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1986,
in File No. 1-4748.)
(10)(b)(2) First Amendment, dated January 15, 1985, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (assignee from affiliate
- Ocean Showboat, Inc.). (Incorporated by reference to
Exhibit (10)(c)(ii) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1984, in
File No. 1-4748.)
(10)(b)(3) Second and Third Amendments, dated July 5 and October 28,
1985, respectively, to Lease Agreement, dated October 26,
1983, between the registrant and Atlantic City Showboat,
Inc. (Incorporated by reference to Exhibit (10)(c)(iii)
to registrant's Form 10-K Annual Report for the fiscal
year ended December 31, 1985, in File No. 1-4748.)
(10)(b)(4) Restated Third Amendment, dated August 28, 1986, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(iv) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1986,
in File No. 1-4748.)
(10)(b)(5) Fourth Amendment, dated December 16, 1986, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(v) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1986,
in File No. 1-4748.)
- 92 -
(10)(b)(6) Fifth Amendment, dated February 1987, to Lease Agreement,
dated October 26, 1983, between the registrant and
Atlantic City Showboat, Inc. (Incorporated by reference
to Exhibit (10)(c)(vi) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1986, in
File No. 1-4748.)
(10)(b)(7) Sixth Amendment, dated March 13, 1987, to Lease Agreement,
dated October 26, 1983, between the registrant and
Atlantic City Showboat, Inc. (Incorporated by reference
to Exhibit (10)(c)(vii) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1986, in
File No. 1-4748.)
(10)(b)(8) Seventh Amendment, dated October 18, 1988, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(viii) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1988, in File No. 1-4748.)
(10)(c)(1)* RII Executive Health Plan. (Incorporated by reference to
Exhibit (10)(c)(1) to registrant's Form 10-K Annual Report
for the fiscal year ended December 31, 1992, in File No.
1-4748.)
(10)(c)(2)* Resorts Retirement Savings Plan. (Incorporated by
reference to Exhibit (10)(c)(2) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1991,
in File No. 1-4748.)
(10)(d)(1)* Employment Agreement, dated as of September 17, 1992,
between the registrant and David P. Hanlon. (Incorporated
by reference to Exhibit (10)(d)(4) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1992, in File No. 1-4748.)
(10)(d)(2)* Termination Agreement, dated as of September 27, 1993,
between RII and David P. Hanlon. (Incorporated by
reference to Exhibit 10.27 to registrant's Form S-4
Registration Statement dated October 25, 1993, in File No.
33-50733.)
(10)(d)(3)* Employment Agreement, dated May 3, 1991, between the
registrant and Christopher D. Whitney. (Incorporated by
reference to Exhibit (10)(d)(2) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1991,
in File No. 1-4748.)
(10)(d)(4)* Amendment to Employment Agreement, dated as of December 3,
1992, between RII and Christopher D. Whitney.
(Incorporated by reference to Exhibit 10.22 to
registrant's Form S-4 Registration Statement dated October
25, 1993, in File No. 33-50733.)
________________________
*Management contract or compensatory plan.
- 93 -
(10)(d)(5)* Employment Agreement, dated May 3, 1991, between the
registrant and Matthew B. Kearney. (Incorporated by
reference to Exhibit (10)(d)(3) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1991,
in File No. 1-4748.)
(10)(d)(6)* Amendment to Employment Agreement, dated December 3, 1992,
between RII and Matthew B. Kearney. (Incorporated by
reference to Exhibit 10.24 to registrant's Form S-4
Registration Statement dated October 25, 1993, in File No.
33-50733.)
(10)(d)(7)* Second Amendment to Employment Agreement, dated September
24, 1993, between RII and Matthew B. Kearney.
(Incorporated by reference to Exhibit 10.25 to
registrant's Form S-4 Registration Statement dated October
25, 1993, in File No. 33-50733.)
(10)(e)(1)* Stock Option Agreement, dated as of May 3, 1991, between
the registrant and David P. Hanlon. (Incorporated by
reference to Exhibit (10)(e)(1) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1991,
in File No. 1-4748.)
(10)(e)(2)* Stock Option Agreement, dated as of May 3, 1991, between
the registrant and Christopher D. Whitney. (Incorporated
by reference to Exhibit (10)(e)(2) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1991, in File No. 1-4748.)
(10)(e)(3)* Stock Option Agreement, dated as of May 3, 1991, between
the registrant and Matthew B. Kearney. (Incorporated by
reference to Exhibit (10)(e)(3) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1991,
in File No. 1-4748.)
(10)(e)(4)* Stock Option Agreement, dated as of May 3, 1991, between
the registrant and David G. Bowden. (Incorporated by
reference to Exhibit (10)(e)(5) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1991,
in File No. 1-4748.)
(10)(e)(5)* Amendment No. 1, dated as of September 17, 1992, to
Exhibit (10)(e)(1). (Incorported by reference to Exhibit
(10)(e)(6) of registrant's Form 10-K Annual Report for the
fiscal year ended December 31, 1992, in File No. 1-4748.)
(10)(f)* License and Services Agreement, dated as of September 17,
1992, among Griffin Group, RII and RIH. (Incorporated by
reference to Exhibit 10.34 to registrant's Form S-4
Registration Statement dated October 25, 1993, in File No.
33-50733.)
