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FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________________
Commission file number ________
COLONY RIH HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4849060
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
----------------------
RESORTS INTERNATIONAL HOTEL AND CASINO, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4828297
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
----------------------
1133 Boardwalk
Atlantic City, NJ 08401
(Address of principal executive offices) (Zip Code)
Registrants' telephone number,
including area code:
(609) 344-6000
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
--- ---
The number of shares outstanding of Colony RIH Holdings, Inc.'s Class A Common
Stock, $0.01 par value, was 38,295 and the number of shares outstanding of
Colony RIH Holdings, Inc.'s Class B Common Stock, $0.01 par value, was 774,982,
each as of August 13, 2002.
The number of shares outstanding of Resorts International Hotel and Casino,
Inc.'s Common Stock, $0.01 par value, was 100 as of August 13, 2002.
COLONY RIH HOLDINGS, INC.
AND
RESORTS INTERNATIONAL HOTEL AND CASINO, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Unaudited Financial Statements
Condensed Consolidated Balance Sheets of Colony RIH Holdings, Inc. at June 2
30, 2002 and December 31, 2001
Condensed Consolidated Statements of Operations of Colony RIH Holdings, Inc. 3
for the six months ended June 30, 2002 and 2001
Condensed Consolidated Statements of Cash Flows of Colony RIH Holdings, Inc. 4
for the six months ended June 30, 2002 and 2001
Notes to Condensed Consolidated Financial Statements of Colony RIH Holdings, 5
Inc.
Condensed Consolidated Balance Sheets of Resorts International Hotel and 8
Casino, Inc. at June 30, 2002 and December 31, 2001
Condensed Consolidated Statements of Operations of Resorts International 9
Hotel and Casino, Inc. for the six months ended June 30, 2002 and 2001
Condensed Consolidated Statements of Cash Flows of Resorts International 10
Hotel and Casino, Inc. for the six months ended June 30, 2002 and 2001
Notes to Condensed Consolidated Financial Statements of Resorts 11
International Hotel and Casino, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results 13
of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COLONY RIH HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
June 30, December 31,
2002 2001
------------- -------------
ASSETS (Unaudited)
------
Current assets
Cash and cash equivalents $ 35,181 $ 15,363
Receivables, net 8,952 8,273
Inventories 1,431 1,536
Prepaid expenses 3,438 2,818
Deferred income taxes 2,590 2,524
------------- -------------
Total current assets 51,592 30,514
Property and equipment, net 133,576 126,139
Other assets (including $99,411 and $0 of restricted cash
and cash equivalents in 2002 and 2001, respectively) 127,447 22,491
------------- -------------
Total assets $ 312,615 $ 179,144
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Current maturities of long-term debt $ 857 $ 10,229
Accounts payable 7,941 5,746
Accrued interest payable 5,750 1,277
Accrued expenses and other current liabilities 25,245 21,274
------------- -------------
Total current liabilities 39,793 38,526
------------- -------------
Long-term debt 183,218 88,502
Deferred income taxes 1,349 1,349
Redeemable common stock 3,875 2,338
------------- -------------
Total liabilities 228,235 130,715
Shareholders' equity
Common stock:
Class A - -
Class B 8 4
Capital in excess of par 74,104 40,750
Retained earnings 10,268 7,524
Accumulated other comprehensive income - 151
------------- -------------
Total shareholders' equity 84,380 48,429
------------- -------------
Total liabilities and shareholders' equity $ 312,615 $ 179,144
============= =============
The accompanying notes are an integral part of these financial statements.
-2-
COLONY RIH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the three and six months ended June 30, 2002 and 2001
(Dollars in thousands)
Three months ended Six months ended
June 30, June 30,
--------------------------------------------- --------------------------------------------
April 1, 2001 to April 25, 2001 to January 1, 2001 to April 25, 2001 to
2002 April 24, 2001 June 30, 2001 2002 April 24, 2001 June 30, 2001
--------- ---------------- ---------------- ------ ------------------ -----------------
Successor Predecessor Successor Successor Predecessor Successor
Revenues
Casino $ 62,152 $ 16,166 $ 41,334 $ 120,236 $ 68,220 $ 41,334
Lodging 3,409 913 2,660 6,583 3,996 2,660
Food and beverage 6,362 1,591 4,783 12,128 6,977 4,783
Other 2,204 417 1,309 3,493 1,523 1,309
Less: promotional allowances (7,038) (1,684) (4,639) (13,576) (7,510) (4,639)
--------- ------------- ------------ ---------- ------------- -------------
Total net revenue 67,089 17,403 45,447 128,864 73,206 45,447
Costs and expenses
Casino 36,520 9,130 25,342 71,850 42,234 25,342
Lodging 522 257 674 949 913 674
Food and beverage 3,333 848 2,696 6,162 3,639 2,696
Other operating 6,329 1,681 4,375 12,496 8,293 4,375
Selling, general and administrative 9,097 2,454 5,855 18,698 10,532 5,855
Depreciation and amortization 1,722 949 1,220 3,249 5,325 1,220
--------- ------------- ------------ ---------- ------------- -------------
Total costs and expenses 57,523 15,319 40,162 113,404 70,936 40,162
Income from operations 9,566 2,084 5,285 15,460 2,270 5,285
Interest income 620 118 195 850 510 195
Interest expense (5,628) (1,585) (1,919) (8,089) (7,673) (1,919)
Other expense (24) - (86) (57) - (86)
--------- ------------- ------------ --------- ------------- ------------
Income (loss) before income taxes
and extraordinary item 4,534 617 3,475 8,164 (4,893) 3,475
Provision for income taxes (1,773) - (1,337) (3,225) - (1,337)
--------- ------------- ------------ --------- ------------- ------------
Income (loss) before
extraordinary item 2,761 617 2,138 4,939 (4,893) 2,138
Extraordinary loss on extinguishment
of debt, net of income tax benefit
of $1,182 - - - (2,196) - -
--------- ------------- ------------ --------- ------------- ------------
Net income (loss) $ 2,761 $ 617 $ 2,138 $ 2,743 $ (4,893) $ 2,138
========= ============= ============ ========= ============= ============
The accompanying notes are an integral part of these financial statements.
