Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
Rio Hotel & Casino, Inc. ("RHCI" or the "Company") owns and operates the country's only all-suite hotel-casino, the Rio Suite Hotel & Casino (the "Rio") in Las Vegas, Nevada. The Rio, which opened in January 1990, is a 21-story hotel containing 1,410 suites, 89,000 square feet of casino space, ten restaurants and food outlets and other related amenities. The Rio is situated on a 45-acre elevated site near the Las Vegas Strip and adjacent to a major exit from Interstate 15, the freeway linking Las Vegas with Southern California. The Company markets to the middle to upper-middle income segments of gaming customers, both local residents and Las Vegas visitors. The Rio utilizes a colorful Brazilian carnival and rain forest theme to enhance its customers' gaming and resort experience.
The Rio was designed to permit multiple expansions in accordance with a conceptual master plan and received zoning approval for 2,400 rooms. In order to better service its present gaming customers and to expand its market, the Company has been proceeding with certain expansion projects. In the Fall of 1993, the Company completed a $37 million hotel expansion (the "Tower Expansion") containing a total of 437 additional suites and other improvements. In September 1993, 375 of the new suites were placed into service, and the balance of the suites were placed into service during October 1993. In July 1993, the Company commenced a $25 million expansion project (the "Eastside Expansion"), which included a 25,000 square foot expansion of the casino to accommodate approximately 500 slot machines and 12 table games (completed December 1993); the new Copacabana Showroom, a unique circular 430-seat video entertainment and restaurant complex (opened February 1994); Fiore, a new 186-seat world class restaurant (opened April 1994); a 36,000 square foot expansion of the Rio's beach pool area with a second swimming pool and additional recreation areas (completed April 1994); and a 135,000 square foot, two-level parking garage with parking spaces for approximately 434 vehicles (opened December 1993). The Company commenced construction in May 1994 of an approximately $75 million hotel and casino expansion (the "Phase III Expansion") containing a total of 549 additional suites (365 new suites were placed into service in February 1995 and the remaining suites were placed into service in March 1995), approximately 10,000 square feet of new casino area which accommodated approximately 300 additional slot machines (opened November 1994), an expansion of the "Carnival World Buffet" by approximately 50% (opened November 1994), a three-level parking garage with 527 parking spaces (opened August 1994), and assorted back-of-the-house enhancements. The Company intends to commence construction in April 1995 of an approximately $20 million expansion (the "Phase IV Expansion"). The project will add 144 suites to the existing 1,410 suites, add approximately 5,400 square feet of meeting room space, double the size of the existing Buzios seafood restaurant to approximately 180 seats, add a new health club and salon facility and include a variety of back-of-the-house improvements. Completion of the Phase IV Expansion is expected to occur in stages through the end of 1995.
On March 29, 1995, the Company announced that it has retained Montgomery Securities as its financial advisor to assist in evaluating various strategic alternatives for the Company.
The Company was incorporated in California in 1981 and reincorporated in Nevada in 1988. The Company changed its name from MarCor Resorts, Inc. to Rio Hotel & Casino, Inc. on February 28, 1992. Its executive offices are located at 3700 West Flamingo Road, Las Vegas, Nevada 89103, and its telephone number is (702) 252-7733. Unless stated otherwise, the "Company" refers to Rio Hotel & Casino, Inc. and its wholly owned subsidiaries. See Note 1 of Notes to Consolidated Financial Statements.
BUSINESS STRATEGY
The Rio seeks to distinguish itself from its Las Vegas competitors and to attract the middle to upper-middle income customer base. The principal aspects of the Company's business strategy are as follows:
CAPITALIZE ON THE RIO'S UNIQUE QUALITIES. The Rio is the only all-suite hotel-casino in the United States. The Rio's standard suites are up to 50% larger than standard Las Vegas hotel rooms. In addition, the Company selected the Rio's site for the marketing advantage of its location, which is adjacent to a major exit from Interstate 15, the freeway linking Las Vegas with Southern California. The off-Strip location allows Rio customers to avoid the ever-increasing traffic congestion on the Las Vegas Strip. As the new generation of themed, destination resorts continue to open, the Company believes that the Rio's location will become an increasingly important marketing advantage. The Company also believes that the Rio's highly visible and accessible location is an important factor in attracting gaming customers. The Rio is strategically located to take advantage of the dynamic residential and commercial growth of the western portion of metropolitan Las Vegas.
MAINTAIN AN IDENTIFIABLE AND INNOVATIVE MARKET PRESENCE. The Company has created an identifiable and innovative marketing presence and continues to build a "signature" Rio theme. The Rio's Brazilian carnival and rain forest theme incorporates bright colors, creative interior designs, festive employee costumes and other exotic touches to contribute to its tropical ambiance. The Rio's message of a fun-filled, colorful atmosphere is constantly emphasized. The Rio has developed the Rio Rita(TM) character as a promotional ambassador to the Rio's hotel-casino guests and as a focal point upon which many promotional activities have been built, such as Rio Rita's(TM) Paycheck Poker Wheel, Carnival Dice, the Jackpot Jungle, Rio Rita's(TM) Lotto Bucks, Carnival Days, Conga Mania and Brazilia Days. The Company advertises extensively in the Las Vegas area print, television and radio media, and periodically in Southern California, Phoenix and other regional markets.
UTILIZE THE RIO SITE IN ACCORDANCE WITH ITS CONCEPTUAL MASTER PLAN. The Company intends to fully utilize the 45-acre Rio site. The Company's conceptual master plan provides for a systematic and flexible expansion program which, in its implementation and depending on management's analysis of changing market conditions, will allow the Rio to expand its customer base by adding more rooms, expand and adjust the casino and entertainment areas, and add amenities that will attract more customers to the Rio. See "Business - Expansion Strategy and Master Plan."
EMPHASIZE SERVICE EXCELLENCE. Management recognizes that a hotel-casino is a service operation and therefore the success of the overall organization is dependent on the consistent quality of each employee's efforts. Every employee plays an integral role in contributing to the overall Rio experience for guests. The Rio's management team continually seeks to instill in each employee a sense of service excellence designed to exceed guest expectations. Customer surveys consistently indicate that guests are sensitive to and impressed by the friendly, sincere and helpful nature of the Rio's employees. Management believes that it has succeeded in making the Rio a positive and fun place to work and that its employees are proud to be members of Team Rio. In the Spring of 1993, the Rio was recognized as "Best of Las Vegas" in six categories, including "Most Efficient Service," in the Spring of 1994, the Rio increased its "Best of Las Vegas" recognition to eight categories and in the Spring of 1995, the Rio increased its "Best of Las Vegas" recognition to ten categories in an annual survey conducted and published by Nevada's largest daily newspaper.
EXPLOIT NEW GAMING OPPORTUNITIES. Management continues to evaluate developments and opportunities in the rapidly expanding gaming industry. The Company's future expansion plans will focus first on addressing customer demand at the Rio site. Past expansions of the Rio site have been accompanied by expanded customer demands for the Company's casino, restaurant and other entertainment facilities. The Company is also exploring the feasibility of additional gaming opportunities in Las Vegas and other jurisdictions. While no assurances can be given that the Company will ever pursue opportunities off the current Rio site, the Company may pursue opportunities that management believes to be in the best interests of the Company.
THE RIO
The Rio, which opened in January 1990, is a 21-story all- suite hotel-casino containing a broad range of gaming, hotel and resort amenities. The Rio's location appeals to local customers and is conveniently located for Las Vegas visitors. The Rio's elevated site and striking glass facade are visible from all directions. The Rio's main floor design provides easy customer access to the casino and all other public areas. The Rio's Brazilian carnival and rain forest theme incorporates bright colors, creative interior designs, festive employee costumes and other exotic touches to contribute to its tropical ambiance. Quality and style are emphasized throughout all aspects of marketing and operations in order to build a solid repeat- customer base. The Rio's facilities are complemented by its human resources program that is intended to foster friendly and courteous employees in all service areas.
GAMING. The Rio has 89,000 square feet of casino space. The casino currently has approximately 2,200 slot machines; 59 table games, including "21," progressive "21," craps, roulette, pai gow poker, caribbean stud poker, and mini-baccarat; other casino games such as keno and poker; and a race and sports book.
Gaming operations at the Rio are continually being monitored and modified to respond to both changing market conditions and customer demand in an effort to attract new customers while retaining the existing customer base. New and innovative slot and table games have been introduced based on customer feedback and demand from both local customers and Las Vegas visitors. For example, the number of slot machines has increased in stages from 850 in December 1990 to 2,200 in December 1994.
The Company has developed a mix of slot machines to appeal to the two primary segments of gaming customers, local residents and Las Vegas visitors. Management devotes substantial time and attention to the type, location and player activity of all slot machines. The Company believes that to continue to attract and retain slot customers, it must expand the number and variety of slot machines on its casino floor, particularly its higher denomination slot machines.
HOTEL. The Rio's 21-story hotel towers contain a total of 1,410 suites, comprised of 1,366 standard Rio suites; 14 "super" suites; 17 "cariocas" suites; 6 two-story penthouse suites; and 7 executive suites that combine a conference room and an adjoining suite. In September 1993, 375 new suites were placed into service and 62 new suites were placed into service during October 1993. In February 1995, 365 new suites were placed into service and 184 new suites were placed into service during March 1995. The average Rio occupancy rates were 96.8% and 95.9% for 1993 and 1994, respectively. During 1993 and 1994, the Company believes that approximately two potential room night bookings were turned away for each room night booking accepted. The Phase III Expansion added 549 suites bringing the Rio's hotel suite count to 1,410 suites in March 1995. The Company anticipates that the Phase IV Expansion will add an additional 144 suites by January 1996.
The standard Rio suite is a luxury room measuring approximately 600 square feet, compared to approximately 400 square feet for the standard Las Vegas hotel room. The Brazilian carnival and rain forest theme is carried throughout the guest suites in wall coverings, art work and other designer accents. Suite amenities include carved wood finishes, cut glass, polished granite surfaces, marble tile in the bath areas, room safes and refrigerators.
RESTAURANTS, ENTERTAINMENT AND OTHER ATTRACTIONS. While important to attracting Las Vegas visitor gaming customers, the high quality, value and variety of food services are critical to consistently attracting the local resident gaming customer to the Rio. To provide such variety, seven bars and ten restaurants and food outlets are located in the Rio's main floor area. The Rio currently serves an average of approximately 12,000 meals per day, including banquets and room service. The following table sets forth, for each restaurant and food outlet, the type of service provided and the seating capacity:
OTHER. The Rio's Copacabana Showroom is a unique, circular 430-seat video, entertainment and restaurant complex which features two 12-foot by 90-foot video screens, an exhibition cooking area, multiple tiers of dining room seating and a stage. The Copacabana Showroom features "Conga", a dinner show/musical review designed around the Rio's theme. The Copacabana Showroom is also used for other functions, including: a late-night dance club with food service; casino-hosted events; concerts; viewing of sporting events on the large video screens; and corporate meetings that capitalize on the unique video and audio qualities of the room.
The Ipanema Lounge and Mambo's each offer live entertainment in separate casino cocktail lounge settings. The Rio also houses a gift shop, a Rio logo shop, a barber and beauty shop, and an exercise room, as well as approximately 13,250 square feet of public meeting and banquet room facilities.
The Rio's pool/outdoor entertainment area is approximately 59,000 square feet and includes: a landscaped sand beach; an 11-foot waterfall; two swimming pools; a multi-level spa; and a terrace bar and food service facility.
MARKETING STRATEGY
The Rio targets the middle to upper-middle income segments of the following five markets: local residents; leisure travelers; tour and travel customers; special casino customers; and selected convention, meeting and incentive program groups. Through the Company's expansion projects, the Company intends to increase its focus on the visitor market, while preserving and expanding its reputation in the local market.
