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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): October 24, 1997
HARVEYS CASINO RESORTS
(Exact name of registrant as specified in its charter)
Nevada 1-12802 88-0066882
(State or other (Commission file number) (IRS Employer
jurisdiction Identification Number)
of incorporation)
Highway 50 & Stateline Avenue
P. O. Box 128
Lake Tahoe, Nevada 89449
(Address of principal executive offices)
Registrant's telephone number, including area code: (702) 588-2411
Inapplicable
(Former name or former address, if changed since last report)
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Item 2. Disposition of Assets
On October 24, 1997, Harveys Casino Resorts (hereinafter the 'Registrant' or
the 'Company')sold (a) all of the capital stock of Hard Rock Hotel, Inc., a
Nevada corporation, ('HRHC')held by the Registrant, representing 40% of the
then outstanding capital stock of HRHC, and (b) all of the Registrant's rights
under a management agreement then in effect between HRHC and Harveys L. V.
Management Company, Inc. ('HLVMC'), a Nevada corporation and a wholly-owned
subsidiary of the Registrant, relating to the management and operations of the
Hard Rock Hotel and Casino owned by HRHC ( the 'Management Agreement'). The
capital stock and the rights under the Management Agreement were sold to HRHC.
The sale closed pursuant to the terms of a Stock Purchase and Management Buyout
Agreement entered into on July 1, 1997 by and among the Registrant, HLVMC, Lily
Pond Investments, Inc., a Nevada corporation, ('Lily Pond') and HRHC. Upon the
closing the Management Agreement terminated and a stockholders agreement among
the Registrant, HRHC and Lily Pond was canceled.
The Registrant received $45.0 million cash for the capital stock and the
Registrant's rights under the Management Agreement. The Registrant received,
in addition, approximately $1.2 million cash in satisfaction of a note and
other amounts due the Registrant from HRHC as of October 24, 1997.
Item 7. Financial Statements and Exhibits.
Harveys Casino Resorts Pro Forma Condensed Consolidated Financial Statements
as of August 31, 1997 and for the Nine Months Ended August 31, 1997 and the
Year Ended November 30, 1996 begin on page 3.
See attached Exhibit Index on page 8.
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HARVEYS CASINO RESORTS
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company's unaudited pro forma condensed consolidated financial statements
as of August 31, 1997 and for the nine months ended August 31, 1997 and the
year ended November 30, 1996 give effect to the sale by the Company of its
interests in Hard Rock Hotel, Inc., as set forth in Note 1 to these financial
statements, as if such transaction had occurred, for balance sheet purposes,
on August 31, 1997 and, for income statement purposes, on December 1, 1995.
These unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the Company's consolidated financial statements, and
notes thereto, appearing in the Company's Annual Report on Form 10-K for the
year ended November 30,1996 and the Company's unaudited condensed consolidated
financial statements, and notes thereto, appearing in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended August 31, 1997.
The pro forma information is not necessarily indicative of the results that
would have been reported had such transaction actually occurred on the dates
specified, nor is it indicative of the Company's future results.