-3-
COLONY RIH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the six months ended June 30, 2002 and 2001
(Dollars in thousands)
Six months ended
June 30,
--------------------------------------------------------
January 1, 2001 to April 25, 2001 to
2002 April 24, 2001 June 30, 2001
----------- ------------------ -----------------
Successor Predecessor Successor
CASH FLOWS FROM OPERATING ACTIVITIES:
Reconciliation of net income (loss) to net cash provided by
operating activities-
Net income (loss) $ 2,743 $ (4,893) 2,138
Adjustments to reconcile net income (loss) to net cash
provided by operating activities-
Extraordinary loss on extinguishment of debt, net
of income tax benefit 2,196 - -
Depreciation and amortization 4,104 5,038 1,038
Amortization of debt premiums, discounts
and issuance costs 542 203 203
Provision for doubtful receivables 739 517 142
Provision for (reversal of) discount on CRDA obligations,
net of amortization (851) 280 180
Other (104) - -
Net (increase) decrease in receivables (1,418) 684 (427)
Net increase in inventories and prepaid expenses (732) (1,600) (2,030)
Net (increase) decrease in deferred charges and
other assets (98) 72 (116)
Net increase (decrease) in accounts payable and
accrued expenses 7,210 (572) 662
Net increase in interest payable 4,473 9,109 413
---------- --------------- ----------------
Net cash provided by operating activities 18,804 8,838 2,203
---------- --------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of cash and cash equivalents - restricted (99,400) - -
Purchases of property and equipment (4,439) (1,229) (2,827)
CRDA deposits (1,420) (1,332) -
CRDA refunds 1,492 - -
Purchase of RIH, net of cash acquired - - (97,004)
---------- --------------- ----------------
Net cash used in investing activities (103,767) (2,561) (99,831)
---------- --------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 180,835 - 84,000
Payments to secure borrowings (7,931) - (6,808)
Proceeds from the issuance of common stock 33,463 - 40,375
Proceeds from the issuance of redeemable common stock 1,537 - 2,125
Prepayment penalty on repayment of long-term debt (1,094) - -
Debt repayments (102,131) (234) (3,114)
Other 102 - -
---------- --------------- ----------------
Net cash provided by (used in) financing activities 104,781 (234) 116,578
---------- --------------- ----------------
Net increase in cash and cash equivalents 19,818 6,043 18,950
Cash and cash equivalents at beginning of period 15,363 21,453 -
---------- --------------- ----------------
Cash and cash equivalents at end of period $ 35,181 $ 27,496 $ 18,950
========== =============== ================
The accompanying notes are an integral part of these financial statements.
-4-
COLONY RIH HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation - Colony RIH Holdings, Inc., a
Delaware corporation ("CRH", the "Company," or the "Successor"), owns 100% of
the outstanding common stock of Resorts International Hotel and Casino, Inc., a
Delaware corporation ("RIHC"). RIHC, through its wholly owned subsidiary Resorts
International Hotel, Inc., a New Jersey corporation ("RIH", or the
"Predecessor"), owns and operates Resorts Atlantic City, a casino/hotel located
in Atlantic City, NJ.
CRH was formed at the direction of Colony Investors IV, L.P. ("Colony
IV"), a Delaware limited partnership, under the laws of the State of Delaware on
March 7, 2001. RIHC was formed at the direction of Colony IV on October 24,
2000.
RIHC, Sun International North America, Inc., a Delaware corporation
("SINA"), and GGRI, Inc., a Delaware corporation ("GGRI"), entered into a
purchase agreement, dated as of October 30, 2000, as amended (the "Purchase
Agreement"). Pursuant to the Purchase Agreement, RIHC acquired all of the
capital stock of RIH, the Warehouse Assets (as defined in the Purchase
Agreement) and all of the capital stock of New Pier Operating Company, Inc., a
New Jersey corporation (collectively, the "Acquisition") on April 25, 2001 for
approximately $144.8 million.
The Acquisition has been accounted for using the purchase method, and
accordingly, the aggregate purchase price, including transaction fees and
expenses, has been allocated based on the fair value of the assets acquired and
liabilities assumed. As a result, the condensed consolidated financial
statements for the period subsequent to the Acquisition are presented on a
different basis of accounting than those for the periods prior to the
Acquisition and, therefore, are not directly comparable.
On March 22, 2002, RIHC sold $180.0 million aggregate principal amount
of 11 1/2% First Mortgage Notes (the "First Mortgage Notes") at a price of
97.686% yielding $175.8 million. Concurrent with the sale of the notes, CRH
issued 17,295 shares of class A common stock at a cash price of $0.0475 and
349,992 shares of class B common stock at a price of $100 to our existing
shareholders for a total price of approximately $35.0 million. The proceeds from
the sale of the First Mortgage Notes and issuance of stock were used to retire
existing debt and will be used to finance the cost to develop, construct, and
equip a new hotel tower. Additionally, $10.0 million of the proceeds from the
issuance of stock has been deposited in a liquidity disbursement account to be
used for working capital in the event RIHC's Adjusted Consolidated EBITDA for
any four fiscal quarters ending on or prior to December 31, 2004 is less than
$28.0 million. Of the proceeds, $99.4 million is considered restricted cash
under the terms of the debt offering and is included in other assets on the
Condensed Consolidated Balance Sheet as of June 30, 2002.
The condensed consolidated financial statements include the accounts of
CRH and its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The Predecessor's financial statements
include the accounts of RIH.
In June 2001, Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142") was issued. This
Statement addresses how goodwill and other intangible assets should be accounted
for after they have been initially recognized in the financial statements. The
Company adopted SFAS No. 142 on January 1, 2002. Adjusting the statement of
operations to reflect the adoption of SFAS No. 142 by excluding amortization of
goodwill totaling $836,000 would have resulted in a net loss of $4.1 million for
the period from January 1, 2001 to April 24, 2001.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and notes
-5-
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for fair presentation have been
included. The casino industry in Atlantic City is seasonal in nature;
accordingly, operating results for the six-month period ended June 30, 2002 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2002.
The balance sheet at December 31, 2001 has been derived from the
audited financial statement at that date but does not include all of the
information and notes required by generally accepted accounting principles for
the complete financial statements.
