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 April 30, 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 June 9, 1994, registrant had outstanding 24,878,654 shares of its $.10 par value common stock. CAESARS WORLD, INC. AND SUBSIDIARIES April 30, 1994 INDEX 	 	 Page No. Part I. Financial Information Item 1. Financial Statements: 	Condensed Consolidated Balance Sheets - 	April 30, 1994 (Unaudited) and July 31, 1993	 3 	Consolidated Statement of Shareholders' Equity 	(Unaudited) - Nine months ended April 30, 1994	 4 	Consolidated Statements of Income (Unaudited) - 	Nine months ended April 30, 1994 and 1993	 5 	 	Consolidated Statements of Income (Unaudited) - 	Three months ended April 30, 1994 and 1993	 6 	Condensed Consolidated Statements of Cash 	Flows (Unaudited) - Nine months ended 	April 30, 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	 11 Part II. Other Information Item 1. Legal Proceedings	 21 Item 5. Other Information	 21 Item 6. Exhibits and Reports on Form 8-K	 24 PART I. Financial Information Item 1. Financial Statements CAESARS WORLD, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) 		 April 30, 	July 31, Assets	 	 1994 	 1993 				 (Unaudited)	 (a) 			 	 Current assets 	Cash and cash equivalent investments 	 $115,970 	 $108,616 	Receivables, net	 75,986 	 66,041 	Inventories	 12,468 	 11,364 	Deferred income taxes	 36,163 	 42,748 	Prepaid expenses and other	 14,105	 12,366 		Total current assets	 254,692 	 241,135 Property and equipment, net	 617,704 	 616,393 Excess cost of investments over net assets acquired, net	 52,732 	 52,916 Other assets	 56,320 	 45,275 				$981,448 	$955,719 Liabilities and Shareholders' Equity Current liabilities 	Current maturities of long-term debt and 		obligations under capital leases	 $ 29,318 	 $ 30,263 	Accounts payable and accrued expenses	 125,122 	 125,835 	Income taxes	 9,738 	 9,361 		Total current liabilities	 164,178 	 165,459 Long-term debt and obligations under capital 	leases, net of current maturities	 221,952 	 253,422 Other liabilities, including deferred income 	taxes of $22,831 and $29,282	 58,370 	 63,948 Shareholders' equity 	Common stock 	2,612 	 2,590 	Additional paid-in capital	 127,125 	117,399 	Common stock in treasury	 (32,695) 	(30,358) 	Deferred compensation	 (20,955) 	(16,146) 	Retained earnings	 460,861 	 399,405 		Total shareholders' equity	 536,948 	 472,890 				 $981,448 	$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) 	Nine months Ended April 30, 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 	50,392 	5 	761 	- 	- 	 -	 766 Amortization of deferred compensation, termination of restricted stock grants and other, net	 (32,868)	 (3)	 (1,230) 	- 	5,406 	 -	 4,173 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		 - 	 - 	 - 	 - 	 - 	 61,456	 61,456 Balance April 30, 1994	 24,882,721 	$2,612 	$127,125 	$(32,695)	$(20,955) $460,861	$536,948 	See notes to condensed consolidated financial statements CAESARS WORLD, INC. AND SUBSIDIARIES Consolidated Statements of Income - (Unaudited) (In thousands, except net income per share) 	 Nine Months Ended 	 April 30, 	 1994 	 1993 		 	 	 Revenue	 	Casino	 $600,763 	$564,171 	Rooms	 51,690 	51,692 	Food and beverage	 60,673 	 57,758 	Other income	 51,182 	47,823 		 764,308 	721,444 Costs and expenses 	Casino	 324,067 	306,464 	Rooms	 15,723 	15,217 	Food and beverage	 46,240 	42,968 	Other operating expenses	 30,226 	28,471 	Selling, general and administrative	 141,411 	137,709 	Depreciation and amortization	 41,671 	40,769 	Provision for doubtful accounts	 51,836 	36,720 		 651,174 	608,318 	Operating income	 113,134 	113,126 Interest and dividend income	 2,403 	1,258 Interest expense, net	 (14,471)	 (21,596) 	Income before income taxes 	101,066 	92,788 Income taxes	 39,610 	35,259 	Net income 	$ 61,456 	$ 57,529 	Net income per share 		$ 2.51 $ 2.36 Average number of common and common equivalent 	shares outstanding	 	 24,532 	 24,418 	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 		 April 30, 		 1994 	 1993 				 	 Revenue 		Casino	 $184,505 	$170,820 		Rooms	 	16,725 	17,561 		Food and beverage	 19,539 	18,729 		Other income	 16,475 	 17,299 	 				 237,244 	 224,409 Costs and expenses 		Casino 	 107,170 	 94,540 		Rooms		 4,951 	5,183 		Food and beverage	 15,486 	14,587 		Other operating expenses	 8,839 	 9,258 		Selling, general and administrative 	46,803 	45,422 		Depreciation and amortization	 14,013 	13,394 		Provision for doubtful accounts	 17,106 	 9,451 	 				 214,368 	 191,835 			Operating income	 22,876 	32,574 		Interest and dividend income	 756 	272 		Interest expense, net	 (4,693)	 (5,371) 			Income before income taxes 	18,939 	27,475 		Income taxes	 7,291 	 10,440 			Net income 	$ 11,648 	$ 17,035 			Net income per share 	$ .47 	$ .69 Average number of common and common equivalent 		shares outstanding	 24,620 	 24,588 See notes to condensed consolidated financial statements. CAESARS WORLD, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows - (Unaudited) (In thousands) 		 		 	Nine Months Ended 				 	 April 30, 				 1994 		 1993 				 Cash