**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-Q**

 

**ý**** QUARTERLY REPORT UNDERSECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended: March 31, 2004**

 

**OR**

 

**o**** TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thetransition periodfrom           to           **

 

**Commissionfile number 333-53211**

 

**Hard Rock Hotel, Inc.**

(Exact name of registrantas specified in its charter)

 
| **Nevada**                                                      |   | **88-0306263**                        |
|-----------------------------------------------------------------|--------|---------------------------------------|
| (State or other jurisdiction  of incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
|                                                            |   |                                  |
| **4455  Paradise Road, Las Vegas NV**                           |   | **89109**                             |
| (Address of principal  executive offices)                       |   | (Zip Code)                            |
|                                                            |   |                                  |

 

Registrant’s telephonenumber, including area code:  **(702) 693-5000**

 

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Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Actof 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes ý No o

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

 

APPLICABLE ONLY TO CORPORATEISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.

 

Common Stock outstandingby class as of May 17, 2004

 

| **Class of  Common Stock** |   | **Shares** |
|----------------------------|--------|------------|
| Class A Common Stock       |   | 12,000     |
| Class B Common Stock       |   | 64,023     |

 

 

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HARD ROCK HOTEL, INC.

 

INDEX

 

 
| Part I  | FINANCIAL  INFORMATION |                                                                                                |
|---------|------------------------|-----------------------------------------------------------------------------------------------------|
|    |                   |                                                                                                |
| Item 1. |                   | Financial  Statements (unaudited)                                                                   |   |
|    |                   |                                                                                                |   |
|    |                   | Condensed  Balance Sheets as of March 31, 2004 and December 31, 2003                      |   |
|    |                   |                                                                                                |   |
|    |                   | Condensed Statements of Operations for the  three-month periods ended March 31, 2004 and 2003  |   |
|    |                   |                                                                                                |   |
|    |                   | Condensed  Statements of Cash Flows for the three-month periods ended March 31,  2004 and 2003 |   |
|    |                   |                                                                                                |   |
|    |                   | Notes to Condensed Financial Statements                                                             |   |
|    |                   |                                                                                                |   |
| Item 2. |                   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations         |   |
|    |                   |                                                                                                |   |
| Item 3. |                   | Quantitative  and Qualitative Disclosures about Market Risk                                         |   |
|    |                   |                                                                                                |   |
| Item 4. |                   | Controls  and Procedures                                                                            |   |
|    |                   |                                                                                                |   |
| PART II | OTHER  INFORMATION     |                                                                                                |
|    |                   |                                                                                                |   |
| Item 6. |                   | Exhibits  and Reports on Form 8-K                                                                   |   |
|    |                   |                                                                                                |   |
|    |                   | (a)  Exhibits                                                                                  |   |
|    |                   |                                                                                                |   |
|    |                   | (b)  Reports on Form 8-K                                                                       |   |

 

2

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Part I                    FINANCIALINFORMATION

 

Item 1.                                                     FinancialStatements

 

HARD ROCK HOTEL, INC.

CONDENSED BALANCE SHEETS (unaudited)

(in thousands, exceptshare amounts)

