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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 1993
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-5440
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AZTAR CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 86-0636534
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2390 East Camelback Road, Suite 400, Phoenix, Arizona 85016
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 381-4100
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common stock, $.01 par value New York
Preferred share purchase rights New York
Securities registered pursuant to Section 12(g) of the Act:
None
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
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Facing Page (Continued)
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]
The aggregate market value of the voting stock held by non-affiliates
of the registrant was $241,045,168 at February 18, 1994 and is based on a
closing price of $6.50 and 37,083,872 common shares outstanding.
At February 18, 1994, the registrant had outstanding 37,364,820 shares
of its common stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the registrant's 1994 definitive Proxy
Statement, to be filed with the Commission, is incorporated by reference
into this Form 10-K. The following cross-referenced index details the page
location of such information. All other sections of the 1994 Proxy
Statement are not required in Form 10-K and should not be considered a part
thereof.
Part and Item of the Form 10-K 1994 Proxy Statement
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PART III
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ITEM 10. Directors and Executive
- ------- Officers of the Registrant Pages 1 and 2
ITEM 11. Executive Compensation Page 5 under caption
- ------- "Executive Compensation"
through page 8 except that
under caption "Board
Compensation Committee
Report" on Page 8
ITEM 12. Security Ownership of
- ------- Certain Beneficial Owners
and Management Page 3
ITEM 13. Certain Relationships
- ------- and Related Transactions Pages 4 and 5 under
caption "Transactions with
Management and Others"
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PART I
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ITEM 1. BUSINESS
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Aztar Corporation ("Aztar" or the "Company") was incorporated in Delaware
in June 1989 to operate the gaming business of Ramada Inc. ("Ramada") after
the restructuring of Ramada (the "Restructuring"). The Restructuring,which
was approved by Ramada's board of directors in October 1988 and
substantially completed December 20, 1989, involved the disposition of
Ramada's hotel and restaurant businesses with Ramada's shareholders
retaining their interest in the gaming business. As part of the
Restructuring, the gaming business and certain other assets and liabilities
of Ramada were transferred to Aztar, and a wholly-owned subsidiary of New
World Hotels (U.S.A.), Inc. was merged with Ramada (the "Merger"). In the
Merger, each share of Ramada common stock was converted into the right to
receive $1.00 and one share of Aztar common stock. For accounting purposes
Aztar is treated as the continuing accounting entity that is the successor
to the historical Ramada and that has discontinued the hotel and restaurant
businesses.
The Company operates in major domestic gaming markets with casino hotel
facilities in Atlantic City, New Jersey, and in Las Vegas and Laughlin,
Nevada. The strategy of the Company has been to develop facilities with
distinctive themes that are "must-see" attractions in their respective
gaming markets and provide a full entertainment experience to attract
gaming patrons. The Company believes that as the gaming industry becomes
increasingly competitive, casino operators that can best provide a broad
entertainment experience will be most successful. The Company targets
gaming customers in the high end of the middle market, with particular
emphasis on slot customers.
The Company has been pursuing the development of its business in various
gaming jurisdictions. An agreement was executed in September 1993 with the
City of Caruthersville, Missouri, to operate a casino riverboat there, and
an application was filed with the Missouri Gaming Commission for a gaming
license to operate the Caruthersville facility. In January 1994, the
Company took delivery of a vessel and began renovation with the intent for
it to be used in Caruthersville. The Company hopes to begin operations in
Caruthersville in 1994. However, the timing of this is dependent on
several factors that are beyond the Company's control. One of these
factors is the granting of a gaming license by the Missouri Gaming
Commission. Another possible factor is a ruling by the Missouri Supreme
Court holding unconstitutional some portions of the Missouri gaming law. A
statewide election to amend the constitution was scheduled to be held
April 5, 1994.
During 1993, a proposal was submitted to the City of Evansville, Indiana,
for a casino riverboat there and an application was filed for a riverboat
gaming license with the Indiana Gaming Commission. In 1994, the Company
plans to continue to explore opportunities in new jurisdictions as they
become interested in gaming.
The TropWorld complex encompasses 10 acres and has 220 yards of ocean beach
frontage along the Boardwalk in Atlantic City. In July 1993, the TropWorld
building became wholly-owned by the Company upon the acquisition by the
Company of the partnership interests in Ambassador Real Estate Investors,
L.P. ("AREI") and Ambassador General Partnership ("AGP"). AREI owned a
99.9 percent general partnership interest in AGP, which acquired a
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substantial interest in TropWorld in a sale-leaseback transaction in 1984.
TropWorld's 92,191 square foot casino (the second largest in Atlantic City)
contains 2,780 slot machines, including a wide variety of progressive
jackpot machines and video poker machines, and contains 95 table games,
including blackjack, craps, roulette, baccarat, pai gow poker, big six, sic
bo and red dog. The TropWorld complex contains 1,020 hotel rooms, 80,000
square feet of meeting, convention and banquet space, a 1,700 seat
theatrical showroom, the largest in Atlantic City, and parking facilities
for over 2,700 vehicles. There is a wide variety of food and beverage
facilities at TropWorld, including gourmet restaurants, several medium-
priced restaurants and a food court offering a large choice of convenient
and moderately priced items. Recreational facilities at TropWorld include
indoor and outdoor swimming pools, tennis courts, a health and fitness club
and a jogging track. TropWorld operates the casino 24 hours a day, seven
days a week.
The theme of TropWorld recalls the heyday of the Atlantic City Boardwalk
Piers with their amusement rides, carnival games and strolling
entertainers. TropWorld offers daily live musical entertainment in its
atrium, which contains a spectacular four-story-high operating ferris
wheel. TropWorld boasts an indoor roller coaster, bumper cars, and other
attractions reminiscent of the old Boardwalk in Atlantic City.
Tropicana is located on a 34-acre site on the southeast corner of the Strip
and Tropicana Avenue in Las Vegas, Nevada. The Tropicana casino occupies
45,000 square feet and contains 1,510 slot machines and 52 table games.
Tropicana has a tropical island theme and is promoted as "The Island of Las
Vegas." It has one of the world's largest swimming pools and a five-acre
water park and tropical garden area. Tropicana has 1,907 hotel rooms and
suites and approximately 100,000 square feet of convention and exhibit
space. The tropical theme is apparent in the decor of the property, which
includes a large collection of tropical birds and fish. Tropicana offers
its guests a variety of entertainment including laser light shows, a comedy
club, lounge shows and the Folies Bergere revue, which is the longest-
running production show in Las Vegas. At the end of 1993, the Company was
in the process of constructing at Tropicana a new main entrance and a new
building facade that will create a colorful Caribbean Village motif. The
Company expects to complete construction of these enhancements during the
first quarter of 1994.
Throughout most of its history, Tropicana, with its upscale decor and
location as the sole major casino hotel on the southern end of the Strip,
catered to high end table games customers with particular emphasis on
baccarat. This strategy allowed for significant gaming revenues without
substantial walk-in traffic. However, beginning in late 1989 with the
opening of the Mirage, competition for this small group of premium table
games customers, dominated by players from the Far East, increased
significantly. The center portion of the Strip, highlighted by Ceasars
Palace and the Mirage, became the focal point of the high end table games
market. As heavy promotion and complimentary expenditures ensued, profit
margins in this segment declined. As a result, management decided to
curtail its emphasis on premium table games and focus on slot revenue from
the high end of the middle market.
Tropicana is located at an intersection which is now referred to as "The
New Four Corners" of Las Vegas. There are three other major casino hotel
properties located at this intersection, two of which, Luxor and MGM Grand,
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opened during the fourth quarter of 1993, and the other, Excalibur, opened
June 1990. The increase in total casino and hotel capacity with the
opening of Luxor and MGM Grand has increased the level of activity and
visitor traffic around Tropicana. Pedestrian traffic around "The New Four
Corners" will be made faster, safer and more convenient upon completion of
an elevated pedestrian bridge system under construction by the State of
Nevada. The bridge system will connect the four corners of the
intersection and will have elevators and escalators set back from all four
corners. The Company is funding a portion of the construction costs for
this project which is scheduled for completion in early 1994. Upon
completion of this project, the Company plans to construct a connecting
bridge into the Tropicana casino in order to facilitate access from the MGM
Grand.
Management believes that the new properties located at "The New Four
Corners" have stimulated and will continue to stimulate additional walk-in
traffic that provides increased opportunities for Tropicana to attract its
target customers and retain them through the Company's proprietary database
marketing system. There can be no assurance, however, that the increased
competition from these new properties will not have an adverse effect on
Tropicana.
Ramada Express is located on 28 acres in Laughlin, Nevada. Laughlin is
situated on the Colorado River at Nevada's southern tip. The facility
features a Victorian-era railroad theme, including a train that carries
guests between the parking areas and the casino hotel. In September 1993,
the Company completed a $75 million expansion of Ramada Express, on
schedule and within budget. The expansion was financed primarily out of
the Company's cash and cash flow. During the fourth quarter 1993, the
Company borrowed $25 million against its $50 million construction and term
loan credit facility which was converted into a $50 million revolving line
of credit in December 1993. The expansion of Ramada Express included a new
1,100-room tower, increasing the property to a total of 1,500 rooms; a
casino expansion of 20,000 square feet, bringing the total to 50,000 square
feet; a 1,100-vehicle parking garage, bringing the total parking capacity
to 2,300 vehicles; and additional restaurant, special event and retail
space. The expanded casino contains 33 gaming tables and 1,545 slot
machines and is utilized 24 hours a day, seven days a week.
COMPETITION AND SEASONALITY
Competition
Although the Company has been able to compete successfully in its gaming
markets in the past, there can be no assurance that the Company will be
able to continue to compete successfully in these markets.
The Company faces intense competition in each of the markets in which its
gaming facilities are located from other companies in the gaming industry,
some of which have significantly greater financial resources than the
Company. Such competition results, in part, from the geographic
concentration of competitors. All of the Company's casinos primarily
compete with other casinos in their immediate geographic area and, to a
lesser extent, with casinos in other locations, including Native American
lands, and on cruise ships and riverboats, and with other forms of
legalized gaming in the United States, including state-sponsored lotteries,
off-track wagering and card parlors. Certain states have recently
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legalized, and several other states are currently considering legalizing,
casino gaming in specific geographic areas within those states.
Legalization of large-scale, unlimited casino gaming in or near any major
metropolitan area or increased gaming in other areas could have an adverse
economic impact on the business of any or all of the Company's gaming
facilities.
As of December 30, 1993, there were 11 casino hotel facilities operating in
Atlantic City in competition with TropWorld. Presently, there is no new
casino hotel supply anticipated in the Atlantic City market for the next
several years.
During 1993, three major casino hotels opened in the Las Vegas market, two
of which, Luxor and MGM Grand, are located adjacent to the Tropicana near
the intersection of Tropicana Avenue and the Strip, which is now referred
to as "The New Four Corners". Circus Circus opened its 2,500-room Luxor in
October 1993. The 5,000-room MGM Grand opened in December 1993. The third
casino, Mirage's 3,000-room Treasure Island, also opened in October 1993
and is located in the middle of the Strip. These newly opened casinos
added a total of approximately 10,500 rooms to an existing Las Vegas market
base of approximately 77,000 rooms, representing an increase of 14%. In
addition, there has been a significant increase in room supply and casino
space in recent years, including the opening of the 3,000-room Mirage in
November 1989 and the 4,000-room Excalibur in June 1990. Management
believes that the MGM Grand and the Luxor have stimulated and will continue
to stimulate additional walk-in traffic that provides increased
opportunities for Tropicana to attract its target customers and retain them
through the Company's proprietary database marketing system. There can be
no assurance, however, that the increased competition from the new casinos
will not have an adverse effect on Tropicana.
In the Laughlin market, in addition to the Company's expansion completed in
September 1993, the Riverside is in the process of obtaining building
permits for its 792-room tower expansion which it expects to open in
December 1994, and has announced a management agreement with the Mohave
Indian Tribe to build and operate a small facility (approximately 250
gaming positions) in Arizona roughly twenty-five miles south of Laughlin to
open in the fall of 1994. Separately, the Golden Nugget is reportedly
planning to add several hundred additional hotel rooms. Another entity is
reportedly planning two projects in Laughlin consisting of 1,800 rooms and
70,000 square feet of casino space north of Ramada Express and 1,000 rooms
and 50,000 square feet of casino space south of Ramada Express. Sewer
permits are available for new sewer capacity that was recently completed
and is currently in a test phase. The new sewer capacity is expected to be
available for use in the summer of 1994.
Competition involves not only the quality of casino, room, restaurant,
entertainment and convention facilities, but also room, food and beverage
prices. The level of gaming activity also varies significantly from time
to time depending on general economic conditions, marketing efforts, hotel
occupancies and the offering of special events and promotions. The extent
and quality of complimentary services to attract high-stakes players and,
in Atlantic City, casino customers arriving under bus programs, the
personal attention offered to guests and casino customers, advertising,
entertainment, slot machine pay-out rates and credit policies with respect
to high-stakes players are also important competitive factors. As a
result, operating results can be adversely affected by significant cash
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outlays for advertising and promotion and complimentary services to
patrons, the amount and timing of which are partially dictated by the
policies of competitors. If operating revenues are insufficient to allow
management the flexibility to match the promotions of competitors, the
number of the Company's casino patrons may decline, with an adverse effect
on its financial performance.
Seasonality
TropWorld experiences seasonal fluctuations in casino play that management
believes are typical of casino hotel operations in Atlantic City.
Operating results indicate that casino play is seasonally higher during the
months of May through October; consequently the Company's revenues during
the first and fourth quarters have generally been lower than for the second
and third quarters and from time to time the Company has experienced losses
in the first and fourth quarters. Because TropWorld's operating results
are especially dependent upon operations in the summer months, any event
that adversely affects the operating results of TropWorld during such
period could have a material adverse effect on the Company's operations and
financial condition. Given Atlantic City's location, it is also subject to
occasional adverse weather conditions such as storms and hurricanes that
would impede access to Atlantic City, thus adversely impacting operations.
The gaming markets in Las Vegas and Laughlin experience a slight decrease
in gaming activity in the hot summer months and during the holiday period
between Thanksgiving and Christmas.
CREDIT POLICY AND CONTROL PROCEDURES
As is customary in the gaming industry and necessitated by competitive
factors, the Company's gaming activities are conducted on a credit as well
as a cash basis. Credit policies vary widely from one operator to another
and are largely dependent on the profile of the targeted customers. Table
games players, for example, are typically extended more credit than slot
players, and high-stakes players are typically extended more credit than
patrons who tend to wager lower amounts. The Company currently markets to
customers in all gaming segments; however, its credit policy will vary from
facility to facility based upon the various types of customers at each
facility. Gaming debts are legally enforceable under the current laws of
both New Jersey and Nevada; it is not clear, however, that all other states
will honor these policies. The uncollectibility of gaming receivables
could have a material adverse effect on results of operations. Provisions
for estimated uncollectible gaming receivables have been made in order to
reduce gaming receivables to amounts deemed to be collectible.
Gaming operations at the casinos are subject to risk of substantial loss as
a result of employee or patron dishonesty, credit fraud or illegal slot
machine manipulation. The Company has in place stringent control
procedures to minimize such risks; however, there can be no assurance that
losses will not occur. Current controls include supervision of employees,
monitoring by electronic surveillance equipment and use of two-way mirrors
and overhead catwalks. In New Jersey, the Company's activities are
observed and monitored on an ongoing basis by agents of both the New Jersey
Casino Control Commission (the "New Jersey Commission") and the New Jersey
Division of Gaming Enforcement (the "New Jersey Division"), each of which
maintains a staff on the premises of TropWorld. Similarly, in Nevada the
Company's gaming subsidiaries must comply with certain regulatory
requirements concerning casino and game security and surveillance, and the
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gaming operations of Tropicana and Ramada Express are subject to routine
audit and supervision by agents of the Nevada State Gaming Control Board
(the "Nevada Board").
REGULATION
General
Regulatory aspects of the gaming business in both Nevada and New Jersey are
pervasive in nature and the following description should not be construed
as a complete summary of all the regulatory requirements faced by the
Company. In both states, gaming authorizations, once obtained, can be
suspended or revoked for a variety of reasons. If the Company were ever
precluded from operating one of its gaming facilities, it would, to the
extent permitted by law, seek to recover its investment by sale of the
property affected, but there can be no assurance that the Company would
recover its full investment. In addition, the Nevada Gaming Commission
(the "Nevada Commission") and the New Jersey Commission have the authority
to require a holder or beneficial owner of the Company's securities to be
found to be suitable or to qualify under applicable laws or regulations.
From time to time, legislative and regulatory changes are proposed that
could be adverse to the Company. In addition, from time to time,
investigations are conducted relating to the gaming industry. TropWorld is
required to report certain cash transactions to the U.S. Department of the
Treasury pursuant to the Bank Secrecy Act. Violation of the reporting
requirements of the Bank Secrecy Act could result in civil as well as
criminal penalties including fines and/or imprisonment. The State of
Nevada has adopted a regulation similar to the Bank Secrecy Act which
requires the Nevada facilities to document and/or report certain currency
transactions to the Nevada Board. Violation of this regulation could
result in action by the Nevada authorities to fine or revoke, suspend,
condition or fail to renew the Nevada facilities' licenses and/or the
Company's licensing approval. These reporting requirements are not
expected to have any adverse effects on the Company's casino operations.
Regulation and Licensing - Nevada
The ownership and operation of casino gaming facilities in Nevada are
subject to: (i) the Nevada Gaming Control Act and the regulations
promulgated thereunder (collectively, "Nevada Act"); and (ii) various local
regulation. The gaming operations of Tropicana and Ramada Express are
subject to the licensing and regulatory control of the Nevada Commission,
the Nevada Board and the Clark County Liquor and Gaming Licensing Board
(the "Clark County Board") (collectively, the "Nevada Gaming Authorities").