HARVEYS CASINO RESORTS
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
August 31, 1997
<TABLE>
<CAPTION>
Historical HRHC Pro Forma
Consolidated Disposition(1) Consolidated(2)
------------ --------------- ----------------
<S> <C> <C> <C>
ASSETS
Cash and equivalents $ 26,048 $ 18,063 $ 44,111
Accounts and notes receivable, net 6,083 (626) 5,457
Other current assets 12,925 - 12,925
--------- --------- ---------
Total current asse 4,056 17,437 62,493
Property and equipment(net of
accumulated depreciation of
$123,595) 319,900 - 319,900
Other assets 20,529 (971) 19,558
Investment in unconsolidated
affiliate 16,561 16,561) -
-------- --------- --------
Total assets $402,046 $ (95) $401,951
======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 38,438 $ - $ 38,438
Long-term debt, net of current
portion 167,720 (17,500) 150,220
Deferred income taxes 19,339 (614) 18,725
Other liabilities 15,986 - 15,986
-------- --------- --------
Total liabilities 241,483 (18,114) 223,369
Stockholders' equity 160,563 18,019 178,582
-------- --------- --------
Total liabilities and stockholders'
equity $402,046 $ (95) $401,951
======== ========== ========
</TABLE>
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HARVEYS CASINO RESORTS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(dollars in thousands, except per share amounts)
Nine Months Ended August 31, 1997
<TABLE>
<CAPTION>
Historical HRHC Adjustments for Pro Forma
Consolidated Disposition (1) Disposition (4) Consolidated(5)
<S> <C> <C> <C> <C>
Revenues
Casino $162,397 $ - $ - $162,397
Lodging 24,659 - - 24,659
Food and beverage 33,380 - - 33,380
Other 5,267 - - 5,267
Management fees and
joint venture 3,920 (3,920) - -
Less: Casino
promotional
allowances (16,092) - - (16,092)
-------- ---------- -------- ---------
Total net revenues 213,531 (3,920) - 209,611
-------- ---------- -------- ---------
Costs and expenses
Casino 75,168 - - 75,168
Lodging 10,051 - - 10,051
Food and beverage 22,595 - - 22,595
Other operating 2,145 - - 2,145
Selling, general
and administrative 55,432 - - 55,432
Depreciation and
amortization 13,987 (166) - 13,821
-------- ---------- -------- --------
Total costs
and expenses 179,378 (166) - 179,212
-------- ---------- -------- --------
Operating income 34,153 (3,754) - 30,399
-------- ---------- --------- --------
Other income (expense)
Interest income 245 (12) - 233
Interest expense (14,776) - 1,548 (13,228)
Other, net 49 - - 49
--------- ---------- ---------- ---------
(14,482) (12) 1,548 (12,946)
--------- ---------- ---------- ---------
Income before
income taxes 19,671 (3,766) 1,548 17,453
Income tax provision (7,965) 1,525 (542) (6,982)
--------- ---------- ---------- ---------
Net income $ 11,706 $ (2,241) $ 1,006 $ 10,471
========= ========== ========== =========
Net income per
common share (3) $ 1.19 $ 1.06
========= =========
Weighted average shares used in calculating income per common share
9,835,297 9,835,297
========= =========
</TABLE>
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HARVEYS CASINO RESORTS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(dollars in thousands, except per share amounts)
Year Ended November 30, 1996
<TABLE>
<CAPTION>
HRHC Adjustments for Pro Forma
Consolidated Disposition (1) Disposition (4) Consolidated(5)
------------ --------------- --------------- --------------
<S> <C> <C> <C> <C>
Revenues
Casino $186,369 $ - $ - $186,369
Lodging 28,746 - - 28,746
Food and beverage 39,852 - - 39,852
Other 6,402 - - 6,402
Management fees
and joint venture 5,023 (5,023) - -
Less: Casino
promotional
allowances (18,643) - - (18,643)
--------- ---------- --------- ---------
Total net revenues 247,749 (5,023) - 242,726
--------- ---------- --------- ---------
Costs and expenses
Casino 86,732 - - 86,732
Lodging 11,67 - - 11,677
Food and beverage 24,797 - - 24,797
Other operating 2,813 - - 2,813
Selling, general
and administrative 67,128 (2) - 67,126
Depreciation and
amortization 16,482 (221) - 16,261
Pre-opening expenses 4,099 - - 4,099
--------- ---------- --------- ---------
Total costs and
expenses 213,728 (223) - 213,505
--------- ---------- --------- ---------
Operating income 34,021 (4,800) - 29,221
--------- ---------- --------- ---------
Other income (expense)
Interest income 904 (6) - 898
Interest expense (15,099) - 2,081 (13,018)
Other, net (221) - - (221)
--------- ---------- --------- ---------
(14,416) (6) 2,081 (12,341)
--------- ---------- --------- ---------
Income before income
taxes and
extraordinary item 19,605 (4,806) 2,081 16,880
Income tax provision (7,791) 1,766 (728) (6,753)
--------- ---------- --------- ---------
Income before
extraordinary item 11,814 (3,040) 1,353 10,127
Loss on early
retirement of debt,
net of taxes 522 - - 522
--------- ---------- --------- ---------
Net income $ 11,292 $ (3,040 ) $ 1,353 $ 9,605
========= ========== ========= =========
Net income per common
sharebefore extraordinary
item (3) $ 1.22 $ 1.04
========= =========
Weighted average shares
used in calculating
income per common
share before
extraordinary
item 9,698,500 9,698,500
========== =========
</TABLE>
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HARVEYS CASINO RESORTS
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The Company's unaudited pro forma condensed consolidated balance sheet as
of August 31, 1997 gives effect to the sale by the Company of its 40%
equity interest in the outstanding capital stock of HRHC and the buyout of
the Company's management agreement, under which the Company managed the
Hard Rock Hotel and Casino ( the 'HRHC Transaction'), as though the HRHC
Transaction had taken place on August 31, 1997. The Company's unaudited
pro forma condensed consolidated income statements for the nine months
ended August 31, 1997 and the year ended November 30, 1996 give effect to
the HRHC Transaction as though it had taken place on December 1, 1995.