LOCAL RESIDENTS. The Rio has placed significant emphasis on marketing to the local resident gaming customer. The Rio relies heavily on its location, its food and beverage operations and slot machine variety to attract local resident patrons. The Company markets to local residents through extensive local television, radio and print advertising, active participation in charitable, community and other public activities, and programs that attract local residents to the Rio, such as check cashing promotions. The Rio believes that it is also the beneficiary of significant word-of-mouth endorsements from local residents, including Las Vegas area service industry employees.
LEISURE TRAVELERS. The leisure travel segment consists of guests who are not affiliated with groups and who make their reservations directly with the resort of their choice or through independent travel agents. Management believes that the Rio's location, all-suite concept, Brazilian carnival and rain forest theme and other resort hotel services and amenities provide a significant benefit in attracting the middle and upper-middle strata of the leisure travel segment. Periodically, as hotel occupancy projections dictate, the Rio utilizes print media, radio and direct mail to advertise in the Southern California, Phoenix and other regional leisure travel markets.
TOUR AND TRAVEL CUSTOMERS. The tour and travel market consists of customers who utilize "packages" to reduce the cost of travel, lodging and entertainment. These "packages" are produced by wholesalers and typically emphasize mid-week stays in Las Vegas. The Rio has developed relationships with national tour and travel wholesale companies and travel agents. The Rio maintains a staff of travel professionals who develop and maintain a presence in the Rio's major markets.
SPECIAL CASINO CUSTOMERS. The special casino customer segment is composed of frequent gaming customers who are known by and are in regular communication with Rio casino marketing personnel. The Rio's suites and other amenities are significant tools in marketing to this segment. Credit play for qualified players is also made available based on the judgment of casino management after an analysis and regular monitoring of the player's gaming and credit history, as well as on-going casino play. Special events are also held for these customers on a regular basis.
SELECTED CONVENTION, MEETING AND INCENTIVE PROGRAM GROUPS. The Rio focuses its efforts within this segment on groups that will have sufficient time and propensity to incorporate gaming activities into their stays. An example of the preferred Rio meeting participants are those whose meetings are scheduled for only a portion of the day leaving a large part of the day open for gaming and entertainment activities. The Rio does not market to large-scale conventions and meetings. The Rio's marketing department maintains contacts and data regarding selected convention, meeting and incentive program planners that the Rio desires to attract.
OTHER. The Company believes that it also attracts visitors staying at other Las Vegas hotels and motels. The Company believes word-of-mouth endorsements by Rio guests and Las Vegas service industry employees about the Rio, its food services, and its entertainment in the Copacabana Showroom, the Ipanema Lounge and Mambo's Lounge are responsible for attracting these Las Vegas visitors. The Rio provides transportation to such customers through the use of regularly scheduled Rio shuttle buses that travel between the Rio and designated Las Vegas Strip locations.
EXPANSION STRATEGY AND MASTER PLAN
The Company's conceptual master plan is composed of three major elements: location, design and land space.
The Company selected the strategically located site based upon its proximity to the Las Vegas Strip, Interstate 15 and Flamingo Road. The Las Vegas Strip is the entertainment and resort center of Las Vegas and the site of most major Las Vegas hotel-casinos. Interstate 15 is the primary highway between Las Vegas and Southern California, and it is Las Vegas' major north- south freeway. Flamingo Road is a major east-west surface street connecting southwestern Las Vegas residential and commercial areas with the Las Vegas Strip and southeastern Las Vegas residential and commercial areas.
The Rio was designed to permit future expansions without significant interruption of the Rio's normal business operations. Depending on management's analysis of changing market conditions, the Company has designed the Rio to allow more rooms, to expand and adjust the main floor area, and to add amenities that will attract more customers. The Rio's original design included construction of a reinforced foundation for the hotel tower and a reinforced elevator core to support and facilitate additional room construction. In anticipation of construction of additional room towers, the Rio was designed so that future towers could be constructed at the rear of the facility, away from operations in the casino and other main floor public areas.
The Company assembled adequate acreage so that the Rio may expand without being landlocked into a site not large enough to permit growth. Starting from its original 30 acres, for which it received zoning approval for up to a 2,400 room hotel-casino, the Company has acquired additional acreage in 1989 and 1991, bringing the current Rio site to 45 acres.
The Company has entered into two agreements to acquire a total of approximately 12 acres of real property adjacent to the Rio site which may be used for expansion or other ancillary uses.
PHASE III EXPANSION. In May 1994, the Company commenced construction of the approximately $75 million Phase III Expansion containing a total of 549 additional suites (365 new suites were placed into service in February 1995 and 184 new suites were placed into service in March 1995), approximately 10,000 square feet of new casino area which accommodated approximately 300 additional slot machines (opened November 1994), an expansion of the "Carnival World Buffet" by approximately 50% (opened November 1994), a three-level parking garage with 527 parking spaces (opened August 1994), and assorted back-of-the-house enhancements. Completion of the Phase III expansion occurred in stages from August 1994 through March 1995.
Completion of the Phase III Expansion brought the Rio's total number of hotel suites to 1,410. Upon completion of the Phase III Expansion, the Rio has approximately 2,200 slot machines and 59 table games in an 89,000 square foot casino that serves both Las Vegas locals and an expanded base of hotel guests. The Phase III Expansion increased seating in the Carnival World Buffet by approximately 360 seats to approximately 980 seats and added four new food experiences and a bar. The 527- space parking structure included in the Phase III Expansion is located near the entrance to the Carnival World Buffet.
PHASE IV EXPANSION. In April 1995, the Company will commence construction of the approximately $20 million Phase IV Expansion. The project will add 144 suites to the existing 1,410 suites, add approximately 5,400 square feet of meeting room space, double the size of the existing Buzios seafood restaurant to approximately 180 seats, add a new health club and salon facility and include a variety of back-of-the-house improvements. Completion of the Phase IV Expansion is expected to occur in stages through the end of 1995 and will bring the Rio's total number of hotel suites to 1,554 suites.
ADDITIONAL GAMING OPPORTUNITIES. Management continues to evaluate developments and opportunities in the rapidly expanding gaming industry. The Company's future expansion plans will focus first on addressing customer demand at the Rio. Past expansions of the Rio have been accompanied by expanded customer demands for the Company's hotel, casino, restaurant and other entertainment facilities. The Company is also exploring the feasibility of additional gaming opportunities in Las Vegas and other jurisdictions. While no assurances can be given that the Company will ever pursue opportunities off the current Rio site, the Company may pursue opportunities that management feels to be in the best interests of the Company.
COMPETITION
The Rio faces intense competition. Broadly, the Rio competes with all hotel-casinos in the Las Vegas area and in other cities for its gaming and hotel customers. The Rio more directly competes with a number of casinos off the Las Vegas Strip for many of its local gaming customers.
Most of the Company's revenues and income are derived from its gaming activities. The Company's gaming revenues depend in part on hotel patrons who stay at the Rio. The Company faces intense competition from other hotel-casinos for its hotel customers. According to the Las Vegas Convention and Visitors Authority, as of December 31, 1994, the Las Vegas hotel-motel room inventory was approximately 88,560. The Company expects that hotel room expansion will continue. As a result of this increased room availability, average hotel occupancy levels in Las Vegas and at the Rio may decrease unless visitor volume and other sources of room demand are sufficient to absorb the increased room supply. From 1985 through 1994, visitor volume to Las Vegas increased at a compound annual growth rate of approximately 7.2%. During 1994, the number of visitors traveling to Las Vegas increased by 19.9% from 1993.
The Rio competes with other state and international gaming operations, as well as hotel-casinos located in the Laughlin and Reno-Lake Tahoe areas of Nevada. The Company believes that it competes for gaming customers with the casinos in Atlantic City, New Jersey and other parts of the world, and with state-sponsored lotteries, on- and off-track wagering, card parlors, riverboat and Native American gaming ventures and other forms of legalized gaming in the United States, as well as with gaming on cruise ships. In addition, certain states have recently legalized, and several other states are currently considering legalizing, casino gaming in specific geographic areas within those states. The Company believes that the legalization of unlimited land-based casino gaming in or near any major metropolitan area, such as Chicago or Los Angeles, could have a material adverse effect on its hotel-casino business. The availability of other gaming opportunities such as local casinos, lotteries and other forms of gaming in other states, particularly in areas close to Nevada, such as California, could adversely affect the Company's operations.
REGULATION AND LICENSING
The ownership and operation of casino gaming facilities in Nevada are subject to: (i) the Nevada Gaming Control Act and the regulations promulgated thereunder (collectively, "Nevada Act"); and (ii) various local regulation. The Company's gaming operations are subject to the licensing and regulatory control of the Nevada Gaming Commission ("Nevada Commission"), the Nevada State Gaming Control Board ("Nevada Board"), and the Clark County Liquor and Gaming Licensing Board (the "Clark County Board"). The Nevada Commission, the Nevada Board, and the Clark County Board are collectively referred to as the "Nevada Gaming Authorities."
The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which are concerned with, among other things: (i) the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) to provide a source of state and local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on the Company's gaming operations.
The Company, which operates the casino, is required to be licensed by the Nevada Gaming Authorities. The gaming license requires the periodic payment of fees and taxes and is not transferable. The Company is registered by the Nevada Commission as a publicly traded corporation ("Registered Corporation") and as such, it is required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information which the Nevada Commission may require. No person may become a stockholder of, or receive any percentage of profits from, the Company without first obtaining licenses and approvals from the Nevada Gaming Authorities. The Company has obtained from the Nevada Gaming Authorities the various registrations, approvals, permits and licenses required in order to engage in gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, the Company in order to determine whether such individual is suitable or should be licensed as a business associate of a gaming licensee. Officers, directors and certain key employees of the Company must file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. Officers, directors and key employees of the Company who are actively and directly involved in gaming activities of the Company may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause which they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with the Company, the Company would have to sever all relationships with such person. In addition, the Nevada Commission may require the Company to terminate the employment of any person who refuses to file appropriate applications. Determinations of suitability or of questions pertaining to licensing are not subject to judicial review in Nevada.
The Company is required to submit detailed financial and operating reports to the Nevada Commission. Substantially all material loans, leases, sales of securities and similar financing transactions by the Company must be reported to, or approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated by the Company, the gaming licenses it holds could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, the Company and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor could be appointed by the Nevada Commission to operate the Company's gaming properties and, under certain circumstances, earnings generated during the supervisor's appointment (except for the reasonable rental value of the Company's gaming properties) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of any gaming license or the appointment of a supervisor could (and revocation of any gaming license would) materially adversely affect the Company's gaming operations.
Any beneficial holder of the Company's voting securities, regardless of the number of shares owned, may be required to file an application, be investigated, and have his suitability as a beneficial holder of the Company's voting securities determined if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of the Company's voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of the Company's voting securities apply to the Nevada Commission for a finding of suitability within 30 days after the Chairman of the Nevada Board mails the written notice requiring such filing. Under certain circumstances, an "institutional investor," as defined in the Nevada Act, which acquires more than 10%, but not more than 15%, of the Company's voting securities may apply to the Nevada Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor shall not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of directors of the Company, any change in the Company's corporate charter, bylaws, management, policies or operations of the Company, or any of its gaming affiliates, or any other action which the Nevada Commission finds to be inconsistent with holding the Company's voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent. If the beneficial holder of voting securities who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information including a list of beneficial owners. The applicant is required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada Commission or the Chairman of the Nevada Board, may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any stockholder found unsuitable and who holds, directly or indirectly, any beneficial ownership of the common stock of a Registered Corporation beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. The Company is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a stockholder or to have any other relationship with the Company, the Company (i) pays that person any dividend or interest upon voting securities of the Company, (ii) allows that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pays remuneration in any form to that person for services rendered or otherwise, or (iv) fails to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities for cash at fair market value.
