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 January 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to
__________________
Commission file number 1-5976
CAESARS WORLD, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0773674
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1801 Century Park East, Los Angeles, California 90067
(Address of principal executive offices)
(Zip Code)
(310) 552-2711
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal
year, if changed since last report.)
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12,
13, or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
At March 3, 1994, registrant had outstanding 24,881,268
shares of its $.10 par value common stock.
CAESARS WORLD, INC. AND SUBSIDIARIES
January 31, 1994
INDEX
Page No. Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets -
January 31, 1994 (Unaudited) and July 31, 1993. . .3
Consolidated Statement of Shareholders' Equity
(Unaudited) - Six months ended January 31, 1994 . .4
Consolidated Statements of Income (Unaudited) -
Six months ended January 31, 1994 and 1993. . . . .5
Consolidated Statements of Income (Unaudited) -
Three months ended January 31, 1994 and 1993. . . .6
Condensed Consolidated Statements of Cash
Flows (Unaudited) - Six months ended
January 31, 1994 and 1993 . . . . . . . . . . . . .7
Notes to Condensed Consolidated Financial
Statements (Unaudited). . . . . . . . . . . . . . .8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . 10
Part II. Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . . . . 18
Item 5. Other Information. . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . 20
PART I. Financial Information
Item 1. Financial Statements
CAESARS WORLD, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
January 31, July 31,
1994 1993
(Unaudited) (a)
Assets
Current assets
Cash and cash equivalent investments $115,580 $108,616
Receivables, net 83,610 66,041
Inventories 12,692 11,364
Deferred income taxes 36,107 42,748
Prepaid expenses and other 10,473 12,366
Total current assets 258,462 241,135
Property and equipment, net 622,228 616,393
Excess cost of investments over net assets
acquired, net 52,794 52,916
Other assets 49,228 45,275
$982,712 $955,719
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt and
obligations under capital leases $ 29,795 $ 30,263
Accounts payable and accrued expenses 123,578 125,835
Income taxes 12,143 9,361
Total current liabilities 165,516 165,459
Long-term debt and obligations under capital
leases, net of current maturities 235,829 253,422
Other
liabilities, including deferred income
taxes of $22,888 and $29,282 57,999 63,948
Shareholders' equity
Common stock 2,612 2,590
Additional paid-in capital 127,145 117,399
Common stock in treasury (32,695) (30,358)
Deferred compensation (22,907) (16,146)
Retained earnings 449,213 399,405
Total shareholders' equity 523,368 472,890
$982,712 $955,719
<FN>
(a) The balance sheet at July 31, 1993 has been condensed from the audited
balance sheet at that date.
See notes to condensed consolidated financial statements.
CAESARS WORLD, INC. AND SUBSIDIARIES
Consolidated Statement of Shareholders' Equity - (Unaudited)
Six months Ended January 31, 1994
(In thousands, except shares outstanding)
Common Stock Additional Common
Shares Paid-in Stock in Deferred Retained
Outstanding Amount Capital Treasury Compensation Earnings Total
Balance
July 31, 1993 24,619,631 $2,590 $117,399 $(30,358) $(16,146) $399,405 $472,890
Stock options
exercised 38,292 4 575 - - - 579
Amortization of
deferred
compensation,
termination
of restricted
stock grants
and other, net (28,001) (2) (1,024) - 3,454 - 2,428
Common stock
purchased
and held in
treasury (44,048) - - (2,337) - - (2,337)
Vesting of
incentive
stock grants 89,833 - - - - - -
Issuance of
restricted
stock grants 199,781 20 10,195 - (10,215) - -
Net income - - - - - 49,808 49,808
Balance January
31, 1994 24,875,488 $2,612 $127,145 $(32,695) $(22,907)$449,213 $523,368
See notes to condensed consolidated financial statements.
