<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 21, 1998
GRAND CASINOS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 0-19565 41-1689535
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
130 CHESHIRE LANE, MINNETONKA, MINNESOTA 55305
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 449-9092
NOT APPLICABLE
(Former name or former address, if changed since last report)
Page 1 of 16
Exhibit Index Appears on Page 3
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ITEM 5. OTHER EVENTS.
The Registrant's Press Release dated July 21, 1998, which is filed as
Exhibit 99.1 to this Form 8-K, is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Press Release dated July 21, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GRAND CASINOS, INC.
(Registrant)
Date: July 23, 1998 By: s/ Timothy Cope
------------------------
Name: Timothy Cope
Title:Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
99.1 Press Release...............................................
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Exhibit 99.1
GRAND CASINOS ANNOUNCES SECOND-QUARTER EARNINGS OF $0.43 PER
SHARE BEFORE EXTRAORDINARY CHARGE
MISSISSIPPI GULF COAST EBITDA INCREASES 21 PERCENT OVER 1997
MINNEAPOLIS--(BUSINESS WIRE)--July 21, 1998-- Grand Casinos, Inc. (NYSE: GND)
today announced basic and diluted earnings of $0.44 per share and $0.43 per
share, respectively, for the second quarter, equal to the per share earnings
results for the second quarter of 1997. Earnings results are before an
extraordinary charge of $0.04 for the early extinguishment of debt. Financial
highlights for the three-month period ended June 28, 1998, include net revenues
of $162.3 million, eight percent higher than the $150.8 million of revenue
earned in the second quarter of 1997. EBITDA (earnings before interest, taxes,
depreciation, and amortization) for the quarter was $51.2 million, compared with
$51.4 million a year ago. Net earnings during the quarter were $17.2 million,
compared with $18.3 million a year ago.
EBITDA continues to show strong year over year increases at each of the
Mississippi locations. The Gulf Coast EBITDA is up over 20% for the first six
months of 1998 compared to the first six months of 1997. Grand Casino Tunica has
also improved EBITDA results with an approximate 25% year to date increase over
the first half of 1997.
Tom Brosig, Chief Executive Officer and President of Grand Casinos, stated, "Our
Gulf Coast properties continue to perform well. Gaming revenue growth, fueled by
the addition of our 500-room hotel, spa, and convention center, opened at Grand
Casino Biloxi in February of this year, and continued improvement in operating
efficiency yielded strong results from our Mississippi Gulf Coast resorts. At
Grand Casino Tunica, business volume continues to grow with total revenues and
gaming revenues improved over last year. We now have the total resort amenities
to attract a more upscale guest, and although we continue to dominate the Tunica
market, we experienced an abnormally low hold percentage at our table games
during the month of June, which negatively impacted the quarter's results."
Management fee income from Grand Casinos' three managed properties was $19.7
million, nearly equal to the year ago period despite the conclusion of the
company's management contract for Grand Casino Mille Lacs which expired on April
2, 1998. Grand Casinos' remaining three managed casinos all contributed strong
year-over-year improvements. Progress on a major expansion continues at Grand
Casino Coushatta where a 223-room hotel, an additional 25,000 square feet of
gaming space, and two new restaurants are scheduled to open near the end of the
year.
On the Gulf Coast, Grand Casinos' two casino resorts generated revenues more
than nine percent higher than the year ago period. Hotel room demand remained
high during the quarter just ended, despite the increased capacity resulting
from the new Biloxi hotel. The company's 1,400
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hotel rooms on the Gulf Coast achieved a combined occupancy rate of 91 percent
at an average daily rate of $80.
"We continue to move forward with aggressive growth and expansion plans in
Mississippi," continued Brosig. "Our most recent expansion project, an
additional 500-room tower at Grand Casino Biloxi, is contributing significantly
to revenue growth. Progress on two new 600-room hotel towers, one at Grand
Casino Tunica and the other at Grand Casino Gulfport continues with openings of
both complexes planned for the second quarter of 1999."
During the second quarter, Grand Casinos completed a transaction to acquire
certain assets of Lady Luck Biloxi in Biloxi, Mississippi, for approximately $15
million. The acquired assets, including the casino barge and land, are
immediately adjacent to Grand Casino Biloxi and will be used for further
development and expansion of the Grand Casino Biloxi resort.
Also during the quarter, the company incurred an extraordinary charge of $1.6
million net of tax, or $0.04 per share, for the early extinguishment of debt.
The extraordinary charge is the result of the early extinguishment of
approximately $94 million in outstanding capital leases related to the initial
development of Grand Casino Tunica. Proceeds from the company's October 1997,
$115-million Senior Unsecured Note offering were used to complete this
transaction.