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are
concerned with, among other things; (i) the prevention of unsavory or
unsuitable persons from having a direct or indirect involvement with gaming
at any time or in any capacity; (ii) the establishment and maintenance of
responsible accounting practices and procedures; (iii) the maintenance of
effective controls over the financial practices of licensees, including the
establishment of minimum procedures for internal fiscal affairs and the
safeguarding of assets and revenues, providing reliable record keeping and
requiring the filing of periodic reports with the Nevada Gaming
Authorities; (iv) the prevention of cheating and fraudulent practices; and
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(v) the provision of a source of state and local revenues though taxation
and licensing fees. Change in such laws, regulations and procedures could
have an adverse effect on the Company.
Hotel Ramada of Nevada ("HRN") is the Company's wholly-owned subsidiary
which operates the casino at Tropicana and Ramada Express, Inc. ("Express")
is the Company's wholly-owned subsidiary which operates the casino at
Ramada Express. HRN and Express are both required to be licensed by the
Nevada Gaming Authorities. The gaming license requires the periodic
payment of fees and taxes and is not transferable. The Company is
registered by the Nevada Commission as a publicly traded corporation
("Registered Corporation") and as such, it is required periodically to
submit detailed financial and operating reports to the Nevada Commission
and furnish any other information which the Nevada Commission may require.
No person may become a stockholder of, or receive any percentage of profits
from HRN or Express without first obtaining licenses and approvals from the
Nevada Gaming Authorities. The Company, HRN and Express have obtained from
the Nevada Gaming Authorities the various registrations, approvals, permits
and licenses required in order to engage in gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company, HRN or
Express in order to determine whether such individual is suitable or should
be licensed as a business associate of a gaming licensee. Officers,
directors and certain key employees of HRN and Express must file
applications with the Nevada Gaming Authorities and may be required to be
licensed or found suitable by the Nevada Gaming Authorities. Officers,
directors and key employees of the Company who are actively and directly
involved in gaming activities of HRN and Express may be required to be
licensed or found suitable by the Nevada Gaming Authorities. The Nevada
Gaming Authorities may deny an application for licensing for any cause
which they deem reasonable. A finding of suitability is comparable to
licensing, and both require submission of detailed personal and financial
information followed by a thorough investigation. The applicant for
licensing or a finding of suitability must pay all the costs of the
investigation. Changes in licensed positions must be reported to the
Nevada Gaming Authorities and in addition to their authority to deny an
application for a finding of suitability or licensure, the Nevada Gaming
Authorities have jurisdiction to disapprove a change in a corporate
position.
If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company, HRN or Express the companies involved would
have to sever all relationships with such person. In addition, the Nevada
Commission may require the Company, HRN or Express to terminate the
employment of any person who refuses to file appropriate applications.
Determinations of suitability or of questions pertaining to licensing are
not subject to judicial review in Nevada.
The Company, HRN and Express are required to submit detailed financial and
operating reports to the Nevada Commission. Substantially all material
loans, leases, sales of securities and similar financing transactions by
HRN and Express must be reported to, or approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated by HRN or Express,
the gaming licenses held by HRN or Express could be limited, conditioned,
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suspended or revoked, subject to compliance with certain statutory and
regulatory procedures. In addition, HRN, Express, the Company and the
persons involved could be subject to substantial fines for each separate
violation of the Nevada Act at the discretion of the Nevada Commission.
Further, a supervisor could be appointed by the Nevada Commission to
operate the Company's Nevada gaming properties and, under certain
circumstances, earnings generated during the supervisor's appointment
(except for the reasonable rental value of the Company's Nevada gaming
properties) could be forfeited to the State of Nevada. Limitation,
conditioning or suspension of any gaming license or the appointment of a
supervisor could (and revocation of any gaming license would) materially
adversely affect the Company.
Any beneficial holder of the Company's voting securities, regardless of the
number of shares owned, may be required to file an application, be
investigated, and have his suitability as a beneficial holder of the
Company's voting securities determined if the Nevada Commission has reason
to believe that such ownership would otherwise be inconsistent with the
declared policies of the State of Nevada. The applicant must pay all costs
of investigation incurred by the Nevada Gaming Authorities in conducting
any such investigation.
The Nevada Act requires any person who acquires more than 5% of the
Company's voting securities to report the acquisition to the Nevada
Commission. The Nevada Act requires that beneficial owners of more than
10% of the Company's voting securities apply to the Nevada Commission for a
finding of suitability within thirty days after the Chairman of the Nevada
Board mails the written notice requiring such filing. Under certain
circumstances, an "institutional investor," as defined in the Nevada Act,
which acquires more than 10%, but not more than 15%, of the Company's
voting securities may apply to the Nevada Commission for a waiver of such
finding of suitability if such institutional investor holds the voting
securities for investment purposes only. An institutional investor shall
not be deemed to hold voting securities for investment purposes unless the
voting securities were acquired and are held in the ordinary course of
business as an institutional investor and not for the purpose of causing,
directly or indirectly, the election of a majority of the members of the
board of directors of the Company, any change in the Company's corporate
charter, bylaws, management, policies or operations of the Company, or any
of its gaming affiliates, or any other action which the Nevada Commission
finds to be inconsistent with holding the Company's voting securities for
investment purposes only. Activities which are not deemed to be
inconsistent with holding voting securities for investment purposes only
include: (i) voting on all matters voted on by stockholders; (ii) making
financial and other inquiries of management of the type normally made by
securities analysts for informational purposes and not to cause a change in
its management, policies or operations; and (iii) such other activities as
the Nevada Commission may determine to be consistent with such investment
intent. If the beneficial holder of voting securities who must be found
suitable is a corporation, partnership or trust, it must submit detailed
business and financial information including a list of beneficial owners.
The applicant is required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within thirty days after being ordered to do so by the Nevada
Commission or the Chairman of the Nevada Board, may be found unsuitable.
The same restrictions apply to a record owner if the record owner, after
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request, fails to identify the beneficial owner. Any stockholder found
unsuitable and who holds, directly or indirectly, any beneficial ownership
of the common stock of a Registered Corporation beyond such period of time
as may be prescribed by the Nevada Commission may be guilty of a criminal
offense. The Company is subject to disciplinary action if, after it
receives notice that a person is unsuitable to be a stockholder or to have
any other relationship with the Company, HRN or Express, the Company (i)
pays that person any dividend or interest upon voting securities of the
Company, (ii) allows that person to exercise, directly or indirectly, any
voting right conferred through securities held by that person, (iii) pays
remuneration in any form to that person for services rendered or otherwise,
or (iv) fails to pursue all lawful efforts to require such unsuitable
person to relinquish his voting securities for cash at fair market value.
Additionally, the Clark County Board has taken the position that it has the
authority to approve all persons owning or controlling the stock of any
corporation controlling a gaming license.
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation to file applications, be
investigated and be found suitable to own the debt security of a Registered
Corporation. If the Nevada Commission determines that a person is
unsuitable to own such security, then pursuant to the Nevada Act, the
Registered Corporation can be sanctioned, including the loss of its
approvals, if without the prior approval of the Nevada Commission, it: (i)
pays to the unsuitable person any dividend, interest, or any distribution
whatsoever; (ii) recognizes any voting right by such unsuitable person in
connection with such securities; (iii) pays the unsuitable person
remuneration in any form; or (iv) makes any payment to the unsuitable
person by way of principal, redemption, conversion, exchange, liquidation,
or similar transaction.
The Company is required to maintain a current stock ledger in Nevada which
may be examined by the Nevada Gaming Authorities at any time. If any
securities are held in trust by an agent or by a nominee, the record
holder may be required to disclose the identity of the beneficial owner to
the Nevada Gaming Authorities. A failure to make such disclosure may be
grounds for finding the record holder unsuitable. The Company is also
required to render maximum assistance in determining the identity of the
beneficial owner. The Nevada Commission has the power to require the
Company's stock certificates to bear a legend indicating that the
securities are subject to the Nevada Act. However, to date, the Nevada
Commission has not imposed such a requirement on the Company.
The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. On June 24, 1993, the Nevada Commission granted the Company
prior approval to make public offerings for a period of one year, subject
to certain conditions ("Shelf Approval"). However, the Shelf Approval may
be rescinded for good cause without prior notice upon the issuance of an
interlocutory stop order by the Chairman of the Nevada Board. The Shelf
Approval does not constitute a finding, recommendation or approval by the
Nevada Commission or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities. Any representation
to the contrary is unlawful.
11
Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or
conduct by a person whereby he obtains control, may not occur without the
prior approval of the Nevada Commission. Entities seeking to acquire
control of a Registered Corporation must satisfy the Nevada Board and
Nevada Commission in a variety of stringent standards prior to assuming
control of such Registered Corporation. The Nevada Commission may also
require controlling stockholders, officers, directors and other persons
having a material relationship or involvement with the entity proposing to
acquire control, to be investigated and licensed as part of the approval
process relating to the transaction.
The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate
defense tactics affecting Nevada gaming licensees, and Registered
Corporation, that are affiliated with those operations, may be injurious to
stable and productive corporate gaming. The Nevada Commission has
established a regulatory scheme to ameliorate the potentially adverse
effects of these business practices upon Nevada's gaming industry and to
further Nevada's policy to: (i) assure the financial stability of corporate
gaming operators and their affiliates; (ii) preserve the beneficial aspects
of conducting business in the corporate form; and (iii) promote a neutral
environmental for the orderly governance of corporate affairs. Approvals
are, in certain circumstances, required from the Nevada Commission before
the Company can make exceptional repurchases of voting securities above the
current market price thereof and before a corporate acquisition opposed by
management can be consummated. The Nevada Act also requires prior approval
of a plan of recapitalization proposed by the Company's Board of Directors
in response to a tender offer made directly to the Registered Corporation's
stockholders for the purposes of acquiring control of the Registered
Corporation.
License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations
are conducted. Depending upon the particular fee or tax involved, these
fees and taxes are payable either monthly, quarterly or annually and are
based upon either: (i) a percentage of the gross revenues received; (ii)
the number of gaming devices operated; or (iii) the number of table games
operated. A casino entertainment tax is also paid by casino operations
where entertainment is furnished in connection with the selling of food or
refreshments.
Any person who is licensed, required to be licensed, registered, required
to be registered, or is under common control with such persons
(collectively, "Licensees"), and who proposes to become involved in a
gaming venture outside of Nevada is required to deposit with the Nevada
Board, and thereafter maintain, a revolving fund in the amount of $10,000
to pay the expenses of investigation of the Nevada Board of their
participation in such foreign gaming. The revolving fund is subject to
increase or decrease in the discretion of the Nevada Commission.
Thereafter, Licensees are required to comply with certain reporting
requirements imposed by the Nevada Act. Licensees are also subject to
disciplinary action by the Nevada Commission if it knowingly violates any
laws of the foreign jurisdiction pertaining to the foreign gaming
operation, fails to conduct the foreign gaming operation in accordance with
12
the standards of honesty and integrity required of Nevada gaming
operations, engages in activities that are harmful to the State of Nevada
or its ability to collect gaming taxes and fees, or employs a person in the
foreign operation who has been denied a license or finding of suitability
in Nevada on the ground of personal unsuitability.
The sale of alcoholic beverages is also subject to licensing, control and
regulation by the Clark County Board. All licenses are revokable and are
not transferable. The Clark County Board has full power to limit,
condition, suspend or revoke any such license and any such disciplinary
action could (and revocation would) have a material adverse effect upon the
operations of the Company.
Regulation and Licensing - New Jersey
Regulation.
The ownership and operation of casino hotel facilities and gaming
activities in Atlantic City, New Jersey, are subject to extensive state
regulation under the New Jersey Casino Control Act (the "New Jersey Act")
and the regulations of the New Jersey Commission. In general, the New
Jersey Act and regulations provide for more extensive controls over a
broader scope of gaming-related activities than does the Nevada regulatory
system.
The New Jersey Act and regulations concern primarily the financial
stability and character of casino licensees, their intermediary and holding
companies, their employees, their security holders and others financially
interested in casino operations, the nature of hotel and casino facilities
and a wide range of gaming and non-gaming related operations. The New
Jersey Act and regulations include detailed provisions concerning, among
other things, financial and accounting practices used in connection with
casino operations, residence and equal employment opportunities for
employees of casino operators, contractors for casino facilities and
others; rules of games, levels of supervision of games and methods of
selling and redeeming chips; manner of granting credit, duration of credit
and enforceability of gaming debts; manufacture, distribution and sale of
gaming equipment; security standards, management control procedures,
accounting and cash control methods and reports to gaming authorities;
advertising of casinos and standards for entertainment and distribution of
alcoholic beverages in casinos. A number of these provisions require
practices which are different from those in Nevada and some of them result
in casino operating costs being higher than those in comparable facilities
in Nevada.
The New Jersey Act also established the New Jersey Division to investigate
all license applications, enforce the provisions of the New Jersey Act and
attendant regulations and prosecute all proceedings for violations of the
New Jersey Act and regulations before the New Jersey Commission. The New
Jersey Division also conducts audits and continuing reviews of all casino
operations.
Licensing.
Adamar of New Jersey, Inc. ("Adamar"), the Company's New Jersey gaming
subsidiary, has been licensed (subject to biennial renewal) by the New
13
Jersey Commission to operate TropWorld. In November 1982, the New Jersey
Commission granted a plenary license to Adamar. In November 1993, the
license was renewed for a period of two years. The Company and Ramada New
Jersey Holdings Corporation ("Holdings"), another of the Company's New
Jersey gaming subsidiaries, have been approved as qualified holding
companies for Adamar's casino license. Officers and directors of the
Company and Adamar and employees who work at casino hotel facilities
operated by Adamar also have been or must be approved or licensed. In
addition, all contracts affecting the facilities have been or must be
approved, and all enterprises that conduct business with Adamar must
register with the New Jersey Commission and those enterprises that conduct
gaming related businesses or that conduct business on a regular and
continuing basis, as defined by the regulations under the New Jersey Act,
must be licensed by the New Jersey Commission.
The New Jersey Commission has broad discretion regarding the issuance,
renewal, revocation and suspension of casino licenses. Casino licenses are
not transferable. A casino hotel facility must also continually satisfy
certain requirements concerning, among other things, the number of
qualifying sleeping units and the relationship between the number of
qualifying sleeping units and the square footage of casino space. The
Company believes that TropWorld continues to meet such requirements.
The New Jersey Act further provides that each person who directly or
indirectly holds any beneficial interest or ownership of the securities
issued by a casino licensee or any of its intermediary or holding
companies, those persons who, in the opinion of the New Jersey Commission,
have the ability to control the casino licensee or its intermediary or
holding companies or elect a majority of the board of directors of said
companies, other than a banking or other licensed lending institution which
makes a loan or holds a mortgage or other lien acquired in the ordinary
course of business, lenders and underwriters of said companies may be
required to seek qualification from the New Jersey Commission. However,
because the Company is a publicly traded holding company, in accordance
with the provisions of the New Jersey Act, a waiver of qualification may be
granted by the New Jersey Commission, with the concurrence of the Director
of the Division, if it is determined that said persons or entities are not
significantly involved in the activities of Adamar and, in the case of
security holders, do not have the ability to control the Company or elect
one or more of its directors. There exists a rebuttable presumption that
any person holding 5% or more of the equity securities of a casino
licensee's intermediary or holding company or a person having the ability
to elect one or more of the directors of such a company has the ability to
control the company and thus must obtain qualification from the New Jersey
Commission.
Notwithstanding this presumption of control, the New Jersey Act provides
for a waiver of qualification for passive "institutional investors," as
defined by the New Jersey Act, if the institutional investor purchased the
securities for investment purposes only and where such securities
constitute (i) less than 10% of the equity securities of a casino
licensee's holding or intermediary company or (ii) debt securities of a
casino licensee's holding or intermediary company representing a percentage
of the outstanding debt of such company not exceeding 20% or a percentage
of any issue of the outstanding debt of such company not exceeding 50%.
The waiver of qualification is subject to certain conditions including,
14
upon request of the New Jersey Commission, filing a certified statement
that the institutional investor has no intention of influencing or
affecting the affairs of the issuer. Additionally, a waiver of
qualification may also be granted to institutional investors holding a
higher percentage of securities of a casino licensee's holding or
intermediary company upon a showing of good cause.
If the institutional investor is granted such a waiver and subsequently
determines to influence or affect the affairs of the issuer, it must
provide not less than 30 days notice of such intent and file with the New
Jersey Commission an application for qualification before taking any action
which may influence or affect the affairs of the issuer, except that an
institutional investor holding voting securities shall be permitted to vote
on matters put to the vote of the holders of outstanding voting securities.
If an institutional investor that has been granted a waiver subsequently
changes its investment intent, or if the New Jersey Commission finds
reasonable cause to believe that the institutional investor may be found
unqualified, no action other than divestiture shall be taken by the
investor with respect to the security holdings until there has been
compliance with the provisions of the New Jersey Act concerning Interim
Casino Authorization. The provisions of the New Jersey Act concerning
Interim Casino Authorization provide that whenever a security holder of
either equity or debt is required to qualify pursuant to the New Jersey
Act, the security holder shall, within 30 days after the New Jersey
Commission determines that qualification is required or declines to waive
qualification, (i) file a completed application for qualification, along
with an executed and approved Trust Agreement, wherein all securities of
the holding or intermediary company held by that security holder are placed
in trust pending qualification, or (ii) file a notice of intent to divest
itself of such securities as the New Jersey Commission may require so as to
remove the need for qualification, which securities must be divested within
120 days from the date such determination was made.
The New Jersey Act further requires that corporate licensees and their
subsidiaries, intermediaries and holding companies adopt certain provisions
in their certificates of incorporation that require certain remedial action
in the event that an individual owner of any security of such company is
found disqualified under the New Jersey Act. The required certificate of
incorporation provisions vary depending on whether the stock of the company
subject to the requirements of the New Jersey Act is publicly or privately
traded. Pursuant to the New Jersey Act, the certificate of incorporation
of a publicly held company must provide that any securities of such
corporation are held subject to the condition that if a holder is found to
be disqualified by the New Jersey Commission pursuant to the New Jersey Act
such holder shall dispose of his interest in such company. The certificate
of incorporation of a privately held company must create the absolute right
of the company to repurchase at the market price or purchase price,
whichever is the lesser, any security, share or other interest in the
company in the event the New Jersey Commission disapproves a transfer in
accordance with the provisions of the New Jersey Act.