For further information, refer to the consolidated financial statements
and notes thereto included in CRH's annual report on Form 10-K for the year
ended December 31, 2001.
2. EFFECTS OF ACQUISITION FINANCING
CRH financed the Acquisition and paid related fees and expenses with:
(i) proceeds of $42.5 million from the issuance of common stock, (ii) a $17.5
million note issued by CRH to SINA (the "Seller Note"), (iii) borrowings by
RIHC, guaranteed by CRH under a $90.0 million credit agreement (the "Credit
Facility") and (iv) RIH's available cash.
Prior to the Acquisition, CRH conducted no business other than in
connection with the Purchase Agreement and the Credit Facility.
In connection with the Acquisition for approximately $144.8 million,
CRH acquired assets with a fair value of $173.9 million and assumed liabilities
of $29.1 million.
The pro forma unaudited results of operations for the six months ended
June 30, 2001, assuming consummation of the Acquisition and issuance of the
Company's Common Stock, Seller Note, and Credit Facility as of January 1, 2001
are as follows:
Revenue $ 118,653
Net income 3,031
3. LONG TERM DEBT
On March 22, 2002, RIHC sold $180.0 million aggregate principal amount
of First Mortgage Notes at a price of 97.686% yielding $175.8 million. Interest
on the First Mortgage Notes is payable on March 15 and September 15 of each year
and the First Mortgage Notes are due in full on March 15, 2009.
The First Mortgage Notes contain certain covenants that, among other
things, will limit our ability and the ability of our subsidiaries to pay
dividends on, redeem or repurchase our or their capital stock, make investments,
incur additional indebtedness, permit payment of or restrict dividends by
certain of our subsidiaries, enter into sale leaseback transactions, sell
assets, guarantee indebtedness, create certain liens, engage in transactions
with affiliates, and consolidate, merge or transfer all or substantially all our
assets and the assets of our subsidiaries on a consolidated basis.
In conjunction with the Acquisition, RIHC borrowed $82.0 million under
an Amended and Restated Credit Agreement, dated April 25, 2001, from the lenders
named therein. The Credit Facility was comprised of $80.0 million in term loans
(Term Loan A for $25.0 million and Term Loan B for $55.0 million) and a $10.0
million revolving credit facility. Principal payments on the term loans were due
quarterly, commencing on June 29, 2001. Interest on borrowings outstanding was
either at LIBOR or an alternative base rate, plus an applicable margin in each
case. The outstanding balance on the Credit Facility was repaid on March 22,
2002 with the proceeds from the sale of the First Mortgage Notes. Additionally,
the Company terminated its existing interest rate collar agreements and received
$102,000 in cash upon termination of these agreements.
-6-
In conjunction with the Acquisition, CRH also issued a $17.5 million
note to SINA. The Seller Note was subordinated to the term loans under the
Credit Facility and had a 7-year term. This loan had interest at 12.5% per annum
of which 6.25% was payable in cash and 6.25% was paid in kind. There was no
amortization of principal on this loan. The Seller Note was repaid on March 22,
2002, with the proceeds from the sale of the First Mortgage Notes.
In connection with the repayment of the Credit Facility and the Seller
Note, the Company recorded an extraordinary loss, net of tax, of $2.2 million
related to pre-payment penalties and the write-off of deferred financing costs
associated with the Credit Facility.
4. REDEEMABLE COMMON STOCK
The value of stock and stock options owned by a shareholder has been
classified separately from shareholders' equity as "Redeemable Common Stock" in
the balance sheet to reflect such shareholder's right to require CRH to
repurchase shares under certain circumstances.
5. SUBSEQUENT EVENT
On July 3, 2002, the State of New Jersey passed the New Jersey Tax Act
(the "Act"). This Act, among other things, requires the suspension of the use of
the New Jersey net operating loss carryforwards for two years and the
introduction of a new alternative minimum amount under the New Jersey corporate
business tax based on gross receipts or gross profits, as defined. The Act is
retroactive to January 1, 2002. As a result of the change in the tax law, the
Company has preliminarily estimated that it will record a charge of
approximately $500,000 to $700,000, net of federal income tax benefit, for the
year ended December 31, 2002. This charge will be recorded beginning in the
period in which the tax law (third quarter) was passed in accordance with
Financial Accounting Standards Board Statement Number 109, Accounting For Income
Taxes.
-7-
RESORTS INTERNATIONAL HOTEL AND CASINO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
June 30, December 31,
2002 2001
------------- -------------
ASSETS (Unaudited)
------
Current assets
Cash and cash equivalents $ 35,181 $ 15,363
Receivables, net 8,952 8,273
Inventories 1,431 1,536
Prepaid expenses 3,438 2,818
Deferred income taxes 2,590 2,524
------------- -------------
Total current assets 51,592 30,514
Property and equipment, net 133,576 126,139
Other assets (including $99,411 and $0 of restricted cash
and cash equivalents in 2002 and 2001, respectively) 127,447 22,491
------------- -------------
Total assets $ 312,615 $ 179,144
============= =============
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Current liabilities
Current maturities of long-term debt $ 857 $ 10,229
Accounts payable 7,941 5,746
Accrued interest payable 5,750 324
Accrued interest payable to affiliates - 953
Accrued expenses and other current liabilities 25,245 21,274
------------- -------------
Total current liabilities 39,793 38,526
------------- -------------
Notes payable to affiliates, net of unamortized discounts - 18,018
Long-term debt 183,218 70,484
Deferred income taxes 1,349 1,349
------------- -------------
Total liabilities 224,360 128,377
Shareholder's equity
Common stock - -
Capital in excess of par 77,774 42,879
Retained earnings 10,481 7,737
Accumulated other comprehensive income - 151
------------- -------------
Total shareholder's equity 88,255 50,767
------------- -------------
Total liabilities and shareholder's equity $ 312,615 $ 179,144
============= =============
The accompanying notes are an integral part of these financial statements.