 
|                                                                                                                                                  |   | **March 31,****2004** |    | **December 31,  2003** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|---------|-----------------------------|--------|
| ASSETS                                                                                                                                                |   |                       |    |                        |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| Current assets:                                                                                                                                       |   |                       |    |                        |   |
| Cash and cash equivalents                                                                                                                             |   | $                          | 11,531  |                        | $      | 10,882 |   |
| Accounts receivable, net of allowance for  doubtful accounts of $1,400 and $1,237 as of March 31, 2004 and  December 31, 2003, respectively |   | 5,735                      |    | 6,554                       |   |
| Inventories                                                                                                                                           |   | 1,747                      |    | 1,743                       |   |
| Prepaid expenses and other current assets                                                                                                             |   | 1,786                      |    | 2,678                       |   |
| Related party receivable                                                                                                                              |   | 810                        |    | —                      |   |
| Total current assets                                                                                                                                  |   | 21,609                     |    | 21,857                      |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| Property and equipment, (net)                                                                                                                         |   | 167,613                    |    | 166,782                     |   |
| Deferred income taxes                                                                                                                                 |   | 1,086                      |    | 1,086                       |   |
| Other assets, (net)                                                                                                                                   |   | 4,364                      |    | 4,352                       |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| TOTAL ASSETS                                                                                                                                          |   | $                          | 194,672 |                        | $      | 194,077 |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| LIABILITIES AND SHAREHOLDERS’ DEFICIENCY                                                                                                         |   |                       |    |                        |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| Current liabilities:                                                                                                                                  |   |                       |    |                        |   |
| Accounts payable                                                                                                                                      |   | $                          | 2,487   |                        | $      | 3,070 |   |
| Construction related payable                                                                                                                          |   | 544                        |    | 982                         |   |
| Related party payable                                                                                                                                 |   | 253                        |    | 224                         |   |
| Accrued expenses                                                                                                                                      |   | 13,194                     |    | 13,217                      |   |
| Interest payable                                                                                                                                      |   | 7,094                      |    | 4,184                       |   |
| Current portion of long-term debt                                                                                                                     |   | 3,923                      |    | 2,673                       |   |
| Total current liabilities                                                                                                                             |   | 27,495                     |    | 24,350                      |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| Deferred income taxes                                                                                                                                 |   | 860                        |    | 860                         |   |
| Long-term debt                                                                                                                                        |   | 206,445                    |    | 207,739                     |   |
| Total long-term liabilities                                                                                                                           |   | 207,305                    |    | 208,599                     |   |
| Total liabilities                                                                                                                                     |   | 234,800                    |    | 232,949                     |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| Commitments and contingencies:                                                                                                                        |   |                       |    |                        |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| Shareholders’ deficiency:                                                                                                                        |   |                       |    |                        |   |
|                                                                                                                                                  |   |                       |    |                        |   |
| Common stock, Class A voting, no par value,  40,000 shares authorized, 12,000 shares issued and outstanding                                           |   | —                     |    | —                      |   |
| Common stock, Class B non-voting, no par  value, 160,000 shares authorized, 64,023 shares issued and outstanding                                      |   | —                     |    | —                      |   |
| Paid-in capital                                                                                                                                       |   | 7,508                      |    | 7,508                       |   |
| Accumulated deficit                                                                                                                                   |   | (47,636                    | )       | (46,380                     | )      |
| Total shareholders’ deficiency                                                                                                                   |   | (40,128                    | )       | (38,872                     | )      |
|                                                                                                                                                  |   |                       |    |                        |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’  DEFICIENCY                                                                                                  |   | $                          | 194,672 |                        | $      | 194,077 |   |

 

*Theaccompanying notes are an integral part of these unaudited condensed financialstatements*

 

3

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HARD ROCK HOTEL, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per shareamounts)

(unaudited)