CAESARS WORLD, INC. AND SUBSIDIARIES
Consolidated Statements of Income - (Unaudited)
(In thousands, except net income per share)
Six Months Ended
January 31,
1994 1993
Revenue
Casino $416,258 $393,351
Rooms 34,965 34,131
Food and beverage 41,134 39,029
Other income 34,707 30,524
527,064 497,035
Costs and expenses
Casino 216,897 211,924
Rooms 10,772 10,034
Food and beverage 30,754 28,381
Other operating expenses 21,387 19,213
Selling, general and administrative 94,608 92,287
Depreciation and amortization 27,658 27,375
Provision for doubtful accounts 34,730 27,269
436,806 416,483
Operating income 90,258 80,552
Interest and dividend income 1,647 986
Interest expense, net (9,778) (16,225)
Income before income taxes 82,127 65,313
Income taxes 32,319 24,819
Net income $ 49,808 $ 40,494
Net income per share $ 2.04 $ 1.66
Average number of common and common equivalent
shares outstanding 24,468 24,328
See notes to condensed consolidated financial statements.
CAESARS WORLD, INC. AND SUBSIDIARIES
Consolidated Statements of Income - (Unaudited)
(In thousands, except net income per share)
Three Months Ended
January 31,
1994 1993
Revenue
Casino $207,598 $218,279
Rooms 15,031 14,465
Food and beverage 18,821 17,576
Other income 16,531 14,153
257,981 264,473
Costs and expenses
Casino 111,722 109,330
Rooms 4,834 4,549
Food and beverage 14,293 13,738
Other operating expenses 10,344 9,129
Selling, general and administrative 46,732 45,606
Depreciation and amortization 13,906 13,784
Provision for doubtful accounts 16,494 21,493
218,325 217,629
Operating income 39,656 46,844
Interest and dividend income 719 179
Interest expense, net (4,668) (5,850)
Income before income taxes 35,707 41,173
Income taxes 13,747 15,646
Net income $ 21,960 $ 25,527
Net income per share $ .90 $ 1.05
Average number of common and common equivalent
shares outstanding 24,535 24,394
See notes to condensed consolidated financial statements.
CAESARS WORLD, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows - (Unaudited)
(In thousands)
<CAPITON>
Six Months Ended
January 31,
1994 1993
Cash flows from (used for) operating activities:
Net income $ 49,808 $ 40,494
Non-cash charges to income, net 30,899 31,134
Changes in assets and liabilities due to
operating activities:
Receivables, net (17,569) (23,773)
Other assets and liabilities, net (1,817) (12,928)
Net cash provided from operating
activities 61,321 34,927
Cash flows used for investing activities:
Purchases of property and equipment (32,708) (18,117)
Other investing activities, net (1,830) (1,823)
Net cash used for investing activities (34,538) (19,940)
Cash flows from (used for) financing activities:
Issuance of 8 7/8 % Senior Subordinated Notes - 150,000
Increase in long-term bank borrowings - 125,000
Reductions in debt and obligations
under capital leases (18,061) (294,788)
Other (1,758) (3,843)
Net cash used for financing
activities (19,819) (23,631)
Net increase (decrease) in cash and cash equivalent
investments 6,964 (8,644)
Cash and cash equivalent investments at the
beginning of the period 108,616 52,336
Cash and cash equivalent investments at the
end of the period $115,580 $ 43,692
Supplemental cash flow information
Cash used for:
Payment of interest $ 9,641 $ 19,890
Payment of Federal and state
income taxes, net $ 29,980 $ 22,888
See notes to condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Condensed Consolidated Financial Statements -
The condensed consolidated balance sheet as of January 31,
1994, the consolidated statement of shareholders' equity for
the six months ended January 31, 1994, the consolidated
statements of income for the three and six months ended
January 31, 1994 and 1993, and the condensed consolidated
statements of cash flows for the six months ended January 31,
1994 and 1993, have been prepared by the Company and have not
been audited. In the opinion of management, all material
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results
of operations and cash flows for all periods presented have
been made. All significant intercompany balances and
transactions have been eliminated.
Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted. These condensed consolidated
financial statements should be read in conjunction with the
financial statements and notes thereto included in the
Company's July 31, 1993 Annual Report to Shareholders. The
results of operations for the three and six month periods
ended January 31, 1994 are not necessarily indicative of the
operating results for the full year.