The Nevada Commission may, in its discretion, require the holder of any debt security of a Registered Corporation to file applications, be investigated and be found suitable to own the debt security of a Registered Corporation. If the Nevada Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Registered Corporation can be sanctioned, including the loss of its approvals, if without the prior approval of the Nevada Commission, it: (i) pays to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by such unsuitable person in connection with such securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.
The Company is required to maintain a current stock ledger in Nevada which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. The Company is also required to render maximum assistance in determining the identity of the beneficial owner. The Nevada Commission has the power to require the Company's stock certificates to bear a legend indicating that the securities are subject to the Nevada Act.
The Company may not make a public offering of its securities without the prior approval of the Nevada Commission if the securities or proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes. On July 28, 1994, the Nevada Commission granted the Company prior approval to make public offerings for a period of one year, subject to certain conditions ("Shelf Approval"). However, the Shelf Approval may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chairman of the Nevada Board. Such approval does not constitute a finding, recommendation or approval by the Nevada Commission or the Nevada Board as to the accuracy or adequacy of the prospectus or the investment merits of the securities. Any representation to the contrary is unlawful.
Changes in control of the Company through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or any act or conduct by a person whereby he obtains control, may not occur without the prior approval of the Nevada Commission. Entities seeking to acquire control of a Registered Corporation must satisfy the Nevada Board and Nevada Commission in a variety of stringent standards prior to assuming control of such Registered Corporation. The Nevada Commission may also require controlling stockholders, officers, directors and other persons having a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.
The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada gaming licensees, and Registered Corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevada's gaming industry and to further Nevada's policy to: (i) assure the financial stability of corporate gaming operators and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from the Nevada Commission before the Company can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by the Company's Board of Directors in response to a tender offer made directly to the Registered Corporation's stockholders for the purposes of acquiring control of the Registered Corporation.
Licensee fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the Nevada licensee's respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon either: (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A casino entertainment tax is also paid by casino operations where entertainment is furnished in connection with the selling of food or refreshments. Nevada licensees that hold a license as an operator of a slot route, or a manufacturer's or distributor's license, also pay certain fees and taxes to the State of Nevada.
Any person who is licensed, required to be licensed, registered, required to be registered, or is under common control with such persons (collectively, "Licensees"), and who proposes to become involved in a gaming venture outside of Nevada is required to deposit with the Nevada Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation of the Nevada Board of their participation in such foreign gaming. The revolving fund is subject to increase or decrease in the discretion of the Nevada Commission. Thereafter, Licensees are required to comply with certain reporting requirements imposed by the Nevada Act. Licensees are also subject to disciplinary action by the Nevada Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employ a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the ground of personal unsuitability.
EMPLOYEES
As of December 31, 1994, the Company employed approximately 2,300 full-time employees. The Rio occasionally employs part- time workers as needed. None of the Company's employees are covered by collective bargaining agreements. The Company believes that its relationship with its employees is good.
ITEM 2.



ITEM 2. PROPERTIES
The Company owns the 45-acre site in Las Vegas on which the Rio is located. The Rio site is subject to a deed of trust securing the Company's $125 million revolving credit facility (the "Rio Bank Loan"), of which $125,000,000 and $67,000,000 was outstanding at December 31, 1994 and February 28, 1995, respectively.
The Rio Suite Hotel & Casino site was designed and master- planned to accommodate at least 2,400 rooms. Twelve acres of the Rio site were not included in the original master plan, which provides additional growth potential. The Company is currently utilizing the additional acreage as parking but is presently evaluating various uses for the property which should enhance the Rio's business. Management intends to develop the property to maximize the utilization of the site.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
As previously reported on April 26, 1994 and May 10, 1994, complaints (the "Complaints") in purported class action lawsuits were filed in the United States District Court, Middle District of Florida (the "Florida Federal Court"), against 41 manufacturers, distributors and casino operators of video poker and electronic slot machines, including the Company. The Complaints allege that the defendants have engaged in a course of conduct intended to induce persons to play such games based on a false belief concerning how the gaming machines operate, as well as the extent to which there is an opportunity to win on a given play. One Complaint alleges violations of the Racketeer Influenced and Corrupt Organizations Act (the "RICO Act"), as well as claims of common law fraud, unjust enrichment and negligent misrepresentation, and seeks damages in excess of $1 billion. The other Complaint alleges violations of the RICO Act and seeks damages in excess of $1 billion. The Complaints have been consolidated and have been transferred to the United States District Court, for the State of Nevada (the "Nevada Federal Court"). The Florida Federal Court deferred action on the Company's motion requesting abstention and did not rule on class certification. The Company expects those motions to be heard by the Nevada Federal Court. Management believes that the Complaints are without merit and intends to defend vigorously the allegations in the Complaints.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Price Range of Common Stock
The Company's Common Stock is traded on the Nasdaq National Market under the symbol "RIOH." The following table sets forth the high and low closing sale prices of the Company's Common Stock, as reported by the Nasdaq National Market, during the periods indicated.
The last reported sale price of the Common Stock on the Nasdaq National Market on February 28, 1995 was $12 3/8 per share. There were approximately 1,784 holders of record of the Company's Common Stock as of February 28, 1995.
(b) Dividend Policy
The Company has never declared or paid cash dividends on its Common Stock. The Company presently intends to retain earnings to finance the operation and expansion of its business and does not anticipate declaring cash dividends in the foreseeable future. Under the terms of the covenants in the Rio Bank Loan defined below, the Company's wholly owned subsidiary, Rio Properties, cannot pay dividends to the Company without the consent of the lenders.
ITEM 7.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Rio's revenues and profits are derived largely from its gaming activities, although the Company also seeks to maximize revenues from food and beverage, lodging, entertainment and retail sales. The Rio generally views its non-casino related operations as complementary to its core casino operations. The Rio utilizes entertainment primarily as a casino marketing tool. The Rio expects to maintain a food and beverage pricing structure designed to maximize casino customer foot traffic. Such a structure tends to result in an operating loss for the food and beverage department, although specific bars or restaurants may report operating profits.
The Company's sole business is the operation of the Rio, which opened in January 1990. The Rio was originally owned and operated by a limited partnership ("Rio Partnership") formed by the Company in 1988. Through a series of transactions involving an exchange of preferred stock for partnership interests and later a merger of Rio Partnership into Rio Properties, the Company increased its ownership of the Rio from 34.4% in 1988 to 100% in 1992. Prior to 1990, the Company's operations consisted of real estate development and management. In December 1991, the Company sold all real estate assets and operations not used or held for the operation or expansion of the Rio.
The Rio was designed to permit multiple expansions in accordance with a conceptual master plan and has received zoning approval for 2,400 rooms. An $8 million buffet-casino expansion was completed in December 1992; the $37 million Tower Expansion was completed in October 1993; and the $25 million Eastside Expansion was completed in April 1994. In May 1994, the Company commenced its Phase III Expansion, an expansion which contained a total of 549 additional suites (365 new suites were placed into service in February 1995 and the remaining suites were placed into service in March 1995), approximately 10,000 square feet of new casino area that accommodated approximately 300 additional slot machines (opened November 1994), an expansion of the Carnival World Buffet by approximately 50% (opened November 1994), a 527-space, three-level parking garage (opened August 1994), and associated back-of-the-house enhancements. The Phase III Expansion was completed in phases from August 1994 through March 1995. In April 1995, the Company will commence its $20 million Phase IV Expansion. The project will add 144 suites to the existing 1,410 suites, add approximately 5,400 square feet of meeting room space, double the size of the existing Buzios seafood restaurant to approximately 180 seats, add a new health club and salon facility and include a variety of back-of-the- house improvements. Completion of the Phase IV Expansion is expected to occur in stages through the end of 1995. See "Business-Expansion Strategy and Master Plan".
YEARS ENDED DECEMBER 31, 1994 AND 1993
Operating profit for the Company increased to $25,802,873 for 1994 from $20,232,262 for 1993, an increase of $5,570,611 or 27.5%. Management believes that the improvement in operating results was due to increased business levels in 1994 as a result of having an additional 437 hotel suites for nine months of the year, an addition of approximately 800 slot machines (approximately 500 slot machines were added in December 1993 and approximately 300 slot machines were added in November 1994), an addition of approximately 13 table games and additional restaurant capacity compared to 1993.
Net revenues for the Company increased to $146,299,304 for 1994 from $109,981,585 for 1993, an increase of $36,317,719 or 33.0%. Casino revenues increased to $87,164,738 for 1994 from $71,295,870 for 1993, an increase of $15,868,868 or 22.3%. The increase in casino revenues was due primarily to an increase in slot machine revenues of $9,256,595 or 20.4% to $54,488,421 for 1994 from $45,231,826 for 1993 and an increase in table games revenues of $5,974,199 or 30.1% to $25,803,789 for 1994 from $19,829,590 for 1993, resulting from the additional slot machines and table games discussed above.
Room revenues increased to $19,261,477 for 1994 from $12,334,207 for 1993, an increase of $6,927,270 or 56.2%. The increase in room revenues resulted primarily from the addition of 437 suites during the fourth quarter of 1993 (375 new suites were placed in service in September 1993 and 62 suites were placed in service in October 1993), bringing the Company's total to 861 suites available during 1994. Demand for the Rio's suites remained high during 1994, at 95.9% occupancy compared to 96.8% occupancy during 1993.
Food and beverage revenues increased to $47,648,778 for 1994 from $32,573,861 for 1993, an increase of $15,074,917 or 46.3%. The increase was principally due to the successful opening in February 1994 of a new 430-seat video, entertainment and restaurant complex, the successful opening in April 1994 of a new 186-seat world class restaurant, the successful completion in November 1994 of a 50% expansion of the Carnival World Buffet to 980 seats, an increase in the number of patrons served in other Rio restaurants and an increase in the average food check contributed to the increase in food and beverage revenues.
Management believes that operating efficiencies in the food and beverage departments improved during 1994 compared to 1993. Expenses in food and beverage were 81% of food and beverage revenues during 1994 compared to 85% during 1993. Food and beverage expense margins improved as a result of an increase in volume, price increases and effective cost control measures. Casino profit margins were flat. Casino expenses were 44% of casino revenue during both 1994 and 1993. Selling, general and administrative expenses were 14% of net revenues during 1994, of which $421,367 were expenses related to gaming development.
Depreciation and amortization increased to $10,863,844 for 1994 from $7,544,326 for 1993, an increase of $3,319,518 or 44.0%. This increase is attributable to a full year of depreciation on the Tower Expansion which was completed in October 1993, depreciation on the Eastside Expansion which was completed in phases by April 1994 and depreciation on the Phase III Expansion projects completed during 1994.
Other income for 1994 was a one-time gain of $1,140,010 related to the resale of certain real estate previously owned by the Company. A one-time gain of $966,510 related to the sale of real estate which was sold by the Company to a related party in December 1991. In April 1994, the real estate was resold to a non-related party. Pursuant to the terms of the sales agreement between the Company and the related party, the Company was entitled to a portion of the resale proceeds, which equaled $966,510, net of expenses. A one-time gain of $173,500 related to the sale of real estate owned by the Company until May 1991, when it was sold to a non-related party. Pursuant to the terms of the sales agreement, the Company was entitled to a portion of the resale proceeds or refinancing amount, which equaled $173,500, net of expenses.
Income before extraordinary items and cumulative effect of a change in accounting principle increased 36.7% to $15,966,409 or $0.74 per share (fully diluted) for 1994 from $11,679,991 or $0.60 per share (fully diluted) for 1993. The results for 1993 were impacted by the cumulative effect of a change in accounting principle resulting from the adoption of Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes" ("SFAS 109"). Adoption of SFAS 109 resulted in a one-time, non- cash charge in the amount of $776,888 or ($0.04) per share (fully diluted). The results for 1993 were also adversely affected by the extraordinary loss on early extinguishment of debt, net of income tax benefit, of $253,711 or ($0.01) per share (fully diluted).