________________________
*Management contract or compensatory plan.
- 94 -
(10)(g) Litigation Trust Agreement, dated as of September 17,
1990, among RII, RIFI, Griffin Resorts Holding Inc. and
Griffin Resorts Inc. (now GGRI). (Incorporated by
reference to Exhibit 1.46 to Exhibit 35 to the Form 8
Amendment dated November 16, 1990, to the registrant's
Form 8-K Current Report dated August 30, 1990, in File No.
1-4748.)
(10)(h)(1) Promissory Note, dated September 28, 1990, between Merv
Griffin and the registrant. (Incorporated by reference to
Exhibit 9.1A to Exhibit 35 to the Form 8 Amendment dated
November 16, 1990, to the registrant's Form 8-K Current
Report dated August 30, 1990, in File No. 1-4748.)
(10)(h)(2) Letter of Credit, dated October 1, 1990, by Morgan
Guaranty Trust Company of New York. (Incorporated by
reference to Exhibit 9.1B to Exhibit 35 to the Form 8
Amendment dated November 16, 1990, to the registrant's
Form 8-K Current Report dated August 30, 1990, in File No.
1-4748.)
(10)(h)(3) Letters extending the termination date of Exhibit
(10)(h)(2). (Incorporated by reference to Exhibit
(10)(i)(2) to the registrant's Form 10-K Annual Report for
the fiscal year ended December 31, 1992, in File No.
1-4748.)
(10)(i)(1) Promissory Note, dated September 17, 1992, between Griffin
Group and the registrant. (Incorporated by reference to
Exhibit 1 to Exhibit 10.34 to registrant's Form S-4
Registration Statement dated October 25, 1993, in File No.
33-50733.)
(10)(i)(2) Guaranty dated September 17, 1992 by Mervyn E. Griffin in
favor of RII. (Incorporated by reference to Exhibit 2 to
Exhibit 10.34 to registrant's Form S-4 Registration
Statement dated October 25, 1993, in File No. 33-50733.)
(10)(j) Indemnity Agreement, executed on September 19, 1990,
between Merv Griffin and the registrant. (Incorporated by
reference to Exhibit 9.6 to Exhibit 35 to the Form 8
Amendment dated November 16, 1990, to the registrant's
Form 8-K Current Report dated August 30, 1990, in File No.
1-4748.)
(10)(k) Hotel Corporation of The Bahamas Right of First Refusal.
(Incorporated by reference to Exhibit (10)(n) to
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1988, in File No. 1-4748.)
(10)(l)(1) Consulting agreement between Alvarez & Marsal, Inc. and
the registrant, effective March 1, 1992. (Incorporated by
reference to Exhibit (10)(m)(l) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31, 1992,
in File No. 1-4748.)
- 95 -
(10)(l)(2) Amendment, dated September 14, 1992, to the consulting
agreement between Alvarez & Marsal, Inc. and the
registrant. (Incorporated by reference to Exhibit
(10)(m)(2) to registrant's Form 10-K Annual Report for the
fiscal year ended December 31, 1992, in File No. 1-4748.)
(10)(m) Letter Agreement dated July 1, 1993 between RII and Bear
Stearns & Co. Inc. for retention of services.
(Incorporated by reference to Exhibit 10.63 to Amendment
No. 1, dated January 5, 1994, to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(10)(n)(l) Paradise Island Purchase Agreement dated October 11, 1993
between RII and Sun International Hotels Limited, with
Exhibits and Schedules. (Incorporated by reference to
Exhibit 10.55 to registrant's Form S-4 Registration
Statement dated October 25, 1993, in File No. 33-50733.)
(10)(n)(2) Amendment dated as of November 30, 1993 to the Paradise
Island Purchase Agreement dated October 11, 1993 between
RII and Sun International Hotels Limited concerning
Bahamas Developers Limited. (Incorporated by reference to
Exhibit 10.55(a) to Amendment No. 3, dated February 1,
1994, to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(10)(n)(3) Amendment dated as of November 30, 1993 to the Paradise
Island Purchase Agreement dated October 11, 1993 between
RII and Sun International Hotels Limited. (Incorporated
by reference to Exhibit 10.55(b) to Amendment No. 3, dated
February 1, 1994, to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(10)(o)(1) PIRL Standby Distribution Agreement dated October 15, 1993
between RII and PIRL. (Incorporated by reference to
Exhibit 10.59 to registrant's Form S-4 Registration
Statement dated October 25, 1993, in File No. 33-50733.)
(10)(o)(2) Letter Agreement between RII and PIRL concerning airline
support services. (Incorporated by reference to Exhibit
10.60 to registrant's Form S-4 Registration Statement
dated October 25, 1993, in File No. 33-50733.)
(10)(p) Bondholders Support Agreement dated October 11, 1993 among
RII, Griffin Resorts Inc. (now GGRI), Sun International
Investments Limited, Sun International Hotels Limited, TCW
Special Credits and Fidelity Management and Research
Company, concerning bondholders support. (Incorporated by
reference to Exhibit 10.52 to registrant's Form S-4
Registration Statement dated October 25, 1993, in File No.
33-50733.)