The Company's independent public accountants
have made an unaudited interim review of the condensed
consolidated financial statements for the three and six
months ended January 31, 1994 and 1993, in accordance with
professional standards and procedures established by the
American Institute of Certified Public Accountants. A report
from the independent public accountants regarding the
unaudited review of the interim financial statements is
included herein in Part II, Item 6 (a), Exhibit 15.
Note 2. Net Income Per Share -- Net income per share
is based upon the weighted average number of common and
common equivalent shares outstanding for each period
presented.
Note 3. Regulatory Environment -- The gaming industry
in which the Company operates is subject to extensive
regulatory supervision and, accordingly, operating results
could be affected by legislative and regulatory changes or
changes in the policies of or application of the laws by
governmental entities. See the discussion under the caption
"Regulatory Environment" set forth on page 24 of the Form 10-
K of the Company for the fiscal year ended July 31, 1993.
Note 4. Income Taxes -- In February 1992, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes, which supersedes previously issued standards.
The Company adopted SFAS 109 effective August 1, 1993. As
permissible under the new standard, the Company reflected the
impact as a cumulative adjustment in the fiscal 1994 first
quarter and did not restate prior periods. Under SFAS No.
109, the liability method is used in accounting for income
taxes. Under this method, tax assets and liabilities are
determined based upon differences between financial reporting
and the tax basis utilizing the enacted tax rates and laws in
effect when the differences are expected to reverse. The
adoption of the new standard had an immaterial impact on net
income.
In August 1993, the Omnibus Budget
Reconciliation Act of 1993 (OBRA) was enacted which resulted
in an increase in the federal corporate tax rate from 34% to
35% retroactive to January 1, 1993. The retroactive impact
of the enactment of OBRA and the adoption of SFAS 109
aggregated a net charge to the provision of income taxes in
the first quarter of fiscal 1994 of approximately $750,000.
Future net income of the Company will be adversely impacted
by the increased tax rate.
Note 5. On January 1, 1994 the Company adopted a
401(k) Plan for all full-time employees having at least one
year of service (as defined in the Plan). This replaced the
Company sponsored Individual Retirement Account (IRA) Plan.
The annual pretax cost to the Company of the new 401-K Plan
will be approximately $2 million greater than the previous
IRA Plan.
CAESARS WORLD, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
Cash flow from operations together with available debt
capacity are the primary components providing the Company
financial flexibility to explore expansion opportunities and
provide adequate liquidity. Net cash provided by operating
activities was $61.3 million in the first six months of
fiscal 1994, compared with $34.9 million in the same period
of fiscal 1993. The increase in fiscal 1994 is primarily
attributable to higher net income and the changes in other
assets and liabilities which reduced the cash generated by
operating activities by a lesser amount during the fiscal
1994 first six month period compared with the same period in
fiscal 1993. At January 31, 1994 the Company's cash
equivalent investments were $68.7 million compared with $67.5
million at July 31, 1993 and $3.5 million at January 31,
1993.
Cash used for investing activities in the six months ended
January 31, 1994 was primarily for capital expenditure
projects at Caesars Palace in Las Vegas and Caesars Atlantic
City. Construction was completed in December 1993 on two
rooftop luxury suites, each costing approximately $6 million,
on one of the hotel towers at Caesars Palace. In mid-October
1993, Caesars Atlantic City opened a new 15,000-square-foot
simulcast casino, bringing the resort's total casino area to
approximately 75,000 square feet. This new facility features
high-tech systems for race horse betting, a poker area and
additional table games. Approximately 300 slot machines were
added in the original casino area where table games had
previously been located.
In the first six months of fiscal 1993, the Company
completed its debt restructuring program. In October 1992,
cash available from operations combined with the proceeds
from the issuance of new 8 7/8% Senior Subordinated Notes and
the drawdown of the new bank term loan were used to retire
the then outstanding 13 1/2% Subordinated Notes. The impact
of this restructuring combined with the scheduled reduction
of bank borrowings has been to significantly reduce interest
expense. A description of the new notes, the new bank loan
agreement and the debt restructuring is included in Note 6 of
Notes to Consolidated Financial Statements beginning on page
40 of the Form 10-K of the Company for the fiscal year ended
July 31, 1993 and in "Debt Restructuring" of Item 7,
Management's Discussion and Analysis of Financial Condition
and Results of Operations on page 21 of the July 31, 1993
Form 10-K incorporated herein by reference.