-8-
RESORTS INTERNATIONAL HOTEL AND CASINO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the three and six months ended June 30, 2002 and 2001
(Dollars in thousands)
Three months ended Six months ended
June 30, June 30,
---------------------------------------------- ---------------------------------------------
April 1, 2001 April 25, 2001 January 1, 2001 April 25, 2001
2002 to April 24, 2001 to June 30, 2001 2002 to April 24, 2001 to June 30, 2001
------------- -------------- ------------- ----------- ------------- --------------
Successor Predecessor Successor Successor Predecessor Successor
Revenues
Casino $ 62,152 $ 16,166 $ 41,334 $ 120,236 $ 68,220 $ 41,334
Lodging 3,409 913 2,660 6,583 3,996 2,660
Food and beverage 6,362 1,591 4,783 12,128 6,977 4,783
Other 2,204 417 1,309 3,493 1,523 1,309
Less: promotional allowances (7,038) (1,684) (4,639) (13,576) (7,510) (4,639)
------------- -------------- ------------- ----------- ------------- --------------
Total net revenue 67,089 17,403 45,447 128,864 73,206 45,447
Costs and expenses
Casino 36,520 9,130 25,342 71,850 42,234 25,342
Lodging 522 257 674 949 913 674
Food and beverage 3,333 848 2,696 6,162 3,639 2,696
Other operating 6,329 1,681 4,375 12,496 8,293 4,375
Selling, general and
administrative 9,097 2,454 5,855 18,698 10,532 5,855
Depreciation and amortization 1,722 949 1,220 3,249 5,325 1,220
------------- -------------- ------------- ----------- ------------- --------------
Total costs and expenses 57,523 15,319 40,162 113,404 70,936 40,162
Income from operations 9,566 2,084 5,285 15,460 2,270 5,285
Interest income 620 118 195 850 510 195
Interest expense (5,628) (1,585) (1,919) (8,089) (7,673) (1,919)
Other expense (24) - (86) (57) - (86)
------------- -------------- ------------- ----------- ------------- --------------
Income (loss) before income
taxes and extraordinary
item 4,534 617 3,475 8,164 (4,893) 3,475
Provision for income taxes (1,773) - (1,337) (3,225) - (1,337)
------------- -------------- ------------- ----------- ------------- --------------
Income (loss) before
extraordinary item 2,761 617 2,138 4,939 (4,893) 2,138
Extraordinary loss on extinguishment
of debt, net of income tax
benefit of $1,182 - - - (2,196) - -
------------- -------------- ------------- ----------- ------------- --------------
Net income (loss) $ 2,761 $ 617 $ 2,138 $ 2,743 $ (4,893) $ 2,138
============= ============== ============= =========== ============= ==============
The accompanying notes are an integral part of these financial statements.
-9-
RESORTS INTERNATIONAL HOTEL AND CASINO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the six months ended June 30, 2002 and 2001
(Dollars in thousands)
Six months ended
June 30,
---------------------------------------------------------
January 1, 2001 to April 25, 2001 to
2002 April 24, 2001 June 30, 2001
---------------- ----------------- ------------------
Successor Predecessor Successor
CASH FLOWS FROM OPERATING ACTIVITIES:
Reconciliation of net income (loss) to net cash provided by
operating activities-
Net income (loss) $ 2,743 $ (4,893) 2,138
Adjustments to reconcile net income (loss) to net cash
provided by operating activities-
Extraordinary loss on extinguishment of debt, net
of income tax benefit 2,196 - -
Depreciation and amortization 4,104 5,038 1,038
Amortization of debt premiums, discounts
and issuance costs 542 203 203
Provision for doubtful receivables 739 517 142
Provision for (reversal of) discount on CRDA obligations,
net of amortization (851) 280 180
Other (104) - -
Net (increase) decrease in receivables (1,418) 684 (427)
Net increase in inventories and prepaid expenses (732) (1,600) (2,030)
Net (increase) decrease in deferred charges and other
assets (98) 72 (116)
Net increase (decrease) in accounts payable and accrued expenses 7,210 (572) 662
Net increase in interest payable 4,473 9,109 413
------------ -------------- ---------------
Net cash provided by operating activities 18,804 8,838 2,203
------------ -------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of cash and cash equivalents - restricted (99,400) - -
Purchases of property and equipment (4,439) (1,229) (2,827)
CRDA deposits (1,420) (1,332) -
CRDA refunds 1,492 - -
Purchase of RIH, net of cash acquired - - (97,004)
------------ -------------- ---------------
Net cash used in investing activities (103,767) (2,561) (99,831)
------------ -------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 180,835 - 84,000
Payments to secure borrowings (7,931) - (6,808)
Repayments to affiliates (18,018) - -
Prepayment penalty on repayment of long-term debt (1,094) - -
Debt repayments (84,113) (234) (3,114)
Capital contribution from Parent 35,000 - 42,500
Other 102 - -
------------ -------------- ---------------
Net cash provided by (used in) financing activities 104,781 (234) 116,578
------------ -------------- ---------------
Net increase in cash and cash equivalents 19,818 6,043 18,950
Cash and cash equivalents at beginning of period 15,363 21,453 -
------------ -------------- ---------------
Cash and cash equivalents at end of period $ 35,181 $ 27,496 $ 18,950
============ ============== ===============
The accompanying notes are an integral part of these financial statements.
-10-
RESORTS INTERNATIONAL HOTEL AND CASINO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation - Colony RIH Holdings, Inc., a
Delaware corporation ("CRH"), owns 100% of the outstanding common stock of
Resorts International Hotel and Casino, Inc., a Delaware corporation ("RIHC",
the "Company," or the "Successor"). RIHC, through its wholly owned subsidiary
Resorts International Hotel, Inc., a New Jersey corporation ("RIH", or the
"Predecessor"), owns and operates Resorts Atlantic City, a casino/hotel located
in Atlantic City, NJ.
CRH was formed at the direction of Colony Investors IV, L.P. ("Colony
IV"), a Delaware limited partnership, under the laws of the State of Delaware on
March 7, 2001. RIHC was formed at the direction of Colony IV on October 24,
2000.
RIHC, Sun International North America, Inc., a Delaware corporation
("SINA"), and GGRI, Inc., a Delaware corporation ("GGRI"), entered into a
purchase agreement, dated as of October 30, 2000, as amended (the "Purchase
Agreement"). Pursuant to the Purchase Agreement, RIHC acquired all of the
capital stock of RIH, the Warehouse Assets (as defined in the Purchase
Agreement) and all of the capital stock of New Pier Operating Company, Inc., a
New Jersey corporation (collectively, the "Acquisition") on April 25, 2001 for
approximately $144.8 million.