 
|                                                  |   | **Three  months ended  March 31,** |   |
|-------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                  |   | **2004**                                |   | **2003** |   |
| Revenue:                                              |   |                                    |   |   |   |
| Casino                                                |   | $                                       | 13,607 |   | $ | 14,249 |   |
| Hotel                                                 |   | 8,626                                   |   | 7,359 |   |
| Food and beverage                                     |   | 11,295                                  |   | 11,237 |   |
| Retail store                                          |   | 1,952                                   |   | 2,025 |   |
| Other                                                 |   | 1,835                                   |   | 1,702 |   |
| Gross revenues                                        |   | 37,315                                  |   | 36,572 |   |
| Less:   promotional allowances                   |   | (2,822                                  | )      | (2,690 | ) |
| Net revenues                                          |   | 34,493                                  |   | 33,882 |   |
|                                                  |   |                                    |   |   |   |
| Costs and expenses:                                   |   |                                    |   |   |   |
| Casino                                                |   | 9,364                                   |   | 8,738 |   |
| Hotel                                                 |   | 2,199                                   |   | 1,938 |   |
| Food and beverage                                     |   | 6,057                                   |   | 5,830 |   |
| Retail store                                          |   | 885                                     |   | 915 |   |
| Other                                                 |   | 965                                     |   | 878 |   |
| Marketing, advertising and entertainment              |   | 2,291                                   |   | 1,081 |   |
| General and administrative                            |   | 4,893                                   |   | 4,716 |   |
| Related party payments                                |   | 1,187                                   |   | 1,079 |   |
| Depreciation and amortization                         |   | 3,010                                   |   | 2,889 |   |
| Pre-opening expenses                                  |   | 200                                     |   | 12 |   |
| Total costs and expenses                              |   | 31,051                                  |   | 28,076 |   |
|                                                  |   |                                    |   |   |   |
| Income from operations                                |   | 3,442                                   |   | 5,806 |   |
|                                                  |   |                                    |   |   |   |
| Other income (expense):                               |   |                                    |   |   |   |
| Other expense, net                                    |   | —                                  |   | (36 | ) |
| Interest income                                       |   | 7                                       |   | 6 |   |
| Interest expense                                      |   | (4,705                                  | )      | (3,265 | ) |
|                                                  |   |                                    |   |   |   |
| Income (loss) before benefit for income  taxes        |   | (1,256                                  | )      | 2,511 |   |
|                                                  |   |                                    |   |   |   |
| Income tax benefit                                    |   | —                                  |   | (100 | ) |
| NET INCOME (loss)                                     |   | (1,256                                  | )      | 2,611 |   |
|                                                  |   |                                    |   |   |   |
| Preferred stock dividends                             |   | —                                  |   | (1,400 | ) |
| Income (loss) applicable to common  shareholders      |   | $                                       | (1,256 | ) | $ | 1,211 |   |
|                                                  |   |                                    |   |   |   |
| BASIC AND DILUTED NET INCOME (LOSS) PER  SHARE:       |   |                                    |   |   |   |
|                                                  |   |                                    |   |   |   |
| Applicable to common shareholders                     |   | $                                       | (16.52 | ) | $ | 15.93 |   |
|                                                  |   |                                    |   |   |   |
| Weighted average number of common shares  outstanding |   | 76,023                                  |   | 76,023 |   |

 

*Theaccompanying notes are an integral part of these unaudited condensed financialstatements.*

 

4

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HARD ROCK HOTEL, INC.

CONDENSEDSTATEMENTS OF CASH FLOWS

(in thousands, exceptsupplemental schedule)

(unaudited)