In October 1993, the Company announced an additional $150
million multi-year capital expenditure program for Caesars
Palace in Las Vegas. This will dramatically change the
exterior of Caesars Palace, add between 100 to 150 new
suites, provide underground parking, add approximately 40,000
square feet of casino space as well as provide new
entertainment features. This is in addition to the major
capital expenditures previously announced which include a new
state-of-the-art magical and dining entertainment facility to
be opened in fiscal 1995. The conceptual design phase of the
multi-year capital program will be completed in fiscal 1994
with the construction occurring in fiscal 1995 and 1996.
Successful development of the expansion projects in St.
Louis, Missouri; Windsor, Ontario, Canada; Palm Springs,
California; Michigan City, Indiana and other projects as
described at Item 5 of Part II of this Report will likely
require capital investment by the Company.
The Company expects to be able to meet its future debt
obligations, finance operations and capital expenditures, as
well as provide for a substantial expansion of operations
through internally generated cash flow, liquidation of cash
equivalent investments, future borrowings (including amounts
available under the bank credit facilities), capital lease
transactions and/or sales of equity securities.
Results of Operations
Comparison of net income for the three month periods ended January 31, 1994 and
January 31, 1993
Contribution to revenue and operating income by location, interest and income
taxes for the periods, were as follows (in thousands):
Three Months Ended January 31,
1994 1993
Revenue
Nevada $168,048 $171,950
New Jersey 76,048 79,552
Casino/hotel operations 244,096 251,502
Pocono Resorts 8,882 8,184
Other (A) 5,003 4,787
Total revenue $257,981 $264,473
Contributions to operating income
Nevada $ 38,319 $ 42,466
New Jersey 7,140 8,939
Casino/hotel operations 45,459 51,405
Pocono Resorts 371 188
Other expenses (B) (6,174) (4,749)
Operating income 39,656 46,844
Interest and dividend income 719 179
Interest expense, net (4,668) (5,850)
Income before income taxes 35,707 41,173
Income taxes 13,747 15,646
Net income $ 21,960 $ 25,527
<FN>
(A) Other revenue is primarily from merchandising operations.
(B) Other expenses include the contribution from merchandising operations
and corporate expenses. Intercompany transactions have been eliminated.
Nevada Operations
Revenue decreased 2 percent and contribution to
operating income decreased 10 percent at the Nevada
properties when comparing the quarters ended January 31, 1994
and 1993. The table game win percentage for the fiscal 1994
second quarter, although above historical averages, was below
the prior year second quarter and was the principal
contributor to declines in revenue and contributions to
operating income. The Company participates in the high-
betting-level player market and table game activity and win
percentages (particularly in baccarat) are volatile and can
fluctuate materially from quarter to quarter from this type
of play. The lower table game win occurred principally in
baccarat which is strongly affected by high-betting-level
customers. Table game activity at the Company's Nevada
casinos decreased by 1 percent during the second quarter when
compared to the same period last year in spite of the opening
of three mega resorts in Las Vegas and the ensuing nationwide
publicity and marketing programs that accompanied these major
openings. Slot machine activity in Nevada was about 5
percent higher in the 1994 quarter but this was offset by a
lower slot win percentage resulting in a relatively flat
quarterly slot revenue comparison. Higher marketing and
casino staffing expenses were partially offset by a $5.1
million or 24 percent reduction in the provision for doubtful
accounts during the 1994 second quarter due to improved
collection experience, a slight reduction in credit issued
and fewer marketing incentives applicable to specific
customers having large receivable balances.