- 96 -
(10)(q) Letter Agreement dated October 11, 1993 among Fidelity
Management and Research Company, TCW Special Credits, RII
and Sun International Hotels Limited concerning consent
rights of holders of Old Series Notes. (Incorporated by
reference to Exhibit 10.50 to registrant's Form S-4
Registration Statement dated October 25, 1993, in File No.
33-50733.)
(10)(r)(1) Letter Agreement dated October 19, 1993 among RII,
Fidelity Management, TCW Special Credits, Sun
International Hotels Limited, Sun International
Investments Limited and GGRI regarding GGRI, Inc.
(Incorporated by reference to Exhibit 10.56 to
registrant's Form S-4 Registration Statement dated October
25, 1993, in File No. 33-50733.)
(10)(r)(2) Letter Agreement dated October 15, 1993, among RII,
Fidelity Management, TCW Special Credits and Sun
International Hotels Limited regarding P.I. Resorts
Limited. (Incorporated by reference to Exhibit 10.58 to
registrant's Form S-4 Registration Statement dated October
25, 1993, in File No. 33-50733.)
(21) Subsidiaries of the registrant.
Registrant agrees to file with the Securities and Exchange
Commission, upon request, copies of any instrument defining the rights
of the holders of its consolidated long-term debt.
(b) Reports on Form 8-K
___________________
The Company filed a Form 8-K Current Report, dated October 25,
1993 to report that RII filed a Registration Statement on Form S-4
(Registration No. 33-50733) with the Securities and Exchange
Commission covering the proposed exchange of the Series Notes for,
among other consideration, shares of RII Class B Stock, $125,000,000
principal amount of RIHF Mortgage Notes, $35,000,000 principal amount
of RIHF Junior Mortgage Notes and, under certain circumstances,
ordinary shares of PIRL.
(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 schedules required by Regulation S-X are
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA."
- 97 -
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, INC.
___________________________
(Registrant)
Date: March 17, 1994 By/s/ Merv Griffin
_____________________________
Merv Griffin
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By/s/ Merv Griffin March 17, 1994
________________________________
Merv Griffin
Chairman of the Board
By
________________________________
Antonio C. Alvarez II
Director
By
________________________________
Warren Cowan
Director
By
_________________________________
Thomas E. Gallagher
Director
By
________________________________
Joseph G. Kordsmeier
Director
By
________________________________
Paul C. Sheeline
Director
By
________________________________
Christopher D. Whitney
Executive Vice President
(Principal Executive Officer)
By
________________________________
Matthew B. Kearney
Executive Vice President - Finance
(Principal Executive Officer and
Principal Financial Officer)
By
________________________________
David G. Bowden
Vice President - Controller
and Assistant Secretary
(Principal Accounting Officer)
- 98 -
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, INC.
___________________________
(Registrant)
Date: March 17, 1994 By
_____________________________
Merv Griffin
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By
________________________________
Merv Griffin
Chairman of the Board
By/s/ Antonio C. Alvarez II March 17, 1994
________________________________
Antonio C. Alvarez II
Director
By
________________________________
Warren Cowan
Director
By
_________________________________
Thomas E. Gallagher
Director
By
________________________________
Joseph G. Kordsmeier
Director
By
________________________________
Paul C. Sheeline
Director
By
________________________________
Christopher D. Whitney
Executive Vice President
(Principal Executive Officer)
By
________________________________
Matthew B. Kearney
Executive Vice President - Finance
(Principal Executive Officer and
Principal Financial Officer)
By
________________________________
David G. Bowden
Vice President - Controller
and Assistant Secretary
(Principal Accounting Officer)
- 99 -
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, INC.
___________________________
(Registrant)
Date: March 17, 1994 By
_____________________________
Merv Griffin
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By
________________________________
Merv Griffin
Chairman of the Board
By
________________________________
Antonio C. Alvarez II
Director
By/s/ Warren Cowan March 17, 1994
________________________________
Warren Cowan
Director
By
_________________________________
Thomas E. Gallagher
Director
By
________________________________
Joseph G. Kordsmeier
Director
By
________________________________
Paul C. Sheeline
Director
By
________________________________
Christopher D. Whitney
Executive Vice President
(Principal Executive Officer)
By
________________________________
Matthew B. Kearney
Executive Vice President - Finance
(Principal Executive Officer and
Principal Financial Officer)
By
________________________________
David G. Bowden
Vice President - Controller
and Assistant Secretary
(Principal Accounting Officer)
- 100 -
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, INC.
___________________________
(Registrant)
Date: March 17, 1994 By
_____________________________
Merv Griffin
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By
________________________________
Merv Griffin
Chairman of the Board
By
________________________________
Antonio C. Alvarez II
Director
By
________________________________
Warren Cowan
Director
By/s/ Thomas E. Gallagher March 17, 1994
_________________________________
Thomas E. Gallagher
Director
By
________________________________
Joseph G. Kordsmeier
Director
By
________________________________
Paul C. Sheeline
Director
By
________________________________
Christopher D. Whitney
Executive Vice President
(Principal Executive Officer)
By
________________________________
Matthew B. Kearney
Executive Vice President - Finance
(Principal Executive Officer and
Principal Financial Officer)
By
________________________________
David G. Bowden
Vice President - Controller
and Assistant Secretary
(Principal Accounting Officer)
- 101 -
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, INC.