The Acquisition has been accounted for using the purchase method, and
accordingly, the aggregate purchase price, including transaction fees and
expenses, has been allocated based on the fair value of the assets acquired and
liabilities assumed. As a result, the condensed consolidated financial
statements for the period subsequent to the Acquisition are presented on a
different basis of accounting than those for the periods prior to the
Acquisition and, therefore, are not directly comparable.
On March 22, 2002, RIHC sold $180.0 million aggregate principal amount
of 11 1/2% First Mortgage Notes (the "First Mortgage Notes") at a price of
97.686% yielding $175.8 million. Concurrent with the sale of the notes, CRH
issued 17,295 shares of class A common stock at a cash price of $0.0475 and
349,992 shares of class B common stock at a price of $100 to our existing
shareholders for a total price of approximately $35.0 million. The proceeds from
the sale of the First Mortgage Notes and issuance of stock were used to retire
existing debt and will be used to finance the cost to develop, construct, and
equip a new hotel tower. Additionally, $10.0 million of the proceeds from the
issuance of stock has been deposited in a liquidity disbursement account to be
used for working capital in the event RIHC's Adjusted Consolidated EBITDA for
any four fiscal quarters ending on or prior to December 31, 2004 is less than
$28.0 million. Of the proceeds, $99.4 million is considered restricted cash
under the terms of the debt offering and is included in other assets on the
Condensed Consolidated Balance Sheet as of June 30, 2002.
The condensed consolidated financial statements include the accounts of
CRH and its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The Predecessor's financial statements
include the accounts of RIH.
In June 2001, Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142") was issued. This
Statement addresses how goodwill and other intangible assets should be accounted
for after they have been initially recognized in the financial statements. The
Company adopted SFAS No. 142 on January 1, 2002. Adjusting the statement of
operations to reflect the adoption of SFAS No. 142 by excluding amortization of
goodwill totaling $836,000 would have resulted in a net loss of $4.1 million for
the period from January 1, 2001 to April 24, 2001.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and notes
-11-
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for fair presentation have been
included. The casino industry in Atlantic City is seasonal in nature;
accordingly, operating results for the six-month period ended June 30, 2002 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2002.
The balance sheet at December 31, 2001 has been derived from the
audited financial statement at that date but does not include all of the
information and notes required by generally accepted accounting principles for
the complete financial statements.
For further information, refer to the consolidated financial statements
and notes thereto included in CRH's annual report on Form 10-K for the year
ended December 31, 2001.
2. EFFECTS OF ACQUISITION FINANCING
CRH financed the Acquisition and paid related fees and expenses with:
(i) proceeds of $42.5 million from the issuance of common stock, (ii) a $17.5
million note issued by CRH to SINA (the "Seller Note"), (iii) borrowings by
RIHC, guaranteed by CRH under a $90.0 million credit agreement (the "Credit
Facility") and (iv) RIH's available cash.
Prior to the Acquisition, CRH conducted no business other than in
connection with the Purchase Agreement and the Credit Facility.
In connection with the Acquisition for approximately $144.8 million,
CRH acquired assets with a fair value of $173.9 million and assumed liabilities
of $29.1 million.
The pro forma unaudited results of operations for the six months ended
June 30, 2001, assuming consummation of the Acquisition and issuance of the
Company's Common Stock, Seller Note, and Credit Facility as of January 1, 2001
are as follows:
Revenue $ 118,653
Net income 3,031
3. LONG TERM DEBT
On March 22, 2002, RIHC sold $180.0 million aggregate principal amount
of First Mortgage Notes at a price of 97.686% yielding $175.8 million. Interest
on the First Mortgage Notes is payable on March 15 and September 15 of each year
and the First Mortgage Notes are due in full on March 15, 2009.
The First Mortgage Notes contain certain covenants that, among other
things, will limit our ability and the ability of our subsidiaries to pay
dividends on, redeem or repurchase our or their capital stock, make investments,
incur additional indebtedness, permit payment of or restrict dividends by
certain of our subsidiaries, enter into sale leaseback transactions, sell
assets, guarantee indebtedness, create certain liens, engage in transactions
with affiliates, and consolidate, merge or transfer all or substantially all our
assets and the assets of our subsidiaries on a consolidated basis.
In conjunction with the Acquisition, RIHC borrowed $82.0 million under
an Amended and Restated Credit Agreement, dated April 25, 2001, from the lenders
named therein. The Credit Facility was comprised of $80.0 million in term loans
(Term Loan A for $25.0 million and Term Loan B for $55.0 million) and a $10.0
million revolving credit facility. Principal payments on the term loans were due
quarterly, commencing on June 29, 2001. Interest on borrowings outstanding was
either at LIBOR or an alternative base rate, plus an applicable margin in each
case. The outstanding balance on the Credit Facility was repaid on March 22,
2002, with the proceeds from the
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sale of the First Mortgage Notes. Additionally, the Company terminated its
existing interest rate collar agreements and received $102,000 in cash upon
termination of these agreements.
In conjunction with the Acquisition, CRH also issued a $17.5 million
note to SINA. The Seller Note was subordinated to the term loans under the
Credit Facility and had a 7-year term. This loan had interest at 12.5% per annum
of which 6.25% was payable in cash and 6.25% was paid in kind. There was no
amortization of principal on this loan. The Seller Note was repaid on March 22,
2002, with the proceeds from the sale of the First Mortgage Notes.
In connection with the repayment of the Credit Facility and the Seller
Note, the Company recorded an extraordinary loss, net of tax, of $2.2 million
related to pre-payment penalties and the write-off of deferred financing costs
associated with the Credit Facility.