 
|                                                                                                                   |   | **March 31,  2004** |   | **March 31,  2003** |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------------------------|--------|
| Cash flows from operating activities:                                                                                  |   |                     |   |                     |   |
| Net income (loss)                                                                                                      |   | $                        | (1,256 | )                        | $      | 2,611 |   |
| Adjustments to reconcile net (loss) income  to net cash provided by operating activities:                              |   |                     |   |                     |   |
| Depreciation and amortization                                                                                          |   | 3,010                    |   | 2,889                    |   |
| Provision for losses on accounts receivable                                                                            |   | 147                      |   | 142                      |   |
| Amortization of bond offering fees and  costs                                                                          |   | 137                      |   | 185                      |   |
| Loss on sales of property and equipment                                                                                |   | —                   |   | 36                       |   |
| Changes in operating assets and liabilities                                                                            |   |                     |   |                     |   |
| Accounts receivable                                                                                                    |   | 672                      |   | 3,531                    |   |
| Inventories                                                                                                            |   | (4                       | )      | 333                      |   |
| Prepaid expenses and other current assets                                                                              |   | 892                      |   | 148                      |   |
| Related party receivable                                                                                               |   | (810                     | )      | (259                     | )      |
| Deferred income taxes                                                                                                  |   | —                   |   | (150                     | )      |
| Accounts payable                                                                                                       |   | (583                     | )      | (347                     | )      |
| Related party payable                                                                                                  |   | 29                       |   | 291                      |   |
| Accrued expenses                                                                                                       |   | (23                      | )      | (4,174                   | )      |
| Interest payable                                                                                                       |   | 2,910                    |   | 2,762                    |   |
| Net cash provided by operating activities                                                                              |   | 5,121                    |   | 7,998                    |   |
|                                                                                                                   |   |                     |   |                     |   |
| Cash flows (used in) investing activities:                                                                             |   |                     |   |                     |   |
| Purchases of property and equipment                                                                                    |   | (3,841                   | )      | (786                     | )      |
| Construction related payables                                                                                          |   | (438                     | )      | (49                      | )      |
| Proceeds from sale of operating assets                                                                                 |   | ––             |   | 45                       |   |
| Net cash (used in) investing activities                                                                                |   | (4,279                   | )      | (790                     | )      |
|                                                                                                                   |   |                     |   |                     |   |
| Cash flows (used in) financing activities:                                                                             |   |                     |   |                     |   |
| Other debt issuance expenses                                                                                           |   | (149                     | )      | —                   |   |
| Payments on debt                                                                                                       |   | (44                      | )      | (5,078                   | )      |
| Net cash (used in) financing activities                                                                                |   | (193                     | )      | (5,078                   | )      |
|                                                                                                                   |   |                     |   |                     |   |
| Net increase (decrease) in cash and cash  equivalents                                                                  |   | 649                      |   | 2,130                    |   |
| Cash and cash equivalents, beginning of  period                                                                        |   | 10,882                   |   | 9,139                    |   |
|                                                                                                                   |   |                     |   |                     |   |
| Cash and cash equivalents, end of period                                                                               |   | $                        | 11,531 |                     | $      | 11,269 |   |
|                                                                                                                   |   |                     |   |                     |   |
| Supplemental disclosures of cash flow  information:                                                                    |   |                     |   |                     |   |
| Cash paid during the period for interest,  (net of amount capitalized of $100 in the period ended March 31, 2004) |   | $                        | 1,658  |                     | $      | 318 |   |
| Cash paid during the period for income  taxes, net                                                                     |   | $                        | — |                     | $      | — |   |

 

(continued)

 

5

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Supplemental Schedule of Non-Cash Investing and FinancingActivities:

 

The value of the 9 1/4% Series A Cumulative Preferred Stock increasedby approximately $835,000 in unpaid accrued dividends for the three-monthperiod ended March 31, 2003.

 

The value of the 9 1/4% Series B Cumulative Preferred Stock increasedby approximately $565,000 in unpaid accrued dividends for the three-monthperiod ended March 31, 2003.

 

*The accompanying notes are an integral partof these unaudited condensed financial statements*

 

6

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HARD ROCK HOTEL, INC. 

NOTES TO CONDENSED FINANCIAL STATEMENTS

 

1.                                       BASIS OFPRESENTATION

 

Hard Rock Hotel, Inc. (the “Company”), a Nevada corporationincorporated on August 30, 1993, operates a hotel-casino in Las Vegas,Nevada (the “Resort”).  Lily PondInvestments, Inc. (“Lily Pond”), a Nevada corporation controlled and majorityowned by Peter Morton, owns all of the voting shares and 93% of the non-votingshares of the Company.  Mr. Morton hasgranted a sublicense to the Company, pursuant to which the Company holds theexclusive right to use the “Hard Rock Hotel” trademark for the Company’soperations in Las Vegas.  Thesefinancial statements have been prepared in accordance with generally acceptedaccounting principles for interim financial information and with instructionsto Form 10-Q and Article 10 of Regulation S-X.  Accordingly, certain notes and other information have beencondensed or omitted from the interim financial statements presented in thisQuarterly Report on Form 10-Q and they do not include all information requiredby accounting principles generally accepted in the United States of America forcomplete financial statements.  In theopinion of management, all adjustments (consisting of normal recurringadjustments) considered necessary for a fair presentation have beenincluded.  The preparation of financialstatements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the amountsof revenues and expenses during the reporting period.  Actual results could differ from these estimates.  Operating results for the three-month periodended March 31, 2004 are not necessarily indicative of future financialresults or the results that may be expected for the year endingDecember 31, 2004.  The unauditedinterim financial statements contained herein should be read in conjunctionwith the audited financial statements and footnotes for the year endedDecember 31,2003.