The Company is a publicly held company and, accordingly, a provision has
been placed in the Company's Restated Certificate of Incorporation which
provides that a holder of the Company's securities must dispose of such
securities if the holder is found disqualified under the New Jersey Act.
In addition, the Restated Certificate of Incorporation for the Company
provides that the Company may redeem the stock of any holder found to be
disqualified.
15
If, at any time, it is determined that Adamar has violated the New Jersey
Act or regulations, or if any security holder of the Company, Adamar or
Holdings who is required to be qualified under the New Jersey Act is found
disqualified but does not dispose of the securities, Adamar could be
subject to fines or its license could be suspended or revoked. If Adamar's
license is revoked, the New Jersey Commission could appoint a conservator
to operate and to dispose of any casino hotel facilities of Adamar. Net
proceeds of a sale by a conservator and net profits of operations by a
conservator (at least up to an amount equal to a fair return on Adamar's
investment which is reasonable for casinos or hotels) would be paid to
Adamar.
The subsidiaries which conduct the Company's gaming operations in Las Vegas
and Laughlin are not required to apply for licensure or qualification under
the New Jersey Act, but their certificates of incorporation are required
under the New Jersey Act to contain a provision granting them an absolute
right to repurchase at the market price or purchase price, whichever is
less, any of their respective securities in the event that the New Jersey
Commission disapproves a transfer of any such securities.
In addition to compliance with the New Jersey Act and regulations relating
to gaming, any facility built in Atlantic City by Adamar or any other
subsidiary of the Company must comply with the New Jersey and Atlantic City
laws and regulations relating to, among other things, the Coastal Area
Facilities Review Act, construction of buildings, environmental
considerations, operation of hotels and the sale of alcoholic beverages.
Gaming Fees and Taxes.
The New Jersey Commission is authorized to establish fees for the issuance
or renewal of casino licenses. Yearly casino hotel alcoholic beverage
license fees are payable for each facility in any of five specified
categories in any licensed casino hotel. There is also an annual license
fee on each slot machine. The New Jersey Commission is also authorized by
regulation to establish annual fees for the issuance and renewal of
licenses other than casino licenses.
The New Jersey Act imposes an annual tax of eight percent on gross revenues
(as defined in the New Jersey Act). In addition, casino licensees are
required to invest one and one-quarter percent of gross revenues for the
purchase of bonds to be issued by the Casino Reinvestment Development
Authority or make other approved investments equal to that amount; in the
event the investment requirement is not met, the casino licensee is subject
to a tax in the amount of two and one-half percent on gross revenues.
EMPLOYEES
The Company employs approximately 8,200 people of which approximately 2,700
employees are represented by unions. Of the approximately 4,300 employees
at TropWorld, approximately 1,300 are covered by collective bargaining
contracts. Substantially all of such employees are covered by a contract
that expires in 1994 and the remainder are covered by contracts that expire
in 1996. At Tropicana, approximately 1,400 of the 2,400 employees are
covered by collective bargaining contracts. Substantially all of such
employees are covered by contracts that expire in 1994 and the remainder
are covered by contracts that expire in 1995.
16
TRADEMARKS
The Company and Adamar of Nevada are the beneficiaries of an agreement with
Tropicana Enterprises, the owner of certain properties related to
Tropicana, and the Jaffe family regarding the use of the name "Tropicana"
for the operation of a casino hotel in Atlantic City and in connection with
the operation of a casino hotel in New York State (if gaming were to be
authorized in New York State). Pursuant to such agreement, the Company has
registered the name under the Lanham Act. Upon the occurrence of certain
events, the right to use the name reverts to Tropicana Enterprises.
Ramada has licensed the Company to use the name "Ramada" in conjunction
with the operation of Ramada Express, and will not use or permit the use of
the name "Ramada" in Laughlin, Nevada by any other person or entity.
The following trademarks are important to the Company: Aztar, Trop,
TropWorld, Trop Park, Tropicana, Tivoli Pier, TropWorld Casino and
Entertainment Resort, Ramada Express and Express. There are no other
trademarks the use of which is material to the conduct of the Company's
business as a whole.
ITEM 2. PROPERTIES
- -------------------
TROPWORLD.
TropWorld is located on a 10-acre site in Atlantic City, New Jersey. In
July 1993, the TropWorld building became wholly-owned by the Company upon
the acquisition by the Company of the partnership interests in AREI and
AGP. AREI owned a 99.9 percent general partnership interest in AGP, which
acquired a substantial interest in TropWorld in a sale-leaseback
transaction in 1984. Adamar owns the land on which the TropWorld
facilities prior to a 1988 expansion are located, and Atlantic-Deauville
owns the land under the expanded facilities.
TROPICANA.
Tropicana is located on a 34-acre site in Las Vegas, Nevada. Tropicana is
owned by Tropicana Enterprises and is leased to HRN, which operates the
casino and hotel under the lease ( the "Tropicana Lease") that expires in
2011. The Company, through its wholly-owned subsidiary, Adamar of Nevada,
owns a noncontrolling 50% general partnership interest in Tropicana
Enterprises. The remaining 50% general partnership interest in Tropicana
Enterprises is held by various individuals and trusts associated with the
Jaffe family and is entitled to certain preferences on distributions and
liquidations. The Company does not have the right to purchase Tropicana
from Tropicana Enterprises and does not have the right to purchase the
remaining partnership interest in Tropicana Enterprises that is not owned
by Adamar of Nevada.
RAMADA EXPRESS.
Ramada Express is located on a 28-acre site in Laughlin, Nevada. The
Company completed in September 1993 a $75 million expansion of Ramada
Express.
17
NEW GAMING JURISDICTIONS
In connection with the Company's development of its business in new gaming
jurisdictions, the Company has options to purchase various parcels of land
in Caruthersville, Missouri and Evansville, Indiana.
GENERAL.
The Company leases its corporate headquarters located in Phoenix, Arizona
and owns or leases certain other facilities which are not material to the
Company's operations.
Substantially all land, casino hotel buildings, furnishings and equipment
owned by the Company are pledged as collateral under long-term debt
agreements.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
The Company is a party to various claims, legal actions and complaints
arising in the ordinary course of business or asserted by way of defense or
counterclaim in actions filed by the Company. Management believes that its
defenses are substantial in each of these matters and that the legal
posture of the Company can be successfully defended or satisfactorily
settled without material adverse effect on its consolidated financial
statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None
18
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
The registrant has elected not to include information concerning its
executive officers in its 1993 Proxy Statement, as allowed by the Proxy
Statement instructions. The registrant relies on General Instruction G(3)
of this report on Form 10-K in presenting the following information on its
executive officers.
Tenure
-----------------
With Present
Name Office Age Company Position
- ------------------- ---------------------------- --- -------- --------
Paul E. Rubeli Chairman of the Board, 50 15 years 2 years
President and Chief
Executive Officer
Robert M. Haddock Executive Vice President 49 13 years 7 years
and Chief Financial
Officer
Nelson W. Armstrong,
Jr. Vice President, 52 21 years 4 years
Administration and Secretary
Joe C. Cole Vice President, 55 6 years 6 years
Corporate Communications
Meridith P. Sipek Controller 47 16 years 4 years
Craig F. Sullivan Treasurer 47 16 years 4 years
Paul E. Rubeli. Mr. Rubeli joined Ramada in 1979 as Group Vice President,
Industrial Operations. He served as Executive Vice President, Gaming, of
Ramada from 1982 to December 1989, when he was appointed President and
Chief Operating Officer of the Company in the Restructuring. He was
appointed Chief Executive Officer in February 1990 and Chairman of the
Board in addition to his other positions in February 1992.
Robert M. Haddock. Mr. Haddock joined Ramada in 1980 and held various
positions before becoming Executive Vice President and Chief Financial
Officer in March 1987, serving in that capacity until the Restructuring,
when he assumed the same position with the Company.
Nelson W. Armstrong, Jr. Mr. Armstrong joined Ramada in 1973 as an
accounting supervisor and held various positions on the corporate
accounting staff, serving as Vice President and Controller of Ramada and
then of the Company after the Restructuring until he was appointed Vice
President, Administration and Secretary of the Company in March 1990.
Joe C. Cole. Mr. Cole joined Ramada in March 1988 as Vice President,
Corporate Communications after having been affiliated with Phoenix
Newspapers Inc. for 26 years as a reporter, columnist and editor. He
became Vice President, Corporate Communications, of the Company in the
Restructuring.
19
EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
- ------------------------------------------------
Meridith P. Sipek. Mr. Sipek joined Ramada's corporate accounting staff in
1977 as a manager and held various positions in corporate and hotel
accounting, serving as Hotel Group Controller before being named Assistant
Corporate Controller of Ramada and then of the Company after the Restructuring
until he was appointed Controller of the Company in March 1990.
Craig F. Sullivan. Mr. Sullivan joined Ramada in 1978 as a treasury analyst
and held various Treasury Department positions before being named Assistant
Treasurer in May 1982, serving in that capacity in Ramada and in the Company
after the Restructuring until he was appointed Treasurer of the Company in
March 1990.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------
Aztar had 12,588 shareholders of record as of February 18, 1994.
The additional information required by this Item 5 is included in this report
on F-15, F-25 and F-37.
ITEMS 6, 7, and 8
- -----------------
The information required by Item 6 is included in this report on F-37; by Item
7, on F-26 through F-36; and by Item 8, on F-1 through F-25.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None.
PART III
ITEMS 10, 11, 12 and 13 --------
- -----------------------
The information required by Items 10, 11, 12 and 13 is incorporated by
reference to the registrant's definitive Proxy Statement to be filed with the
Commission. A cross-referenced index is located on the facing page of this
report. Information concerning the registrant's executive officers is
presented above under a separate caption in Part I of this report.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
Page No.
(a) 1. Financial Statements: --------
Report of Independent Accountants F-1
Consolidated Balance Sheets, December 30, 1993 and
December 31, 1992 F-2
Consolidated Statements of Operations for the years ended
December 30, 1993, December 31, 1992 and January 2, 1992 F-4
Consolidated Statements of Cash Flows for the years ended
December 30, 1993, December 31, 1992 and January 2, 1992 F-6
Consolidated Statements of Shareholders' Equity for the
years ended December 30, 1993, December 31, 1992 and
January 2, 1992 F-8
Notes to Consolidated Financial Statements F-9
20
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
(Continued)
- -----------
Page No.
--------
2. Financial Statement Schedules:
Report of Independent Accountants S-1
V - Property, Plant and Equipment S-2
VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment S-3
VIII - Valuation and Qualifying Accounts S-4
X - Supplementary Income Statement Information S-5
All other schedules are omitted because the required
information is either presented in the financial
statements or notes thereto, or is not present in amounts
sufficient to require submission of the schedules.
3. Exhibits:
3 Articles of Incorporation and By-Laws *
4 Instruments Defining the Rights of Security
Holders, Including Indentures *
10 Material Contracts *
11 Statement Regarding Computation of Per Share Earnings *
21 Subsidiaries of the Registrant *
23 Consents of Experts and Counsel *
* See exhibit index at page E-1 of this report for a listing of
exhibits filed with this report and those incorporated by
reference.
All other exhibits have been omitted because the information
is not required or is not applicable.
(b) Reports on Form 8-K:
The Company did not file any report on Form 8-K during the
quarter ended December 30, 1993.
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act
of 1933, the undersigned registrant hereby undertakes as follows, which
undertaking shall be incorporated by reference into registrant's
Registration Statements on Form S-8 No. 33-32399 and No. 33-44794
(filed January 5, 1990 and December 24, 1991, respectively):
21
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
22
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.
AZTAR CORPORATION By /s/ Robert M. Haddock March 11, 1994
----------------- ------------------------- ------------------
Registrant Robert M. Haddock Date
Executive Vice President
(Chief Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Paul E. Rubeli Chairman of the Board, March 11, 1994
- ------------------------- President and Chief ----------------
Paul E. Rubeli Executive Officer
/s/ Robert M. Haddock Executive Vice President, March 11, 1994
- ------------------------- Chief Financial Officer ----------------
Robert M. Haddock and Director
/s/ Meridith P. Sipek Controller March 11, 1994
- ------------------------- ----------------
Meridith P. Sipek
/s/ John B. Bohle Director March 11, 1994
- ------------------------- ----------------
John B. Bohle
/s/ E. M. Carson Director March 11, 1994
- ------------------------- ----------------
Edward M. Carson
/s/ A. S. Gittlin Director March 11, 1994
- ------------------------- ----------------
A. Sam Gittlin
/s/ John R. Norton, III Director March 11, 1994
- ------------------------- ----------------
John R. Norton, III
/s/ Robert S. Rosow Director March 11, 1994
- ------------------------- ----------------
Robert S. Rosow
/s/ R. Snell Director March 11, 1994
- ------------------------- ----------------
Richard Snell
/s/ Terence W. Thomas Director March 11, 1994
- ------------------------- ----------------
Terence W. Thomas
/s/ Carroll V. Willoughby Director March 11, 1994
- ------------------------- ----------------
Carroll V. Willoughby
23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Aztar Corporation
We have audited the consolidated balance sheets of Aztar Corporation and
Subsidiaries as of December 30, 1993 and December 31, 1992, and the related
consolidated statements of operations, cash flows and shareholders' equity
for each of the three years in the period ended December 30, 1993. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
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 Aztar Corporation and Subsidiaries as of December 30, 1993 and
December 31, 1992, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December
30, 1993 in conformity with generally accepted accounting principles.
As discussed in Note 16 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1992.
COOPERS & LYBRAND
Phoenix, Arizona
February 11, 1994
F-1
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 30, 1993 and December 31, 1992
----------------------------------------
(in thousands, except share data)
1993 1992
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 39,551 $ 100,403
Accounts and notes receivable, net 19,170 28,601
Refundable income taxes 2,062 2,062
Inventories 5,564 5,144
Prepaid expenses 9,206 8,208
Deferred income taxes 6,566 13,353
--------- ---------
Total current assets 82,119 157,771
Investments in and advances to unconsolidated
partnership 13,776 15,225
Other investments 22,131 19,250
Notes receivable -- 246,310
Property and equipment:
Buildings and equipment, net 648,139 287,228
Land 81,795 78,853
Construction in progress 6,701 15,718
Leased under capital leases, net 1,043 9,262
--------- ---------
737,678 391,061
Other assets 21,467 19,948
--------- ---------
$ 877,171 $ 849,565
========= =========
The accompanying notes are an integral part of these financial statements.
F-2
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
December 30, 1993 and December 31, 1992
----------------------------------------
(in thousands, except share data)
1993 1992
--------- ---------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accruals $ 39,515 $ 39,749
Accrued payroll and employee benefits 15,823 17,854
Accrued interest payable 13,714 13,365
Income taxes payable 2,633 2,757
Current portion of long-term debt 2,499 3,508
--------- ---------
Total current liabilities 74,184 77,233
Long-term debt 404,086 378,058
Other long-term liabilities 21,882 23,334
Deferred income taxes 26,126 34,193
Contingencies and commitments
Series B ESOP convertible preferred stock
(redemption value $4,295 and $3,118) 3,905 2,998
Shareholders' equity:
Common stock, $.01 par value (37,359,011
and 36,977,662 shares outstanding) 414 410
Paid-in capital 346,965 344,574
Retained earnings 16,559 5,787
Less: Treasury stock (16,885) (16,885)
Unearned compensation (65) (137)
--------- ---------
Total shareholders' equity 346,988 333,749
--------- ---------
$ 877,171 $ 849,565
========= =========
The accompanying notes are an integral part of these financial statements.
F-3
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
-----------------------------------
(in thousands, except per share data)
1993 1992 1991
Revenues --------- --------- ---------
Casino $439,294 $431,831 $392,917
Rooms 32,248 32,651 36,577
Food and beverage 36,357 37,519 42,040
Other 10,863 10,044 9,751
-------- -------- --------
518,762 512,045 481,285
Costs and expenses
Casino 217,087 202,747 187,189
Rooms 19,495 19,527 21,598
Food and beverage 34,773 35,008 39,229
Other 6,737 6,827 7,211
Marketing 45,427 45,705 41,385
General and administrative 46,849 46,399 46,190
Utilities 12,328 11,617 11,227
Repairs and maintenance 19,953 18,544 18,064
Provision for doubtful accounts 1,566 2,622 4,763
Property taxes and insurance 16,729 16,108 15,391
Net rent 27,747 45,653 47,193
Depreciation and amortization 32,652 28,679 28,191
-------- -------- --------
481,343 479,436 467,631
-------- -------- --------
Operating income 37,419 32,609 13,654
Interest income 24,172 28,655 26,245
Interest expense (45,363) (31,132) (32,101)
-------- -------- --------
Income from continuing operations before
other items, income taxes, extraordinary
items and cumulative effect of accounting
change 16,228 30,132 7,798
Equity in unconsolidated partnership's loss (3,822) (4,125) (5,030)
-------- -------- --------
Income from continuing operations before
income taxes, extraordinary items and
cumulative effect of accounting change 12,406 26,007 2,768
Income taxes (1,024) (9,629) (60)
-------- -------- --------
Income from continuing operations before
extraordinary items and cumulative effect
of accounting change 11,382 16,378 2,708
Discontinued operations -- 1,262 2,553
Extraordinary items -- (5,335) 1,237
Cumulative effect of accounting change -- 7,500 --
-------- -------- --------
Net income $ 11,382 $ 19,805 $ 6,498
======== ======== ========
The accompanying notes are an integral part of these financial statements.