Net income for 1994 increased 49.9% to $15,966,409 or $0.74 per share (fully diluted) from $10,649,392 or $0.55 per share (fully diluted) for 1993 as a result of the factors discussed above.
YEARS ENDED DECEMBER 31, 1993 AND 1992
Operating profit for the Company increased to $20,232,262 for 1993 from $12,295,761 for 1992, an increase of $7,936,501 or 64.5%. Management believes that the improvement in operating results was primarily the result of an increase in casino revenues and food and beverage revenues combined with smaller increases in operating expenses.
Net revenues for the Company increased to $109,981,585 for 1993 from $82,475,164 for 1992, an increase of $27,506,421 or 33.4%. Casino revenues increased to $71,295,870 for 1993 from $56,524,184 for 1992, an increase of $14,771,686 or 26.1%. The increase in casino revenues was due primarily to an increase in slot machine revenues. Slot machine revenues increased $11,063,662 or 32.4% to $45,231,826 for 1993 from $34,168,164 for 1992. The increase in slot machine revenues resulted primarily from the addition of approximately 385 slot machines (approximately 85 slot machines in April 1992 and approximately 300 slot machines in December 1992) while at the same time the daily win per slot machine slightly increased. Table game revenues increased by $3,217,838 or 19.4% to $19,829,590 for 1993 from $16,611,752 for 1992. The increase in table game revenues resulted primarily from a 16.6% increase in volume to $123,901,043 for 1993 from $106,307,122 for 1992. Food and beverage revenues increased to $32,573,861 for 1993 from $21,171,930 for 1992, an increase of $11,401,931 or 53.9%. The successful opening in December 1992 of an expanded buffet and an additional lounge, the successful opening in May 1993 of a new 92- seat seafood restaurant, as well as a sizable increase in the number of patrons served, contributed to the increase in food and beverage revenues.
Demand for the Rio's suites remained high during 1993, at 96.8% occupancy compared to 96.5% occupancy during 1992. There were 424 suites available during 1992. In September 1993, 375 new suites were placed into service and 62 additional suites were placed into service in October 1993.
The Company's expense margins improved in 1993 as compared to 1992. Casino expenses were 44% of casino revenues during 1993 compared to 48% during 1992. Casino expense margins improved as a result of increased casino activity, particularly in slots, which has a lower expense margin than other casino games. Expenses in food and beverage were 85% of food and beverage revenues during 1993 compared to 87% during 1992. Food and beverage expense margins improved as a result of a sizable increase in the number of patrons served and effective cost controls.
Net interest expense of the Company was reduced primarily because of reduced average borrowing during the period. The Company took advantage of the revolving line of credit feature of its bank loan by applying cash on hand to reduce borrowing amounts during most of the year. This was partially offset by a reduction in interest income. Interest expense was also reduced by $467,798 because of interest capitalized on amounts expended on the Tower Expansion and Eastside Expansion projects.
Income from continuing operations after minority interests and tax provisions but before extraordinary items and cumulative effect of a change in accounting principle increased 111.8% to $11,679,991 or $0.60 per share (fully diluted) for 1993 from $5,514,388 or $0.36 per share (fully diluted) for 1992. The results for 1993 were impacted by the cumulative effect of a change in accounting principle resulting from the adoption of SFAS 109 which resulted in a one-time, non-cash charge in the amount of $776,888 or ($0.04) per share (fully diluted). The results for 1993 were also adversely affected by the extraordinary loss on early extinguishment of debt, net of income tax benefit, of $253,711 or ($0.01) per share (fully diluted). The results for 1992 were affected by an extraordinary credit of $793,511 or $0.05 per share (fully diluted), reflecting a reduction of federal income taxes arising from the carryforward of prior years' operating losses.
Net income for 1993 increased 68.8% to $10,649,392 or $0.55 per share (fully diluted) from $6,307,899 or $0.41 per share (fully diluted) for 1992 as a result of the factors discussed above.
EFFECT OF FASB STATEMENT NO. 106 AND NO. 112
In December 1990, the Financial Accounting Standards Board issued Statement No. 106 and No. 112, respectively entitled, "Employers Accounting for Post-Retirement Benefits other than Pension," and "Employers Accounting for Post-Employment Benefits." These statements require the recognition and measurement of post-employment benefits that are not pension benefits and are effective for fiscal years beginning after December 15, 1992 and December 15, 1993, respectively. Management believes that based upon present circumstances these statements have no impact on the Company's financial position or results of operations.
IMPACT OF INFLATION
Absent changes in competitive and economic conditions or in specific prices affecting the industry, the Company believes that the hotel-casino industry may be able to maintain its real operating profit margins in periods of general inflation by increasing minimum wagering limits for its games and increasing the prices of its hotel rooms, food and beverage and other items, and by taking actions designed to increase the number of patrons. The industry may be able to maintain growth in gaming revenues by the tendency of customer gaming budgets to increase with inflation. Changes in specific prices (such as fuel and transportation prices) relative to the general rate of inflation may have a material effect on the hotel-casino industry.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994, the Company had working capital of $50,198,343 compared with $38,091,630 at December 31, 1993. Cash and cash equivalents were $76,426,258 at December 31, 1994 compared with $55,784,937 at December 31, 1993. The increase in working capital and cash was primarily due to the $60 million increase to the Rio Bank Loan ($20 million increase effective in April 1994 and $40 million increase effective in December 1994) less application of funds for the Company's $37 million Tower Expansion, $25 million Eastside Expansion and $75 million Phase III Expansion, and the increase in accounts payable-related party reflecting construction amounts due on the Phase III Expansion.
During 1994, cash provided from operating activities was $25,795,875. Investing activities used $66,053,542 of the Company's cash during 1994. Approximately $3,688,280 of such expenditures was related to the Company's $37 million Tower Expansion, $12,517,746 was related to the Eastside Expansion and $45,809,009 was related to the Phase III Expansion. . As of January 1, 1995, the Company's capital commitments included approximately $29,190,991 for the remainder of the Phase III Expansion. Based upon cash on hand, cash available through borrowings under the Rio Bank Loan and anticipated cash from operations, the Company believes that it has adequate cash available to fund the remaining cost of the Phase III Expansion.
On March 13, 1995, the Company announced that in April 1995 it will commence construction of its Phase IV Expansion which will have an estimated cost of $20 million. The Company presently expects to fund costs of the Phase IV Expansion through a combination of cash flows from operations and proceeds from the Rio Bank Loan.
On July 15, 1993, Rio Properties entered into the $65 million Rio Bank Loan with a consortium of banks consisting of Bank of America National Trust Savings and Association; Bank of America Nevada; Societe Generale; NBD Bank, N.A.; First Security Bank of Idaho, N.A.; First Interstate Bank of Nevada, N.A.; and U.S. Bank of Nevada. The Rio Bank Loan was increased to an $85 million loan in April 1994 and increased to a $125 million loan in December 1994. The Rio Bank Loan is a revolving credit facility to be used for construction and working capital purposes.
The Rio Bank Loan matures on June 30, 2001, and bears interest on the outstanding principal amount at a rate per annum equal to the Eurodollar Rate or the Base Rate (as defined in the Rio Bank Loan) at the election of Rio Properties, plus a predetermined margin over the Eurodollar Rate or the Base Rate, as applicable. The Eurodollar Rate means an interest rate per annum determined pursuant to the following formula:
LIBOR Eurodollar Rate = ____________________________________ 1.00 - Eurodollar Reserve Percentage
The Base Rate means a rate per annum equal to the higher of the reference rate as it is publicly announced from time to time by Bank of America in San Francisco, or 0.50% per annum above the latest Federal Funds Rate. The Rio Bank Loan requires monthly payments of interest only and quarterly principal reductions in the amount of $15 million on December 31, 1995, $5 million on March 31, 1996 and $5 million every quarter thereafter until maturity. To reduce the risk from rate fluctuations, the Company has entered into an interest rate swap agreement in the amount of $20 million from September 30, 1994 through December 29, 1995 and $15 million from December 29, 1995 through June 28, 1996. In addition, in August 1994 the Company purchased a $40 million interest rate cap. The cap is effective on September 30, 1994, has a three-year term, and provides for quarterly payments to the Company in the event that three-month LIBOR exceeds 7.00% on any quarterly reset date. The Company is exposed to credit risk in the event of non-performance by the counterparties. However, the Company does not anticipate non-performance by the counterparties. The Rio Bank Loan is secured by a first priority mortgage lien on the Rio and certain other real and personal property of Rio Properties and the Company. The Company is a guarantor of the Rio Bank Loan.
The Rio Bank Loan contains certain customary financial covenants to which the Company is subject as well as events of default if Anthony A. Marnell II beneficially owns less than 10% of the voting stock of the Company, any person holds or controls a greater amount of voting stock than the amount held or controlled by Anthony A. Marnell II, or if either Anthony A. Marnell II or James A. Barrett, Jr. cease to perform their functions as Chief Executive Officer and President, respectively, for a period of 30 consecutive days. The Company is subject to annual capital expenditure limits of $7.5 million under the Rio Bank Loan, however, the Company received a written waiver to allow the Company to construct the Tower Expansion, the Eastside Expansion, the Phase III Expansion and the Phase IV Expansion. Because of the annual restrictions on capital expenditures by the Company contained in the Rio Bank Loan, any other significant new capital improvements to the Rio will also require the consent of the lenders.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Rio Hotel & Casino, Inc.:
We have audited the accompanying consolidated balance sheets of RIO HOTEL & CASINO, INC. (a Nevada corporation) and subsidiaries as of December 31, 1994 and 1993 and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rio Hotel & Casino, Inc. and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles.
As discussed in Note 7 to the consolidated financial statements, effective January 1, 1993, the Company changed its method of accounting for income taxes.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada January 25, 1995
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Rio Hotel & Casino, Inc. and its wholly owned subsidiaries Rio Properties, Inc. ("Rio Properties," which owns and operates the Rio Suite Hotel & Casino [the "Rio"] in Las Vegas, Nevada); MarCor Development Company, Inc.; MarCor Resort Properties, Inc. ("MRPI"); MarCor Rio Holding Corp. ("MRHC") (until its dissolution as of December 29, 1992), a subsidiary of MRPI and second-tier subsidiary of the Company; and one limited partnership, MarCor Resorts, L.P. V (the "Rio Partnership"), until its merger with Rio Properties on August 15, 1992 (collectively the "Company"). The Rio Partnership is included in the accounts of the Company as a result of the Company retaining more than a 50% ownership interest or a "controlling" interest as defined by Statement of Financial Accounting Standards No. 94, "Consolidation of All Majority Owned Subsidiaries".
All significant intercompany balances and transactions have been eliminated in consolidation.
RECLASSIFICATIONS
The financial statements for prior periods reflect certain reclassifications, which have no effect on net income, to conform with classifications adopted in the current year.
CAPITALIZATION OF INTEREST
The Company capitalizes interest on funds disbursed during the active construction phases of real estate development and other major projects. Interest capitalized during the years ended December 31, 1994, 1993, and 1992 was $619,887, $467,798, and $59,732, respectively.
PROPERTY AND EQUIPMENT
Land and improvements, building and improvements, and equipment, furniture and improvements are stated at cost.
Depreciation and amortization of property and equipment is computed using the straight-line method predominantly over the following estimated useful lives:
Building and improvements 7 to 45 years Equipment, furniture and improvements 3 to 15 years
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by using the first-in, first-out method.
REVENUE AND PROMOTIONAL ALLOWANCES
Casino revenues represent the net win from gaming wins and losses. The retail value of rooms, food, beverage and other services provided to customers without charge is included in gross revenue and deducted as promotional allowances. The estimated departmental costs of providing such promotional allowances are included in casino costs and expenses as follows:
EARNINGS PER SHARE
Earnings per common share are computed on the basis of the weighted average number of common shares and common stock equivalents outstanding during the period.