flows from (used for) operating activities: 	Net income	 $ 61,456 	$ 57,529 	Non-cash charges to income, net	 47,242 	46,371 	Changes in assets and liabilities due to 		operating activities: 			Receivables, net	 (9,945) 	1,344 			Accounts payable and accrued expenses	 (713)	 (20,021) 			Other assets and liabilities, net	 (12,739)	 (8,703) 			 Net cash provided from operating 			 activities	 85,301	 76,520 Cash flows used for investing activities: 	Purchases of property and equipment 	(42,040) 	(25,052) 	Other investing activities, net	 (1,921)	 (2,541) 		 	 Net cash used for investing activities	 (43,961)	 (27,593) 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	 (32,415)	(309,312) 	Other		 (1,571)	 (3,769) 			 Net cash used for financing activities	 (33,986)	 (38,081) Net increase in cash and cash equivalent investments	 7,354 	10,846 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 	$ 115,970	 $ 63,182 Supplemental cash flow information 	Cash used for: 		Payment of interest 	$ 17,732	 $ 28,372 		Payment of Federal and state income taxes, net	 $ 39,756	 $ 36,835 		See notes to condensed consolidated financial statements. Note 1.	Condensed Consolidated Financial Statements -- The condensed consolidated balance sheet as of April 30, 1994, the consolidated statement of shareholders' equity for the nine months ended April 30, 1994, the consolidated statements of income for the three and nine months ended April 30, 1994 and 1993, and the condensed consolidated statements of cash flows for the nine months ended April 30, 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 nine month periods ended April 30, 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 nine months ended April 30, 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. There have been recent aborted proposals for a federal gaming excise tax and for withholding on certain gaming winnings which in either case if adopted could materially adversely affect operating results. See also 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, deferred tax assets and liabilities are determined based upon differences between financial and tax reporting 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 for 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. Note 6.	The Culinary Workers Union and Bartenders Union contracts covering approximately 2,500 employees and another union contract covering approximately 20 theatrical stage employees expired on June 1, 1994 at Caesars Palace in Las Vegas and work is continuing under a contract extension cancelable with three days notice. The Company is continuing to negotiate with these unions and currently does not expect a work slow- down or stoppage as a result of these expired labor contracts. 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 $85.3 million in the first nine months of fiscal 1994, compared with $76.5 million in the same period of fiscal 1993. The increase in fiscal 1994 is primarily attributable to higher net income and the changes in accounts payable and accrued expenses which reduced the cash generated by operating activities by a lesser amount during the fiscal 1994 first nine month period compared with the same period in fiscal 1993. At April 30, 1994 the Company's cash equivalent investments were $76.1 million compared with $67.5 million at July 31, 1993. Cash used for investing activities in the nine months ended April 30, 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. 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 approximately 100 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 is expected to be complete in the summer of 1994 with the construction occurring principally in fiscal 1995 and 1996. During the nine months ended April 30, 1994, $6.3 million was advanced by the Company to Windsor Casino Ltd. (WCL). The Company owns one-third of WCL, a management company that will operate a casino for the government in Windsor, Ontario, Canada. See Item 5 "Other Information" in Part II on page 21 of this Form 10-Q. Between April 30, 1994 and June 13, 1994 an additional $8.3 million was advanced to WCL by the Company. A temporary casino was opened to the public on May 17, 1994 and no additional material advances are expected to be made by the Company prior to July 31, 1994. WCL is currently negotiating with banks to obtain a credit line which will repay substantially all the amounts advanced by the owners of WCL including the Company. Such a bank facility will be severally guaranteed by each of the joint venture partners and is expected to be in place during the fourth quarter of the Company's fiscal 1994 year. Successful development of the projects described at Item 5 of Part II of this Report and of other opportunities currently being explored 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 April 30, 1994 and April 30, 1993 Contribution to revenue and operating income by location, interest and income taxes for the periods, were as follows (in thousands): 		 			Three Months Ended April 30, 					 1994 	 1993 			 	 	 	 	Revenue 		Nevada	 $142,157 	 $133,153 		