F-4
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
-----------------------------------
(in thousands, except per share data)
1993 1992 1991
-------- -------- --------
Earnings per common and common equivalent
share:
Income from continuing operations before
extraordinary items and cumulative
effect of accounting change $ .28 $ .41 $ .05
Discontinued operations -- .03 .07
Extraordinary items -- (.14) .03
Cumulative effect of accounting change -- .20 --
-------- -------- --------
Net income $ .28 $ .50 $ .15
======== ======== ========
Earnings per common share assuming full
dilution:
Income from continuing operations before
extraordinary items and cumulative
effect of accounting change $ .27 $ .40 $ .05
Discontinued operations -- .03 .06
Extraordinary items -- (.13) .03
Cumulative effect of accounting change -- .19 --
-------- -------- --------
Net income $ .27 $ .49 $ .14
======== ======== ========
Weighted average common shares
applicable to:
Earnings per common and common
equivalent share 38,367 38,212 38,782
Earnings per common share assuming
full dilution 39,429 39,311 39,939
The accompanying notes are an integral part of these financial statements.
F-5
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
--------------
(in thousands)
1993 1992 1991
---------- ---------- ----------
Cash Flows from Operating Activities
Net income $ 11,382 $ 19,805 $ 6,498
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 34,577 30,639 31,048
Provision for losses on accounts
receivable 1,566 2,622 4,763
Loss on reinvestment obligation 991 1,103 1,060
Interest income 1,889 (4,389) (2,144)
Rent expense (880) (2,537) (2,527)
Distribution in excess of equity in
income of partnership 1,449 1,355 1,393
Deferred income taxes (1,280) (1,556) (41)
Change in assets and liabilities:
(Increase) decrease in accounts
receivable (1,442) (1,372) (15)
(Increase) decrease in refundable
income taxes -- (2,062) --
(Increase) decrease in inventories
and prepaid expenses (1,969) (1,582) (1,332)
Increase (decrease) in accounts payable,
accrued expenses and income taxes
payable 1,955 (12,745) (2,776)
Other items, net 2,087 2,502 3,245
--------- --------- ---------
Net cash provided by (used in) operating
activities 50,325 31,783 39,172
--------- --------- ---------
Cash Flows from Investing Activities
Reduction (increase) in invested funds -- 5,075 (5,075)
Payments received on TropWorld second
mortgage 24,400 51,450 45,900
Payments received on other notes receivable 2,191 2,383 3,075
Increase in TropWorld second mortgage (24,400) (51,450) (45,900)
Increase in other notes receivable (419) (174,678) (3,252)
Purchases of property and equipment (77,804) (20,607) (18,400)
Acquisition of AREI/AGP partnership
interests, net of cash acquired (61,859) -- --
Additions to other long-term assets (7,360) (10,893) (3,489)
--------- --------- ---------
Net cash provided by (used in) investing
activities $(145,251) $(198,720) $ (27,141)
-------- -------- --------
The accompanying notes are an integral part of these financial statements.
F-6
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
--------------
(in thousands)
1993 1992 1991
Cash Flows from Financing Activities --------- --------- ---------
Proceeds from issuance of long-term debt $ 35,000 $200,000 --
Proceeds from issuance of common stock 2,149 261 $ 35
Principal payments on long-term debt (2,157) (3,787) (3,902)
Repurchase of common stock -- (5,364) (224)
Preferred stock dividend (787) (797) (800)
Redemption of preferred stock (131) (90) (24)
Redemption of Holdings preferred stock -- -- (4,131)
-------- -------- --------
Net cash provided by (used in)
financing activities 34,074 190,223 (9,046)
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents (60,852) 23,286 2,985
Cash and cash equivalents at beginning
of year 100,403 77,117 74,132
-------- -------- --------
Cash and cash equivalents at end
of year $ 39,551 $100,403 $ 77,117
======== ======== ========
Supplemental Cash Flow Disclosures
Acquisition of AREI/AGP partnership interests:
Working capital, other than cash $ 3,370 $ -- $ --
Notes receivable 242,605 -- --
Building and equipment (307,582) -- --
Capital lease assets, net 6,703 -- --
Long-term debt (5,682) -- --
Other long-term liabilities (1,273) -- --
-------- -------- --------
Net cash used in acquisition (61,859) -- --
Summary of non-cash investing and
financing activities:
Capital lease obligations incurred
for property and equipment $ 385 $ 3,687 $ 3,282
Note received in sale of
property and equipment -- 225 --
Tax benefit from stock options
and preferred stock dividend 431 290 --
Issuance of restricted stock -- -- 210
Forfeiture of restricted stock -- 30 --
Cash paid (refunded) during the
year for the following for continuing
and discontinued operations:
Interest, net of amount capitalized $ 43,160 $ 31,905 $ 28,883
Income taxes 1,997 8,165 (408)
The accompanying notes are an integral part of these financial statements.
F-7
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
-------------
(in thousands)
Retained Unearned
Common Paid-in Earnings Treasury Compen-
Stock Capital (Deficit) Stock sation Total
Balance, -------- -------- --------- --------- --------- --------
January 3, 1991 $ 409 $343,990 $(19,130) $(11,267) $(1,231) $312,771
Stock options
exercised 35 35
Issuance of
restricted stock 210 (210) --
Repurchase of
common stock (224) (224)
Preferred stock
dividend (800) (800)
Amortization of
unearned
compensation 620 620
Net income 6,498 6,498
Balance, -------- -------- -------- -------- -------- --------
January 2, 1992 409 344,235 (13,432) (11,491) (821) 318,900
Stock options
exercised 1 260 261
Tax benefit
from stock
options exercised 79 79
Repurchase of
common stock (5,364) (5,364)
Preferred stock
dividend, net of
income tax benefit (586) (586)
Forfeitures of
restricted stock (30) 30 --
Amortization of
unearned
compensation 654 654
Net income 19,805 19,805
Balance, -------- -------- -------- -------- -------- --------
December 31, 1992 410 344,574 5,787 (16,885) (137) 333,749
Stock options
exercised 4 2,145 2,149
Tax benefit
from stock
options exercised 246 246
Preferred stock
dividend, net of
income tax benefit (610) (610)
Amortization of
unearned
compensation 72 72
Net income 11,382 11,382
Balance, -------- -------- -------- -------- -------- --------
December 30, 1993 $ 414 $346,965 $ 16,559 $(16,885) $ (65) $346,988
======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidated Statements
Aztar Corporation ("Aztar" or the "Company") was incorporated in Delaware
in June 1989 to operate the gaming business of Ramada Inc. ("Ramada") after
the restructuring of Ramada (the "Restructuring"). The Restructuring
involved the disposition of Ramada's hotel and restaurant businesses with
Ramada's shareholders retaining their interest in the gaming business. As
part of the Restructuring, the gaming business and certain other assets and
liabilities of Ramada were transferred to Aztar, and a wholly-owned
subsidiary of New World Hotels (U.S.A.), Inc. was merged with Ramada (the
"Merger"). In the Merger, each share of Ramada common stock was converted
into the right to receive $1.00 and one share of Aztar common stock. For
accounting purposes Aztar is treated as the continuing accounting entity
that is the successor to the historical Ramada and that has discontinued
the hotel and restaurant businesses.
The consolidated financial statements include the accounts of Aztar and all
of its controlled subsidiaries and partnerships. All subsidiary companies
are wholly owned. Ramada New Jersey Holdings Corporation ("Holdings") was
majority owned until January 4, 1991, when it redeemed its outstanding
shares of Convertible Class A Preferred Stock and became wholly owned. In
consolidating, all material intercompany transactions are eliminated. The
Company uses a 52/53 week fiscal year ending on the Thursday nearest
December 31, which includes 52 weeks in 1993, 1992 and 1991.
Cash and Cash Equivalents
Highly liquid investments purchased with an original maturity of three
months or less are classified as cash equivalents. These instruments are
stated at cost, which approximates fair value because of their short
maturity.
Inventories
Inventories, which consist primarily of food, beverage and operating
supplies, are stated at the lower of cost or market value. Costs are
determined using the first-in, first-out method.
Property and Equipment
Property and equipment are stated at cost. During construction, the
Company capitalizes interest and other direct and indirect development
costs. Interest is capitalized monthly by applying the effective interest
rate on certain borrowings to the average balance of expenditures.
Capitalized interest was $3,491,000 in 1993, $1,061,000 in 1992 and
$253,000 in 1991.
Depreciation and amortization are computed by the straight-line method
based upon the following useful lives: buildings and improvements, 3-40
years; furniture and equipment, 3-15 years; and leasehold improvements,
shorter of lease term or asset useful life. Accumulated depreciation and
amortization on buildings and equipment was $139,690,000 at December 30,
1993 and $112,442,000 at December 31, 1992.
F-9
Improvements, renewals and extraordinary repairs that extend the life of
the asset are capitalized; other repairs and maintenance are expensed. The
cost and accumulated depreciation applicable to assets retired are removed
from the accounts and the gain or loss, if any, on disposition is
recognized in income as realized.
Deferred Charges
Note and loan issuance costs are amortized using the interest method.
Costs incurred to obtain initial gaming licenses to operate a casino are
capitalized and amortized over ten years; subsequent renewal costs are
amortized over the renewal period.
Preopening costs directly related to the opening of a gaming operation or
major addition to a gaming operation are capitalized as incurred and
expensed in the period the related facility commences operations.
Revenue Recognition
Casino revenue consists of gaming win net of losses. Revenues exclude the
retail value of complimentary food and beverage, accommodations and other
goods and services provided to customers. The estimated costs of providing
such complimentaries have been classified as casino expenses through
interdepartmental allocations as follows (in thousands):
1993 1992 1991
-------- -------- --------
Rooms $ 18,992 $ 14,930 $ 12,130
Food and beverage 33,287 30,568 26,795
Other 6,666 6,509 6,033
-------- -------- --------
$ 58,945 $ 52,007 $ 44,958
======== ======== ========
Interest Rate Swap Agreement
The differential to be paid or received is recognized in interest expense
as incurred.
Income Taxes
Deferred tax assets and liabilities are recognized for the expected future
tax consequences of events that have been included in the financial
statements or income tax returns. Deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax
bases of assets and liabilities using enacted rates expected to apply to
taxable income in the years in which those differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes
the enactment date.
F-10
Earnings Per Share
Earnings per common and common equivalent share are computed based on the
weighted average number of common shares outstanding after consideration of
the dilutive effect of stock options. Earnings per common share, assuming
full dilution, are computed based on the weighted average number of common
shares outstanding after consideration of the dilutive effect of stock
options and the assumed conversion of the preferred stock at the stated
rate.
In calculating the 1993, 1992 and 1991 earnings per share for both
computations, dividends of $610,000, $586,000 and $800,000, respectively,
on the Series B ESOP Convertible Preferred Stock are deducted in arriving
at income applicable to the common stock. The 1993 and 1992 dividends are
net of income tax benefits of $185,000 and $211,000, respectively.
Reclassifications
Certain reclassifications have been made in the 1992 Consolidated Balance
Sheet in order to be comparable with the 1993 presentation.
NOTE 2. ACCOUNTS RECEIVABLE
The Company's principal operations are conducted in Atlantic City, New
Jersey, at TropWorld and in Las Vegas and Laughlin, Nevada, at Tropicana
and Ramada Express. TropWorld has a concentration of credit risk in the
northeast region of the U.S. Approximately 50% of the receivables at the
Nevada operations are concentrated in Asian and Latin American customers
and the remainder of their receivables are concentrated in California and
the southwest region of the U.S. As a general policy, the Company does not
require collateral for these receivables. At December 30, 1993 and
December 31, 1992, the net receivables at TropWorld were $8,948,000 and
$10,372,000, respectively, and the net receivables at Tropicana and Ramada
Express combined were $10,175,000 and $10,575,000, respectively.
An allowance for doubtful accounts is maintained at a level considered
adequate to provide for possible future losses. At December 30, 1993 and
December 31, 1992, the allowance for doubtful accounts was $9,908,000 and
$13,124,000, respectively.
NOTE 3. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED PARTNERSHIP
The Company's investment in unconsolidated partnership is a noncontrolling
partnership interest of 50% in Tropicana Enterprises, a Nevada general
partnership that owns the real property and certain personal property that
the Company leases in the operation of Tropicana. The Company uses the
equity method of accounting for this investment and in connection with the
lease expensed rents of $12,684,000 in 1993, $12,815,000 in 1992 and
$14,545,000 in 1991, of which 50% was eliminated in consolidation.
F-11
Summarized balance sheet information and operating results for the
unconsolidated partnership are as follows (in thousands):
1993 1992
-------- --------
Current assets $ 270 $ 272
Noncurrent assets 81,220 83,504
Current liabilities 1,516 1,320
Noncurrent liabilities 73,033 73,713
1993 1992 1991
-------- -------- --------
Revenues $ 12,815 $ 12,980 $ 14,717
Operating expenses (2,755) (2,836) (2,837)
-------- -------- --------
Operating income 10,060 10,144 11,880
Interest expense (3,793) (4,318) (6,129)
-------- -------- --------
Net income $ 6,267 $ 5,826 $ 5,751
======== ======== ========
The Company's share of the above operating results, after intercompany
eliminations, is as follows (in thousands):
1993 1992 1991
-------- -------- --------
Equity in unconsolidated
partnership's loss $ (3,822) $ (4,125) $ (5,030)
NOTE 4. OTHER INVESTMENTS
The Company satisfies a New Jersey assessment based upon its casino
revenues by purchasing bonds issued by the Casino Reinvestment Development
Authority ("CRDA"). Deposits with the CRDA bear interest at two-thirds of
market rates resulting in a fair value lower than cost. At December 30,
1993 and December 31, 1992, other investments consisted of the Company's
deposit with the CRDA of $31,726,000 and $27,853,000, respectively, net of
a valuation allowance of $9,595,000 and $8,603,000, respectively.
NOTE 5. NOTES RECEIVABLE
At December 30, 1993 and December 31, 1992, notes receivable consisted of
(in thousands):
1993 1992
-------- --------
First Mortgage $ -- $171,000
Second Mortgage -- 69,859
FF&E Mortgage -- 24,855
-------- --------
-- 265,714
Less: Deferred gain -- (12,966)
Current portion -- (6,438)
-------- --------
$ -- $246,310
======== ========
F-12
In July 1993, the Company acquired the partnership interests in Ambassador
Real Estate Investors, L.P. ("AREI") and Ambassador General Partnership
("AGP"). AREI owned a 99.9% general partnership interest in AGP, which
acquired a substantial interest in TropWorld in a sale-leaseback
transaction in 1984. The above notes receivable from AGP together with the
cash paid by Aztar were replaced on Aztar's balance sheet by the assets
acquired.
In November 1992, the Company loaned $171,000,000 principal amount (the
"First Mortgage") to AGP. AGP used the funds to redeem $171,000,000 of its
outstanding 12% First Mortgage Notes Due 1996. As modified by another
agreement, the First Mortgage bore interest at a rate of 16% and was
payable quarterly. The Second Mortgage bore interest at 16 1/2% payable
annually. Under the terms of the Second Mortgage, the Company advanced
funds to AGP and AREI for cash flow shortfalls, including any unpaid
interest on the Second Mortgage. The Company funded AGP's purchase of
replacement furniture, fixtures and equipment by 5-year loans
collateralized by the FF&E Mortgage from AGP. Each loan accrued interest
at the rate of 16 1/2% compounded annually. No principal or interest
payments were made on such loans until maturity. The furniture, fixtures
and equipment were leased back to the Company by AGP under 5-year leases.
At December 31, 1992, the estimated cost for AGP to raise debt in the
public bond markets was approximately 13%. Based on a 13% interest rate,
the approximate fair values as of December 31, 1992 were $179,326,000 for
the First Mortgage, $81,129,000 for the Second Mortgage and $26,274,000 for
the FF&E Mortgage.
NOTE 6. LONG-TERM DEBT
At December 30, 1993 and December 31, 1992, long-term debt included (in
thousands):
1993 1992
13 1/2% First Mortgage Notes Due 1996 ($170,000 -------- --------
principal amount, 13.7% effective interest rate);
redeemable beginning September 15, 1994 at 100.00%;
net of unamortized discount $169,133 $168,882
11% Senior Subordinated Notes Due 2002; redeemable
beginning October 1, 1997 at 103.143% 200,000 200,000
$50 million revolving credit note; floating rate,
6.44% at December 30, 1993; matures June 30, 1996 25,000 --
$10 million revolving credit note; floating rate,
6 1/4 % at December 30, 1993; matures
December 31, 1994 10,000 --
Other mortgage loans; 7%; maturities to 1999 907 1,037
Notes payable, other; 7%; maturities to 1999 168 196
Obligations under capital leases 1,377 11,451
-------- --------
406,585 381,566
Less current portion (2,499) (3,508)
-------- --------
$404,086 $378,058
======== ========
F-13
Maturities of long-term debt for the five years subsequent to December 30,
1993 are as follows (in thousands):
Year
1994 $ 2,499
1995 12,527
1996 191,357
1997 311
1998 331
On December 20, 1989, the Company, through a wholly-owned, special-purpose
subsidiary, issued $170,000,000 principal amount of 13 1/2% First Mortgage
Notes Due September 15, 1996 (the "First Mortgage Notes"). Interest on the
First Mortgage Notes is payable semiannually on March 15 and September 15.
The First Mortgage Notes are redeemable at par at the option of the
Company, in whole or in part, on or after September 15, 1994. Mandatory
annual sinking fund payments of $2,000,000, commencing September 15, 1994,
are calculated to retire $4,000,000 principal amount of the First Mortgage
Notes prior to maturity. Upon change of control of the Company, the
holders of the First Mortgage Notes would have the right to require the
First Mortgage Notes to be repurchased at par plus accrued interest.
Payment of principal and interest on the First Mortgage Notes is
unconditionally guaranteed by the Company and is collateralized by
TropWorld.
On October 8, 1992, the Company issued $200,000,000 principal amount of 11%
Senior Subordinated Notes Due October 1, 2002 (the "Subordinated Notes").