HEDGING TRANSACTION
The Company is a party to an interest rate swap agreement and has purchased an interest rate cap (Note 6). Any net payments made or received by the Company in connection with this interest rate swap agreement or interest rate cap, or any other hedging transaction that the Company may enter into, will be classified as cash flows from operating activities.
INCOME TAXES
Effective January 1, 1993, the Company implemented the provisions of SFAS 109. SFAS 109 utilizes the liability method and deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of the enacted tax laws. Prior to the implementation of SFAS 109, the Company accounted for income taxes using Accounting Principles Board Opinion No. 11.
2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at December 31, 1994 and 1993 include $68 million and $48 million, respectively, in overnight repurchase agreements with a bank. These items are recorded at cost which approximates market value and are considered cash equivalents for purposes of the Consolidated Statements of Cash Flows.
3. CONSOLIDATED STATEMENTS OF CASH FLOWS
The following supplemental disclosures are provided as part of the Consolidated Statements of Cash Flows:
Non-cash financing and investing activities:
DECEMBER 31, 1994
Purchase of property and equipment financed through payables totaled $10,026,210.
Tax benefit arising from the exercise of stock options granted under the Company's Non-Statutory Stock Option Plan ("NSOP") totaled $886,132.
DECEMBER 31, 1993
Purchase of property and equipment financed through payables totaled $8,442,660.
Purchase of property and equipment financed through long- term debt totaled $183,586.
Additional costs of issuing Common Stock totaled $12,194.
Costs of issuing Common Stock financed through payables totaled $163,801.
Tax benefit arising from the exercise of stock options granted under the NSOP totaled $1,120,823.
Reduction in paid-in capital as a result of the implementation of SFAS 109 totaled $823,152. This amount was charged directly against equity because it reflects the tax effect of SFAS 109 as it related to the gain on sale of assets to affiliates of the Company's largest stockholder in December 1991, which was also recorded directly to equity.
DECEMBER 31, 1992
During 1992, the Company exchanged 728,461 stock exchange rights for 728,461 shares of the Company's Common Stock. The transactions resulted in the following changes:
Common Stock $ 7,285 Additional paid-in capital 3,766,653 Stock exchange rights (3,773,938)
$ - - -
On August 14, 1992, the Company, through Rio Properties, acquired an additional 3.25% of the Rio Partnership in exchange for 354,549 shares of the Company's Common Stock. On August 15, 1992, the Rio Partnership was merged into Rio Properties, with an additional 109,092 shares of Common Stock issued for the remaining 1% interests in the Rio Partnership. The summarized results of these transactions are as follows: (1) Rio Properties now owns 100% of the assets and liabilities formerly held by the Rio Partnership; (2) the Rio Partnership, as a result of its merger with Rio Properties, no longer exists; (3) Rio Properties is wholly owned by the Company; (4) the Company issued 463,641 shares of Common Stock to the former minority partners in the Rio Partnership; (5) MRPI and MRHC, which had previously held 27.90% and 67.85% ownership interests in the Rio Partnership, respectively, no longer hold such interests.
The transaction resulted in the following:
Value of stock issued (463,641 shares @ $ 3,129,577 $6.75/share) Minority interests (1,877,067) Premium paid $ 1,252,510
This premium was allocated based on fair market values among land, building, and equipment, furniture and improvements.
The Company reclassified $248,951 of Rio assets previously in equipment, furniture and improvements into other assets during the year ended December 31, 1992.
The Company reclassified $160,443 of Rio assets previously in other assets into construction in progress during the year ended December 31, 1992.
Construction in progress financed through payables totaled $74,369. Additional asset purchases financed through payables totaled $829,242. Costs of issuing Common Stock, financed through payables, totaled $91,750.
4. ACCOUNTS RECEIVABLE
Components of receivables are as follows:
5. ACCRUED EXPENSES
Components of accrued expenses are as follows:
6. LONG-TERM DEBT
Long-term debt consists of the following:
The prime interest rates quoted by the Company's primary lenders at December 31, 1994 and 1993 were 8.50% and 6.00%, respectively.
At December 31, 1994, the three month Eurodollar Rate was 6.50%. The margin on the Company's Eurodollar Rate borrowings at December 31, 1994 was 1.00%.
On July 15, 1993, Rio Properties entered into the $65 million Rio Bank Loan with a consortium of banks. The Rio Bank Loan was increased to an $85 million loan in April 1994 and increased to a $125 million loan in December 1994. The Rio Bank Loan is a revolving credit facility to be used for construction and working capital purposes.
The Rio Bank Loan matures on June 30, 2001, and bears interest on the outstanding principal amount at a rate per annum equal to the Eurodollar Rate or the Base Rate (as defined in the Rio Bank Loan) at the election of Rio Properties, plus a predetermined margin over the Eurodollar Rate or the Base Rate, as applicable. The Eurodollar Rate means an interest rate per annum determined pursuant to the following formula:
LIBOR Eurodollar Rate = ____________________________________ 1.00 - Eurodollar Reserve Percentage
The Base Rate means a rate per annum equal to the higher of the reference rate as it is publicly announced from time to time by Bank of America in San Francisco, or 0.50% per annum above the latest Federal Funds Rate. The Rio Bank Loan requires monthly payments of interest only and principal reductions of $15 million on December 31, 1995, $5 million on March 31, 1996 and $5 million every quarter thereafter until maturity. To reduce the risk from rate fluctuations, the Company has entered into an interest rate swap agreement in the amount of $20 million from September 30, 1994 through December 29, 1995 and $15 million from December 29, 1995 through June 28, 1996. In addition, in August 1994 the Company purchased a $40 million interest rate cap. The cap is effective on September 30, 1994, has a three year term, and provides for quarterly payments to the Company in the event that three-month LIBOR exceeds 7.00% on any quarterly reset date. The Company is exposed to credit risk in the event of non-performance by the counterparties. However, the Company does not anticipate non-performance by the counterparties. The Rio Bank Loan is secured by a first priority mortgage lien on the Rio and certain other real and personal property of Rio Properties and the Company. The Company is a guarantor of the Rio Bank Loan.
The Rio Bank Loan contains certain customary financial covenants to which the Company is subject. Because of annual restrictions on capital expenditures by the Company contained in the Rio Bank Loan, any new significant capital improvements to the Rio will require the consent of the lenders.
The revolving credit feature of the Rio Bank Loan allows the Company to pay down and reborrow principal under the line of credit as the Company deems appropriate. The Company utilized this ability by reborrowing $50 million on December 30, 1993 and repaying $50 million on January 3, 1994. The Company also reborrowed $69 million on December 30, 1994 and repaid $69 million on January 3, 1995 under the terms of the Rio Bank Loan.
As of December 31, 1994, annual maturities of total notes and loans payable are as follows:
Based upon the present operations of the Rio, internal projections of revenues and expenses, and other anticipated cash requirements of Rio Properties during 1995, the Company anticipates meeting required principal and interest payments under the Rio Bank Loan during 1995.
The carrying values of assets included in the consolidated financial statements, which collateralize bank loans payable, are as follows:
7. INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued SFAS 109 which supersedes previous pronouncements on accounting for income taxes and is effective for fiscal years commencing after December 15, 1992. The Company adopted SFAS 109 in the first quarter of 1993 by reporting the effect of SFAS 109 as a cumulative effect of a change in accounting principle and not restating prior periods. The effect of SFAS 109 recorded in January 1993 decreased net income as a non-cash, non-recurring cumulative effect of a change in accounting principle by an amount totaling $776,888. It also reduced paid-in capital by an amount totaling $823,152. This amount was charged directly against equity because it reflects the tax effect of SFAS 109 as it related to the gain on sale of assets to affiliates of the Company's largest stockholder in December 1991, which was also recorded directly to equity.
The federal income tax provisions for the years ended December 31, 1994 and 1993 consist of the following:
The Revenue Reconciliation Act of 1993 raised the Corporate Income Tax Rate from 34% to 35%, retroactively to January 1, 1993. In accordance with the requirements of SFAS 109, the deferred income tax assets and liabilities were adjusted accordingly, resulting in a charge against income in the amount of $113,433.
The following schedule reconciles the Company's effective tax rate to the statutory rate:
During 1994, the Company utilized all remaining alternative minimum tax credit carryforwards.
The Company's deferred tax assets (liabilities) at December 31, 1994 consisted of the following:
The Company's deferred tax assets (liabilities) at December 31, 1993 consisted of the following:
The current portion of the Company's net deferred tax assets is included on the Consolidated Balance Sheet under the heading "Prepaid Expenses and Other Current Assets."
The Company has determined that it is probable that the full amount of the tax benefit from the deferred tax assets will be realized and therefore, has not recorded a valuation allowance to reduce the carrying value of the deferred tax assets.
Prior to 1993, the Company accounted for income taxes in accordance with APB 11. The provision for income taxes for the year ended December 31, 1992 is as follows:
8. COMMITMENTS AND CONTINGENCIES
In connection with the bank loan agreements, the Company has entered into agreements with certain key stockholders, directors and executive officers to facilitate borrowings by the Company. These individuals personally guaranteed the previous bank loan made to Rio Properties in exchange for compensation of $1,250,000 upon the satisfaction of certain terms and conditions. The first potential payment obligation of the Company of $250,000 commenced with the fiscal year ended December 31, 1990 and continued to December 31, 1994, with a two-year extension provision. No amounts were due or paid arising out of the years ended December 31, 1990 or 1991. The Company made $250,000 payments in each of the three years ended December 31, 1994, 1993, and 1992. The Company anticipates paying the entire balance on or before December 31, 1996. Because the personal guaranties under the former bank loan have been replaced under the Rio Bank Loan with provisions that trigger events of default should the Company's Chief Executive Officer voluntarily allow his stockholdings in the Company to fall below 10% or that of another holder or if the Company's Chief Executive Officer or Chief Operating Officer cease for a period of 30 consecutive days to hold their respective executive officer positions, the agreement with the guarantors has been amended to terminate the guarantor payments in the event that said events of default are triggered by voluntary act of the respective guarantors.
Effective January 1, 1991, Rio Properties maintains an employee profit sharing plan for all employees who have accredited service. Contributions to the plan are discretionary and cannot exceed amounts permitted under the Internal Revenue Code. Contributions of $215,039, $109,701, and $69,113 have been authorized and charged to income for the years ended December 31, 1994, 1993, and 1992, respectively.
In the normal course of business, the Company is involved with various negotiations and legal matters. In addition, Rio Properties is a potential defendant in various personal injury allegations. Management is of the opinion that the effect of these matters is not material to the consolidated financial statements.
9. STOCKHOLDERS' EQUITY
COMMON STOCK
During 1994, the Company issued 223,550 shares of Common Stock at exercise prices ranging from $3.00 per share to $15.625 per share pursuant to options previously granted under the Company's NSOP (see below).
On November 24, 1993, the Company sold in a public offering 2,300,000 shares of Common Stock at a net price per share of $13.60. The proceeds from the sale were received in November 1993.
During 1993, the Company issued 247,000 shares of Common Stock at exercise prices ranging from $3.00 per share to $6.00 per share pursuant to options previously granted under the Company's NSOP (see below).
On November 24, 1992, the Company sold in a public offering 3,737,500 shares of Common Stock at a net price per share of $7.98. The proceeds from the sale were received in December 1992.
On August 15, 1992, the Company issued 463,641 shares of Common Stock to the partners in the Rio Partnership in exchange for 4.25% of the Rio Partnership (Note 3).
During 1992, the Company issued 55,400 shares of Common Stock at exercise prices ranging from $3.00 per share to $5.00 per share pursuant to options previously granted under the Company's NSOP (see below).