New Jersey	 80,389 	 76,526 			Casino/hotel operations	 222,546 	209,679 		Pocono Resorts	 9,798 	 9,734 		Other (A)	 4,900 	 4,996 				Total revenue	 $237,244 	$224,409 	Contributions to operating income 		Nevada	 $ 14,686 	 $ 22,893 		New Jersey	 11,014	 12,400 			Casino/hotel operations	 25,700 	 35,293 		Pocono Resorts	 1,002	 1,133 		Other expenses (B)	 (3,826)	 (3,852) 				Operating income	 22,876 	 32,574 	Interest and dividend income	 756 	272 	Interest expense, net	 (4,693)	 (5,371) 		Income before income taxes	 18,939 	27,475 	Income taxes	 7,291 	 10,440 		Net income 	$ 11,648 	$ 17,035 <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 increased 7% at the Nevada properties in the three months ended April 30, 1994 compared with the same prior year period. Higher casino revenue during the quarter resulted from record third quarter table game and slot machine activity generated by the Company's two Nevada casinos. The table games win percentage was lower than the five-year average but about the same as the year earlier third quarter. Total slot win was flat as compared with the fiscal 1993 third quarter win because a lower win percentage offset increased slot machine activity in the fiscal 1994 third quarter. The 36% reduction in operating income from Nevada operations during the three months ended April 30, 1994 compared with the prior year was primarily the result of increased casino expenses and a higher provision for doubtful accounts. Casino expenses included marketing costs associated with the higher volume of business in Nevada operations along with costs related to a world heavyweight championship fight at Caesars Palace. The provision for doubtful accounts increased $6.8 million during the quarter as the use of issuing receivable allowances to high-betting limit customers as a marketing incentive has intensified with the opening of three new themed casino/hotels on the "Strip" in Las Vegas between October and December 1993. The higher provision for doubtful accounts was also caused by a 23% increase in the amount of casino credit issued. Caesars New Jersey Revenue from Caesars Atlantic City for the third quarter ended April 30, 1994 increased 5% from the same prior year period, primarily attributable to increased casino revenue. Slot activity was 15% higher, which combined with a slightly lower win percentage, resulted in a 14% increase in slot win for the third quarter of fiscal 1994, compared with the fiscal 1993 third quarter. The Simulcast Casino, which began operation in October 1993, also had a favorable impact on the third quarter. Table game win for the three months ended April 30, 1994, compared with the three months ended April 30, 1993, was down 15% due to a comparatively low win percentage during the quarter on approximately the same amount of table game activity. The contribution of operating income from Atlantic City was down 11%, primarily the result of higher operating costs, including the increased payroll costs related to the Simulcast Casino and an increase in the provision for doubtful accounts. Interest Expense The Company's interest expense decreased 13% when comparing the fiscal 1994 third quarter with the fiscal 1993 third quarter, primarily due to reduced amount of debt. Subsequent Event See page 20 for discussion of subsequent event occurring after April 30, 1994. Comparison of net income for the nine month periods ended April 30, 1994 and April 30, 1993 Contribution to revenue and operating income by location, interest and income taxes for the periods, were as follows (in thousands): 		 			Nine Months Ended April 30, 						 1994 	1993 			 	 			 	Revenue 		Nevada	 $465,429 	$423,334 		New Jersey	 250,473 	 251,141 			Casino/hotel operations 	715,902 	 674,475 		Pocono Resorts 	33,172 	31,644 		Other (A)	 15,234 	 15,325 				Total revenue 	$764,308 	$721,444 	Contributions to operating income 		Nevada 	$ 80,489 	$ 78,590 		New Jersey	 40,796	 	 41,168 			Casino/hotel operations 	121,285	 	119,758 		Pocono Resorts	 6,450 	6,150 		Other expenses (B)	 (14,601)	 (12,782) 				Operating income	 113,134 	 113,126 	Interest and dividend income	 2,403 	 1,258 	Interest expense, net	 (14,471)	 (21,596) 		Income before income taxes 101,066 	92,788 	Income taxes	 39,610 	 35,259 		Net income 	$ 61,456 	$ 57,529 <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 from Nevada operations increased 10% in the nine months ended April 30, 1994 compared with the same prior year period. This increase is primarily due to a 12% increase in casino revenue over the prior year and is a Company record for any first nine months period. Table game activity during the nine months ended April 30, 1994 increased 8%, with a win percentage of 22.0% compared with 20.6% for the nine months ended April 30, 1993. Slot activity improved 13% during the nine months, as the number of visitors to Las Vegas increased and marketing programs continued to generate higher levels of customer traffic at Caesars Palace. Slot win increased by 4.8%, less than the activity improvement due to a lower slot win