Caesars New Jersey
Revenue decreased 4 percent at the Company's New Jersey
operation and, the contribution to operating income decreased
20 percent when comparing the second quarter of fiscal 1994
with the same period in fiscal 1993. The revenue decline was
primarily the result of lower casino table game and slot
activity offset in part by an increase in the table game win
percentage and the opening late in October of a simulcast
casino. Table game activity declined 18 percent primarily
due to increased competition and bad weather during the
fiscal 1994 quarter making it difficult for customers to get
to Atlantic City. Marketing related expenses decreased,
principally due to a reduction in passengers bussed to the
property and as a result of the lower overall casino
activity.
In mid-October, Caesars Atlantic City opened its new
15,000-square-foot simulcast casino, bringing the resort's
total casino capacity to approximately 75,000 square feet.
This new facility features high-tech systems for horse race
betting, a poker table section and additional casino table
games. The resort's slots capacity was simultaneously
expanded in the original casino area.
Other Expenses
Other expenses include the contribution from
merchandising operations and corporate expenses. The $1.4
million increase of these expenses when comparing the fiscal
1994 and 1993 second quarters is primarily attributable to
increased activities to explore expansion opportunities for
the Company. See Item 5 of Part II of this Report for a
discussion of the major expansion activities the Company is
currently working on.
Interest Expense
The Company's interest expense decreased $1.2 million
when comparing the fiscal 1994 and 1993 second quarters due
primarily to the debt refinancing which was completed during
the second quarter in fiscal 1993. This refinancing lowered
the effective borrowing rate on the majority of the Company's
outstanding indebtedness. Total long-term debt and
obligations under capital leases also decreased between the
second quarter of fiscal 1993 and the same period in fiscal
1994.
Comparison of net income for the six month periods ended January 31, 1994 and
January 31, 1993
Contribution to revenue and operating income by location,
interest and income taxes for the periods, were as follows
(in thousands):
Six Months Ended January 31,
1994 1993
Revenue
Nevada $323,272 $290,181
New Jersey 170,084 174,615
Casino/hotel operations 493,356 464,796
Pocono Resorts 23,374 21,910
Other (A) 10,334 10,329
Total revenue $527,064 $497,035
Contributions to operating income
Nevada $ 65,803 $ 55,697
New Jersey 29,782 28,768
Casino/hotel operations 95,585 84,465
Pocono Resorts 5,448 5,017
Other expenses (B) (10,775) (8,930)
Operating income 90,258 80,552
Interest and dividend income 1,647 986
Interest expense, net (9,778) (16,225)
Income before income taxes 82,127 65,313
Income taxes 32,319 24,819
Net income $ 49,808 $ 40,494
<FN>
(A) Other revenue is primarily from merchandising operations.
(B) Other expenses include the contribution from merchandising operations
and corporate expenses. Intercompany transactions have been eliminated.
Nevada Operations
Contribution to operating income from the Nevada
operations increased 18 percent in the six months ended
January 31, 1994 compared with the same period in the prior
year, primarily the result of higher casino revenue. Revenue
generated by the Nevada operations increased 11 percent in
the fiscal 1994 first six months compared to the same period
in fiscal 1993. During the 1994 six month period table game
activity increased 4 percent and the win percentage increased
to 23.3 percent at the Nevada operations compared with 21.1
percent during the same period in fiscal 1993. Slot machine
activity increased at both Nevada locations and was the
primary reason for the 7 percent improvement in slot machine
revenue. The slot improvement at the Company's Nevada
operations was primarily attributable to greater customer
traffic generated by slot marketing programs as well as an
increase in visitors to Las Vegas. See the discussion of
Nevada Operations beginning on page 12 as to the quarter-to-
quarter volatility resulting from high-level play.
Casino expenses at the Nevada operations increased 10
percent during the six months ended January 31, 1994 compared
with the same period last year and were primarily for
increased high-level customer expenses, slot marketing
programs, increased casino payroll to service the increased
activity and other casino marketing programs. The provision
for doubtful accounts was $6.9 million higher due to
increases in the issuance of casino credit and marketing
incentives applicable to specific high-betting-limit
customers along with additional allowances for specific
uncollectible receivables.