STOCK OPTIONS
Key officers and employees are eligible to participate in the Company's NSOP. As of December 31, 1994, 2,637,500 shares were available for issuance pursuant to options granted under the NSOP and 2,585,500 options had been granted at exercise prices ranging from $3.00 to $15.625 per share. As of December 31, 1994, 505,950 options had been exercised and 144,500 options had been forfeited, resulting in 1,935,050 options outstanding.
The NSOP will terminate July 8, 1997, subject to the right of the Board of Directors to terminate the NSOP prior thereto.
On September 5, 1991, the Company's Board of Directors adopted the 1991 Directors' Stock Option Plan, which was ratified by the Company's stockholders on May 16, 1992, under which options to purchase up to 100,000 shares of Common Stock may be granted to non-employee directors. The option exercise price is 100% of the fair market value of the Common Stock on the date of grant. As of December 31, 1994, 85,000 options had been granted at exercise prices ranging from $3.00 per share to $16.00 per share. As of December 31, 1994, 20,000 options had been exercised and 1,000 options had been forfeited, resulting in 64,000 options outstanding.
STOCK EXCHANGE RIGHTS
On September 28, 1990, MRHC issued 6,638,214 shares of preferred stock (the "Stock Exchange Rights") in exchange for 60.85 Rio Partnership Units. These Stock Exchange Rights permitted the exchange for the Company Common Stock on a one- for-one basis after March 28, 1991, and the Company could have required exchange any time on or after December 31, 1999. In connection with this transaction, the Company paid $13,681,286 of costs in excess of recorded minority interests for the Rio Partnership Units. All costs were allocated to assets based on fair market values; however, the costs in excess of recorded minority interests paid to related parties were not recorded. As of December 31, 1992, all 6,638,214 Stock Exchange Rights had been exchanged for the Company's Common Stock. The Company has reflected the cost of the issuance of the Stock Exchange Rights in its stockholders' equity.
10. RELATED PARTY TRANSACTIONS
The Company has contracted with two affiliates of the Company's largest stockholder for the design and construction of a 21-story hotel tower containing 549 suites (the "Phase III Expansion") for a total of $64,166,368. As of December 31, 1994, the Company had capitalized $37,241,468 in connection with these contracts. As of December 31, 1994, $10,026,210 had been accrued in connection with these construction and design contracts.
In 1993, the Company contracted with two affiliates of the Company's largest stockholder for the design and construction of a 21-story hotel tower containing 437 suites (the "Tower Expansion") and an expansion of the Rio's public area (the "Eastside Expansion"). The two contracts were in amounts not to exceed $57,557,093. Amounts capitalized in connection with these contracts totaled $50,193,919. As of December 31, 1993, $7,189,042 had been accrued in connection with these construction and design contracts. As of December 31, 1994, all amounts due in connection with these contracts had been capitalized and paid.
On July 1, 1992, the Company entered into contracts with two affiliates of the Company's largest stockholder in an amount not to exceed $6,107,571 for the design and construction of an addition to the Rio's buffet restaurant, as well as expansion of casino space and addition of a lounge. As of December 31, 1992, $5,605,540 had been capitalized in connection with these contracts. As of December 31, 1992, $984,195 had been accrued in connection with these contracts. As of December 31, 1993, all amounts due in connection with these contracts had been capitalized and paid.
In December 1991, the Company sold non-Rio real estate to an affiliate of the Company's largest stockholder. In April 1994, the affiliated entity sold the real estate to a non- related party. Pursuant to the terms of the sales agreement, the Company was entitled to a portion of the sales proceeds which equaled $966,510, net of expenses.
The Company entered into consulting contracts with an affiliated entity to provide real estate, financial and supervisory services through April 30, 1992. The contract was terminated three months early, on January 31, 1992, by mutual agreement of the parties. Revenues earned thereunder during the years ended December 31, 1994, 1993, and 1992 were $0, $0, and $100,000, respectively.
The Company reimbursed an affiliate of the Company's largest stockholder for certain expenses advanced on behalf of or supplied to the Company during the years ended December 31, 1993 and December 31, 1992 of approximately $162,425 and $121,000, respectively. Nominal amounts were paid by the Company to the affiliate for similar purposes during 1994. Such amounts were generally billed to the Company at the affiliate's cost.
Two director/officers of the Company are associated with affiliated entities which render various architectural and construction services for the Company. The Company paid these entities, in the aggregate, approximately $50,416,348, $44,567,088 and $5,669,743 during the years ended December 31, 1994, 1993, and 1992, respectively, for their services.
Entities in which a director of the Company is the principal stockholder and the executive officer received commissions from the Company totaling approximately $124,912, $90,325 and $79,000 for the years ended December 31, 1994, 1993, and 1992, respectively, arising out of the acquisition of various insurance coverage by the Company.
The Company believes that the transactions described above are on terms at least as favorable as would have been obtained from non-related parties.
11. MARCOR RESORTS, L.P. V (THE RIO PARTNERSHIP)
During the year ended February 28, 1989, a limited partnership (known as MarCor Resorts, L.P. V, a Nevada limited partnership) was formed. Until its merger into Rio Properties on August 15, 1992, the Rio Partnership was included in the consolidated financial statements of the Company. The Company obtained a 34.4% general partnership interest in the Rio Partnership in exchange for land, cash and certain other assets with a collective value of $13,760,000. The exchange resulted in a deferred gain to the Company of $1,608,274. Subsequently, the Company acquired an additional 0.5% limited partnership interest.
On September 28, 1990, MarCor Rio Holding Corp. issued 6,638,214 stock exchange rights in exchange for 60.85 Rio Partnership Units, increasing the Company's total investment in the Rio Partnership to 95.75%. As a result of this transaction, certain related party rules came into effect, thereby requiring the reversal of the deferred gain of $1,608,274 recorded upon initial capitalization of the partnership.
On August 15, 1992, the Rio Partnership merged with Rio Properties (Note 3), resulting in the Company owning 100% of the net assets formerly held by the Rio Partnership. As a result of the merger, the Rio Partnership ceased to exist.
ITEM 9.



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information is incorporated by reference from the Company's Proxy Statement to be filed with the Commission in connection with the Annual Meeting of Stockholders on May 16, 1995.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Company's Proxy Statement to be filed with the Commission in connection with the Annual Meeting of Stockholders on May 16, 1995.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the Company's Proxy Statement to be filed with the Commission in connection with the Annual Meeting of Stockholders on May 16, 1995.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Company's Proxy Statement to be filed with the Commission in connection with the Annual Meeting of Stockholders on May 16, 1995.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
Included in Part II of this report:
Consolidated Balance Sheets at December 31, 1994 and December 31, 1993.
Consolidated Statements of Income for the Years Ended December 31, 1994, 1993 and 1992.
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1994, 1993 and 1992.
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992.
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
Included in Part IV of this report:
Schedule III - Condensed Financial Information of Registrant
Schedule VIII - Valuation and Qualifying Accounts
Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto.
ITEM 14. EXHIBITS
EXHIBIT NUMBER DESCRIPTION
4.01 Amended and Restated Articles of Incorporation of Rio Hotel & Casino, Inc. filed July 19, 1994, are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 10-Q for the Quarter Ended June 30, 1994, Part II, Item 6(a), Exhibit 4.01.
4.02 Amended and Restated Bylaws of Rio Hotel & Casino, Inc. certified March 3, 1993 are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 8-K for the Year Ended December 31, 1992, Part IV, Item 14, Exhibit 4.02.
4.03 Specimen Common Stock Certificate for the Common Stock of Rio Hotel & Casino, Inc. is incorporated herein by reference from the Company's Registration Statement on Form S-3 filed on August 24, 1992, File No. 33-51092, Part II, Item 16, Exhibit 4.01.
4.04 Agreement and Plan of Exchange by and between Rio Hotel & Casino, Inc., a Nevada corporation, and Rio Properties, Inc., a Nevada corporation, dated August 14, 1992, is incorporated herein by reference from the Company's Registration Statement on Form S-3 filed on August 24, 1992, File No. 33-51092, Part II, Item 16, Exhibit 2.01.
4.05 Form of Subscription and Exchange Agreement between Rio Properties, Inc., a Nevada corporation, and MarCor Resorts, Inc., a Nevada corporation, and subscriber is incorporated herein by reference from the Company's Registration Statement on Form S-3 filed on August 24, 1992, File No. 33-51092, Part II, Item 16, Exhibit 2.02.
4.06 Rio Hotel & Casino, Inc. Non-Statutory Stock Option Plan as amended September 5, 1991, as amended February 28, 1992 (to reflect change in Company name) and as amended June 22, 1993, is incorporated herein by reference from the Company's (SEC File No. 33-38752) Registration Statement on Form S-8 filed on October 5, 1993, Item 8, Exhibit 4.04.
4.07 Rio Hotel & Casino, Inc. Directors' Stock Option Plan As Amended February 28, 1992 (to reflect change in Company name only) is incorporated herein by reference from the Company's (SEC File No. 2- 88147) Annual Report on Form 10-K for the Year Ended December 31, 1991, Part IV, Item 14(c), Exhibit 4.07.
4.08 Rio Suite Hotel & Casino Employee Retirement Savings Plan Trust Agreement dated February 11, 1991; First Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated March 20, 1992, effective April 1, 1992; Second Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated March 20, 1992, effective April 1, 1992; Third Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated December 14, 1992, effective August 15, 1992, and Rio Suite Hotel & Casino Employee Retirement Savings Plan, Participant Loan Program dated March 19, 1992 are incorporated herein by reference from the Company's Registration Statement on Form S-8, filed January 8, 1993, File No. 33-56860, Part II, Item 8, Exhibit 4.11; Rio Suite Hotel & Casino Employment Retirement Savings Plan dated February 21, 1991 is incorporated herein by reference from the Company's Registration Statement on Form S-8, Amendment No. 1, filed February 3, 1993, File No. 33-56860, Part II, Item 8, Exhibit 4.11; Fourth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated April 30, 1993, effective July 1, 1993; Fifth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated August 17, 1993, effective July 1, 1993; Sixth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated October 27, 1993, effective October 25, 1993; Seventh Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan Trust Agreement dated and effective December 16, 1993; and Eighth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated May 3, 1994, effective May 1, 1994 are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 10-Q for the Quarter Ended June 30, 1994, Part II, Item 6(a), Exhibit 4.03; Ninth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated August 26, 1994, effective August 25, 1994; Tenth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated and effective January 1, 1995; and Eleventh Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated and effective January 12, 1995.