___________________________
(Registrant)
Date: March 17, 1994 By
_____________________________
Merv Griffin
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By
________________________________
Merv Griffin
Chairman of the Board
By
________________________________
Antonio C. Alvarez II
Director
By
________________________________
Warren Cowan
Director
By
_________________________________
Thomas E. Gallagher
Director
By/s/ Joseph G. Kordsmeier March 17, 1994
________________________________
Joseph G. Kordsmeier
Director
By
________________________________
Paul C. Sheeline
Director
By
________________________________
Christopher D. Whitney
Executive Vice President
(Principal Executive Officer)
By
________________________________
Matthew B. Kearney
Executive Vice President - Finance
(Principal Executive Officer and
Principal Financial Officer)
By
________________________________
David G. Bowden
Vice President - Controller
and Assistant Secretary
(Principal Accounting Officer)
- 102 -
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, INC.
___________________________
(Registrant)
Date: March 17, 1994 By
_____________________________
Merv Griffin
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By
________________________________
Merv Griffin
Chairman of the Board
By
________________________________
Antonio C. Alvarez II
Director
By
________________________________
Warren Cowan
Director
By
_________________________________
Thomas E. Gallagher
Director
By
________________________________
Joseph G. Kordsmeier
Director
By/s/ Paul C. Sheeline March 17, 1994
________________________________
Paul C. Sheeline
Director
By
________________________________
Christopher D. Whitney
Executive Vice President
(Principal Executive Officer)
By
________________________________
Matthew B. Kearney
Executive Vice President - Finance
(Principal Executive Officer and
Principal Financial Officer)
By
________________________________
David G. Bowden
Vice President - Controller
and Assistant Secretary
(Principal Accounting Officer)
- 103 -
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, INC.
___________________________
(Registrant)
Date: March 17, 1994 By
_____________________________
Merv Griffin
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By
________________________________
Merv Griffin
Chairman of the Board
By
________________________________
Antonio C. Alvarez II
Director
By
________________________________
Warren Cowan
Director
By
_________________________________
Thomas E. Gallagher
Director
By
________________________________
Joseph G. Kordsmeier
Director
By
________________________________
Paul C. Sheeline
Director
By/s/ Christopher D. Whitney March 17, 1994
________________________________
Christopher D. Whitney
Executive Vice President
(Principal Executive Officer)
By/s/ Matthew B. Kearney March 17, 1994
________________________________
Matthew B. Kearney
Executive Vice President - Finance
(Principal Executive Officer and
Principal Financial Officer)
By/s/ David G. Bowden March 17, 1994
________________________________
David G. Bowden
Vice President - Controller
and Assistant Secretary
(Principal Accounting Officer)
- 104 -
RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(2)(a) Second Amended Joint Incorporated by reference
Plan of Reorganization to Exhibit 35 to registrant's
of Resorts International, Form 8 Amendment No. 1 to
Inc., Resorts International its Form 8-K Current Report
Financing, Inc., Griffin dated August 30, 1990, in
Resorts Inc. (now GGRI), File No. 1-4748.
and Griffin Resorts Holding
Inc., dated as of May 31,
1990.
(2)(b) Joint Plan of Reorgan- Incorporated by reference to
ization Proposed by Resorts Appendix A of the Information
International, Inc., GGRI, Statement/Prospectus included
Inc., Resorts International in Amendment No. 3, dated Feb-
Hotel, Inc., Resorts Inter- ruary 1, 1994, to the Form S-4
national Hotel Financing, Registration Statement in File
Inc. and P.I. Resorts No. 33-50733.
Limited.
(3)(a) Restated Certificate of Incorporated by reference to
Incorporation of the Exhibit (3)(a) to regis-
registrant. trant's Form 10-K Annual
Report for the fiscal year
ended December 31, 1990,
in File No. 1-4748.
(3)(b) By-laws, as amended, of Incorporated by reference
the registrant. to Exhibit (4)(d) to
registrant's Form l0-Q
Quarterly Report for the
quarter ended September 30,
1990, in File No. l-4748.
(4)(a)(1) See Exhibits (3)(a) and
(3)(b) as to the rights
of holders of registrant's
common stock.
(4)(a)(2) Indenture dated as of Incorporated by reference
September 14, 1990, to Exhibit (4)(a)(1) to
between the registrant and registrant's Form l0-Q
Chemical Bank (successor Quarterly Report for the
to Manufacturers Hanover quarter ended September
Trust Company), as Trustee, 30, 1990, in File No.
with respect to registrant's l-4748.
Senior Secured Redeemable
Notes due April 15, 1994,
with Exhibits as executed.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(4)(a)(3) Amended and Restated RIH Incorporated by reference
$200,000,000 Senior Note. to Exhibit (4)(a)(2) to
registrant's Form 10-Q
Quarterly Report for the
quarter ended September 30,
1990, in File No. 1-4748.
(4)(a)(4) Amended and Restated RIH Incorporated by reference
$125,000,000 Senior Note. to Exhibit (4)(a)(3) to
registrant's Form 10-Q
Quarterly Report for the
quarter ended September 30,
1990, in File No. 1-4748.