Corporate expenses for the quarter were negatively impacted by approximately
$1.4 million net of tax, or $0.03 per share as a result of non-recurring costs
associated with the company's previously announced plans to relocate its
corporate headquarters from Minnesota to Mississippi and accruals for litigation
expense. The aforementioned costs represent a charge of approximately $5.1
million net of tax, or $0.12, for the six-month period. The company anticipates
that it has now fully reserved for the costs associated with the corporate
headquarters relocation.
For the first half of 1998, Grand Casinos generated net revenues of $328.8
million, a 12 percent increase over net revenues of $293.0 million for the first
six months of 1997. Consolidated EBITDA for the six-month period increased eight
percent to $101.4 million, compared with $93.8 million in 1997. Net earnings
grew by five percent from $32.9 million to $34.6 million.
Immediately following the end of the second quarter, Grand Casinos announced
that it will separate its Indian casino management business from its Mississippi
gaming operations in a tax-free distribution to shareholders, and simultaneously
merge its Mississippi gaming operations with the gaming operations of Hilton
Hotels Corporation (NYSE: HLT). The transactions are subject to shareholder and
regulatory approvals and are expected to be completed by year-end 1998.
Grand Casinos, Inc. is a publicly traded company listed on the New York Stock
Exchange under the trading symbol GND. The company currently owns and operates
the three largest casino
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hotel resorts in the state of Mississippi, manages two land-based casinos in
Louisiana, and manages one casino hotel resort in Minnesota.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this press
release (as well as information included in oral statements or other written
statements made or to be made by the Company) contains statements that are
forward-looking, such as statements relating to plan for future expansion and
other business development activities as well as other capital spending,
financing sources and the effects of regulation (including gaming and tax
regulation) and competition. Such forward-looking information involves important
risks and uncertainties that could significantly affect anticipated results in
the future and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to development and
construction activities, dependence on existing management, leverage and debt
service (including sensitivity to fluctuations in the interest rates), domestic
or global economic conditions, activities of competitors and the presence of new
or additional competition, fluctuations and changes in customer preferences and
attitudes, changes in federal or state tax laws of the administration of such
laws and changes in gaming laws or regulations (including the legalization of
gaming in certain jurisdictions). For more information, review the Company's
filings with the Securities and Exchange Commission, including the Company's
annual report on Form 10-K and certain registration statements of the Company.
Comprehensive corporate information on Grand Casinos is now available on the
Internet and may be accessed through the company's home page at
"www.grandcasinos.com. Grand Casinos has introduced an enhanced company
information web site. Historical stock charts, earnings estimates, and a
calendar of events are among the web site's features. Also available is a
complete record of Grand Casinos' SEC filings and corporate news releases.
Interested parties can also provide their e-mail address and receive immediate
notification of corporate events, company announcements, and SEC filings.
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GRAND CASINOS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited) (a)
June 28, 1998 December 28, 1997
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $92,847 $238,635
Current installments of
notes receivable 7,367 6,856
Accounts receivable 21,239 15,644
Deferred income taxes 12,602 13,399
Other current assets 15,751 15,087
Total Current Assets 149,806 289,621
Property and Equipment-Net 1,034,020 941,022
Other Assets:
Cash and cash
equivalents-restricted 8,120 4,967
Securities available for sale 15,372 13,110
Notes receivable-less current
installments 25,955 26,979
Investments in and notes
from unconsolidated affiliates 8,142 8,180
Debt issuance and deferred
licensing costs-net 21,625 26,000
Other long-term assets 29,615 23,858
Total Other Assets 108,829 103,094
Total Assets $1,292,655 $1,333,737
Liabilities and
Shareholders' Equity
Current Liabilities:
Accounts payable $9,745 $12,947
Current installments of
long-term debt 60 3,509
Current installments of
capital lease obligations 0 97,376
Accrued interest 5,291 5,817
</TABLE>
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<TABLE>
<S> <C> <C>
Accrued payroll and
related expenses 25,551 25,555
Other accrued expenses 46,762 22,398
Total Current Liabilities 87,409 167,602
Long-term Liabilities:
Long-term debt-less
current installments 566,481 566,434
Deferred income taxes 97,192 97,085
Total Long-Term Liabilities 663,673 663,519
Total Liabilities 751,082 831,121
Commitments and Contingencies
Shareholders' Equity:
Capital stock, $.01 par value;
authorized 100,000 shares;
common stock issued and
outstanding 42,291 and 41,966
at June 28, 1998 and December 28,
1997, respectively 423 420
Additional paid-in-capital 416,566 413,631
Net unrealized losses on
securities available for sale (1,548) (2,947)
Retained earnings 126,132 91,512
Total Shareholders' Equity 541,573 502,616
Total Liabilities and