4.09 Rio Hotel & Casino, Inc. 1995 Long-Term Incentive Plan as adopted January 26, 1995.
4.10 Credit Agreement among Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, as Lenders, and Rio Properties, Inc., as Borrower, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America National Trust and Savings Association, in the amount of $9,692,307.70 dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America Nevada, in the amount of $3,230,769.23, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of Societe Generale, in the amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of NBD Bank, N.A., in the amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of First Security Bank of Idaho, N.A., in the amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of First Interstate Bank of Nevada, N.A., in the amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of U.S. Bank of Nevada, in the amount of $3,230,769.23, dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America National Trust and Savings Association, in the amount of $5,307,692.30 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America Nevada, in the amount of $1,769,230.77 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of First Interstate Bank of Nevada, N.A., in the amount of $3,538,461.54 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of First Security Bank of Idaho, N.A., in the amount of $3,538,461.54 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of NBD Bank, N.A., in the amount of $3,538,461.54 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of Societe Generale, in the amount of $3,538,461.54 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of U.S. Bank of Nevada, in the amount of $1,769,230.77 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America National Trust and Savings Association, in the amount of $15,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America Nevada, in the amount of $5,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of First Interstate Bank of Nevada, N.A., in the amount of $10,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of First Interstate Bank of Idaho, N.A., in the amount of $10,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of NBD Bank, N.A., in the amount of $10,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of Societe Generale, in the amount of $10,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of U.S. Bank of Nevada, in the amount of $5,000,000 dated July 15, 1993; Security Agreement executed by Rio Properties, Inc., as Debtor, in favor of Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, as Secured Party, dated July 15, 1993; Construction Deed of Trust With Assignment of Rents and Fixture Filing among Rio Properties, Inc., as Trustor, Equitable Deed Company, as Trustee, and Bank of America National Trust and Savings Association, as agent for itself and the other financial institutions, as Beneficiary, dated July 15, 1993; Unsecured Indemnity Agreement executed by Rio Properties, Inc., as Indemnitor, in favor of Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, dated July 15, 1993; Guaranty executed by Rio Hotel & Casino, Inc., as Guarantor, in favor of Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, as Guaranteed Parties, dated July 15, 1993; and, Parent Guarantor Security Agreement by Rio Hotel & Casino, Inc., as Debtor, in favor of Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, as Secured Party, dated July 15, 1993 are incorporated by reference from the Company's (SEC File No. 2-88147) Report on Form 8-K dated July 15, 1993, Item 7(c), Exhibit 28.01; First Amendment to Credit Agreement dated as of October 25, 1993 and Second Amendment and Waiver to Credit Agreement dated as of November 8, 1993 among Rio Properties, Inc., Bank of America National Trust and Savings Association, Bank of America Nevada, First Interstate Bank of Nevada, First Security Bank of Idaho, N.A., NBD Bank, N.A., Societe Generale, and U.S. Bank of Nevada are incorporated by reference from the Company's (SEC File No. 0-13760) Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 4.09.
4.11 Third Amendment to Credit Agreement dated as of April 15, 1994 among Rio Properties, Inc., Bank of America National Trust and Savings Association, as Agent and as a Bank, Bank of America, Nevada, First Interstate Bank of Nevada, First Security Bank of Idaho, N.A, NBD Bank, N.A., Societe Generale, and U.S. Bank of Nevada; Memorandum of Amendments to Credit Agreement and Amendment to Construction Deed of Trust with Assignment of Rents and Fixture Filing dated as of May 9, 1994 by Rio Properties, Inc. and Bank of America National Trust and Savings Association are incorporated herein by reference from the Company's (SEC File No. 0- 13760) Report on Form 10-Q for the Quarter Ended June 30, 1994, Part II, Item 6(a), Exhibit No. 4.02; and Fourth Amendment to Credit Agreement among Rio Properties, Inc., a Nevada corporation, as Borrower, and Bank of America National Trust and Savings Association, First Interstate Bank of Nevada, First Security Bank of Idaho, N.A., NBD Bank, N.A., Societe Generale, Bank of America, Nevada, U.S. Bank of Nevada, Bank of Scotland and Midlantic Bank, N.A., as Lenders; and Second Memorandum of Amendment to Credit Agreement and Amendment to Construction Deed of Trust with Assignment of Rents and Fixture Filing between Borrower and Bank of America National Trust and Savings Association, as agent for Lenders, dated December 16, 1994 are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 8-K dated December 16, 1994, Item 7(c), Exhibit 10.01; Fifth Amendment to Credit Agreement dated as of March 20, 1995, among Rio Properties, Inc., Bank of America National Trust and Savings Association, as Agent and as a Bank, First Interstate Bank of Nevada, First Security Bank of Idaho, N.A., NBD Bank, N.A., Societe Generale, Bank of America Nevada, U.S. Bank of Nevada, Bank of Scotland and Midlantic Bank, N.A., as Banks.
10.01 First Amendment to Agreement dated October 25, 1993 by and among Rio Hotel & Casino, Inc., and Marnell Corrao, Inc., Marnell Corrao Associates, Inc., MarCor Partnership, Anthony A. Marnell II, Barrett Family Revocable Living Trust dated December 18, 1981, James A. Barrett, Jr. and Maureen M. Barrett incorporated herein by reference from the Company's (SEC File No. 0- 13760) Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.01; and Agreement by and among MarCor Resorts Inc., Marnell Corrao, Inc., Marnell Corrao Associates, Inc., MarCor Partnership, The Anthony A. Marnell II Revocable Living Trust dated June 16, 1982, Anthony A. Marnell II, Sandra J. Marnell, Barrett Family Revocable Living Trust dated December 18, 1981, James A. Barrett, Jr. and Maureen M. Barrett dated February 22, 1989.
10.02 Agreement of Purchase and Sale by and among MarCor Resorts, Inc., MarCor Resort Properties, Inc., MarCor Development Company, Inc., MarCor Resorts, L.P.V and Focus 2000, Inc., entered into December 30, 1991; Agreement to Assume and Hold Harmless Note entered into by and among MarCor Development Company, Inc. and Focus 2000, Inc. on December 30, 1991; are incorporated herein by reference from the Company's (SEC File No. 2- 88147) Report on Form 8-K dated December 30, 1991, Item 7(c), Exhibit 2.01.
10.03 Completion Guaranty dated November 20, 1992, by and among Rio Properties, Inc. and Marnell Corrao, Inc., Marnell Corrao Associates, Inc., MarCor Partnership, Focus 2000, Inc., The Anthony A. Marnell II Revocable Living Trust dated June 16, 1982, Anthony A. Marnell II, Barrett Family Revocable Living Trust dated December 18, 1981, and James A. Barrett, Jr. and Maureen M. Barrett, husband and wife, collectively as Guarantors is incorporated herein by reference from the Company's Registration Statement on Form S-2, Pre- Effective Amendment No. 2, filed November 23, 1992, File No. 33-53758, Part II, Item 16, Exhibit 10.13.
10.04 Memorandum of Understanding dated as of June 30, 1992, by and among MarCor Resorts, L.P. V, Focus 2000, Inc., and Anthony A. Marnell II and James A. Barrett, Jr. is incorporated herein by reference from the Company's Registration Statement on Form S-2, Pre- Effective Amendment No. 2, filed November 23, 1992, File No. 33-53758, Part II, Item 16, Exhibit 10.14.
10.05 Interest Rate and Currency Exchange Agreement dated as of July 28, 1993 between Rio Properties, Inc. and Bank of America National Trust and Savings Association is incorporated herein by reference from the Company's (SEC File No. 0-13760) Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.11.
10.06 Architectural Agreement entered into as of February 25, 1994 between Rio Hotel & Casino, Inc., as Owner, and Anthony A. Marnell II, Chartered, as Architect is incorporated herein by reference from the Company's (SEC File No. 0-13760), Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.12.
10.07 Building Contract entered into as of February 25, 1994 between Marnell Corrao Associates, Inc., as General Contractor, and Rio Properties, Inc., as Owner is incorporated herein by reference from the Company's (SEC File No. 0-13760), Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.13.
10.08 Architectural Agreement entered into as of February 9, 1995 between Rio Hotel & Casino, Inc., as Owner, and Anthony A. Marnell, Chartered, as Architect.
10.09 Building Contract entered into as of February 27, 1995 between Marnell Corrao Associates, Inc., as General Contractor, and Rio Properties, Inc., as Owner.
10.10 Real Estate Purchase and Sale Agreement entered into as of January 25, 1995 between Focus 2000, Inc., as Seller, and Rio Properties, Inc., as Buyer.
10.11 Exchange Agreement entered into as of January 6, 1995 between Allied Building Materials, Cinderlane, Inc., and Rio Hotel & Casino, Inc.
10.12 Letter Agreement regarding Rate Cap Transaction dated August 11, 1994 between Bank of America National Trust and Savings Association and Rio Properties, Inc.
21.01 List of the Company's Subsidiaries.
23.01 Consent of Arthur Andersen LLP.
27.01 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
The Company reported on Form 8-K dated December 16, 1995 that it increased its borrowing capacity by $40 million pursuant to an amendment to the Rio Bank Loan (the "Amendment"). The Amendment also extended the maturity date of the Rio Bank Loan to June 30, 2001. Moreover, the Company reported the appointment of Susan L. Johnson as Secretary of the Company.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To the Board of Directors of Rio Hotel & Casino, Inc.:
We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements of Rio Hotel & Casino, Inc. and subsidiaries included elsewhere in this annual report and have issued our report thereon dated January 25, 1995. Our report on the consolidated financial statements includes an explanatory paragraph with respect to the change in the method of accounting for income taxes as discussed in Note 7 to the consolidated financial statements. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The financial statement schedules listed in Item 14 are the responsibility of the Company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada January 25, 1995
Supplemental Schedule of Non-Cash Investing and Financing Activities
DECEMBER 31, 1994
Tax benefit arising from the exercise of stock options granted under the NSOP totaled $886,132.
DECEMBER 31, 1993
Additional costs of issuing Common Stock financed through payables totaled $12,194.
Costs of issuing Common Stock financed through payables totaled $163,801.
Tax benefit arising from the exercise of stock options granted under the Company's NSOP totaled $1,120,823.
Reduction of paid-in capital as a result of the implementation of SFAS 109 totaled $823,152. This amount was charged directly against equity because it reflects the tax effect of SFAS 109 as it related to the gain on sale of assets to affiliates of the Company's largest stockholder in December 1991, which was also recorded directly to equity (Note 10).
DECEMBER 31, 1992
During 1992, the Company exchanged 728,461 stock exchange rights for 728,461 shares of the Company's Common Stock. The transactions resulted in the following changes:
Common Stock $ (7,285) Notes Receivable 4,732,892 Due from Subsidiaries 113,319 Investments in Subsidiaries (4,732,892) Additional Paid-In Capital (3,766,653) Stock exchange rights 3,660,619 $ ---
On August 14, 1992, the Company, through a subsidiary, acquired an additional 3.25% of the Rio Partnership in exchange for 354,549 shares of the Company's Common Stock. On August 15, 1992, the Rio Partnership was merged into a subsidiary of the Company, with an additional 109,092 shares of Common Stock of the Company issued for the remaining 1% interests in the Rio Partnership. The transactions resulted in the following changes:
Common Stock $ ($4,636) Additional Paid-In Capital (3,124,941) Due to Subsidiaries (42,554,852) Investments in Subsidiaries 45,684,429 $ ---
Costs of issuing Common Stock, financed through payables, totaled $91,750.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RIO HOTEL & CASINO, INC.
March 28, 1995 By:/S/ HARLAN D. BRAATEN Harlan D. Braaten, Treasurer and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/ANTHONY A. MARNELL II Chairman of the Board March 28, 1995 Anthony A. Marnell II of Directors and Chief Executive Officer (Principal Executive Officer)
/S/JAMES A. BARRETT, JR. President, Chief March 28, 1995 James A. Barrett, Jr. Operating Officer and Director
/S/HARLAN D. BRAATEN Treasurer and Chief March 28, 1995 Harlan D. Braaten Financial Officer (Principal Financial Officer)
/S/JOHN A. STUART Director March 28, 1995 John A. Stuart
/S/THOMAS Y. HARTLEY Director March 28, 1995 Thomas Y. Hartley
/S/DEAN P. PETERSEN Director March 28, 1995 Dean P. Petersen
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
4.01 Amended and Restated Articles of Incorporation of Rio Hotel & Casino, Inc. filed July 19, 1994, are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 10-Q for the Quarter Ended June 30, 1994, Part II, Item 6(a), Exhibit 4.01.
4.02 Amended and Restated Bylaws of Rio Hotel & Casino, Inc. certified March 3, 1993 are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 8-K for the Year Ended December 31, 1992, Part IV, Item 14, Exhibit 4.02.
4.03 Specimen Common Stock Certificate for the Common Stock of Rio Hotel & Casino, Inc. is incorporated herein by reference from the Company's Registration Statement on Form S-3 filed on August 24, 1992, File No. 33-51092, Part II, Item 16, Exhibit 4.01.
4.04 Agreement and Plan of Exchange by and between Rio Hotel & Casino, Inc., a Nevada corporation, and Rio Properties, Inc., a Nevada corporation, dated August 14, 1992, is incorporated herein by reference from the Company's Registration Statement on Form S-3 filed on August 24, 1992, File No. 33-51092, Part II, Item 16, Exhibit 2.01.