 

2.                                       AGREEMENTS WITH RELATED PARTIES

 

TheCompany entered into a twenty-five year Amended and Restated SupervisoryAgreement with Peter Morton, Chairman and Chief Executive Officer, which providesfor the supervision of the development, improvement, operation, and maintenanceof the Company through 2022.  Mr. Mortonhas the option to renew the agreement for two successive fifteen year terms.  Pursuant to the terms of the SupervisoryAgreement, Mr. Morton is to provide consulting and supervisory services to theCompany.  In the event either we are orMr. Morton is in Default (as defined in the agreement), the non-defaultingparty may terminate the agreement after the other party has received the opportunityto cure such default.  As part of thisagreement, the Company pays to Mr. Morton a supervisory fee equal to twopercent of annual gross revenues (as defined), net of complimentaries for eachyear.  Total supervisory fee expensesfor these services for the three months ended March 31, 2004 and 2003amounted to $678,000 and $747,000, respectively.  These expenses are included in related party expenses in theaccompanying statements of operations. The unpaid amounts at March 31, 2004 and December 31, 2003 are$253,000 and $176,000, respectively, and are included in related party payablein the accompanying balance sheets.

 

Entitiescontrolled by Mr. Morton have provided additional technical support servicesfor the development, ongoing improvement and operation of the Company.  The Company reimburses these entities forall costs and expenses incurred in connection with these services, including,without limitation, employee salary and benefits and allocated overhead.  These expenses aggregated approximately$509,000 and $332,000 for the three months ended March 31, 2004 and 2003,respectively, and are included in the accompanying statements ofoperations.  At March 31, 2004,$810,000 was due from these entities for expenses paid in advance and is includedin related party receivable in the accompanying balance sheet.  At December 31, 2003, $48,000 was dueto these entities for expenses and is included in related party payable in theaccompanying balance sheet.

 

Ourpreferred stock was, and the junior subordinated notes are, held byMr. Morton or affiliates of Mr. Morton (see Note 3 below).

 

3.                                       LONG-TERM DEBT

 

As of March 31, 2004,the Company had $140.0 million outstanding of its 8.875% Second Lien Notes due2013 (the “2013 Notes”).  The Companyalso has a $40 million Senior Secured Credit Facility (the “Facility”) througha group of banks.  The Facility consists of a $20 million, five-yearsenior secured term loan (the “Term Loan”) and a $20 million senior securedrevolving credit facility (the “Revolving Credit Facility”).  As of March 31, 2004, the Company had$20.0 million outstanding on its Term Loan and had no balance outstanding onits Revolving Credit Facility.  As ofMarch 31, 2004, the Company also has approximately $50.0 millionoutstanding of junior subordinated notes (the “Junior Notes”).

 

2013 Notes

Interest on the 2013 Notes is payable on eachJune 1 and December 1 beginning December 1, 2003.  The 2013 Notes are secured by a securityinterest in substantially all of the Company’s existing and future assets,other than licenses which may not be pledged under applicable law.  The 2013 Notes are contractually subordinated in right of payment to allindebtedness incurred pursuant to the Facility.  The liens and security interests securing the obligations of theCompany under the 2013 Notes are contractually subordinated to the lienssecuring the obligations of the Company under the Facility and exceptfor permitted secured purchase money indebtedness.  The 2013 Notes are subject to redemption at the option of theCompany, in whole or in part, at any time on or after June 1, 2008, at apremium to the face amount ($140 million) that decreases on each subsequentanniversary date, plus accrued interest to the date of redemption.  The 2013 Notes contain covenants restrictingor limiting the ability of the Company to, among other things, pay dividends,create liens or other encumbrances, incur additional indebtedness, issuecertain preferred stock, sell or otherwise dispose of a portion of its assets, makeacquisitions or merge or consolidate with another entity and enter intotransactions with affiliates.  The Company was in compliance withthese covenants as of March 31, 2004.