Shareholders' Equity $1,292,655 $1,333,737
</TABLE>
(a) From audited consolidated financial statements
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GRAND CASINOS, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except earnings per share)
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
June 28, 1998 June 29, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Casino $121,090 $113,628
Hotel 12,602 9,514
Food and beverage 18,072 16,347
Management fee income 19,717 19,814
Retail and other income 3,606 3,488
Gross Revenues 175,087 162,791
Less: Promotional allowances (12,801) (11,954)
- ----------------------------------------------------------------------------------------------------
Net Revenues 162,286 150,837
- ----------------------------------------------------------------------------------------------------
Costs and Expenses:
Casino 40,609 39,587
Hotel 4,096 2,291
Food and beverage 9,647 8,534
Other operating expenses 3,258 3,390
Depreciation and amortization 13,948 12,410
Lease expense 5,356 4,676
Selling, general and
administrative 48,149 40,993
Total Costs and Expenses 125,063 111,881
- -----------------------------------------------------------------------------------------------------
Earnings (loss) From Operations 37,223 38,956
Other income (expense):
Interest income 2,785 2,981
Interest expense (10,118) (11,971)
Other (583) (125)
- -----------------------------------------------------------------------------------------------------
Total other expense, net (7,916) (9,115)
- -----------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<S> <C> <C>
Earnings (loss) before income taxes 29,307 29,841
Provision (benefit) for income taxes 10,567 11,525
- ----------------------------------------------------------------------------------------------------
Earnings before Extraordinary Charge 18,740 18,316
Extraordinary Charge-Net of Taxes (1,560) ---
- ----------------------------------------------------------------------------------------------------
Net Earnings $17,180 $18,316
====================================================================================================
Basic Earnings per Share before
Extraordinary Charge $0.44 $0.44
Basic Loss per Share -
Extraordinary Charge ($0.04) $0.00
- ----------------------------------------------------------------------------------------------------
Basic Earnings per Share $0.40 $0.44
====================================================================================================
Diluted Earnings per Share before
Extraordinary
Charge $0.43 $0.43
Diluted Loss per Share -
Extraordinary Charge ($0.04) $0.00
- ----------------------------------------------------------------------------------------------------
Diluted Earnings per Share $0.39 $0.43
====================================================================================================
Weighted Average Common Shares
Outstanding 42,136 41,890
====================================================================================================
Weighted Average Common and Diluted
Shares Outstanding 43,378 42,782
====================================================================================================
</TABLE>
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GRAND CASINOS, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except earnings per share)
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended
June 28, 1998 June 29, 1997
<S> <C> <C>
Revenues:
Casino $247,272 $222,308
Hotel 22,472 16,576
Food and beverage 35,943 30,952
Management fee income 42,748 38,868
Retail and other income 6,572 6,425
- --------------------------------------------------------------------------------------------------------
Gross Revenues 355,007 315,129
Less: Promotional allowances (26,256) (22,122)
- --------------------------------------------------------------------------------------------------------
Net Revenues 328,751 293,007
- --------------------------------------------------------------------------------------------------------
Costs and Expenses:
Casino 81,932 78,067
Hotel 7,192 4,110
Food and beverage 18,517 16,519
Other operating expenses 6,159 6,451
Depreciation and amortization 28,011 23,961
Lease expense 10,750 9,181
Selling, general and
administrative 102,846 84,899
- --------------------------------------------------------------------------------------------------------
Total Costs and Expenses 255,407 223,188
- --------------------------------------------------------------------------------------------------------
Earnings From Operations 73,344 69,819
- --------------------------------------------------------------------------------------------------------
Other income (expense):
Interest income 6,852 6,694
Interest expense (21,815) (22,617)
Other (888) (313)
- --------------------------------------------------------------------------------------------------------
Total expense, net (15,851) (16,236)
- --------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<S> <C> <C>
Earnings before income taxes 57,493 53,583
Provision for income taxes 21,313 20,686
- --------------------------------------------------------------------------------------------------------
Earnings before extraordinary
charge 36,180 32,897
Extraordinary charge-net of
taxes (1,560) --
- --------------------------------------------------------------------------------------------------------
Net Earnings $34,620 $32,897
========================================================================================================
========================================================================================================
Basic Earnings per Share
before Extraordinary $0.86 $0.79