Interest on the Subordinated Notes is payable semiannually on April 1 and
October 1. The Subordinated Notes are redeemable at the option of the
Company, in whole or in part, on or after October 1, 1997, at prices from
103.143% of the principal amount plus interest declining to 100% plus
interest beginning October 1, 1999. The Subordinated Notes are general
unsecured obligations of the Company and are subordinated in right of
payment to all present and future Senior indebtedness (as defined) of the
Company. Upon change of control of the Company, the holders of the
Subordinated Notes would have the right to require repurchase of the
Subordinated Notes at par plus accrued interest but their rights would be
subordinated to the right of the holders of the First Mortgage Notes to
receive payment if the holders of the First Mortgage Notes exercise their
right to require repurchase.
In connection with an expansion of Ramada Express that was completed in
September 1993, the Company converted its construction and term loan credit
facility into a $50 Million Revolving Credit Note pursuant to the terms of
the First Amended and Restated Credit Agreement, dated December 28, 1993
(the "$50 Million Credit Facility"). The maximum principal amount that can
be outstanding may not exceed $50,000,000 at any one time. Interest is
payable monthly on the outstanding principal balance at a rate of prime
plus 1/2 %. The Company may elect to pay interest based on a one, two or
three month LIBOR rate plus 2 1/4%. The Company incurs a commitment fee of
0.5% per annum on the unused portion of this credit facility. The $50
Million Credit Facility matures on June 30, 1996 and is collateralized by
Ramada Express. The Company may request that the maturity date be extended
for one-year periods at the lenders' discretion. At the Company's option,
the credit facility can be converted to a three-year reducing revolving
credit facility whereby the maximum principal amount that can be
outstanding will be reduced by 1/12 each quarter.
F-14
In connection with the AREI/AGP acquisition, the Company borrowed
$10,000,000 under a $10 million Revolving Credit Note pursuant to the
Revolving Credit Loan Agreement, dated July 29, 1993 (the "$10 Million
Credit Facility"). Borrowings under the $10 Million Credit Facility may
not exceed $10,000,000 principal amount at any one time. Interest is
payable monthly on the unpaid principal balance at a rate of prime plus
1/4%. The $10 Million Credit Facility matures on December 31, 1994.
Certain covenants in the First Mortgage Notes and the Subordinated Notes
limit the ability of the Company to incur indebtedness, sell or encumber
any of the applicable collateral or engage in mergers, consolidations or
sales of assets. A covenant related to the First Mortgage Notes limits the
amount of cash dividends that the Company may pay to $3,814,000 as of
December 30, 1993.
At December 30, 1993 and December 31, 1992, based on the bid prices in the
public bond markets, the fair value of the First Mortgage Notes was
105.125% and 107.25%, respectively, of the principal amount and the fair
value of the Subordinated Notes was 101.75% and 100%, respectively, of the
principal amount. The estimated fair value of both revolving credit notes
approximates the carrying amount due to the short maturity of these notes.
Substantially all of the Company's properties are pledged as collateral
under long-term debt agreements.
NOTE 7. INTEREST RATE SWAP AGREEMENT
The Company had outstanding an interest rate swap agreement with a
commercial bank. This agreement had a notional principal amount of
$50,000,000 and matured on December 31, 1991. Under the terms of the
agreement, the Company made annual interest payments to the bank based on a
fixed rate of 12.41%, and the bank made quarterly interest payments to the
Company based on the LIBOR rate.
NOTE 8. LEASE OBLIGATIONS
The Company is a lessee under a number of noncancelable lease agreements
involving land, buildings, leasehold improvements and equipment, some of
which provide for contingent rentals based on the consumer price index
and/or interest rate fluctuations. The leases extend for various periods
up to 18 years and generally provide for the payment of executory costs
(taxes, insurance and maintenance) by the Company. Certain of these leases
have provisions for renewal options ranging from 3 to 10 years, primarily
under similar terms, and/or options to purchase at various dates.
Properties leased under capital leases are as follows (in thousands):
1993 1992
-------- --------
Furniture and equipment $ 9,410 $ 54,751
Less accumulated amortization (8,367) (45,489)
-------- --------
$ 1,043 $ 9,262
======== ========
Amortization of furniture and equipment leased under capital leases,
computed on a straight-line basis, was $1,899,000 in 1993, $3,533,000 in
1992 and $3,667,000 in 1991.
F-15
Minimum future lease obligations on long-term, noncancelable leases in
effect at December 30, 1993 are as follows (in thousands):
Year Capital Operating
---- -------- ---------
1994 $ 425 $ 8,147
1995 417 8,000
1996 214 7,856
1997 146 7,469
1998 146 7,347
Thereafter 330 87,086
-------- --------
1,678 $125,905
========
Amount representing interest (301)
--------
Net present value 1,377
Less current portion (331)
--------
Long-term portion $ 1,046
========
The above net present value is computed based on specific interest rates
determined at the inception of the leases.
Net rent expense is detailed as follows (in thousands):
1993 1992 1991
-------- -------- --------
Minimum rentals $ 30,565 $ 51,647 $ 51,133
Contingent rentals 7,512 12,377 14,118
Less: Minimum lease income (2,773) (5,544) (5,544)
Maintenance reimbursement (7,557) (12,827) (12,514)
-------- -------- --------
$ 27,747 $ 45,653 $ 47,193
======== ======== ========
NOTE 9. OTHER LONG-TERM LIABILITIES
At December 30, 1993 and December 31, 1992, other long-term liabilities
consisted of (in thousands):
1993 1992
-------- --------
Accrued rent expense $ 13,684 $ 15,837
Deferred compensation and
retirement plans 8,044 7,343
Deferred income 154 154
-------- --------
$ 21,882 $ 23,334
======== ========
F-16
NOTE 10. REDEEMABLE PREFERRED STOCK
A series of preferred stock consisting of 100,000 shares has been
designated Series B ESOP Convertible Preferred Stock (the "ESOP Stock") and
those shares were issued on December 20, 1989, to the Company's Employee
Stock Ownership Plan (the "ESOP"). The ESOP purchased the shares for
$10,000,000 with funds borrowed from a subsidiary of the Company. These
funds are repayable in even semiannual payments of principal and interest
at 13 1/2% per year over a 10-year term. During 1993, 1992 and 1991,
respectively, 1,203 shares, 878 shares and 239 shares were redeemed
primarily in connection with employee terminations. The ESOP Stock has an
annual dividend rate of $8.00 per share per annum payable semiannually in
arrears. These shares have no voting rights except under certain limited,
specified conditions. Shares not allocated to participant accounts and
those shares not vested may be redeemed at $100 per share. Shares may be
converted into common stock at $9.46 and have a liquidation preference of
$100 per share.
The shares that have been allocated to the ESOP participant accounts and
have vested are redeemable at the higher of appraised value, conversion
value or $100 per share, by the participant upon termination. The excess
of the redemption value of the ESOP Stock over the carrying value is
charged to retained earnings upon redemption. In the event of default in
the payment of dividends on the ESOP Stock for six consecutive semiannual
periods, each outstanding share would have one vote per share of common
stock into which the preferred stock is convertible.
NOTE 11. CAPITAL STOCK
The Company is authorized to issue 10,000,000 shares of preferred stock,
par value $.01 per share, issuable in series as the Board of Directors may
designate. Approximately 40,000 shares of preferred stock have been
designated Series A Junior Participating Preferred Stock but none have been
issued.
The Company is authorized to issue 100,000,000 shares of common stock with
a par value of $.01 per share. Shares issued were 41,351,153 at
December 30, 1993 and 41,012,323 at December 31, 1992. Common stock
outstanding was net of 3,992,142 and 4,034,661 treasury shares at
December 30, 1993 and December 31, 1992, respectively. One preferred stock
purchase right (a "Right") is attached to each share of the Company's
common stock. Each Right will entitle the holder, subject to the
occurrence of certain events, to purchase a unit with no par value (a
"Unit") consisting of one one-thousandth of a share of Series A Junior
Participating Preferred Stock at a purchase price of $40.00 per Unit
subject to adjustment. The Rights will expire in December 1999 if not
earlier redeemed by the Company at $.01 per Right.
The Company issued 42,000 shares of restricted stock in 1991, on which the
restrictions will lapse over a three-year period, commencing on the date of
issuance, to certain executive officers and key employees. Compensation
expense in connection with these and prior issuances, recognized in 1993,
1992 and 1991, respectively, was $72,000, $654,000 and $620,000.
In accordance with the Merger agreement, 666,572 shares of common stock
that had not been claimed by the shareholders of Ramada were returned to
F-17
the Company in December 1990 to be held as treasury shares until claimed.
During 1993, 1992 and 1991, respectively, 42,519, 60,179 and 117,117 shares
were claimed; the balance of unclaimed shares was 446,757 as of
December 30, 1993.
During 1990, the Board of Directors authorized the Company to make
discretionary repurchases of up to 4,000,000 shares of its common stock
from time to time in the open market or otherwise and at December 30, 1993,
there remains 591,900 shares that could be repurchased under this
authority. During 1992 the Company repurchased 1,025,100 shares of common
stock. None were repurchased under this program in 1993 or 1991. During
1991, under a separate odd-lot buyback program, the Company repurchased
49,857 shares of common stock. During 1992, 3,779 shares of restricted
stock that were issued in 1989 were forfeited. Repurchased and forfeited
shares are stated at cost and held as treasury shares to be used for
general corporate purposes.
Effective July 18, 1990, the Company adopted a stock option plan for
directors who are not employees of the Company ("Nonemployee Director Stock
Option Plan"). As of December 30, 1993, 71,000 common shares were reserved
under the Nonemployee Director Stock Option Plan. During 1993, options
were granted for 9,000 shares at $6.75 per share; during 1992, options were
granted for 5,000 shares at $6.75 per share and 9,000 shares at $5.50 per
share; during 1991, options were granted for 8,000 shares at $6.50 per
share. All options granted under the Nonemployee Director Stock Option
Plan are immediately exercisable on the date of grant and expire ten years
from the date of grant. At December 30, 1993, December 31, 1992 and
January 2, 1992, common shares reserved for future grants of options under
this plan were 179,000, 188,000 and 202,000, respectively.
Changes in the number of common shares reserved under the Company's
employee stock option plans are as follows (in thousands of shares):
Number of Price Range
Shares of Options
--------- -----------
Balance, January 3, 1991 2,992 $3.19-$8.15
Granted 900 $5.00
Exercised (11) $3.19
Cancelled, expired or surrendered (14) $5.83
--------
Balance, January 2, 1992 3,867 $3.19-$8.15
Granted 135 $6.88
Exercised (82) $3.19
Cancelled, expired or surrendered (87) $3.19-$8.15
--------
Balance, December 31, 1992 3,833 $3.19-$8.15
Granted 50 $7.63
Exercised (339) $3.19-$8.15
Cancelled, expired or surrendered (42) $6.49-$8.15
--------
Balance, December 30, 1993 3,502 $3.19-$8.15
========
At December 30, 1993, December 31, 1992 and January 2, 1992, options
exercisable under the Company's employee stock option plans were 3,077,000,
3,118,000 and 2,238,000, respectively; shares reserved for future grants
were 1,797,000, 1,805,000 and 1,849,000, respectively.
F-18
In addition to the common shares reserved under stock option plans at
December 30, 1993, the Company has 1,033,000 common shares reserved for the
conversion of the ESOP Stock. The Company also has 40,563 shares of
preferred stock reserved for exercise of the Rights.
NOTE 12. BENEFIT PLANS
The Company has a pension plan, which is not currently funded, for certain
former executive employees. The Company has a nonqualified retirement
plan, which is not required to be funded by the Company, for certain senior
executives. The Company has a savings plan that covers substantially all
employees who are not covered by a collective bargaining unit.
Contributions to the savings plan are discretionary. Total pension and
savings plan expense was $689,000 for 1993, $662,000 for 1992 and $900,000
for 1991. The Company also contributed $1,990,000, $1,834,000 and
$1,881,000 in 1993, 1992 and 1991, respectively, to trusteed pension plans
under various collective bargaining agreements.
The Company has a deferred compensation plan for designated executives and
a similar plan for outside directors. The plans provide for the payment of
benefits commencing at retirement. The Company is substantially funding
the plans through the purchase of life insurance. Net expense recognized
in 1993, 1992 and 1991 was $180,000, $184,000 and $103,000, respectively.
In connection with Restructuring, the Company adopted the ESOP that covers
substantially all non-union employees. The Company will make contributions
to the ESOP so that, after the dividends are paid on the Company's ESOP
Stock, the ESOP can make its debt service payments to the Company. Cash
dividends and contributions, respectively, paid to the ESOP were $787,000
and $1,088,000 in 1993, $797,000 and $1,078,000 in 1992, and $800,000 and
$1,076,000 in 1991. Compensation expense recognized in 1993, 1992 and
1991, respectively, was $1,311,000, $1,400,000 and $1,482,000.
NOTE 13. INCOME TAXES
The (provision) benefit for income taxes for continuing operations before
extraordinary items and cumulative effect of accounting change is comprised
of (in thousands):
1993 1992 1991
Current: -------- -------- --------
Federal $ (2,231) $ (3,685) $ 1,136
State (73) -- --
--------- -------- --------
(2,304) (3,685) 1,136
Deferred: -------- -------- --------
Federal 378 (5,303) 41
State 902 (641) --
-------- -------- --------
1,280 (5,944) 41
-------- -------- --------
Charge in lieu of income taxes -- -- (1,237)
-------- -------- --------
$ (1,024) $ (9,629) $ (60)
======== ======== ========
The Company is responsible, with certain exceptions, for the taxes of
Ramada through December 20, 1989. In 1991, the Company settled the
Internal Revenue Service's examination of Ramada's income tax returns for
F-19
the years 1984 and 1985 and paid taxes and interest of $17,495,000 in
January 1992. The tax liability was less than that provided and the
Company recorded a continuing operations benefit of $1,264,000 in 1991.
The Internal Revenue Service is examining the income tax returns for the
years 1986 through 1991. The New Jersey Division of Taxation is examining
the income tax returns for the years 1983 through 1988. Management
believes that adequate provision for income taxes and interest has been
made in the financial statements.
General business credits are taken as a reduction of the provision for
federal income taxes during the year such credits become available. The
following table provides a reconciliation between the federal statutory
rates and the (provision) benefit for income taxes when both are expressed
as a percentage of pretax income.
1993 1992 1991
-------- -------- --------
Tax (provision) benefit at statutory rate (35.0)% (34.0)% (34.0)%
(Increase) decrease in tax resulting from:
State income taxes 4.3 (6.1) --
Contributions and gifts (.6) (.5) (6.1)
Disallowance of business meals (4.1) (2.2) (11.1)
Capitalized restructuring costs .8 2.3 13.5
Restricted stock and non-qualified stock
options .7 -- (3.1)
Casino license amortization -- -- (3.1)
IRS examination (7.9) 3.6 42.2
Targeted jobs tax credit 4.2 1.5 --
Change in valuation allowance 30.3 -- --
Other, net (1.0) (1.6) (.5)
------- ------- -------
(8.3)% (37.0)% (2.2)%
======= ======= =======
The income tax effects of loss carryforwards, tax credit carryforwards and
temporary differences between financial and income tax reporting that give
rise to the deferred income tax assets and liabilities at December 30, 1993
and December 31, 1992, are as follows (in thousands):
1993 1992
--------- ---------
Net operating loss carryforward $ 21,902 $ 26,505
Accrued rent expense 4,818 11,856
Accrued bad debt expense 3,972 6,081
Accrued compensation 5,030 4,737
Accrued liabilities 2,396 1,205
General business credit carryforward 2,887 2,066
-------- --------
Gross deferred tax assets 41,005 52,450
-------- --------
Deferred tax asset valuation allowance (20,974) (24,732)
-------- --------
Other (1,528) (1,195)
Partnership investment (5,328) (4,704)
Depreciation and amortization (12,199) (20,544)
Ramada tax sharing agreement (20,536) (22,115)
-------- ---------
Gross deferred tax liabilities (39,591) (48,558)
-------- --------
Net deferred tax liabilities $(19,560) $(20,840)
======== ========
F-20
Included in the valuation allowance is $520,000 that will be allocated to
shareholders' equity when recognized.
The deferred tax amounts were adjusted in 1993 for the effect of
legislation that increased the federal income tax rate from 34% to 35%.
The net effect of this change was not significant. The December 31, 1992
valuation allowance was reduced during 1993 due to the generation of
taxable income that resulted in the utilization of a portion of the net
operating loss carryforward. The effect of this reduction was to decrease
the 1993 income tax expense by $3,878,000.
At December 30, 1993, tax benefits are available for federal income tax
purposes as follows (in thousands):
Net operating losses $ 40,466
General business credits 2,121
These tax benefits will expire in the years 2003 through 2008 if not used.
The Company also has alternative minimum tax credit carryforwards of
$766,000 that can be carried forward indefinitely and offset against the
regular federal income tax liability. In addition, the Company has net
operating loss carryforwards for state income tax purposes that will expire
in the following years if not used (in thousands):
1994 $13,705
1995 26,377
1996 13,300
1997 15,962
1998 6,334
2000 10,307
A valuation allowance has been established for those federal and state tax
benefits which are not expected to be realized.
NOTE 14. DISCONTINUED OPERATIONS
In 1989, the Company disposed of its hotel business and the following items
are related to this discontinued operation. In 1992, the Company reached a
settlement with Canadian tax authorities in relation to the 1988 and 1989
income tax returns of Ramada Inc. and received a refund of $1,262,000. In
1991, the Company recorded a tax benefit of $1,861,000 in connection with
the settlement discussed in "Note 13. Income Taxes". In another matter, but
also in 1991, the Company reached a settlement with Canadian tax
authorities and received a refund of $692,000.
NOTE 15. EXTRAORDINARY ITEMS
A substantial portion of the proceeds from the issuance of the Subordinated
Notes were loaned to AGP to redeem its 12% First Mortgage Notes Due 1996.