 

# Facility

Interest on the Facility accrues on all individual borrowings at aninterest rate determined at the option of the Company, at either the LIBORIndex plus an applicable margin (not to exceed 3.5% (applicable margin was2.75% at March 31, 2004) and aggregating 4.4% at March 31, 2004), orthe Base Rate, defined as the higher of the Federal Funds Rate plus 0.5%, orthe reference rate, as defined, plus an applicable margin (not to exceed2.25%).  The Company chose the LIBORIndex for all of its borrowings outstanding at March 31, 2004.  These margins are dependent upon the Company’stotal debt to EBITDA ratio, as defined. Interest accrued on the Base Rate borrowings is due monthly, up to thematurity date, while interest on LIBOR borrowings is due quarterly up to thematurity date.  The Facility is securedby substantially all of the Company’s property at the Las Vegas site.  The Facility contains certain covenantsincluding, among other things, financial covenants, limitations on the Companyfrom disposing of capital stock, entering into mergers and certainacquisitions, incurring liens or indebtedness, issuing dividends on stock, andentering into transactions with affiliates. The Company is in compliance with these covenants as of March 31,2004.

 

JuniorSubordinated Notes

Interest on the Junior Subordinated Notes ispayable on each January 15 and July 15, commencing on January 15, 2004, and maybe paid in cash or in kind at the Company’s option, provided that interest willbe paid in kind if a payment of such interest in cash would cause a defaultunder the 2013 Notes or the Facility. The Junior Notes require that any semi-annual interest payment in cashbe equal to the lesser of (x) 50% of the amount of interest accrued on theJunior Notes since the most recent interest payment date and (y) the amount ofinterest that the Company is permitted to pay in cash without causing a defaultunder the 2013 Notes or the Facility. For interest payments payable in cash, interest accrues at a rate perannum equal to 9.875%, and for interest payments payable in kind, interestaccrues at a rate per annum equal to 10.50%. On January 15, 2004, the Company paid in cash $1.5 million of intereston the Junior Subordinated Notes.  Thisrepresents 50% of the accrued interest at 9.875% due as of December 31,2003.  The remaining accrued interest waspaid in kind at a rate of 10.50%.  TheJunior Notes are contractually subordinated to the 2013 Notes and the Facilityand any other senior debt of the Company.

 

7

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The Junior Notes mature on January 15, 2014 but are subject toredemption at the option of the Company, in whole or in part, at any time on orafter January 15, 2009, at a premium to the principal amount thereof thatdecreases on each subsequent anniversary date, plus accrued interest to the dateof redemption.  The Junior Notes containcovenants restricting the Company’s ability to, among other things, sell orotherwise dispose of its assets, pay dividends, incur additional indebtedness,make acquisitions or merge or consolidate with another entity and enter intotransactions with affiliates.  TheCompany is in compliance with these covenants as of March 31, 2004.

 

4.                                       LEGAL AND REGULATORY PROCEEDINGS

 

The Company is a defendant in various lawsuits relating to routinematters incidental to its business.

 

Management provides an accrual for estimated losses that may occur anddoes not believe that the outcome of any pending claims or litigation, in theaggregate, will have a material adverse effect on the Company’s financialposition, results of operations or liquidity beyond the amounts recorded in theaccompanying balance sheet as of March 31, 2004.

 

DuringJanuary 2004, the Nevada Gaming Commission served us with a complaint fordisciplinary action pursuant to NRS 463.310(2) and NRS 463.312charging violations of the Nevada Gaming Control Act and State Gaming ControlBoard and Nevada Gaming Commission Regulations.  The complaint contains three counts each carrying a penalty of upto $100,000.  Subsequent toMarch 31, 2004, the Company tentatively agreed to pay the State $300,000related to the complaint.

 

5.                                       CONSTRUCTIONCOMMITMENT

 

During January 2004, the Company entered into various agreementsto remodel and expand its nightclub formerly called Baby’s.  Total costs of the remodel and expansion areestimated to be between $6.5 million and $7.0 million, of which approximately$1.1 million has been paid in cash as of March 31, 2004.