Charge
Basic Loss per Share -
Extraordinary Charge ($0.04) ---
Basic Earnings per Share $0.82 $0.79
=========================================================================================================
=========================================================================================================
Diluted Earnings per Share
before Extraordinary $0.84 $0.77
Charge
- ---------------------------------------------------------------------------------------------------------
Diluted Loss per Share -
Extraordinary Charge ($0.04) --
- ---------------------------------------------------------------------------------------------------------
Diluted Earnings per Share $0.80 $0.77
=========================================================================================================
=========================================================================================================
Weighted Average Common Shares
Outstanding 42,101 41,859
=========================================================================================================
=========================================================================================================
Weighted Average Common and Diluted
Shares Outstanding 43,229 42,609
=========================================================================================================
=========================================================================================================
</TABLE>
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GRAND CASINOS, INC. AND SUBSIDIARIES
Selected Financial Information
(In thousands, except percentages and hotel statistics)
<TABLE>
<CAPTION>
Three Months Ended
June 28, 1998 June 29, 1997
<S> <C> <C>
REVENUES
- --------------------------------------------------------------------------------------------------
Gulf Coast $103,344 $95,515
Tunica 52,026 47,462
Management Fee Income/Other 19,717 19,814
---------- ---------
Gross Revenues 175,087 162,791
Promotional Allowances (12,801) (11,954)
---------- ---------
Net Revenues 162,286 150,837
---------- ---------
COSTS AND EXPENSES
- --------------------------------------------------------------------------------------------------
Gulf Coast 73,121 70,199
Tunica 43,414 37,343
Corporate Expenses 8,528 4,339
---------- ---------
Total Costs and Expenses 125,063 111,881
---------- ---------
EARNINGS (LOSS) FROM OPERATIONS $37,223 $38,956
- --------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE
- --------------------------------------------------------------------------------------------------
GULF COAST
- --------------------------------------------------------------------------------------------------
Gaming Revenue $79,297 $74,970
EBITDA 29,407 24,231
EBITDA % 30.8% 27.4%
Hotel Occupancy % 90.9% 97.8%
Hotel Average Daily Rate $80 $78
TUNICA
- --------------------------------------------------------------------------------------------------
Gaming Revenue $41,793 $38,658
EBITDA 9,348 10,546
EBITDA % 19.9% 24.7%
Hotel Occupancy % 89.4% 87.0%
Hotel Average Daily Rate $54 $50
CONSOLIDATED
- --------------------------------------------------------------------------------------------------
EBITDA $51,173 $51,366
EBITDA % 31.5% 34.1%
</TABLE>
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GRAND CASINOS, INC. AND SUBSIDIARIES
Selected Financial Information
(In thousands, except percentages and hotel statistics)
<TABLE>
<CAPTION>
Six Months Ended
June 28, 1998 June 29, 1997
------------------ -----------------
<S> <C> <C>
REVENUES
- --------------------------------------------------------------------------------------------------
Gulf Coast $206,545 $189,630
Tunica 105,714 86,631
Management Fee Income/Other 42,748 38,868
------------- -------------
Gross Revenues 355,007 315,129
Promotional Allowances (26,256) (22,122)
------------- -------------
Net Revenues 328,751 293,007
------------- -------------
COSTS AND EXPENSES
- --------------------------------------------------------------------------------------------------
Gulf Coast 147,225 139,757
Tunica 86,076 72,162
Corporate Expenses 22,106 11,269
------------- -------------
Total Costs and Expenses 255,407 223,188
------------- -------------
EARNINGS FROM OPERATIONS $73,344 $69,819
- --------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE
- --------------------------------------------------------------------------------------------------
GULF COAST
- --------------------------------------------------------------------------------------------------
Gaming Revenue $161,735 $150,432
EBITDA 57,467 47,514
EBITDA % 30.1% 27.1%
Hotel Occupancy % 93.3% 97.7%
Hotel Average Daily Rate $74 $73
TUNICA
- --------------------------------------------------------------------------------------------------
Gaming Revenue $85,537 $71,876
EBITDA 20,574 16,449
EBITDA % 21.7% 20.9%
Hotel Occupancy % 88.7% 86.8%
Hotel Average Daily Rate $55 $51
CONSOLIDATED
- --------------------------------------------------------------------------------------------------
EBITDA $101,356 $93,780
EBITDA % 30.8% 32.0%
</TABLE>
Contact:
Grand Casinos, Minneapolis
Jaye Snyder, 612/449-8556
or
Lawrence Taylor, 612/449-7076
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements in this press release regarding Grand Casinos, Inc.'s business
which are not historical facts are "forward-looking statements" that involve
risks and uncertainties. For a discussion of such risks and uncertainties, which
could cause actual results to differ from those contained in the forward-looking
statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for
the most-recently ended fiscal year.
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