In connection with the debt redemption, the Company paid a prepayment
premium and expensed its remaining deferred financing costs. These items
were reflected in the 1992 Consolidated Statement of Operations as an
extraordinary loss of $5,335,000, net of an income tax benefit of
$2,749,000.
F-21
The Company has a net operating loss carryforward from 1989. A portion of
the tax benefit of the 1989 loss was offset against the 1991 provision for
income taxes as an extraordinary item because the tax benefit of the 1989
loss could not have been recorded previously.
NOTE 16. CUMULATIVE EFFECT OF ACCOUNTING CHANGE
In February 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes ("SFAS 109"), which superseded Statement of Financial Accounting
Standards No. 96 with the same title ("SFAS 96"). SFAS 96 was never
adopted by the Company. The Company adopted the provisions of SFAS 109 in
the first quarter of 1992 and elected not to restate prior year financial
statements. The effect from prior years of adopting SFAS 109 as of the
beginning of fiscal 1992 was a net deferred income tax benefit of
$7,500,000 and it was reflected in the 1992 Consolidated Statement of
Operations as the Cumulative effect of accounting change.
The income tax effects of loss carryforwards, tax credit carryforwards and
temporary differences between financial and income tax reporting that give
rise to the deferred income tax assets and liabilities at January 2, 1992,
under the provisions of SFAS 109, are as follows (in thousands):
Deferred Income Tax
--------------------------
Assets Liabilities
--------- ------------
Net operating loss carryforward $ 26,058
Accrued rent expense 12,914
Accrued bad debt expense 5,770
Accrued compensation 3,572
Accrued liabilities 2,199
General business credit carryforward 1,407
Other 618
Partnership investment $ 4,963
Depreciation and amortization 14,472
Ramada tax sharing agreement 22,437
-------- ---------
52,538 $ 41,872
=========
Valuation allowance (25,562)
--------
$ 26,976
========
Included in the valuation allowance is $505,000 that will be allocated to
shareholders' equity when recognized.
NOTE 17. CONTINGENCIES AND COMMITMENTS
The Company agreed to indemnify Ramada against all monetary judgments in
lawsuits pending against Ramada and its subsidiaries as of the conclusion
of the Restructuring on December 20, 1989, as well as all related
attorneys' fees and expenses not paid at that time, except for any
judgments, fees or expenses accrued on the hotel business balance sheet and
except for any unaccrued and unreserved aggregate amount up to $5,000,000
of judgments, fees or expenses related exclusively to the hotel business.
Aztar is entitled to the benefit of any crossclaims or counterclaims
F-22
related to such lawsuits and of any insurance proceeds received. In
addition, the Company agreed to indemnify Ramada for various lease
guarantees made by Ramada relating to the restaurant business conducted
through its Marie Callender Pie Shops, Inc. ("MCPSI") subsidiary. In
connection with these matters the Company has an accrued liability of
$3,980,000 and $4,256,000 at December 30, 1993 and December 31, 1992,
respectively.
The Company is a party to various other claims, legal actions and
complaints arising in the ordinary course of business or asserted by way of
defense or counterclaim in actions filed by the Company. Management
believes that its defenses are substantial in each of these matters and
that the Company's legal posture can be successfully defended without
material adverse effect on its consolidated financial statements.
The Company had commitments for capital expenditures of approximately
$13,000,000 at December 30, 1993.
NOTE 18. ACQUISITION
In July 1993, the Company acquired the partnership interests in Ambassador
Real Estate Investors, L.P. ("AREI") and Ambassador General Partnership
("AGP"). AREI owned a 99.9% general partnership interest in AGP, which
acquired a substantial interest in TropWorld in a sale-leaseback
transaction in 1984.
The acquisition has been accounted for as a purchase by the Company. The
aggregate consideration, including costs incurred to complete the
transaction, was approximately $62,000,000 in cash. The Company obtained
the $10 million Credit Facility to fund a portion of the purchase price.
This acquisition did not significantly change Aztar's total assets. The
cash paid by Aztar and notes receivable from AGP were replaced on Aztar's
balance sheet by the assets acquired, which consisted primarily of building
and equipment. The additional $10,000,000 of indebtedness incurred by
Aztar was more than offset by a reduction of indebtedness to AGP.
The Company's consolidated statement of operations for the year ended
December 30, 1993 includes the results of AGP since its acquisition. After
intercompany eliminations, the acquisition has the following effects on
consolidated results: Most of the reduction in Aztar interest income from
the replacement of the AGP notes receivable is offset by a reduction in
rent expense. Aztar's net income is affected negatively primarily by an
increase in depreciation expense.
F-23
If the acquisition had occurred at the beginning of each of the years ended
December 30, 1993 and December 31, 1992, the Company's results of
operations would have been as follows (in thousands, except per share
data):
1993 1992
-------- --------
(unaudited)
Revenues $518,762 $512,045
Income from continuing operations before
extraordinary item and cumulative
effect of accounting change 7,846 8,332
Net income 7,846 11,759
Earnings per common and common equivalent
share:
Income from continuing operations before
extraordinary item and cumulative
effect of accounting change $ .19 $ .20
Net income .19 .29
Earnings per common share assuming full
dilution:
Income from continuing operations before
extraordinary item and cumulative
effect of accounting change $ .18 $ .20
Net income .18 .28
F-24
NOTE 19. UNAUDITED QUARTERLY RESULTS/COMMON STOCK PRICES
The following unaudited information shows selected items in thousands,
except per share data, for each quarter in the years ended December 30,
1993 and December 31, 1992. The Company's common stock is listed on the
New York Stock Exchange.
First Second Third Fourth
1993 -------- -------- -------- --------
- ----
Revenues $122,322 $130,781 $144,038 $121,621
Operating income 3,517 6,869 19,576 7,457
Income (loss) before income taxes 2,542 6,078 8,859 (5,073)
Income taxes (958) (2,172) (3,526) 5,632
Net income 1,584 3,906 5,333 559
Earnings per common and common
equivalent share:
Net income .04 .10 .13 .01
Earnings per common share assuming
full dilution:
Net income .04 .09 .13 .01
1992
- ----
Revenues $117,669 $131,646 $141,225 $121,505
Operating income 2,995 10,400 15,147 4,067
Income from continuing
operations before income
taxes, extraordinary item
and cumulative effect of
accounting change 1,549 9,210 13,888 1,360
Income taxes (629) (3,158) (5,382) (460)
Discontinued operations -- -- -- 1,262
Extraordinary item -- -- -- (5,335)
Cumulative effect of accounting
change 7,500 -- -- --
Net income (loss) 8,420 6,052 8,506 (3,173)
Earnings per common and common
equivalent share:
Income from continuing operations
before extraordinary item and
cumulative effect of accounting
change .02 .16 .22 .02
Net income (loss) .21 .16 .22 (.09)
Earnings per common share assuming
full dilution:
Income from continuing operations
before extraordinary item and
cumulative effect of accounting
change .02 .15 .22 .02
Net income (loss) .21 .15 .22 (.09)
Common Stock Prices
- -------------------
1993 - High $ 8.88 $10.13 $ 9.63 $ 7.88
- Low 6.63 6.25 7.00 6.00
1992 - High 7.50 6.50 7.13 7.63
- Low 5.00 4.63 5.00 6.13
F-25
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial Condition-Liquidity and Capital Resources
CASH FLOW AND COVERAGE The company's operating cash flow (measured
by adding net rent and depreciation and amortization to operating
income) was $97.8 million in 1993 compared to $106.9 million in
1992. Net financing charges were $48.9 million in 1993 compared to
$48.1 million in 1992. Even with a decrease in operating cash
flow, as defined, the company's coverage of its net financing
charges was 2.0 times.
RAMADA EXPRESS EXPANSION AND FINANCING One of the company's three
major capital expenditures in 1993 was the expansion of Ramada
Express, which was completed in September, on schedule and within
budget. The expansion included a new 1,100-room tower; 20,000
square feet of casino space, bringing the total to 50,000 square
feet; a 1,100-vehicle parking garage; additional restaurant and
event space; and other amenities. The company spent $60.0 million
on this project in 1993 for a total cost of $74.7 million.
Financing was provided primarily out of cash and cash flow. In the
fourth quarter 1993, the company borrowed $25 million under its $50
million construction and term loan credit facility that is
collateralized by Ramada Express. In December 1993, the company
entered into the First Amended and Restated Credit Agreement, which
converted the construction and term loan into a $50 million
revolving line of credit that matures in June 1996. This new
credit agreement can be used for general corporate purposes and may
be converted into a three-year reducing revolving line of credit.
PURCHASE OF THIRD PARTY PARTIAL INTEREST IN TROPWORLD A second
major capital expenditure in 1993 was the purchase in July of the
partnership interests in Ambassador Real Estate Investors, L.P.
("AREI") and Ambassador General Partnership ("AGP"). AREI owned a
99.9% general partnership interest in AGP, which acquired a
substantial interest in TropWorld in a sale-leaseback transaction
in 1984. The aggregate consideration, including costs incurred to
complete the transaction, was approximately $62 million. The
company funded the AREI/AGP acquisition using cash and a $10
million revolving credit loan obtained in July 1993. This
acquisition did not significantly change Aztar's total assets. The
cash paid by Aztar and notes receivable from AGP were replaced on
Aztar's balance sheet by the assets acquired. The additional $10
million of indebtedness incurred by Aztar was more than offset by
a reduction of indebtedness to AGP.
TROPICANA PROJECT At the end of 1993 at Tropicana, the company was
in the process of constructing a new main entrance, adding a new
building facade that will create a colorful Caribbean Village motif
facing "The New Four Corners" of Las Vegas and funding a portion of
F-26
the construction by the State of Nevada of a four-way pedestrian
skywalk system at the intersection of Las Vegas Boulevard and
Tropicana Avenue. Expenditures in 1993 were approximately $5
million on this project and will be approximately $6 million in
1994. Funding for this project was and will be from available cash
balances and cash flow.
STOCK OPTIONS An additional source of funds in 1993 was $2.1
million from the exercise of stock options for approximately
339,000 shares of common stock.
DEBT PAYMENTS AND FUTURE REFINANCINGS The company's maturities of
long-term debt were $2.2 million in 1993 and are $2.5 million and
$12.5 million for 1994 and 1995, respectively. The 1994 and 1995
maturities of long-term debt include $2 million each year for
mandatory sinking fund payments on the 13 1/2% First Mortgage Notes
Due 1996 ("13 1/2% Notes"). These notes are redeemable at par at
the option of the company, in whole or in part, on or after
September 15, 1994. Also included in the 1995 maturities is the
$10 million revolving credit loan obtained in connection with the
AREI/AGP acquisition. If favorable interest rates continue, the
company intends to call the 13 1/2% Notes in 1994 and obtain a new
loan or loans secured by TropWorld that would provide sufficient
funds to pay off the 13 1/2% Notes, to pay off the $10 million
revolving credit loan and to provide some additional funds for
riverboat facilities or general corporate purposes. If the 13 1/2%
notes are redeemed in 1994, the company will expense the remaining
unamortized deferred financing costs and unamortized discount.
This expense would be presented as an extraordinary charge and
shown net of an income tax benefit. These unamortized items
totaled $4.8 million at December 30, 1993.
In October 1996, a balloon payment of $71.3 million is due on
Tropicana Enterprises' bank loan. This loan is serviced through
rent payments made by the Tropicana operation. The company is a
noncontrolling 50% partner in Tropicana Enterprises.
FUTURE DEVELOPMENTS AND FINANCING The company has been pursuing
the development of its business in various gaming jurisdictions.
An agreement was executed in September 1993 with the City of
Caruthersville, Missouri, to operate a casino riverboat there, and
an application was filed with the Missouri Gaming Commission for a
gaming license to operate the Caruthersville facility. In January
1994, the company took delivery of a vessel and began renovation
with the intent for it to be used in Caruthersville. On another
front, a proposal was submitted to the City of Evansville, Indiana,
for a casino riverboat there and an application was filed for a
riverboat gaming license with the Indiana Gaming Commission. In
the event that the company is granted approval by the applicable
jurisdictions to proceed with one or both of these riverboat
projects, financing may be required to fund the related capital
expenditures. One source of financing could come under the $50
million First Amended and Restated Credit Agreement discussed
previously, which provides a structure for an additional borrowing
capacity of $25 million for a total of $75 million. Under this
F-27
structure, the maximum amount of additional borrowing that could be
outstanding would be tied to the cash flows of Ramada Express. Any
additional capacity will require additional lenders that may be
sought by the agent bank and the company.
COMMITMENTS AND ON-GOING CAPITAL EXPENDITURES At December 30,
1993, the company had commitments of approximately $13 million for
the purchase of fixed assets. In 1994, including the remaining
expenditures on the Tropicana project, the company plans to spend
approximately $33 million on routine capital expenditures at its
three land-based properties and the purchase and renovation of the
vessel acquired in January. In addition to this, expenditures will
be required for the Caruthersville facility; however, the timing of
these expenditures is uncertain. We believe that the company's
existing credit facilities, along with continuing cash flow from
operations and cash balances, will be sufficient to meet any
anticipated obligations as well as any working capital and
liquidity requirements.
Results of Operations - 1993 versus 1992
REVENUES AND OPERATING INCOME Aztar's consolidated revenues were
$518.8 million for 1993, an increase of 1% from $512.0 million in
1992. The increase came primarily from an increase in casino
revenue resulting from the expansion at Ramada Express and improved
market share in the slot segment at Tropicana. Casino revenue at
TropWorld was lower in 1993 than in 1992, partially resulting from
a $5.3 million year-over-year decrease in the reversal of
progressive jackpot accruals. The trend in the mix of consolidated
casino revenue that existed in 1992 continued into 1993 whereby the
table games revenue is decreasing and the slot revenue is
increasing. Rooms revenue and food and beverage revenue continued
to decline in 1993 as a result of a continuing strategy of using
rooms and food and beverage service as a means of promoting casino
activity. However, the expansion at Ramada Express caused
consolidated rooms revenue for 1993 to finish approximately even
with 1992.
Consolidated operating income was $37.4 million in 1993 compared
with $32.6 million in 1992. The primary reason for the increase
in consolidated operating income is the reduction in net rent.
This reduction was principally caused by the purchase of the
AREI/AGP partnership interests in July 1993, which eliminated the
rent we incurred for the portion of TropWorld that was owned by
AREI/AGP. The net rent reduction was partially offset by the
increase in depreciation and amortization that was caused primarily
by this purchase. Consolidated casino costs are higher because of
the increased use of rooms and food and beverage service as a means
of promoting casino activity and increased coin redemptions at
TropWorld. Since there is more credit business associated with
table games revenue than with slot revenue, the decrease in table
games revenue has allowed for a decrease of $1.1 million or 40% in
the provision for doubtful accounts. Additional analysis of the
performance of each of Aztar's three properties follows.
F-28
TROPICANA Tropicana Resort and Casino in Las Vegas, Nevada,
continued to improve in 1993. Once again, an increase in revenue
contributed to improved operating income as Tropicana held the
increase in total operating costs to 1% or less. Total revenues
for Tropicana were up 3% to $134.9 million in 1993 compared to
$130.9 million in 1992 and operating income improved 68% to $7.2
million from $4.3 million. Operating income is after net rent of
$6.8 million in 1993 compared to $7.1 million in 1992 and
depreciation and amortization of $6.5 million in 1993 compared to
$7.1 million in 1992.
Casino revenue was up 7% in 1993 as Tropicana continued its shift
in the mix of table games revenue and slot revenue. The table
games revenue was down 8% in 1993 on top of a 7% decrease in 1992.
Table games revenue has been declining as a result of lower
baccarat revenue as we shift from a historical dependence on
premium table games to the slot segment of the business. Baccarat
revenue amounted to only 3% of casino revenue in 1993 compared to
7% in 1992 and 10% in 1991. Slot revenue, on the other hand,
increased 19% in 1993 on top of a 25% increase in 1992. The mix of
slot revenue to total casino revenue was 63% in 1993 compared to
56% in 1992 and 49% in 1991. This shift in the revenue mix allows
Tropicana to be a steady producer of operating income and less
subject to the volatility associated with baccarat revenue.
The number of rooms occupied in 1993 increased 6% over 1992 but the
revenues from rooms and food and beverage decreased in 1993 from
1992. This situation is a result of increased complimentaries as
we make greater use of our database targeted marketing strategy and
as our database increases. The increased complimentaries result in
higher casino costs since we charge the cost of complimentaries to
the casino department.
Major cost savings in 1993 compared to 1992 occurred in two
categories. One reduction was $1.1 million in marketing costs due
to less television advertising. The other reduction was also $1.1
million and it occurred in the provision for doubtful accounts.
This reduction is a benefit associated with the mix in revenue
toward more slot revenue and less table games revenue. With regard
to staffing, we operated in 1993 at about the same level as in
1992. However, our payroll and related taxes and benefits went up
about 4% in 1993 compared to 1992 primarily from a 9% increase in
taxes and benefits.
As we look to 1994, we continue to be optimistic about Tropicana's
prospects. With the opening of the approximate 2,500-room Luxor
resort in October 1993 and the approximate 5,000-room MGM Grand
resort in December 1993 on corners of the Las Vegas Strip and
Tropicana Avenue adjacent to our corner, "The New Four Corners" of
Las Vegas has become a reality. During the first quarter of 1994,
we plan to complete the colorful Caribbean Village motif
enhancement to Tropicana's facade that faces these two corners.
Customer access to Tropicana will be facilitated by an elevated
F-29
pedestrian crosswalk system under construction by the State of
Nevada. This pedestrian bridge system, with elevators and
escalators set back from all four corners, will make pedestrian
traffic faster, safer and more convenient. Upon completion of this
project, we plan to construct a connecting bridge into the
Tropicana casino in order to facilitate access from the MGM Grand
resort. We believe that most visitors to Las Vegas will go to one
or more casinos besides the one where they are staying. Since we
believe this has been true of our customers all along, we welcome
the opportunity of having other casino customers so close to our
facility, especially those customers that are in the high end of
the middle market, which we believe to be the market targeted by
these two new resorts.