 

During March 2004, the Company entered into various agreements toremodel its Race and Sports Book.  Totalcosts of the remodel are estimated to be approximately $0.7 million of whichapproximately $0.4 million has been paid in cash as of March 31, 2004.

 

8

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Item 2.                                                     Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

 

The following discussion should be read inconjunction with, and is qualified in its entirety by, the Company’s financialstatements, including the notes thereto, and the other financial informationappearing elsewhere herein and by the Annual Report to Shareholders on Form10-K for the year ended December 31, 2003, which may be obtained upon requestfrom the Company.

 

SPECIAL NOTEREGARDING FORWARD-LOOKING STATEMENTS

 

This document includes various “forward-looking statements” within themeaning of Section 27A of the Securities Act of 1933, as amended, andSections 21E of the Securities Exchange Act of 1934, as amended, whichrepresent the Company’s expectations or beliefs concerning future events.  Statements containing expressions such as“believes,” “anticipates” or “expects” used in our press releases and periodicreports on Forms 10-K and 10-Q filed with the Securities and ExchangeCommission are intended to identify forward-looking statements.  All forward-looking statements involve risksand uncertainties. Although we believe our expectations are based uponreasonable assumptions within the bounds of our knowledge of our business andoperations, there can be no assurances that actual results will not materiallydiffer from expected results. We caution that these and similar statementsincluded in this report and in previously filed periodic reports, includingreports filed on Forms 10-K and 10-Q, are further qualified by importantfactors that could cause actual results to differ materially from those in theforward-looking statements.  Suchfactors include, without limitation, the following:  increased competition in existing markets or the opening of newgaming jurisdictions; a decline in the public acceptance of gaming; thelimitation, conditioning or suspension of any of our gaming licenses; increasesin or new taxes imposed on gaming revenues or gaming devices; a finding ofunsuitability by regulatory authorities with respect to our officers, directorsor key employees; loss or retirement of key executives; significant increasesin fuel or transportation prices; adverse economic conditions in our keymarkets; severe and unusual weather in our key markets; and adverse results ofsignificant litigation matters.  Readers are cautioned not to placeundue reliance on forward-looking statements, which speak only as of the datethereof.  We expressly disclaimany obligation or undertaking to disseminate any updates or revisions to anyforward-looking statement contained in this report, including to reflect anychange in our expectations with regard to that forward-looking statement or anychange in events, conditions or circumstances on which that forward-lookingstatement is based.  For moreinformation regarding risks inherent in an investment in the Company, see thesection ”Business — Risk Factors” in our Annual Report to Shareholders onForm 10-K filed with the SEC on March 30, 2004.

 

OVERVIEW

 

Our sole business is the operation of the Hard Rock Hotel and Casino inLas Vegas, NV.

 

RESULTSOF OPERATIONS

QUARTERENDED MARCH 31, 2004 COMPARED TO QUARTER ENDED MARCH 31, 2003

 

NETREVENUES.  Net revenues increased 2% for the quarter endedMarch 31, 2004  to$34.5 million compared to $33.9 million for the quarter endedMarch 31, 2003.  The$0.6 million increase in net revenues is primarily attributable to a$1.3 million or 17% increase in hotel revenue, a $0.1 million or 8%increase in other revenues and a $0.1 million or a 1% increase in food andbeverage revenue.  These increases in revenuewere partially offset by a $0.6 million or 5% decrease in casino revenue,a $0.1 million or 4% decrease in retail revenue and a $0.1 million or 5%increase in promotional allowances related to items furnished to customers on acomplimentary basis.

 