Caesars New Jersey
The contribution to operating income from Caesars New
Jersey increased 4 percent over the first six months of
fiscal 1993. Caesars Atlantic City's casino revenue was down
3 percent compared with the prior year six month period.
Table game activity declined by 18 percent. This was
consistent with, but steeper than, the industry trend and was
partially offset by a higher table game win percentage in
fiscal 1994 compared with the same six month period in fiscal
1993. A decrease in slot machine activity was partially
offset by an increase in slot machine hold percentages.
Increased competition and bad weather in the second quarter
of fiscal 1994 were responsible for the reduced casino
activity. The fiscal 1994 casino revenue was favorably
impacted by $1.8 million of revenue generated by the
introduction of poker and horse race betting in October 1993.
The 15,000 square foot casino expansion features high-tech
horse race betting, a poker section, additional casino table
games and enabled the Company to add additional slot machines
in the original casino area.
During the six months ended January 31, 1994 casino
expenses decreased $7.4 million primarily reflecting a
reduction in marketing expenses and lower casino operating
expenses resulting from the decreased casino activity.
Other Expenses
Other expenses increased in the first six months of
fiscal 1994 by $1.8 million compared with the same period in
fiscal 1993. Increased compensation costs and expenses
related to the exploring of expansion activities by the
Company were the primary reasons for the higher expenses.
See Item 5 of Part II of this Report for a discussion of the
major expansion activities the Company is currently working
on.
Interest Expenses
The Company's interest expense decreased 40 percent for
the six months of fiscal 1994 compared to a year earlier. A
reduction in borrowings as well as the debt restructuring
completed in early fiscal 1993 resulted in the lower interest
expense.
Income Taxes
The effective income tax rate for the six months ended
January 31, 1994, was 1.4 percentage points higher than the
same period in 1993. The higher tax rate reflects the impact
of two non-recurring tax charges. In August 1993, the
Federal tax rate increased from 34% to 35%, retroactive to
January 1, 1993. The Company also changed its method for
income tax accounting by adopting SFAS 109 effective August
1, 1993. The impact of this cumulative change in accounting
and the retroactive change in the corporate tax rate
aggregated a net charge of approximately $750,000 during the
six month period ending January 31, 1994.
PART II. Other Information
Item 1. Legal Proceedings
See Item 3 of the Form 10-K of the Company for the
year ended July 31, 1993 which is hereby incorporated herein.
Item 5. Other Information
The Forum Shops at Caesars (the Forum) is a
shopping complex located on approximately eight acres owned
by the Company at the north end of Caesars Palace in Las
Vegas having approximately 235,000 square feet of gross
leasable area. The Company leases the land to an independent
development company which provided its own financing to
construct the Forum and which owns the development and pays
rent to the Company. The Company has agreed in principle to
lease approximately four additional acres adjacent to the
site to the independent development company in order for them
to add an approximate 160,000 square foot expansion to the
Forum, including parking and new entertainment features. The
project is expected to be completed in fiscal 1995 and is
subject to finalizing a new lease agreement, the independent
development company obtaining the necessary financing and
obtaining regulatory approvals.
A partnership with two other gaming companies in
which the Company has a one-third interest has been selected
as the "preferred developer" for the first casino development
to be constructed in the Province of Ontario, Canada. The
partnership will be the manager, responsible for day-to-day
operations of the casino/hotel development and will receive
a management fee. The provincial government will actually
own the business. This development will be located in
Windsor, Ontario and is currently expected to open in early
1996 with approximately 75,000 square feet of casino space
and about 2,000 slot machines and 125 table games. It will
also include a 300 room hotel, showroom, meeting facilities,
waterfront amphitheater, other public facilities and a
variety of food and beverage outlets. The current projected
cost is approximately $300 million. In addition, a temporary
casino of approximately 50,000 square feet is currently
planned to open in the Spring of 1994. The final completion
of this project will depend on the successful negotiation and
consummation of an operating agreement and other matters with
the Province of Ontario, the obtaining of appropriate
regulatory and other approvals and completion of financing.