TROPWORLD TropWorld Casino and Entertainment Resort in Atlantic
City, New Jersey, had a difficult year in 1993 with the continuing
poor economic conditions in the Northeast, a very competitive local
market and increased competition from other gaming jurisdictions.
The rate of growth for casino revenue in the Atlantic City market
was anemic for the year. As participants in the market try to
maintain or increase market share in this environment, the costs
associated with attracting revenue go up, which causes pressure on
margins and profits.
TropWorld's revenues decreased 2% to $327.7 million in 1993 from
$334.3 million in 1992 while operating income increased 21% to
$33.5 million from $27.7 million. Casino revenue was down $5.1
million or 2% in 1993 compared to 1992. Continuing the trend from
prior years, table games revenue in 1993 was down $10.4 million
from 1992 while slot revenue was up $5.3 million in spite of a
year-over-year $5.3 million decrease in the reversal of slot
machine progressive jackpot accruals. The slot revenue percentage
of total casino revenue increased again in 1993 to 76% from 73% in
1992 and 69% in 1991. While the slot segment of the casino
business has a higher gross operating margin than the table games
segment, we believe the customers' desired casino experience
includes a certain level of tables games activity. We therefore
anticipate the slot revenue percentage of total casino revenue to
be maintained rather than to continue to increase.
The increase in slot revenue came at a high cost. We increased
promotional programs in anticipation of a greater market growth
rate than what actually occurred. Specifically, we increased the
number of rooms occupied on a complimentary basis by 11%. There
was also an increase in coin redemptions of $4.7 million in 1993
compared to 1992. These two items were the primary causes of a
$4.8 million or 3% increase in casino costs for 1993 compared to
1992.
Since payroll and related taxes and benefits are our largest cost
item, we continue to monitor the level of full-time equivalent
headcounts. These costs in 1993 were $0.3 million less than in
1992.
F-30
Net rent in 1993 was $20.4 million compared to $38.2 million in
1992 and depreciation and amortization in 1993 was $20.4 million
compared to $17.3 million in 1992. The primary cause of both the
decrease in net rent and the increase in depreciation and
amortization was the purchase of the AREI/AGP partnership interests
as mentioned in the discussion of financial condition.
While the current slow growth in the Atlantic City market is a
cause for concern, we believe that infrastructure improvements
underway will boost Atlantic City's attractiveness as a
destination. Since TropWorld has substantial untapped capacity and
there is no significant new casino supply in sight in Atlantic
City, the improving economy and increased consumer confidence cause
us to be optimistic.
RAMADA EXPRESS Ramada Express Hotel and Casino in Laughlin,
Nevada started 1993 with approximately 400 hotel rooms, 30,000
square feet of casino space and surface parking for 1,500 vehicles.
The facility ended 1993 with approximately 1,500 hotel rooms,
50,000 square feet of casino space, parking for 2,300 vehicles with
about one-half in a garage, additional food and beverage
facilities, and additional special event and retail space.
The expansion began in September 1992 and was completed in
September 1993. Because of this expansion, the operating results
for 1993 are not comparable to 1992. Ramada Express revenues were
$56.2 million in 1993 compared to $46.8 million in 1992. Operating
income was $5.5 million in 1993 compared to $8.7 million in 1992.
Operating income is after depreciation and amortization of $5.4
million in 1993 compared to $3.9 million in 1992. Net rent was not
significant in either year.
All significant revenue components were higher in 1993 than in 1992
and all significant cost components were higher in 1993 than in
1992. Ramada Express operating income was lower in 1993 than in
1992 as a result of the disruption to its operations associated
with the construction activities and additional costs incurred so
as to minimize that disruption. In the third quarter 1993, we
expensed $1.4 million of costs associated with the opening of the
expanded facilities.
During December 1993, we lowered the Ramada Express room rates in
order to increase occupancy and to build our customer database.
This approach was successful as the Ramada Express occupied room
nights more than tripled in December 1993 compared to December
1992.
Now that the expansion is completed and we have one full quarter of
operating the expanded facility behind us, we expect improvements
in Ramada Express operating income in 1994.
NEW GAMING JURISDICTIONS In mid-1993, the company began pursuing
the development of its business in various gaming jurisdictions.
In addition to those jurisdictions mentioned in the analysis of
F-31
financial condition, the company was one of four finalists but
unsuccessful in its proposal to develop and operate a casino
complex in Windsor, Ontario. We also investigated several other
locations in Missouri and Indiana. In connection with these
efforts, we expensed approximately $1.3 million in development
costs in 1993.
In 1994, we hope to begin the operation of a casino riverboat in
Caruthersville, Missouri. However, the timing of this is dependent
on several factors that are beyond our control. One of these
factors is the granting of a gaming license by the Missouri Gaming
Commission. The company applied for this license when the Missouri
Gaming Commission began taking applications. Another possible
factor is a ruling by the Missouri Supreme Court holding
unconstitutional some portions of the Missouri gaming law. A
statewide election to amend the constitution was scheduled to be
held April 5, 1994. We also plan to continue to explore
opportunities in new jurisdictions as they become interested in
gaming.
INTEREST INCOME AND EXPENSE Interest income declined by $4.5
million in 1993 compared to 1992. The replacement of the AGP notes
receivable on Aztar's balance sheet with the assets acquired in the
acquisition of the AREI/AGP partnership interests in July 1993
caused a net decrease of $2.9 million in 1993. Included in this
$2.9 million net decrease was an increase of $7.4 million as a
result of a $171 million 12 1/4% First Mortgage note receivable
from AGP. The company loaned AGP the $171 million in November 1992
so that AGP could redeem its outstanding 12% First Mortgage Notes
Due 1996. This note was one of the notes receivable that were
replaced in the AREI/AGP acquisition.
Interest expense increased by $14.2 million in 1993 compared to
1992. Interest incurred on the $200 million 11% Senior Subordinated
Notes Due 2002 that were issued in October 1992 was $17.2 million
higher in 1993 than in 1992. This increase in interest expense was
offset by $2.4 million of increased interest being capitalized in
1993 in association with construction projects.
DISCONTINUED OPERATIONS The company received a refund of $1.2
million in a settlement in 1992 with Canadian tax authorities
related to the 1988 and 1989 income tax returns of Ramada Inc.
involving the discontinued hotel business.
EXTRAORDINARY ITEMS The company had an extraordinary loss in 1992
of $5.3 million, net of an income tax benefit of $2.8 million,
related to the payment of a redemption premium and the writeoff of
deferred financing costs associated with the redemption of the $171
million outstanding of 12% First Mortgage Notes Due 1996 of AGP.
ACCOUNTING CHANGE In 1992, the company adopted Statement of
Financial Accounting Standards No. 109 related to the reporting of
income taxes. The effect of this action and the company's election
not to restate prior-year financial statements resulted in a net
deferred income tax benefit of $7.5 million.
F-32
Results of Operations - 1992 versus 1991
Aztar's consolidated revenues were $512.0 million for 1992, an
increase of 6% from $481.3 million in 1991, reflecting higher
revenues from all three properties. The increase in revenues was
primarily as a result of increases in casino revenue at all three
properties resulting from market growth in the slot segment, added
slot machine capacity, improved market shares and the reversal of
$6.0 million of progressive jackpot accruals at TropWorld. Rooms
and food and beverage revenue declined at all three properties,
reflecting a continuing strategy of using rooms and food and
beverage service as a means of promoting casino activity.
Aztar's consolidated operating costs and expenses were $479.4
million in 1992, a 3% increase from $467.6 million in 1991. The
increase primarily reflects a larger volume of business.
Consolidated marketing expenses were higher, reflecting increased
marketing expenses at all three properties, as a result of
increased staffing, higher levels of expenses for entertainers, and
special promotions to stimulate incremental revenue.
Consolidated operating income was $32.6 million in 1992, a 138%
improvement over $13.7 million in 1991, reflecting improved
operating results at all three properties. Increased revenues from
the more profitable slot segment combined with relatively lower
increases in costs and expenses resulted in operating efficiencies
that led to higher operating margins at all three properties.
Operating income is after net rent of $45.7 million in 1992, down
$1.5 million from 1991 principally as a result of a $0.9 million
decline in the interest factor at Tropicana due to an overall
decline in interest rates in 1992.
TROPWORLD TropWorld had a successful year in 1992 despite
continuing poor economic conditions in the Northeast and a very
competitive market. TropWorld revenues rose 8% to $334.3 million
in 1992 from $310.3 million in 1991, while the increase in costs
and expenses was proportionally less, 3% to $306.6 million from
$298.1 million. The most important source of the resulting
excellent operating flow-throughs was in the casino, where total
revenues increased 9% while associated casino and marketing
expenses increased 7%. TropWorld's use of rooms and food and
beverage services as a way to promote casino activity resulted in
a 10% decrease in revenue in those categories, with a corresponding
9% decrease in rooms and food and beverage costs.
The Atlantic City market recorded strong growth in 1992 with $3.2
billion of casino win*, an increase of 7.5% from 1991. TropWorld's
growth exceeded the market's with casino revenue up 8% to $310
million, its highest ever, from $287 million in 1991. Slot
operations were the driving force at TropWorld in 1992. Slot win
for 1992 was $227.5 million, a 15% increase over $198.4 million in
1991 due to a targeted marketing and product strategy and growth in
* Market comparisons are stated on a calendar basis for the market
and the property.
F-33
the market. The Atlantic City slot market grew 14% during 1992,
reaching $2.114 billion in slot win, up from $1.851 billion in
1991. TropWorld captured 10.8% of the slot market in 1992,
compared with a 10.7% share in 1991 and 10.3% in 1990. Atlantic
City market-wide table games revenue declined approximately 3% in
1992, to $1.102 billion from $1.140 billion in 1991. TropWorld's
table games revenue dropped to $83 million in 1992, a 7% decrease.
The decline in table games revenue in 1992 was the fourth
consecutive year of decline in the Atlantic City market and the
third consecutive year of decline at TropWorld, in both cases
somewhat by design. With the easing of restrictions on the
allocation of casino floor space, operators are dedicating more
floor space to the more profitable slot segment, thereby reducing
the number of table games units.
TropWorld's improvements in operating efficiencies, partially a
result of the change in the mix of revenue toward higher-margin
slots from table games, were reflected in a 127% improvement in
operating income, to $27.7 million from $12.2 million. The
decrease in table games revenue together with the issuance of less
credit has allowed for a decrease in the provision for doubtful
accounts of 75% to $0.5 million in 1992 from $2.0 million in 1991.
Operating income is after net rent of $38.2 million in 1992, down
from $38.6 million in 1991. Depreciation and amortization was
$17.3 million in both years. To some extent the year-over-year
comparison favors 1992 because of the negative effects the Persian
Gulf War had on operations at TropWorld in the first quarter of
1991.
TROPICANA Tropicana reported improved results for 1992 despite
external factors including a highly competitive market due to
unabsorbed capacity and to negative economic conditions,
particularly in southern California. The Las Vegas market in 1992
experienced visitor growth that was weak by Las Vegas standards
early in the year, countered in part by a boost due to deep air
fare discounting during the summer.
Tropicana revenues for 1992 were $130.9 million, a gain of 1% from
$129.4 million in 1991. Casino revenue was 8% higher in 1992 than
in 1991. Tropicana made significant progress in 1992 in the
continuing shift from its historical dependence on premium table
games to the slot segment, which has higher growth rates and better
profit margins. Slot revenue growth at Tropicana was significantly
higher than growth in the market as a result of increased slot
machine capacity and improved slot machine product in the casino,
coupled with increased slot marketing efforts. Slot revenue at
Tropicana rose 27%* in 1992 while Las Vegas market slot revenues
rose 9%. Tropicana win from games excluding baccarat was down 3%
in 1992. Total games revenue, including baccarat, was down 7%.
The games hold percentage was basically unchanged in 1992 from
1991. The decrease in games revenue allowed for a decrease in the
provision for doubtful accounts of 25%, to $2.1 million in 1992
from $2.8 million in 1991.
* Market comparisons are stated on calendar basis for the market
and the property.
F-34
Occupancy at Tropicana was higher in 1992 than in 1991 by more than
two occupancy points. But continuing pressure on room rates in Las
Vegas and greater utilization of Tropicana's rooms to promote its
casino games resulted in an 8% reduction in rooms revenue. Food
and beverage revenue was also lower, by 13%, because of lower
demand for banquets and the closing of Tropicana's buffet. Food
and beverage costs were correspondingly 14% lower in 1992 than in
1991.
Cost and expenses were $126.6 million in 1992, less than 1% higher
than the level of $126.2 million in 1991. Costs and expenses in
1992 included $7.1 million of net rent, compared with $8.0 million
in 1991, and depreciation and amortization of $7.1 million in 1992,
compared with $6.9 million in 1991. Operating income was $4.3
million in 1992, an increase of 34% from $3.2 million in 1991.
RAMADA EXPRESS Ramada Express revenues for 1992 were $46.8
million, a 13% increase from $41.6 million in 1991. Costs and
expenses rose less than half of the revenue increase, creating good
flow-through to profit and higher overall operating margins. Costs
and expenses included $3.9 million of depreciation and amortization
in 1992, compared with $3.7 million in 1991. Net rent was not
significant in either year. Operating income was $8.7 million in
1992, an increase of 45% from $6.0 million in 1991.
Ramada Express turned in a strong operating performance in 1992,
improving its market position in a highly competitive atmosphere
even as the company commenced in September a $75 million expansion
of the property. Despite some negative impact from the woes of the
southern California economy, the Laughlin market grew strongly in
1992. Casino revenues* for the market were $506.9 million for
1992, a 9% increase from $463.4 million in 1991. Slot revenue
growth for the Laughlin market was particularly strong, with slot
revenues growing 12% during 1992, while Ramada Express slot revenue
grew 22% in the same period. Rooms occupancy for the Laughlin
market was 91% for 1992 compared with 90% in 1991. Occupancy at
Ramada Express was 90% in 1992, 2.5 occupancy points higher than
the previous year.
INTEREST INCOME AND EXPENSE Interest income increased $2.5
million in 1992 from 1991, due principally to the $171 million note
receivable from AGP. Consolidated interest expense in 1992 was
$31.1 million, down $1.0 million from the prior year. The company
incurred $5.2 million of interest expense in 1992 in connection
with the $200 million 11% Senior Subordinated Notes Due 2002 issued
in October 1992. That increase was offset by decreases in interest
expense that occurred principally as a result of three factors, the
primary factor being the expiration on December 31, 1991 of an
interest rate swap agreement. The other factors were the payment
in January 1992 of a settlement with the Internal Revenue Service
on which interest had been accrued in 1991 and the capitalization
of interest on the Ramada Express expansion.
* Market comparisons are stated on a calendar basis for the market
and the property.
F-35
UNCONSOLIDATED PARTNERSHIP The company's loss on its equity share
in Tropicana Enterprises, the partnership that owns the Tropicana
land and improvements, declined as a result of lower interest
expense due to an overall decline in interest rates in 1992 on the
floating rate bank financing of Tropicana Enterprises. Aztar is a
noncontrolling 50% partner in Tropicana Enterprises.
F-36
SUMMARY OF SELECTED FINANCIAL DATA
Aztar Corporation and Subsidiaries
For the Five Years Ended December 30, 1993
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
Statement of Operations
Data (in thousands)
Revenues $518,762 $512,045 $481,285 $515,060 $522,255
Operating income (loss)(a) 37,419 32,609 13,654 (3,574) (33,812)
Net interest income and
expense (a) (21,191) (2,477) (5,856) (4,480) (20,950)
Other, net (3,822) (4,125) (5,030) (6,905) (7,422)
Income (loss) from
continuing operations
before extraordinary
items and cumulative
effect of accounting
change 11,382 16,378 2,708 (15,922) (47,689)
Discontinued operations -- 1,262 2,553 -- 127,130
Extraordinary items -- (5,335) 1,237 963 --
Cumulative effect of
accounting change (b) -- 7,500 -- -- --
Net income (loss) 11,382 19,805 6,498 (14,959) 79,441
Common Stock Data
(per share)
Income (loss) from
continuing operations
before extraordinary
items and cumulative
effect of accounting
change:
Earnings per common
and common
equivalent share $ .28 $ .41 $ .05 $ (.42) $ (1.17)
Earnings per common
share assuming
full dilution .27 .40 .05 * (1.15)
Cash dividends declared -- -- -- -- 1.00
Equity 9.29 9.03 8.42 8.29 8.28
* Anti-dilutive
Balance Sheet Data
(in thousands at
year end)
Total assets $877,171 $849,565 $638,474 $641,905 $678,476
Long-term debt 404,086 378,058 176,693 180,391 181,102
Series B ESOP convertible
preferred stock 3,905 2,998 2,059 1,056 --
Shareholders' equity 346,988 333,749 318,900 312,771 338,528
(a) See "Note 18. Acquisition" of the Notes to Consolidated Financial
Statements.
(b) See "Note 16. Cumulative Effect of Accounting Change" of the Notes to
Consolidated Financial Statements.
F-37
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Shareholders and Board of Directors
Aztar Corporation
Our report on the consolidated financial statements of Aztar Corporation and
Subsidiaries is included in this report on Form 10-K on page F-1. In
connection with our audits of such consolidated financial statements, we have
also audited the related financial statement schedules listed in the index on
page 21 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken
as a whole, present fairly, in all material respects, the information required
to be included therein.