4. SUBSEQUENT EVENT
On July 3, 2002, the State of New Jersey passed the New Jersey Tax Act
(the "Act"). This Act, among other things, requires the suspension of the use of
the New Jersey net operating loss carryforwards for two years and the
introduction of a new alternative minimum amount under the New Jersey corporate
business tax based on gross receipts or gross profits, as defined. The Act is
retroactive to January 1, 2002. As a result of the change in the tax law, the
Company has preliminarily estimated that it will record a charge of
approximately $500,000 to $700,000, net of federal income tax benefit, for the
year ended December 31, 2002. This charge will be recorded beginning in the
period in which the tax law (third quarter) was passed in accordance with
Financial Accounting Standards Board Statement Number 109, Accounting For Income
Taxes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Prior to the completion of the Acquisition on April 25, 2001, neither
CRH nor RIHC had conducted business other than in connection with the Purchase
Agreement and the new Credit Facility. On April 25, 2001, RIHC, a wholly-owned
subsidiary of CRH, acquired all of the outstanding capital stock of RIH, all of
the outstanding capital stock of New Pier and certain related assets. RIH owns
and operates Resorts Atlantic City.
The financial information contained in "Results of Operations" and
"Liquidity and Capital Resources" provides a comparison of the combination of
CRH, RIHC and RIH (collectively, the "Companies") in the current year to that of
RIH in the prior year. CRH and RIHC are successor company to RIH and,
accordingly, is on a different basis of accounting than RIH; however, we believe
amounts included in revenue and certain costs and expenses are comparable.
Results of Operations - Comparison of Three Months Ended June 30, 2002
and 2001
Revenues
Gaming revenues were $62.2 million for the three months ended June 30,
2002, an increase of $4.7 million, or 8.2%, from gaming revenues for the
comparable 2001 period of $57.5 million.
Slot revenues were $44.2 million for the three months ended June 30,
2002, an increase of $3.0 million, or 7.3%, from the comparable 2001 period of
$41.2 million. This was due to an increase in slot handle, or dollar amounts
wagered, of $104.5 million, or 19.4%, to $644.4 million, partially offset by a
decrease in the net slot hold percentage to 6.9% for the three months ended June
30, 2002 from 7.6% for the comparable 2001 period.
Table game revenues were $17.2 million for the three months ended June
30, 2002, an increase of $1.7 million, or 11.0%, from table game revenues for
the comparable 2001 period of $15.5 million. This was due to an increase in
table game hold percentage to 15.3% for the three months ended June 30, 2002
from 13.1% for the comparable 2001 period, partially offset by a decrease in
table game drop, or the dollar amount of chips purchased,
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of $6.1 million, or 5.1%, to $112.5 million for the three months ended June 30,
2002 from $118.6 million for the comparable 2001 period.
Lodging revenues were $3.4 million for the three months ended June 30,
2002, a decrease of $0.2 million, or 5.6%, from the comparable 2001 period of
$3.6 million. Lodging revenues decreased due to a decline in the average room
rate from $66.41 for the three months ended June 30, 2001 to $65.06 for the
current period. The decline in average room rate is attributable to a reduction
in the complimentary room rate of $3.16, or 5.0%, to $60.06 for the three months
ended June 30, 2002 from $63.22 for the comparable 2001 period. For the same
periods, cash room rates increased $35.79, or 47.4%, to $111.33 in 2002 from
$75.54 in 2001. Also contributing to the decrease in lodging revenues was the
decline in occupancy rate to 91.6% for the three months ended June 30, 2002 from
92.8% for the comparable period in 2001.
Other revenues, which include revenues from entertainment and other
miscellaneous items, were $2.2 million for the three months ended June 30, 2002,
an increase of $0.5 million, or 29.4%, from the comparable 2001 period.
Entertainment revenues were $1.0 million for the three months ended June 30,
2002, an increase of $0.4 million, or 66.7%, from the comparable 2001 period of
$0.6 million, due to an increase in the number of headliner acts from the
comparable 2001 period.
Costs and Expenses
Gaming costs and expenses were $36.5 million for the three months ended
June 30, 2002, an increase of $2.0 million, or 5.8% from gaming expenses for the
comparable 2001 period of $34.5 million, primarily due to increased promotional
and marketing expenses as the Company adjusted its marketing strategy to target
more profitable segments of the gaming market as well as growth in slot revenue.
Lodging costs and expenses were $0.5 million for the three months ended
June 30, 2002, a decrease of $0.4 million, or 44.4%, from lodging costs and
expenses for the comparable 2001 period of $0.9 million. RIH allocates the
departmental costs of providing complimentary services to casino patrons to
gaming costs and expenses. For the three months ended June 30, 2002, the
complimentary occupancy percentage was 82.7% compared to 68.7% in 2001 resulting
in a higher allocation of costs, and, therefore, lowered lodging expenses.
Food and beverage expenses were $3.3 million for the three months ended
June 30, 2002, a decrease of $0.2 million, or 5.7%, from the comparable 2001
period of $3.5 million. The decrease is due to increased allocation of
complimentary expenses to gaming costs.
Selling, general and administrative costs were $9.1 million for the
three months ended June 30, 2002, an increase of $0.8 million, or 9.6%, from
expenses for the comparable 2001 period of $8.3 million. The increase is due to
higher rents, advertising, and other miscellaneous corporate expenses.
Depreciation and amortization expenses were $1.7 million for the three
months ended June 30, 2002, compared to $2.2 million for the same period in
2001. The decrease of $0.5 million, or 22.7%, is due to the revaluation of
assets and the elimination of goodwill as a result of the Acquisition.
Interest expense was $5.6 million for the three months ended June 30,
2002, an increase of $2.1 million, or 60.0%, from the comparable period 2001 of
$3.5 million. The increase is attributable to the sale of the First Mortgage
Notes. At June 30, 2002, RIH's long term debt was $183.2 million compared to
$89.5 million as of June 30, 2001.
Results of Operations - Comparison of Six Months Ended June 30, 2002
and 2001
Revenues
Gaming revenues were $120.2 million for the six months ended June 30,
2002, an increase of $10.6 million, or 9.7%, from gaming revenues for the
comparable 2001 period of $109.6 million.
-14-
Slot revenues were $83.5 million for the six months ended June 30,
2002, an increase of $6.7 million, or 8.7%, from the comparable 2001 period of
$76.8 million. This was due to an increase in slot handle, or dollar amounts
wagered, of $219.0 million, or 21.6%, to $1,234.4 million, partially offset by a
decrease in the net slot hold percentage to 6.8% for the six months ended June
30, 2002 from 7.6% for the comparable 2001 period.