(4)(a)(5) RII Pledge Agreement. Incorporated by reference
to Exhibit Q to registrant's
Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(a)(6) Assignment of Leases and Incorporated by reference
Rents, RII as Assignor. to Exhibit U to registrant's
Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(a)(7) RIB $50,000,000 Promissory Incorporated by reference
Note to RIH. to Exhibit V to registrant's
Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(a)(8) Indenture of Mortgage from Incorporated by reference
Paradise Island Limited. to Exhibit W to registrant's
Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(a)(9) Guaranty by Paradise Incorporated by reference
Island Limited. to Exhibit X to registrant's
Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(a)(10) Indenture of Mortgage Incorporated by reference
from Paradise Beach Inn to Exhibit Y to registrant's
Limited. Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(4)(a)(11) Guaranty by Paradise Beach Incorporated by reference
Inn Limited. to Exhibit Z to registrant's
Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(a)(12) Indenture of Mortgage from Incorporated by reference
Island Hotel Company to Exhibit AA to registrant's
Limited. Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(a)(13) Guaranty by Island Hotel Incorporated by reference
Company Limited. to Exhibit BB to registrant's
Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(a)(14) RIB Collateral Assignment Incorporated by reference
Agreement among RIH, GRI to Exhibit CC to registrant's
(now GGRI), RIB, Paradise Form 8-A Registration
Island Limited, Island Hotel Statement dated July 19, 1990,
Company Limited, Paradise in File No. 1-4748.
Beach Inn Limited, and The
Bank of New York.
(4)(a)(15) RII Security Agreement. Incorporated by reference
to Exhibit P to registrant's
Form 8-A Registration
Statement dated July 19, 1990,
in File No. 1-4748.
(4)(b) Indenture dated as of Incorporated by reference
September 14, 1990, to Exhibit (4)(b) to
between the registrant registrant's Form 10-Q
and The Bank of New York, Quarterly Report for the
as Trustee, with respect quarter ended September
to registrant's First 30, 1990, in File No.
Mortgage Non-Recourse 1-4748.
Pass-Through Notes due
June 30, 2000, with
Exhibits as executed.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(4)(c) Resorts International, Incorporated by reference
Inc. Senior Management to Exhibit 8.5 to Exhibit
Stock Option Plan. 35 to registrant's Form 8
Amendment No. 1 to its Form
8-K Current Report dated
August 30, 1990, in File
No. 1-4748.
(10)(a)(1) Agreement, dated May 23, Incorporated by reference
l978, between HCB and to Exhibit (10)(b)(i) to
Paradise Enterprises registrant's Form 10-K
Limited. Annual Report for the fis-
cal year ended December 31,
1988, in File No. 1-4748.
(10)(a)(2) Letter, dated July 2, Incorporated by reference
1985, from HCB to the to the exhibit to regis-
registrant amending trant's Form 8-K Current
Exhibit (10)(a)(1) hereto. Report dated July 9, 1985,
in File No. 1-4748.
(10)(a)(3) Agreement, dated May 23, Incorporated by reference
1978, between HCB and to Exhibit 10.01 to GRI's
Paradise Realty Limited Form S-1 Registration
(now RIB). Statement filed July 13,
1988, in File No. 33-23063.
(10)(a)(4) Letter, dated September Incorporated by reference
26, 1988, from HCB to RIB to Exhibit (10)(b)(iv)
extending Exhibit to registrant's Form 10-K
(10)(a)(3) hereto. Annual Report for the fiscal
year ended December 31, 1988,
in File No. 1-4748.
(10)(a)(5) Supplement, dated February Incorporated by reference
21, 1990, to license to Exhibit (10)(b)(v) to
granted March 30, 1978 to registrant's Form 10-K
Paradise Enterprises Annual Report for the fis-
Limited. cal year ended December 31,
1989, in File No. 1-4748.
(10)(a)(6) Supplement, dated Septem- Incorporated by reference
ber 7, 1990, to license to Exhibit (10)(b)(6) to
granted March 30, 1978 to registrant's Form 10-K
Paradise Enterprises Annual Report for the fis-
Limited. cal year ended December 31,
1990, in File No. 1-4748.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(10)(a)(7) Supplement, dated January Incorporated by reference
15, 1991, to license to Exhibit (10)(b)(7) to
granted March 30, 1978 to registrant's Form 10-K
Paradise Enterprises Annual Report for the
Limited. fiscal year ended December
31, 1990, in File No.
1-4748.
(10)(a)(8) Supplement, dated February Incorporated by reference
13, 1992, to license to Exhibit (10)(a)(8) to
granted March 30, 1978 to the registrant's Form 10-K
Paradise Enterprises Ltd. Annual Report for the fiscal
year ended December 31, 1992,
in File No. 1-4748.
(10)(a)(9) Supplement, dated December Incorporated by reference
30, 1992, to license granted to Exhibit (10)(a)(9) to
March 30, 1978 to Paradise the registrant's Form
Enterprises Limited. 10-K Annual Report for the
fiscal year ended December
31, 1992, in File No. 1-4748.
(10)(b)(1) Lease Agreement, dated Incorporated by reference
October 26, 1983, between to Exhibit (10)(c)(i) to
the registrant and Ocean registrant's Form 10-K
Showboat, Inc. Annual Report for the fis-
cal year ended December 31,
1986, in File No. 1-4748.
(10)(b)(2) First Amendment, dated Incorporated by reference
January 15, 1985, to Lease to Exhibit (10)(c)(ii)
Agreement, dated October to registrant's Form 10-K
26, 1983, between the Annual Report for the
registrant and Atlantic fiscal year ended December
City Showboat, Inc. 31, 1984, in File No.