In October 1993, the Casino Reinvestment
Development Authority (CRDA) of the State of New Jersey
announced it had selected a joint venture comprised of
Doubletree Hotel Corporation, a subsidiary of the Company and
an independent developer and operator to build in two phases,
a 1,000 room non-gaming Convention Center Headquarters Hotel
in Atlantic City. The first phase will be a 600 room first
class hotel whose opening will coincide with the opening of
the new Atlantic City Convention Center in 1996. As
currently proposed, in exchange for a non-controlling
interest in the joint venture and receipt of certain CRDA
credits, the Company will guarantee a portion of the first
mortgage note on the property. The project is subject to
final agreements among all the parties, including
governmental regulatory agencies and the obtaining of third-
party financing for the project.
Subsidiaries of the Company have entered into joint
ventures to seek opportunities to own and operate riverboats
in Michigan City, Indiana and St. Louis, Missouri. With
respect to the St. Louis project, the joint venture has
announced that it had proposed the "Joint Venture Proposal",
a $210 million casino and hotel development at Laclede's
Landing which includes a $110 million 976-room convention
center hotel with parking, and a 152,000 square foot,
dockside casino barge and entertainment complex expected to
cost approximately $100 million including a $10 million
investment for parking. The current plan calls for 2,658
slot machines and 170 gaming tables on two 2,000 gaming
position barges to be built in phases about two years apart.
The City of St. Louis has announced that the Joint Venture
Proposal was ranked first among the six proposals the City
had received and the City planned to commence negotiations
for a berthing lease with the joint venture. Representatives
of the City cautioned, however, that it had some concerns
about the Joint Venture Proposal and if negotiations did not
eliminate those concerns or were otherwise unsuccessful, it
would move to the second-ranked candidate. Recently, the
Missouri gaming law was declared unconstitutional insofar as
it allowed slot machines, baccarat, craps, roulette, and
other games which do not require skill in deciding the
outcome. The legislature has proposed a voter initiative
legalizing such games that do not require skill for an April
5, 1994 election. Once a lease is negotiated, City agency
and board of alderman approval and state licensing will be
required. The ultimate outcome of these negotiations,
approvals and the election are uncertain at this time. The
joint venture currently expects to finance about 80% of the
project through mortgage bonds. The Company expects to have
a 37.5% interest in the ultimate limited partnership and a
50% interest in management companies that will manage the
hotel and casino under the Joint Venture Proposal.
The Company also is in the process of working with
the Agua Caliente Tribe in completing land acquisitions and
regulatory approvals with respect to the proposed management
project for the Tribe in Palm Springs, California. The
ultimate timing of this project is uncertain at this time.
A subsidiary of the Company has submitted, with a
joint venture partner, an application for a gaming license in
Greece. In the event of the successful awarding of the
license to the venture the Company expects to invest
approximately $3.5 million in a casino/hotel project in
Greece. The prospects and timing for this project are
presently uncertain, however, the Company has been advised
that it is possible the government will act in the spring of
1994.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed herewith (the * denotes
documents included in this filing):
*10(a) Caesars World, Inc. 401(k) Retirement
Savings Plan dated January 1, 1994.
*10(b) Master Trust Agreement between Caesars
World, Inc. and State Street Bank and Trust Company dated
January 1, 1994.
*10(c) Form of Contingent Severance Agreement
as revised December 7, 1993.
*15 Review Report of Independent Public
Accountants
(b) During the quarter ended January 31, 1994 no
reports on Form 8-K were filed with the Securities Exchange
Commission.
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.
CAESARS WORLD, INC.
(Registrant)
Principal Financial Officer:
Date: March 7, 1994 /s/ Roger Lee
Roger Lee
Senior Vice President-
Finance and
Administration
Principal Accounting Officer:
Date: March 7, 1994 /s/ Bruce C. Hinckley
Bruce C. Hinckley
Vice President and
Corporate Controller
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.
CAESARS WORLD, INC.
(Registrant)
Principal Financial Officer:
Date: March 7, 1994
Roger Lee
Senior Vice President-
Finance and Administration
Principal Accounting Officer:
Date: March 7, 1994
Bruce C. Hinckley
Vice President and Corporate
Controller