percentage. Contribution to operating income from Nevada operations for the nine months ended April 30, 1994 was 2.4% higher than the nine months ended April 30, 1993. Increased casino costs and a higher provision for doubtful accounts partially offset the higher revenue for the nine months. Casino cost increases were primarily related to the increased activity levels in Las Vegas and include marketing related costs, including a world heavyweight championship fight held in the third quarter at Caesars Palace in Las Vegas, as well as increases in payroll expenses for necessary staffing levels. The provision for doubtful accounts was 38% higher than the nine months ended April 30, 1993, primarily because of increased casino credit issued and marketing incentives for high-betting-limit customers. The intensified competition, particularly in Las Vegas, has increased nearly all types of marketing costs in order to maintain and grow market share. Caesars New Jersey Revenue from Caesars Atlantic City for the nine months ended April 30, 1994 was flat as compared with the nine months ended April 30, 1993. Casino revenue decreased for the nine months, due to lower table game revenue partially offset by increased slot revenue. The decrease in table game revenue was primarily attributable to a 12% lower activity level for the nine months, compared with the same period last year. This decrease is consistent with the Atlantic City industry trend, and was partially offset by a higher win percentage compared with prior year. An increased number of jurisdictions allowing legalized gaming as well as a severe winter reduced the number of visitors to Atlantic City. The fiscal 1994 casino revenue was favorably impacted by the opening in October 1993 of the Simulcast Casino, which features horse race betting and poker. The game of keno is expected to be introduced in the Simulcast Casino area in June 1994. Costs were flat in the nine months compared with prior year, as increases in payroll related costs associated with the new casino area and in the provision for doubtful accounts were offset by decreases in marketing, busing and legal costs. Other Expenses Other expenses increased 14% in the first nine months of fiscal 1994 compared with fiscal 1993 due to increased compensation costs and costs related to the exploration of expansion opportunities by the Company. See Item 5 of Part II of this Form 10-Q for a discussion of the major expansion activities the Company is currently working on. Interest and Dividend Income A higher balance of interest and dividend earning cash equivalent investments during the first nine months of fiscal 1994 compared with the same period last year is the primary reason for the $1.1 million increase. Interest Expenses The Company's interest expense decreased 33% for the nine months ended April 30, 1994 compared with the nine months ended April 30, 1993. 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 during the nine months ended April 30, 1994, was 1.2 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, retroactive to January 1, 1993, from 34 to 35 percent. The Company also changed its method for income tax accounting by adopting FASB 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 in the first quarter of fiscal 1994. Subsequent Event On June 13, 1994, the Company announced that due to unusually large losses to a small number of long-term, table-game customers in June the Company expects a substantial reduction in the Company's income for the fiscal 1994 fourth quarter ending July 31, 1994, when compared with the same quarter of fiscal 1993. The Company's net income for the fiscal 1993 fourth quarter was $25,686,000, or $1.04 per share. The Company can not estimate the size of the expected reduction in net income because about seven weeks remain in the current fiscal quarter and the sizes of either casino wins or losses in the short-term are difficult to predict, particularly when it comes to high-level betting activity. The Company believes that it is highly unlikely that the effects of the recent losses to these high-level customers at its Nevada operations, estimated to total more than $18 million, could be offset enough to avoid the quarter-to-quarter decline in earnings. 	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 is negotiating the possible lease of approximately four additional acres adjacent to the site to a spin off of current tenant in order for them to add an approximate 200,000 square foot expansion to the Forum, including a new entertainment feature. Since the project is subject to the mutually satisfactory completion of such negotiations, finalizing a new lease agreement, and the independent development company obtaining the necessary financing and obtaining regulatory approvals, the ultimate timing and completion of this project is uncertain at this time. On May 20, 1994, Ontario Canada Corp. and Windsor Casino Ltd. announced details of the Interim Casino Operating Agreement for Casino Windsor, the 50,000 square foot temporary casino which opened to the public on May 17, 1994. The casino is owned by the Government of Ontario and operated by Windsor Casino, Ltd., an Ontario company owned equally by Caesars World, Inc., Circus Circus Enterprises, Inc. and Hilton Hotels Corporation. The interim agreement runs until April 30, 1997, and calls for Windsor Casino Ltd. to receive 2.75 percent of gross operating revenue and 5 percent of net operating margins. Windsor Casino Ltd. has first refusal operating rights for casinos in Ontario within 125 kilometers of Casino Windsor and the parent companies agree that without Ontario Casino Corp.'s consent, they will not be part of any U.S.