(assignee from affiliate 1-4748.
- Ocean Showboat, Inc.).
(10)(b)(3) Second and Third Amend- Incorporated by reference
ments, dated July 5 and to Exhibit (10)(c)(iii)
October 28, 1985, to registrant's Form
respectively, to Lease 10-K Annual Report for
Agreement, dated October the fiscal year ended
26, 1983, between the December 31, 1985, in
registrant and Atlantic File No. 1-4748.
City Showboat, Inc.
- 109 -
RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(10)(b)(4) Restated Third Amendment, Incorporated by reference
dated August 28, 1986, to to Exhibit (10)(c)(iv)
Lease Agreement, dated to registrant's Form
October 26, 1983, between 10-K Annual Report for
the registrant and the fiscal year ended
Atlantic City Showboat, December 31, 1986, in File
Inc. No. 1-4748.
(10)(b)(5) Fourth Amendment, dated Incorporated by reference
December 16, 1986, to to Exhibit (10)(c)(v)
Lease Agreement, dated to registrant's Form
October 26, 1983, between 10-K Annual Report for
the registrant and the fiscal year ended
Atlantic City Showboat, December 31, 1986, in File
Inc. No. 1-4748.
(10)(b)(6) Fifth Amendment, dated Incorporated by reference
February 1987, to Lease to Exhibit (10)(c)(vi)
Agreement, dated October to registrant's Form
26, 1983, between the 10-K Annual Report for
registrant and Atlantic the fiscal year ended
City Showboat, Inc. December 31, 1986, in File
No. 1-4748.
(10)(b)(7) Sixth Amendment, dated Incorporated by reference
March 13, 1987, to Lease to Exhibit (10)(c)(vii)
Agreement, dated October to registrant's Form
26, 1983, between the 10-K Annual Report for
registrant and Atlantic the fiscal year ended
City Showboat, Inc. December 31, 1986, in File
No. 1-4748.
(10)(b)(8) Seventh Amendment, dated Incorporated by reference
October 18, 1988, to Lease to Exhibit (10)(c)(viii)
Agreement, dated October to registrant's Form
26, 1983, between the 10-K Annual Report for
registrant and Atlantic the fiscal year ended
City Showboat, Inc. December 31, 1988, in File
No. 1-4748.
(10)(c)(1) RII Executive Health Plan. Incorporated by reference
to Exhibit (10)(c)(1) to
registrant's Form 10-K Annual
Report for the fiscal year
ended December 31, 1992, in
File No. 1-4748.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(10)(c)(2) Resorts Retirement Incorporated by reference to
Savings Plan. Exhibit (10)(c)(2) to regis-
trant's Form 10-K Annual
Report for the fiscal year
ended December 31, 1991, in
File No. 1-4748.
(10)(d)(1) Employment Agreement, Incorporated by reference
dated as of September 17, to Exhibit (10)(d)(4) to
1992, between the regis- registrant's Form 10-K Annual
trant and David P. Hanlon. Report for the fiscal year
ended December 31, 1992, in
File No. 1-4748.
(10)(d)(2) Termination Agreement, Incorporated by reference to
dated as of September Exhibit 10.27 to registrant's
27, 1993, between RII Form S-4 Registration State-
and David P. Hanlon. ment dated October 25, 1993,
in File No. 33-50733.
(10)(d)(3) Employment Agreement, Incorporated by reference
dated May 3, 1991, to Exhibit (10)(d)(2) to
between the registrant registrant's Form 10-K Annual
and Christopher D. Whitney. Report for the fiscal year
ended December 31, 1991, in
File No. 1-4748.
(10)(d)(4) Amendment to Employment Incorporated by reference
Agreement, dated as of to Exhibit 10.22 to regis-
December 3, 1992, between trant's Form S-4 Registration
RII and Christopher D. Statement dated October 25,
Whitney. 1993, in File No. 33-50733.
(10)(d)(5) Employment Agreement, dated Incorporated by reference
May 3, 1991, between the to Exhibit (10)(d)(3) to
registrant and Matthew B. registrant's Form 10-K
Kearney. Annual Report for the
fiscal year ended December
31, 1991, in File No.
1-4748.
(10)(d)(6) Amendment to Employment Incorporated by reference
Agreement, dated December to Exhibit 10.24 to regis-
3, 1992, between RII and trant's Form S-4 Registration
Matthew B. Kearney. Statement dated October 25,
1993, in File No. 33-50733.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(10)(d)(7) Second Amendment to Employ- Incorporated by reference
ment Agreement, dated Sep- to Exhibit 10.25 to regis-
tember 24, 1993, between RII trant's Form S-4 Registration
and Matthew B. Kearney. Statement dated October 25,
1993, in File No. 33-50733.
(10)(e)(1) Stock Option Agreement, Incorporated by reference
dated as of May 3, 1991, to Exhibit (10)(e)(1) to
between the registrant registrant's Form 10-K Annual
and David P. Hanlon. Report for the fiscal year
ended December 31, 1991, in
File No. 1-4748.