Table game revenues were $35.1 million for the six months ended June
30, 2002, an increase of $3.8 million, or 12.1%, from table game revenues for
the comparable 2001 period of $31.3 million. This was due to an increase in
table game hold percentage to 16.1% for the six months ended June 30, 2002 from
14.0% for the comparable 2001 period. Table game drop, or the dollar amount of
chips purchased, decreased $5.2 million, or 2.3%, to $217.5 million for the six
months ended June 30, 2002 from $222.7 million for the comparable 2001 period.
Simulcast revenues were $1.6 million for the six months ended June 30,
2002, an increase of $0.1 million, or 6.7%, from the comparable 2001 period of
$1.5 million.
Lodging revenues were $6.6 million for the six months ended June 30,
2002, a decrease of $0.1 million, or 1.5%, from the comparable 2001 period of
$6.7 million. Lodging revenues decreased due to a decline in the average room
rate from $66.58 for the six months ended June 30, 2001 to $64.74 for the
current period. The decline in average room rate is attributable to a reduction
in the complimentary room rate of $2.97, or 4.7%, to $60.83 for the three months
ended June 30, 2002 from $63.80 for the comparable 2001 period. The occupancy
rate was 90.1% for the six months ended June 30, 2002 compared to 88.8% for the
same period in 2001.
Other revenues, which include revenues from entertainment and other
miscellaneous items, were $3.5 million for the six months ended June 30, 2002,
an increase of $0.7 million, or 25.0%, from the comparable 2001 period of $2.8
million. Entertainment revenues were $1.5 million for the six months ended June
30, 2002, an increase of $0.5 million, or 50.0%, from the comparable 2001 period
of $1.0 million, due to an increase in the number of headliner acts from the
comparable 2001 period.
Costs and Expenses
Gaming costs and expenses were $71.9 million for the six months ended
June 30, 2002, an increase of $4.3 million, or 6.4%, from the comparable 2001
period of $67.6 million, primarily due to increased promotional and marketing
expenses as RIH adjusted its marketing strategy to target more profitable
segments of the gaming market and growth in slot revenue.
Lodging costs and expenses were $0.9 million for the six months ended
June 30, 2002, a decrease of $0.7 million, or 43.8%, from lodging costs and
expenses for the comparable 2001 period of $1.6 million. RIH allocates the
departmental costs of providing complimentary services to casino patrons to
gaming costs and expenses. In 2002, the complimentary occupancy percentage was
81.4% compared to 68.0% in 2001 resulting in a higher allocation of costs, and,
therefore, lowered lodging expenses.
Selling, general and administrative costs were $18.7 million for the
six months ended June 30, 2002, an increase of $2.3 million, or 14.0%, from
expenses for the comparable 2001 period of $16.4 million. This increase is due
to higher rents, advertising, and other miscellaneous corporate expenses.
Depreciation and amortization expenses were $3.2 million for the six
months ended June 30, 2002 compared to $6.5 million for same period in 2001. The
decrease of $3.3 million, or 50.8%, is due to the revaluation of assets and the
elimination of goodwill at the time of the Acquisition.
Interest expense was $8.1 million for the six months ended June 30,
2002, a decrease of $1.5 million, or 15.6%, from the comparable 2001 period of
$9.6 million. The decline is attributable to the reduction in RIH's debt due to
the Acquisition, offset by an increase due to the sale of the First Mortgage
Notes.
The extraordinary loss on extinguishment of debt includes a $2.4
million write-off of deferred debt issuance costs and a $1.1 million prepayment
penalty resulting from the repayment of the Credit Facility.
-15-
Liquidity and Capital Resources
RIH's principal source of liquidity is cash flow from operations. For
the six months ended June 30, 2002, cash flow from operations, approximated
$18.8 million, compared with $11.0 million in the same period for the prior
year.
In November 2002, CRH will begin construction of a new, 27-story hotel
tower on the site of the existing 166 room Atlantic City Tower at a cost of
approximately $115.5 million. The expansion will add approximately 400 hotel
rooms and suites. Subject to the approval of the New Jersey Casino Control
Commission, the project will also add approximately 14,000 square feet of
additional gaming space, and 570 slot machines. From the proceeds of the sale of
the First Mortgage Notes and issuance of stock, $89.4 million has been deposited
in a construction disbursement account for use in construction of the hotel
tower and $10.0 million has been deposited in a liquidity disbursement account
to be used for working capital in the event RIHC's Adjusted Consolidated EBITDA
for any four fiscal quarters ending on or prior to December 31, 2004 is less
than $28.0 million. Additionally, the New Jersey Casino Reinvestment Development
Authority ("CRDA") will reimburse our construction costs in the amount of $9.8
million through 2003 and an additional $2.7 million in the aggregate from 2004
through 2008. The CRDA will also make an additional $1.5 million available for
expenses incurred in connection with public improvements relating to the
construction of the new hotel tower. In June 2002, RIH entered into a $20.0
million credit facility, the proceeds of which are to be used for the
acquisition of furniture, fixtures and equipment. RIHC has guaranteed the
obligations of RIH under this equipment credit facility. The Companies intend to
use $14.8 million of the equipment credit facility to purchase furniture,
fixtures and equipment for the new hotel tower and expanded gaming facility. The
Companies also intend to enter into a $10.0 million revolving credit facility
and are currently negotiating the terms with potential lenders; however, there
can be no assurances that the Companies will enter into the revolving credit
facility. The hotel tower project is subject to many variables, including
financing, regulatory and governmental approvals and typical delays associated
with construction. No assurances can be given as to when this expansion project
will commence or if the project will be completed.
For the six months ended June 30, 2002, CRH has expended $4.4 million
for the hotel expansion project and other capital improvements and replacements,
such other expenditures including the purchases of slot machines and related
equipment, computer upgrades and facility improvements. For the remainder of
2002, CRH expects capital project spending (in addition to the expenditures for
the new hotel tower) to total approximately $6.9 million and include projects
related to renovations of the casino floor and related areas, purchases of slot
machines and related equipment, purchases of computers and upgrades and various
facility improvements.