4.05 Form of Subscription and Exchange Agreement between Rio Properties, Inc., a Nevada corporation, and MarCor Resorts, Inc., a Nevada corporation, and subscriber is incorporated herein by reference from the Company's Registration Statement on Form S-3 filed on August 24, 1992, File No. 33-51092, Part II, Item 16, Exhibit 2.02.
4.06 Rio Hotel & Casino, Inc. Non-Statutory Stock Option Plan as amended September 5, 1991, as amended February 28, 1992 (to reflect change in Company name) and as amended June 22, 1993, is incorporated herein by reference from the Company's (SEC File No. 33-38752) Registration Statement on Form S-8 filed on October 5, 1993, Item 8, Exhibit 4.04.
4.07 Rio Hotel & Casino, Inc. Directors' Stock Option Plan As Amended February 28, 1992 (to reflect change in Company name only) is incorporated herein by reference from the Company's (SEC File No. 2- 88147) Annual Report on Form 10-K for the Year Ended December 31, 1991, Part IV, Item 14(c), Exhibit 4.07.
4.08 Rio Suite Hotel & Casino Employee Retirement Savings Plan Trust Agreement dated February 11, 1991; First Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated March 20, 1992, effective April 1, 1992; Second Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated March 20, 1992, effective April 1, 1992; Third Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated December 14, 1992, effective August 15, 1992, and Rio Suite Hotel & Casino Employee Retirement Savings Plan, Participant Loan Program dated March 19, 1992 are incorporated herein by reference from the Company's Registration Statement on Form S-8, filed January 8, 1993, File No. 33-56860, Part II, Item 8, Exhibit 4.11; Rio Suite Hotel & Casino Employment Retirement Savings Plan dated February 21, 1991 is incorporated herein by reference from the Company's Registration Statement on Form S-8, Amendment No. 1, filed February 3, 1993, File No. 33-56860, Part II, Item 8, Exhibit 4.11; Fourth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated April 30, 1993, effective July 1, 1993; Fifth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated August 17, 1993, effective July 1, 1993; Sixth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated October 27, 1993, effective October 25, 1993; Seventh Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan Trust Agreement dated and effective December 16, 1993; and Eighth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated May 3, 1994, effective May 1, 1994 are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 10-Q for the Quarter Ended June 30, 1994, Part II, Item 6(a), Exhibit 4.03; Ninth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated August 26, 1994, effective August 25, 1994; Tenth Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated and effective January 1, 1995; and Eleventh Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated and effective January 12, 1995.
4.09 Rio Hotel & Casino, Inc. 1995 Long-Term Incentive Plan as adopted January 26, 1995.
4.10 Credit Agreement among Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, as Lenders, and Rio Properties, Inc., as Borrower, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America National Trust and Savings Association, in the amount of $9,692,307.70 dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America Nevada, in the amount of $3,230,769.23, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of Societe Generale, in the amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of NBD Bank, N.A., in the amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of First Security Bank of Idaho, N.A., in the amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of First Interstate Bank of Nevada, N.A., in the amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower, in favor of U.S. Bank of Nevada, in the amount of $3,230,769.23, dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America National Trust and Savings Association, in the amount of $5,307,692.30 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America Nevada, in the amount of $1,769,230.77 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of First Interstate Bank of Nevada, N.A., in the amount of $3,538,461.54 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of First Security Bank of Idaho, N.A., in the amount of $3,538,461.54 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of NBD Bank, N.A., in the amount of $3,538,461.54 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of Societe Generale, in the amount of $3,538,461.54 dated July 15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower, in favor of U.S. Bank of Nevada, in the amount of $1,769,230.77 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America National Trust and Savings Association, in the amount of $15,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of Bank of America Nevada, in the amount of $5,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of First Interstate Bank of Nevada, N.A., in the amount of $10,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of First Interstate Bank of Idaho, N.A., in the amount of $10,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of NBD Bank, N.A., in the amount of $10,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of Societe Generale, in the amount of $10,000,000 dated July 15, 1993; Revolving Note executed by Rio Properties, Inc., as Borrower, in favor of U.S. Bank of Nevada, in the amount of $5,000,000 dated July 15, 1993; Security Agreement executed by Rio Properties, Inc., as Debtor, in favor of Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, as Secured Party, dated July 15, 1993; Construction Deed of Trust With Assignment of Rents and Fixture Filing among Rio Properties, Inc., as Trustor, Equitable Deed Company, as Trustee, and Bank of America National Trust and Savings Association, as agent for itself and the other financial institutions, as Beneficiary, dated July 15, 1993; Unsecured Indemnity Agreement executed by Rio Properties, Inc., as Indemnitor, in favor of Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, dated July 15, 1993; Guaranty executed by Rio Hotel & Casino, Inc., as Guarantor, in favor of Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, as Guaranteed Parties, dated July 15, 1993; and, Parent Guarantor Security Agreement by Rio Hotel & Casino, Inc., as Debtor, in favor of Bank of America National Trust and Savings Association, as agent for itself and other financial institutions, as Secured Party, dated July 15, 1993 are incorporated by reference from the Company's (SEC File No. 2-88147) Report on Form 8-K dated July 15, 1993, Item 7(c), Exhibit 28.01; First Amendment to Credit Agreement dated as of October 25, 1993 and Second Amendment and Waiver to Credit Agreement dated as of November 8, 1993 among Rio Properties, Inc., Bank of America National Trust and Savings Association, Bank of America Nevada, First Interstate Bank of Nevada, First Security Bank of Idaho, N.A., NBD Bank, N.A., Societe Generale, and U.S. Bank of Nevada are incorporated by reference from the Company's (SEC File No. 0-13760) Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 4.09.
4.11 Third Amendment to Credit Agreement dated as of April 15, 1994 among Rio Properties, Inc., Bank of America National Trust and Savings Association, as Agent and as a Bank, Bank of America, Nevada, First Interstate Bank of Nevada, First Security Bank of Idaho, N.A, NBD Bank, N.A., Societe Generale, and U.S. Bank of Nevada; Memorandum of Amendments to Credit Agreement and Amendment to Construction Deed of Trust with Assignment of Rents and Fixture Filing dated as of May 9, 1994 by Rio Properties, Inc. and Bank of America National Trust and Savings Association are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 10-Q for the Quarter Ended June 30, 1994, Part II, Item 6(a), Exhibit No. 4.02; and Fourth Amendment to Credit Agreement among Rio Properties, Inc., a Nevada corporation, as Borrower, and Bank of America National Trust and Savings Association, First Interstate Bank of Nevada, First Security Bank of Idaho, N.A., NBD Bank, N.A., Societe Generale, Bank of America, Nevada, U.S. Bank of Nevada, Bank of Scotland and Midlantic Bank, N.A., as Lenders; and Second Memorandum of Amendment to Credit Agreement and Amendment to Construction Deed of Trust with Assignment of Rents and Fixture Filing between Borrower and Bank of America National Trust and Savings Association, as agent for Lenders, dated December 16, 1994 are incorporated herein by reference from the Company's (SEC File No. 0-13760) Report on Form 8-K dated December 16, 1994, Item 7(c), Exhibit 10.01; Fifth Amendment to Credit Agreement dated as of March 20, 1995, among Rio Properties, Inc., Bank of America National Trust and Savings Association, as Agent and as a Bank, First Interstate Bank of Nevada, First Security Bank of Idaho, N.A., NBD Bank, N.A., Societe Generale, Bank of America Nevada, U.S. Bank of Nevada, Bank of Scotland and Midlantic Bank, N.A., as Banks.
10.01 First Amendment to Agreement dated October 25, 1993 by and among Rio Hotel & Casino, Inc., and Marnell Corrao, Inc., Marnell Corrao Associates, Inc., MarCor Partnership, Anthony A. Marnell II, Barrett Family Revocable Living Trust dated December 18, 1981, James A. Barrett, Jr. and Maureen M. Barrett incorporated herein by reference from the Company's (SEC File No. 0-13760) Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.01; and Agreement by and among MarCor Resorts Inc., Marnell Corrao, Inc., Marnell Corrao Associates, Inc., MarCor Partnership, The Anthony A. Marnell II Revocable Living Trust dated June 16, 1982, Anthony A. Marnell II, Sandra J. Marnell, Barrett Family Revocable Living Trust dated December 18, 1981, James A. Barrett, Jr. and Maureen M. Barrett dated February 22, 1989.
10.02 Agreement of Purchase and Sale by and among MarCor Resorts, Inc., MarCor Resort Properties, Inc., MarCor Development Company, Inc., MarCor Resorts, L.P.V and Focus 2000, Inc., entered into December 30, 1991; Agreement to Assume and Hold Harmless Note entered into by and among MarCor Development Company, Inc. and Focus 2000, Inc. on December 30, 1991; are incorporated herein by reference from the Company's (SEC File No. 2-88147) Report on Form 8-K dated December 30, 1991, Item 7(c), Exhibit 2.01.
10.03 Completion Guaranty dated November 20, 1992, by and among Rio Properties, Inc. and Marnell Corrao, Inc., Marnell Corrao Associates, Inc., MarCor Partnership, Focus 2000, Inc., The Anthony A. Marnell II Revocable Living Trust dated June 16, 1982, Anthony A. Marnell II, Barrett Family Revocable Living Trust dated December 18, 1981, and James A. Barrett, Jr. and Maureen M. Barrett, husband and wife, collectively as Guarantors is incorporated herein by reference from the Company's Registration Statement on Form S-2, Pre-Effective Amendment No. 2, filed November 23, 1992, File No. 33-53758, Part II, Item 16, Exhibit 10.13.
10.04 Memorandum of Understanding dated as of June 30, 1992, by and among MarCor Resorts, L.P. V, Focus 2000, Inc., and Anthony A. Marnell II and James A. Barrett, Jr. is incorporated herein by reference from the Company's Registration Statement on Form S-2, Pre- Effective Amendment No. 2, filed November 23, 1992, File No. 33- 53758, Part II, Item 16, Exhibit 10.14.
10.05 Interest Rate and Currency Exchange Agreement dated as of July 28, 1993 between Rio Properties, Inc. and Bank of America National Trust and Savings Association is incorporated herein by reference from the Company's (SEC File No. 0-13760) Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.11.
10.06 Architectural Agreement entered into as of February 25, 1994 between Rio Hotel & Casino, Inc., as Owner, and Anthony A. Marnell II, Chartered, as Architect is incorporated herein by reference from the Company's (SEC File No. 0-13760), Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.12.
10.07 Building Contract entered into as of February 25, 1994 between Marnell Corrao Associates, Inc., as General Contractor, and Rio Properties, Inc., as Owner is incorporated herein by reference from the Company's (SEC File No. 0-13760), Annual Report on Form 10-K for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.13.
10.08 Architectural Agreement entered into as of February 9, 1995 between Rio Hotel & Casino, Inc., as Owner, and Anthony A. Marnell, Chartered, as Architect.
10.09 Building contract entered into as of February 27, 1995 between Marnell Corrao Associates, Inc., as General Contractor, and Rio Properties, Inc., as Owner.
10.10 Real Estate Purchase and Sale Agreement entered into as of January 25, 1995 between Focus 2000, Inc., as Seller, and Rio Properties, Inc., as Buyer.
10.11 Exchange Agreement entered into as of January 6, 1995 between Allied Building Materials, Cinderlane, Inc., and Rio Hotel & Casino, Inc.
10.12 Letter Agreement regarding Rate Cap Transaction dated August 11, 1994 between Bank of America National Trust and Savings Association and Rio Properties, Inc.
21.01 List of the Company's Subsidiaries.
23.01 Consent of Arthur Andersen LLP.
27.01 Financial Data Schedule.