(10)(e)(2) Stock Option Agreement, Incorporated by reference
dated as of May 3, 1991, to Exhibit (10)(e)(2) to
between the registrant registrant's Form 10-K Annual
and Christopher D. Whitney. Report for the fiscal year
ended December 31, 1991, in
File No. 1-4748.
(10)(e)(3) Stock Option Agreement, Incorporated by reference
dated as of May 3, 1991, to Exhibit (10)(e)(3) to
between the registrant registrant's Form 10-K Annual
and Matthew B. Kearney. Report for the fiscal year
ended December 31, 1991, in
File No. 1-4748.
(10)(e)(4) Stock Option Agreement, Incorporated by reference
dated as of May 3, 1991, to Exhibit (10)(e)(5) to
between the registrant registrant's Form 10-K Annual
and David G. Bowden. Report for the fiscal year
ended December 31, 1991, in
File No. 1-4748.
(10)(e)(5) Amendment No. 1, dated Incorporated by reference
as of September 17, 1992, to Exhibit (10)(e)(6) to
to Exhibit (10)(e)(1). registrant's Form 10-K Annual
Report for the fiscal year
ended December 31, 1992, in
File No. 1-4748.
(10)(f) License and Services Incorporated by reference to
Agreement, dated Exhibit 10.34 to registrant's
as of September 17, 1992, Form S-4 Registration State-
among Griffin Group, RII ment dated October 25, 1993,
and RIH. in File No. 33-50733.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(10)(g) Litigation Trust Agreement, Incorporated by reference
dated as of September 17, to Exhibit 1.46 to Exhibit
1990, among RII, RIFI, 35 to the Form 8 Amendment
Griffin Resorts Holding dated November 16, 1990,
Inc. and Griffin Resorts to the registrant's Form
Inc. (now GGRI). 8-K Current Report dated
August 30, 1990, in File
No. 1-4748.
(10)(h)(1) Promissory Note, dated Incorporated by reference
September 28, 1990, to Exhibit 9.1A to Exhibit
between Merv Griffin and 35 to the Form 8 Amendment
the registrant. dated November 16, 1990,
to the registrant's Form
8-K Current Report dated
August 30, 1990, in File
No. 1-4748.
(10)(h)(2) Letter of Credit, dated Incorporated by reference
October 1, 1990, by Morgan to Exhibit 9.1B to Exhibit 35
Guaranty Trust Company of to the Form 8 Amendment dated
New York. November 16, 1990, to the
registrant's Form 8-K Current
Report dated August 30, 1990,
in File No. 1-4748.
(10)(h)(3) Letters extending the term- Incorporated by reference to
ination date of Exhibit Exhibit (10)(i)(2) to the
(10)(h)(2). registrant's Form 10-K Annual
Report for the fiscal year
ended December 31, 1992, in
File No. 1-4748.
(10)(i)(1) Promissory Note, dated Incorporated by reference to
September 17, 1992, between Exhibit 1 to Exhibit 10.34 to
Griffin Group and the registrant's Form S-4 Regis-
registrant. tration Statement dated Octo-
ber 25, 1993, in File No.
33-50733.
(10)(i)(2) Guaranty dated September Incorporated by reference to
17, 1992 by Mervyn E. Exhibit 2 to Exhibit 10.34 to
Griffin in favor of RII. registrant's Form S-4 Regis-
tration Statement dated Octo-
ber 25, 1993, in File No.
33-50733.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(10)(j) Indemnity Agreement, Incorporated by reference
executed on September 19, to Exhibit 9.6 to Exhibit
1990, between Merv Griffin 35 to the Form 8 Amendment
and the registrant. dated November 16, 1990,
to the registrant's Form
8-K Current Report dated
August 30, 1990, in File
No. 1-4748.
(10)(k) Hotel Corporation of The Incorporated by reference
Bahamas Right of First to Exhibit (10)(n) to
Refusal. registrant's Form 10-K
Annual Report for the fiscal
year ended December 31, 1988,
in File No. 1-4748.
(10)(l)(1) Consulting agreement Incorporated by reference to
between Alvarez & Marsal, Exhibit (10)(m)(1) to regis-
Inc. and the registrant, trant's Form 10-K Annual
effective March 1, 1992. Report for the fiscal year
ended December 31, 1992, in
File No. 1-4748.
(10)(1)(2) Amendment, dated September Incorporated by reference to
14, 1992, to the consulting Exhibit (10)(m)(2) to
agreement between Alvarez registrant's Form 10-K Annual
& Marsal, Inc. and the Report for the fiscal year
registrant. ended December 31, 1992, in
File No. 1-4748.
(10)(m) Letter Agreement dated Incorporated by reference to
July 1, 1993 between RII Exhibit 10.63 to Amendment
and Bear Stearns & Co. Inc. No. 1, dated January 5, 1994,
for retention of services. to registrant's Form S-4
Registration Statement in File
No. 33-50733.
(10)(n)(1) Paradise Island Purchase Incorporated by reference to
Agreement dated October 11, Exhibit 10.55 to registrant's
1993 between RII and Sun Form S-4 Registration State-
International Hotels ment dated October 25, 1993,
Limited, with Exhibits and in File No. 33-50733.