COOPERS & LYBRAND
Phoenix, Arizona
February 11, 1994
S-1
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
AZTAR CORPORATION AND SUBSIDIARIES
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------------- -------- -------- -------- -------- --------
Balance at Retire- Balance
Beginning Additions ments or Other at End of
Description of Year at Cost Sales Changes Year
- -------------- --------- --------- -------- --------- ---------
1993
- ----
Buildings and
equipment $399,670 $ 83,851 $ 3,352 $306,841 (a)
819 (b) $787,829
Land 78,853 2,942 -- -- 81,795
Leased under
capital leases 54,751 385 459 (45,267)(a) 9,410
Construction in
progress 15,718 (8,989) -- 741 (a)
(769)(b) 6,701
-------- -------- -------- -------- --------
$548,992 $ 78,189 $ 3,811 $262,365 $885,735
======== ======== ======== ======== ========
1992
- ----
Buildings and
equipment $394,035 $ 11,339 $ 5,704 $ -- $399,670
Land 78,735 118 -- -- 78,853
Leased under
capital leases 51,727 3,687 663 -- 54,751
Construction in
progress 6,568 9,150 -- -- 15,718
-------- -------- -------- -------- --------
$531,065 $ 24,294 $ 6,367 $ -- $548,992
======== ======== ======== ======== ========
1991
- ----
Buildings and
equipment $385,096 $ 20,071 $ 9,082 $ (2,050)(b) $394,035
Land 76,181 2,554 -- -- 78,735
Leased under
capital leases 50,276 3,282 1,684 (147)(b) 51,727
Construction in
progress 10,883 (4,225) 90 -- 6,568
-------- -------- -------- -------- --------
$522,436 $ 21,682 $ 10,856 $ (2,197) $531,065
======== ======== ======== ======== ========
(a) Acquisition of AREI/AGP partnership interests.
(b) Primarily transfers and reclassifications.
S-2
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
AZTAR CORPORATION AND SUBSIDIARIES
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ------------------ ---------- ---------- ---------- ---------- ----------
Balance at Additions Retire- Balance at
Beginning Charged to ments or Other End of
Description of Year Expense Sales Changes Year
- ------------------ ---------- ---------- ---------- ---------- ----------
1993
- ----
Buildings and
equipment $112,442 $ 29,672 $ 2,424 $ -- $139,690
Leased under
capital leases 45,489 1,899 457 (38,564)(a) 8,367
-------- -------- -------- -------- --------
$157,931 $ 31,571 $ 2,881 $(38,564) $148,057
======== ======== ======== ======== ========
1992
- ----
Buildings and
equipment $ 93,689 $ 24,111 $ 5,358 $ -- $112,442
Leased under
capital leases 42,524 3,533 568 -- 45,489
-------- -------- -------- -------- --------
$136,213 $ 27,644 $ 5,926 $ -- $157,931
-------- -------- -------- -------- --------
1991
- ----
Buildings and
equipment $ 78,072 $ 23,282 $ 6,496 $ (1,169)(b) $ 93,689
Leased under
capital leases 39,671 3,668 668 (147)(b) 42,524
-------- -------- -------- -------- --------
$117,743 $ 26,950 $ 7,164 $ (1,316) $136,213
======== ======== ======== ======== ========
(a) Acquisition of AREI/AGP partnership interests.
(b) Primarily transfers and reclassifications.
S-3
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
AZTAR CORPORATION AND SUBSIDIARIES
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------ ------------ ------------ ------------ ------------
Balance at Balance at
Beginning End of
Description of Year Additions Deductions Year
- ------------------- ------------ ------------ ---------- ------------
Allowance for
doubtful accounts
receivable:
1993 $ 13,124 $ 1,566(a) $ 4,782(d) $ 9,908
1992 14,349 2,622(a) 3,847(d) 13,124
1991 15,126 4,763(a) 5,540(d) 14,349
Deferred income
tax asset
valuation
allowance:
1993 $ 24,732 $ 479(b) $ 4,237(e) $ 20,974
1992 -- 25,562(a)(c) 830(d) 24,732
(a) Charged to costs or expenses.
(b) Reflects an adjustment to the deferred income tax asset account for the
effect of legislation that increased the federal income tax rate from 34%
to 35%.
(c) Allowance established in 1992 in connection with the adoption of
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes.
(d) Related assets charged against allowance account.
(e) Reflects a reduction of $3,878,000, with a corresponding decrease to the
1993 income tax expense, due to the generation of taxable income that
resulted in the utilization of a portion of a net operating loss
carryforward. The remainder of the reduction represented charges of
deferred tax assets against the valuation allowance account.
S-4
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
AZTAR CORPORATION AND SUBSIDIARIES
For the Years Ended December 30, 1993, December 31, 1992 and January 2, 1992
(in thousands)
COLUMN A COLUMN B
------------------------------------- ------------------
Charged to
Item Costs and Expenses
------------------------------------- ------------------
1993
----
Advertising $ 5,714 (a)
Property taxes 14,183
Gaming revenue taxes 34,758
1992
----
Advertising $ 7,484 (a)
Property taxes 13,692
Gaming revenue taxes 33,647
1991
----
Advertising $ 7,082 (a)
Property taxes 12,905
Gaming revenue taxes 30,493
(a) Includes only direct media costs paid by the Company.
S-5
EXHIBIT INDEX
- -------------
3.1 Restated Certificate of Incorporation, filed as Exhibit 3.1 to Aztar
Corporation's Registration Statement No. 33-32009 and incorporated
herein by reference.
3.2 By-Laws, as amended and restated May 9, 1991, filed as Exhibit 1 to
Aztar Corporation's Form 8-K dated May 9, 1991 and incorporated
herein by reference.
4.1 Rights Agreement between Aztar Corporation and First Interstate Bank
of Arizona, N.A. as Rights Agent, filed as Exhibit 4.1 to Aztar
Corporation's Registration Statement No. 33-51008 and incorporated
herein by reference.
4.2(a) Indenture, dated as of December 15, 1989, among Aztar Mortgage
Funding, Inc., Ramada Inc., as guarantor, and First Interstate Bank
of Arizona, N.A., as Trustee, relating to the First Mortgage Notes
Due 1996, filed as Exhibit 4.2 to Aztar Corporation's Registration
Statement No. 33-51008 and incorporated herein by reference.
4.2(b) Instrument of Appointment and Acceptance of Successor Trustee dated
as of January 26, 1993, among Aztar Mortgage Funding, Inc., as
Issuer, Aztar Corporation, as Guarantor, First Interstate Bank of
Arizona N.A., as resigning Trustee, and First Bank National
Association, as successor Trustee.
4.3 Indenture, dated as of October 8, 1992, between Aztar Corporation
and Bank of America National Trust & Savings Association, as
Trustee, relating to the Senior Subordinated Notes due 2002 of Aztar
Corporation, filed as Exhibit 4.1 to Aztar Corporation's Form 10-Q
for the quarter ended October 1, 1992 and incorporated herein by
reference.
10.1 Amended and Restated Lease (Tropicana Hotel/Casino) between
Tropicana Enterprises and Hotel Ramada of Nevada, dated November 1,
1984, filed as Exhibit 10.20 to Ramada Inc.'s 1984 Form 10-K
(Commission File Reference Number 1-5440) and incorporated herein
by reference.
10.2 Amended and Restated Partnership Agreement by and between the Jaffe
Group and Adamar of Nevada, entered into as of November 1, 1984,
filed as Exhibit 10.22 to Ramada Inc.'s 1984 Form 10-K (Commission
File Reference Number 1-5440) and incorporated herein by reference.
*10.3(a) Management (Severance) Agreement, dated December 30, 1981, by and
between Ramada Inc. and Paul E. Rubeli, filed as Exhibit 10(l) to
Ramada Inc.'s 1981 Form 10-K (Commission File Number 1-5440) and
incorporated herein by reference.
*10.3(b) Management (Severance) Agreement, dated October 30, 1985, by and
between Ramada Inc. and Robert M. Haddock, filed as Exhibit 10.29
to Ramada Inc.'s 1985 Form 10-K (Commission File Number 1-5440) and
incorporated herein by reference.
*Indicates a management contract or compensatory plan or arrangement.
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EXHIBIT INDEX
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*10.3(c) Severance Agreements by and between Ramada Inc. and 2 executives of
Ramada Inc. prior to the Restructuring, filed as Exhibit 10.18(a)
and (b) to Aztar Corporation's Registration Statement No. 33-51008
and incorporated herein by reference.
*10.3(d) Severance Agreements by and between Ramada Inc. and certain
executives of Ramada Inc. prior to the Restructuring, filed as
Exhibit 10.18(c),(d),(e),(f),(g),(h) and (i) to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein by
reference.
*10.3(e) Amendment to Severance Agreement by and between Ramada Inc. and Paul
E. Rubeli prior to the Restructuring, filed as Exhibit 10.18(j) to
Aztar Corporation's Registration Statement No. 33-51008 and
incorporated herein by reference.
*10.3(f) Amendment to Severance Agreements by and between Ramada Inc. and
certain executives of Ramada Inc. prior to the Restructuring, filed
as Exhibit 10.18(k),(l),(m),(n) and (o) to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein by
reference.
10.4 Ramada Express Expansion Design-Build Construction Agreement, dated
as of August 24, 1992, by and between Mardian Construction Company
and Ramada Express, Inc., filed as Exhibit 10.32 to Aztar
Corporation's Registration Statement No. 33-51008 and incorporated
herein by reference.
*10.5 Aztar Corporation 1989 Stock Option and Incentive Plan filed as
Exhibit 4 to Aztar Corporation's Registration Statement No. 33-32399
and incorporated herein by reference.
10.6 Master Consent Agreement, dated July 18, 1989, by and among Ramada
Inc., Adamar of Nevada, Hotel Ramada of Nevada, Adamar of New
Jersey, Inc., Aztar Corporation, Tropicana Enterprises, Trop C.C.
and the Jaffe Group, with attached exhibits, filed as Exhibit 10.50
to Aztar Corporation's Registration Statement No. 33-29562 and
incorporated herein by reference.
10.7 Mortgage and Fixture Security Agreement, dated December 15, 1989,
made by Ambassador General Partnership, Adamar of New Jersey, Inc.,
Atlantic-Deauville Inc. and Aztar Mortgage Funding, Inc., covering
TropWorld, filed as Exhibit 10.38 to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein by
reference.
10.8 Mortgage and Fixture Security Agreement, dated December 15, 1989,
made by Adamar of New Jersey, Inc., Atlantic-Deauville Inc., Adamar
Garage Corporation and Aztar Mortgage Funding, Inc., covering the
Barbun Parking Garage, filed as Exhibit 10.39 to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein by
reference.
*Indicates a management contract or compensatory plan or arrangement.
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EXHIBIT INDEX
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10.9 Mortgage and Fixture Security Agreement, dated December 15, 1989,
made by Adamar of New Jersey, Inc., Atlantic-Deauville Inc., Adamar
Garage Corporation and Aztar Mortgage Funding, Inc., covering the
Transportation Center, filed as Exhibit 10.40 to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein by
reference.
10.10 Mortgage and Collateral Assignment, dated December 15, 1989, made
by Adamar of New Jersey, Inc., Adamar Garage Corporation and First
Fidelity Bank of New Jersey, National Association, as Trustee,
covering the Barbun Parking Garage, filed as Exhibit 10.41 to Aztar
Corporation's Registration Statement No. 33-51008 and incorporated
herein by reference.
10.11 Security Agreement and Assignment of Contracts, dated December 15,
1989, by and among Adamar of New Jersey, Inc., Ambassador General
Partnership, Atlantic-Deauville Inc. and Aztar Mortgage Funding,
Inc., covering TropWorld, filed as Exhibit 10.44 to Aztar
Corporation's Registration Statement No. 33-51008 and incorporated
herein by reference.
10.12 Collateral Assignment of Commercial Leases, dated December 15, 1989,
made by Adamar of New Jersey, Inc. and Aztar Mortgage Funding, Inc.,
covering the Expansion, filed as Exhibit 10.46 to Aztar
Corporation's Registration Statement No. 33-51008 and incorporated
herein by reference.
10.13 Collateral Assignment of Option to Purchase, dated December 19,
1989, made by Ambassador General Partnership to Aztar Mortgage
Funding, Inc., covering the Transportation Center Air Space Parcel
and the Barbun Parking Garage, filed as Exhibit 10.47 to Aztar
Corporation's Registration Statement No. 33-51008 and incorporated
herein by reference.
10.14 Assignment and Agreement, dated December 15, 1989, made by Adamar
of New Jersey, Inc., Ambassador General Partnership, Atlantic-
Deauville Inc., Adamar Garage Corporation and First Interstate Bank
of Arizona, N.A., filed as Exhibit 10.48 to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein by
reference.
10.15 Subordination Agreement, among Aztar Corporation, Adamar of New
Jersey, Inc., Aztar Mortgage Funding, Inc. and Ambassador General
Partnership, filed as Exhibit 4.15 to Aztar Mortgage Funding, Inc.
and Aztar Corporation's Registration Statement No. 33-29701 and
incorporated herein by reference.
*10.16(a) Employee Stock Ownership Plan of Aztar Corporation, as amended and
restated effective December 19, 1989, dated December 12, 1990, filed
as Exhibit 10.60(a) to Aztar Corporation's 1990 Form 10-K and
incorporated herein by reference.
*Indicates a management contract or compensatory plan or arrangement.
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EXHIBIT INDEX
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10.16(b) Term Loan Agreement, dated as of December 19, 1989, by and among
State Street Bank and Trust Company, as Trustee, Adamar Garage
Corporation, as lender, and Aztar Corporation, filed as Exhibit
10.50(b) to Aztar Corporation's Registration Statement No. 33-51008
and incorporated herein by reference.
10.16(c) Preferred Stock Purchase Agreement, dated as of December 19, 1989,
between Ramada Inc. and State Street Bank and Trust Company, as
Trustee, filed as Exhibit 10.50(c) to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein by
reference.
10.16(d) Letter Agreement, dated as of December 19, 1989, between Aztar
Corporation and State Street Bank and Trust Company, as Trustee,
relating to the Employee Stock Ownership Plan of Aztar Corporation,
filed as Exhibit 10.50(d) to Aztar Corporation's Registration
Statement No. 33-51008 and incorporated herein by reference.
10.17(a) Agreement and Plan of Merger, dated as of April 17, 1989, among New
World Hotels (U.S.A.), Inc., RI Acquiring Corp. and Ramada Inc., as
amended and Restated as of October 23, 1989, filed as Exhibit 2.1
to Aztar Corporation's Registration Statement No. 33-32009 and
incorporated herein by reference.
10.17(b) Letter, dated as of October 23, 1989, from Ramada Inc. to New World
Hotels (U.S.A.), Inc. regarding "Net Cash Flows from Investing
Activities", filed as Exhibit 2.1(a) to Aztar Corporation's
Registration Statement No. 33-32009 and incorporated herein by
reference.
10.17(c) Letter, dated as of October 23, 1989, from Ramada Inc. to New World
Hotels (U.S.A.), Inc. regarding certain franchising matters and
hotel projects, filed as Exhibit 2.1(b) to Aztar Corporation's
Registration Statement No. 33-32009 and incorporated herein by
reference.
10.18 Reorganization Agreement, dated as of April 17, 1989, between Ramada
Inc. and Aztar Corporation, as amended and restated as of October
23, 1989, filed as Exhibit 2.2 to Aztar Corporation's Registration
Statement No. 33-32009 and incorporated herein by reference.
10.19 Tax Sharing Agreement, dated as of April 17, 1989, among New World
Hotels (U.S.A), Inc., Ramada Inc. and Aztar Corporation, as amended
and restated as of October 23, 1989, filed as Exhibit 2.3 to Aztar
Corporation's Registration Statement No. 33-32009 and incorporated
herein by reference.
10.20 Guaranty and Acknowledgement Agreement, dated as of April 17, 1989,
among New World Development Company Limited, New World Hotels
(Holdings) Limited, New World Hotels (U.S.A.), Inc. and RI Acquiring
Corp., filed as Exhibit 2.4 to Aztar Corporation's Registration
Statement No. 33-29562 and incorporated herein by reference.
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EXHIBIT INDEX
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*10.21 Aztar Corporation 1990 Nonemployee Directors Stock Option Plan, as
amended and restated effective March 15, 1991, filed as Exhibit A
to Aztar Corporation's 1991 definitive Proxy Statement and
incorporated herein by reference.
*10.22 Aztar Corporation Nonqualified Retirement Plan for Senior
Executives, dated September 5, 1990, filed as Exhibit 10.2 to Aztar
Corporation's Form 10-Q for the quarter ended September 27, 1990 and
incorporated herein by reference.
10.23 First Amended and Restated Credit Agreement, dated December 28,
1993, by and among Ramada Express, Inc., Aztar Corporation, First
Interstate Bank of Nevada, N.A., as agent, Midlantic National Bank,
The Daiwa Bank, Limited, NBD Bank, N.A. and First Security Bank of
Idaho, N.A., and the Lenders listed therein.
10.24 Loan Agreement by and between Tropicana Enterprises, Hotel Ramada
of Nevada, Ramada Inc. and Lenders made and entered into November
19, 1984, as amended, filed as Exhibit 10.23 to Ramada Inc.'s 1984
Form 10-K (Commission File Reference Number 1-5440) and incorporated
herein by reference.
*10.25 Summary of deferred compensation program for designated executives
of Ramada, dated November 10, 1983, filed as Exhibit 10(r) to Ramada
Inc.'s 1983 Form 10-K (Commission File Reference Number 1-5440) and
incorporated herein by reference.
*10.26 Deferred Compensation Agreements entered into by and between Ramada
and designated executives (including each Executive Officer), dated
December 1, 1983, 1984 or 1985, filed as Exhibits 10.60(a) through
(w) to Aztar Corporation's Registration Statement No. 33-51008 and
incorporated herein by reference.
*10.27 Deferred Compensation Plan for Directors, dated December 1, 1983,
filed as Exhibit 10(t) to Ramada Inc.'s 1983 Form 10-K (Commission
File Reference Number 1-5440) and incorporated herein by reference.
*10.28 Deferred Compensation Agreements entered into by and between Ramada
and certain outside Directors as of December 1, 1983, filed as
Exhibits 10.62(a),(b),(c) and (d) to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein by
reference.
11. Statement Regarding Computation of Per Share Earnings.
21. Subsidiaries of Aztar Corporation.
23. Consent of Coopers & Lybrand.
*Indicates a management contract or compensatory plan or arrangement.
E-5