On June 16, 2002, RIH entered into a Thermal Energy Services Agreement
(the "Agreement"). The initial term of the Agreement is 20 years, renewable at
RIH's option for two additional five year terms. The Agreement has three
components - a monthly charge for operation and maintenance of the thermal
energy facilities; a capital lease component for capital improvements whose
value is estimated at $6.5 million, for which payments during 2002 are projected
to be $126,000, with the total payments over the 20 year initial term estimated
at $9.6 million including interest and; a usage fee for steam and chilled water,
whose usage and rate will vary by month of the year.
At June 30, 2002, CRH's cash and cash equivalents were $35.2 million as
compared to $15.4 million at December 31, 2001. Additionally, at June 30, 2002,
CRH has a restricted cash balance of $99.4 million. Of the restricted cash,
$89.4 million has been deposited in a construction disbursement account to be
disbursed for the construction of the new hotel tower, and $10.0 million has
been deposited in a liquidity disbursement account to be used for working
capital in the event RIHC's Adjusted Consolidated EBITDA for any four fiscal
quarters ending on or prior to December 31, 2004 is less than $28.0 million. A
portion of the unrestricted cash and cash equivalents is required for the
day-to-day operations of Resorts Atlantic City, which includes approximately
$10.0 million of currency and coin on-hand for casino and hotel operations. This
amount varies by days of the week, holidays, and seasons. Due to the change in
debt following the sale of First Mortgage Notes, CRH's long-term debt increased
from $88.5 million at December 31, 2001 to $183.2 million at June 30, 2002. As a
result of the change in debt, annual interest expense will be approximately
$18.9 million in 2002 compared to the $13.9 million of 2001.
-16-
Management believes that its existing cash and projected operating cash
flows will be sufficient to meet the cash requirements of its existing
operations, including capital improvements and debt service requirements, for at
least the next twelve months and the foreseeable future thereafter. Management
currently believes that cash requirements of its existing operations beyond the
next twelve months and the foreseeable future thereafter will consist of costs
relating to construction of the new hotel tower, debt service requirements and
capital improvements and replacements in the ordinary course of business, which
management expects to be met by existing cash, cash flows from operations, the
furniture, fixtures and equipment credit facility and our anticipated revolving
credit facility.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest Rate Risk
The First Mortgage Notes have a fixed, 11 1/2% per annum rate. CRH's
interest rate risk is therefore deemed immaterial.
CAUTIONARY STATEMENT FOR PURPOSES OF THE `SAFE HARBOR' PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
This document includes various `forward-looking statements' within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Sections
21E of the Securities Exchange Act of 1934, as amended, which represent CRH's
expectations or beliefs concerning future events. Statements containing
expressions such as `believes', `anticipates', or `expects' used in CRH's press
releases and periodic reports on Forms 10-K and 10-Q filed with the Securities
and Exchange Commission are intended to identify forward-looking statements. All
forward-looking statements involve risks and uncertainties. Although CRH
believes its expectations are based upon reasonable assumptions within the
bounds of its knowledge of its business and operations, there can be no
assurances that actual results will not materially differ from expected results.
CRH cautions that these and similar statements included in this report and in
previously filed periodic reports, including reports filed on Forms 10-K and
10-Q, are further qualified by important factors that could cause actual results
to differ materially from those in the forward-looking statements. Such factors
include, without limitation, the following: increased competition in existing
markets or the opening of new gaming jurisdictions; a decline in the public
acceptance of gaming; the limitation, conditioning or suspension of any of CRH's
gaming licenses; increases in or new taxes imposed on gaming revenues or gaming
devices; a finding of unsuitability by regulatory authorities with respect to
CRH's officers, directors or key employees; loss or retirement of key
executives; significant increases in fuel or transportation prices; adverse
economic conditions in CRH's key markets; severe and unusual weather in CRH's
key markets; adverse results of significant litigation matters. Readers are
cautioned not to place undue reliance on forward-looking statements, which speak
only as of the date thereof. CRH undertakes no obligation to publicly release
any revision to such forward-looking statements to reflect events or
circumstances after the date thereof.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meetings of shareholders for CRH and RIHC was held on May 2,
2002. The matters voted on at the meeting were: (1) to elect two directors for
both CRH and RIHC to one-year terms until the 2003 Annual Meeting or until their
successors are duly elected and qualified and (2) to ratify the appointment of
Ernst & Young LLP as independent auditors of both CRH and RIHC for the fiscal
year ending December 31, 2002.
-17-
Thomas J. Barrack, Jr. and Nicholas L. Ribis were elected as
directors of CRH and RIHC until the 2003 Annual Meeting of Shareholders, with
the results of voting as follows:
CRH RIHC
----------------------- -----------------------
For Withheld For Withheld
----------- ----------- ------------ ----------
Thomas J. Barrack, Jr. 38,295 0 100 0
Nicholas L. Ribis 38,295 0 100 0
The appointment of Ernst & Young LLP as independent auditors of CRH
and RIHC was ratified, with the results of voting as follows:
CRH RIHC
------------ ---------------
For 38,295 100
Against 0 0
Abstain 0 0
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.1 Amended and Restated Loan and Security Agreement, dated June 24, 2002,
between CIT Group/Equipment Financing, Inc. and Resorts International
Hotel, Inc.
10.2 Guaranty and Suretyship Agreement, dated June 24, 2002, by Resorts
International Hotel and Casino, Inc. for the benefit of CIT
Group/Equipment Financing, Inc.
10.3 Thermal Energy Services Agreement, dated June 16, 2002, between Marina
Energy, LLC and Resorts International Hotel, Inc.
99.1 Certification of Thomas J Barrack, Jr., President and Treasurer of CRH
and RIHC, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification of Joseph A. D'Amato, Vice President and Principal
Financial Officer of CRH and RIHC, pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(B) REPORTS ON FORM 8-K
None
-18-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLONY RIH HOLDINGS, INC.
Dated: August 14, 2002 /s/ Joseph A. D'Amato
---------------------------
Joseph A. D'Amato
Vice President
(Duly Authorized Officer and Principal
Financial Officer)
RESORTS INTERNATIONAL HOTEL
AND CASINO, INC.
Dated: August 14, 2002 /s/ Joseph A. D'Amato
---------------------------
Joseph A. D'Amato
Vice President
(Duly Authorized Officer and Principal
Financial Officer)
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