- based competing casinos within this distance. The interim casino includes 65 table games and 1,702 slot machines. A permanent facility, which will include a 75,000 square foot casino and 300-room hotel, will be built in Windsor and is expected to open within three years. Ontario Casino Corp. and Windsor Casino Ltd. also signed a Heads of Agreement which represents a commitment by the parties to negotiate final agreements for the construction, development, financing, and operation of the permanent facility. 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. 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 and is currently is awaiting regulatory approval, which is uncertain as to timing and result at the current time. 		 Subsidiaries of the Company have also entered into joint ventures to seek opportunities to own and operate riverboats in Michigan City, Indiana and St. Louis, Missouri. The Michigan City project is still in the proposal stage and is a joint venture with a subsidiary of the Company being a 30% partner. With respect to the St. Louis project, the joint venture has previously 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. On January 24, 1994 the City of St. Louis (City) announced that the Joint Venture Proposal was ranked first among the nine proposals the City had received and the City planned to commence negotiations for a berthing lease with the joint venture. Representatives of the City have 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. Once a lease is negotiated, City agency and board of alderman approvals and state licensing will be required. The ultimate outcome of these negotiations and approvals are uncertain at this time. On January 25, 1994, the Missouri gaming law was declared unconstitutional insofar as it allowed slot machines, baccarat, craps, roulette, and other games which in the Court's view do not require skill in deciding the outcome. A voter initiative directed at legalizing games that were found to be unconstitutional did not pass at the April 5, 1994 election. Efforts are in process to obtain a sufficient number of signatures on a petition to have a referendum on the ballot for the November, 1994 election. Currently, Missouri law only authorizes poker and blackjack, video games and craps and the authorization of the video games and craps is being challenged in court as contrary to the aforesaid court decision. The original proposal by the Company as described above does not appear to be financially feasible under such a limited gaming scenario. The joint venture currently expects to finance about 80% of the project through mortgage bonds. Subject to further developments, the Company currently 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 (Tribe) in completing land acquisitions and regulatory approvals with respect to a proposed management project for the Tribe in Palm Springs, California. The ultimate timing of this project is uncertain at this time. The government of Greece plans to shortly issue a new request for proposal ("RFP") to operate private casinos in Greece. The Company has an arrangement with another company to be a manager and investor in a project to be developed by such other company if it is successful in obtaining a franchise from the Greek government. This RFP will be evaluated for submission after it is issued. The prospects and timing for this project are uncertain. Item 6.	Exhibits and Reports on Form 8-K (a)	Exhibits filed herewith (the * denotes documents included in this filing): *10(a)	First Amendment dated May 24, 1994 to CWI's Executive Security Plan as amended and restated as of January 24, 1989. *10(b)	First Amendment dated May 24, 1994 to CWI's 1985 Executive Security Plan as amended and restated as of February 21, 1991. *10(c)	First Amendment dated May 24, 1994 to CWI's 401(k) Retirement Savings Plan dated January 1, 1994.		 10(d)	Stock Option Agreement between CWI and Evander Holyfield dated February 22, 1994. Incorporated by reference to Exhibit 28(ii) of this Corporation's registration statement on Form S-8, Registration No. 33-52363 filed with the Commission February 22, 1994. *15	Review Report of Independent Public Accountants 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: June 14, 1994	 /s/ Roger Lee 				Roger Lee 				Senior Vice President-Finance and Administration 				Principal Accounting Officer: Date: June 14, 1994	 /s/ Bruce C. Hinckley 				Bruce C. Hinckley 				Vice President and Corporate Controller