Schedules.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(10)(n)(2) Amendment dated as of Novem- Incorporated by reference to
ber 30, 1993 to the Para- Exhibit 10.55(a) to Amend-
dise Island Purchase Agree- ment No. 3, dated February 1,
ment dated October 11, 1994, to registrant's Form S-4
1993 between RII and Sun Registration Statement in File
International Hotels No. 33-50733.
Limited concerning Bahamas
Developers Limited.
(10)(n)(3) Amendment dated as of Incorporated by reference to
November 30, 1993 to the Exhibit 10.55(b) to Amend-
Paradise Island Purchase ment No. 3, dated February 1,
Agreement dated October 11, 1994, to registrant's Form S-4
1993 between RII and Sun Registration Statement in File
International Hotels No. 33-50733.
Limited.
(10)(o)(1) PIRL Standby Distribution Incorporated by reference to
Agreement dated October 15, Exhibit 10.59 to registrant's
1993 between RII and PIRL. Form S-4 Registration State-
ment dated October 25, 1993,
in File No. 33-50733.
(10)(o)(2) Letter Agreement between Incorporated by reference to
RII and PIRL concerning Exhibit 10.60 to registrant's
airline support services. Form S-4 Registration State-
ment dated October 25, 1993,
in File No. 33-50733.
(10)(p) Bondholders Support Incorporated by reference to
Agreement dated October 11, Exhibit 10.52 to registrant's
1993 among RII, Griffin Form S-4 Registration State-
Resorts Inc. (now GGRI), ment dated October 25, 1993,
Sun International Invest- in File No. 33-50733.
ments Limited, Sun Inter-
national Hotels Limited,
TCW Special Credits and
Fidelity Management and
Research Company, concerning
bondholders support.
(10)(q) Letter Agreement dated Oct- Incorporated by reference to
ober 11, 1993 among Fidelity Exhibit 10.50 to registrant's
Management and Research Com- Form S-4 Registration State-
pany, TCW Special Credits, ment dated October 25, 1993,
RII and Sun International in File No. 33-50733.
Hotels Limited concerning
consent rights of holders of
Old Series Notes.
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RESORTS INTERNATIONAL, INC.
___________________________
Form 10-K for the fiscal year
ended December 31, 1993
EXHIBIT INDEX
_____________
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
_______ _______ _____________________
(10)(r)(l) Letter Agreement dated Oct- Incorporated by reference to
ober 19, 1993 among RII, Exhibit 10.56 to regis-
Fidelity Management, TCW trant's Form S-4 Registration
Special Credits, Sun Inter- Statement dated October 25,
national Hotels Limited, 1993, in File No. 33-50733.
Sun International Invest-
ments Limited and GGRI
regarding GGRI, Inc.
(10)(r)(2) Letter of Agreement dated Incorporated by reference to
October 15, 1993, among RII, Exhibit 10.58 to registrant's
Fidelity Management, TCW Form S-4 Registration State-
Special Credits and Sun ment dated October 25, 1993,
International Hotels in File No. 33-50733.
Limited regarding P.I.
Resorts Limited.
(21) Subsidiaries of the Pages 117-118.
registrant.
- 116 -
EXHIBIT 21
__________
Subsidiaries of the Registrant
As of December 31, 1993
______________________________
Percentage of
Outstanding
Place of Stock Held
Name of Subsidiary Incorporation By Registrant
__________________ _____________ _____________
ANTL, Inc. Florida l00%
Aces Advertising Agency, Inc. New Jersey (1)
Bahamas Developers Limited The Bahamas (2)
Ess Zee Corporation New Jersey 100%
GGRI, Inc. Delaware 100%
International Suppliers, Inc. Florida 100%
Island Hotel Company Limited The Bahamas (2)
New Pier Operating Company, Inc. New Jersey 100%
P.I. Resorts Limited The Bahamas 100%
Paradise Beach Inn, Limited The Bahamas (3)
Paradise Enterprises Limited The Bahamas (2)
Paradise Island Airlines, Inc. Florida l00%
Paradise Island Bridge Management
Company Limited The Bahamas (2)
Paradise Island Limited The Bahamas (2)
Paradise Island Vacations, Inc. Florida 100%
Paradise Security Services
Limited The Bahamas (2)
Resorts International (Bahamas)
1984 Limited The Bahamas (4)
Resorts International
Disbursement, Inc. Florida 100%
Resorts International
Hotel Financing, Inc. Delaware 100%
Resorts International Hotel, Inc. New Jersey l00%
Resorts Representation
International, Inc. Florida 100%
(1) 100% owned by Resorts International Hotel, Inc.
(2) 100% owned by Resorts International (Bahamas) 1984 Limited
(3) 100% owned by Paradise Island Limited
(4) 100% owned by GGRI, Inc.
- 117 -
The registrant's subsidiaries generally do business in their
respective corporate names or distinctive short forms thereof which
are readily identifiable. Resorts International Hotel, Inc. uses the
name Merv Griffin's Resorts Casino Hotel extensively. Resorts
International (Bahamas) 1984 Limited, Paradise Enterprises Limited and
Island Hotel Company Limited do business under the name Paradise
Island Resort & Casino. Paradise Beach Inn, Limited does business
under the name Paradise Paradise Beach Resort.
The names of certain subsidiaries, which considered in the
aggregate did not constitute a "significant subsidiary" as of December
31, l993 as defined in Rule l.02(v) of Regulation S-X, have been
omitted.
- 118 -