2. The gross proceeds, had the HRHC Transaction taken place on August 31,
1997, would have included $45.0 million cash for the capital stock and the
Company's rights under the management agreement and approximately $1.3
million cash in satisfaction of a note and other amounts due the Company
from HRHC as of August 31, 1997. The Company's unaudited pro forma
condensed consolidated balance sheet as of August 31, 1997 includes (a)
the estimated net proceeds from the HRHC Transaction, and the use thereof,
and (b) the estimated increase in retained earnings as a result of the
after tax gain on the HRHC Transaction, each calculated as follows
(dollars in thousands):
<TABLE>
<CAPTION>
<S> <C>
Gross proceeds $46,330
Income taxes, cash (10,317)
Estimated transaction costs (450)
--------
Net proceeds 35,563
Reduction of long-term debt (17,500)
--------
Increase in cash balances $18,063
========
Gross proceeds $46,330
Book basis, at August 31,1997, of assets sold (18,158)
Estimated transaction costs (450)
--------
Gain 27,722
Income taxes, cash (10,317)
Decrease in deferred income taxes 614
--------
Gain, net of taxes $18,019
========
</TABLE>
3. Net income per common share and net income per common share before
extraordinary item are computed based on the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding
during the period. Fully diluted per share amounts are the same as primary
per share amounts for all periods presented.
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HARVEYS CASINO RESORTS
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. The adjustments to the Company's unaudited pro forma condensed
consolidated statements of income for the nine months ended August 31,
1997 and the year ended November 30,1996 include (a) the reduction in
interest expense to reflect the use of the estimated net proceeds, that
would have been received from the HRHC Transaction if the HRHC Transaction
had closed on December 1, 1995, to reduce the amount outstanding under the
Company's reducing, revolving credit agreement with a consortium of banks,
and (b) an increase in the income tax provision, at the statutory rate, to
reflect the decreased deduction for interest expense discussed above.
5. The unaudited pro forma condensed consolidated income statements for the
nine months ended August 31, 1997 and for the year ended November 30,1996
exclude the net gain of approximately $17.9 million recognized on the
close of the HRHC Transaction at October 24, 1997 calculated as follows
(dollars in thousands):
<TABLE>
<CAPTION>
<S> <C>
Gross proceeds $46,227
Book basis, at October 24, 1997, of assets sold (18,256)
Estimated transaction costs (450)
--------
Gain 27,521
Income tax at statutory rate (9,632)
--------
Gain, net of taxes $17,889
========
</TABLE>
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<PAGE> EXHIBIT INDEX
Exhibit # Description
2.1 Stock Purchase Agreement, dated July 1, 1997. (1)
99.1 Press release, dated July 1, 1997. (1)
--------------------------------------------
(1) Incorporated herein by reference to Registrant's Current Report
on Form 8-K dated July 1, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HARVEYS CASINO RESORTS
(Registrant)
DATED: November 5, 1997 /s/ John J. McLaughlin
-------=----------------
John J. McLaughlin
Senior Vice President,
Chief Financial Officer and Treasurer