CASINOREVENUES.  The $0.6 million decrease in casino revenues wasprimarily due to a $0.7 million or 7% decrease in table games revenues anda $0.1 million or 13% decrease in race and sports book revenues partiallyoffset by a $0.1 million or 2% increase in slot machine revenues.  The decrease in table games revenues was dueto a decrease in table games hold percentage offset partially by an increase intable games drop.  Table games holdpercentage decreased 1.7 percentage points to 11.0% from 12.7%.  Table games drop increased $5.9 millionor 8% to $81.0 million.  Theaverage number of table games in operations increased to 93 from 91, anincrease of 2 tables or 2%.  The netresult of these changes in drop, hold percentage and average number of tablegames in operation was a decrease in win per table game per day to $1,050 from$1,164, a decrease of $114 or 10%.  Wehave historically reported table games hold percentage using the gross method,while casinos on the Strip report hold percentage using the net method (whichreduces the table game drop by marker repayments made in the gaming pitarea).  For the purpose of comparison toproperties on the Strip, our net hold percentage for the quarter endedMarch 31, 2004 was 12.9% compared to 14.1% for the quarter endedMarch 31, 2003.  The decrease inrace and sports book revenues was due to a decrease in race and sports handleand race and sports hold percentage. Race and sports handle decreased $0.1 million or 2% to$5.3 million.  Race and sports holdpercentage decreased 1.3 percentage points to 8.9% from 10.2%.  The increase in slot machine revenues wasdue to an increase in slot machine handle while hold percentage remainedconstant.  Slot machine handle increased$1.0 million or 1% to $88.7 million from $87.7 million.  Slot machine hold percentage remainedconstant at 4.8%.  The average number ofslot machines in operation decreased to 557 from 559, a decrease of 2 machines orless than 1%.  The net result of thesechanges in handle, hold percentage and average number of slot machines inoperation was an increase in win per slot machine per day to $84 from $83, anincrease of $1 or 1%.

 

HOTELREVENUES.  The $1.3 million increase in hotel revenues to$8.6 million was primarily due to an increase in average daily rate(“ADR”) to $152 from $128 and a $0.2 million increase in miscellaneoussales, offset partially by a decrease in occupancy percentage to 91.6% from93.0% between periods and a $0.1 million decrease in telephone sales.

 

FOODAND BEVERAGE REVENUES.  The $0.1 million increase in food andbeverage revenues was due to food revenues increasing by approximately$0.2 million offset partially by beverage revenues decreasingapproximately $0.1 million.  Foodrevenues 

 

9

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increaseddue primarily to a $0.2 million increase in Simon Kitchen and Bar and a$0.1 million increase in each of the Pink Taco, Mr. Lucky’s and AJ’s.  These increases in food revenues werepartially offset by a $0.3 million decrease in Banquets food revenue.  Beverage revenues decreased due primarily toa $0.6 million decrease in Baby’s nightclub, due to being closed forremodeling and expansion since February 1, 2004, and a $0.1 million decreasein Banquet beverage revenue.  Thesedecreases in beverage revenue were partially offset by a $0.1 millionincrease in each of Simon Kitchen and Bar, the Las Vegas Lounge, Sports Deluxebar, Pink Taco, the service bar and in combined other outlets.

 

RETAILREVENUES.  We believe the $0.1 million decrease in retailrevenues was due in part to continued general market decline in the themedmerchandise segment and the addition of other retail operations in Las Vegas.

 

OTHERINCOME.  Other income increased $0.1 million primarily due toconversion of the Company’s video arcade to a lingerie store, Love Jones, whichopened during September 2003, income from the Chevrolet Rock and Rollmobile tour, rent from Rocks Jewelry Store and various changes in otheroperations, each of which was less than $0.1 million.

 

PROMOTIONALALLOWANCES.  Promotional allowances increased as a percentage ofcasino revenues to 21% from 19%.  Theincrease in promotional allowances was primarily due to increased marketing,general and administrative complimentaries.

 

CASINOEXPENSES.  Casino expenses increased $0.6 million or 7% to$9.4 million.  The increase wasprimarily due to a $0.3 million increase in tickets given to customers forthe Joint, a $0.2 million increase in payroll and related expenses and a$0.2 million increase in bad debt expenses related to potentially uncollectiblecredit extended to casino customers. These increases were offset partially by a $0.1 million decrease ingaming taxes.  The Company’s provisionand allowance for doubtful accounts are based on estimates by management of thecollectability of the receivable balances at each period end.  Management’s estimates consider, among otherfactors, the age of the receivables, the type or source of the receivables andthe results of collection efforts to date, especially with regard tosignificant accounts.  Casino expensesas a percentage of casino revenues increased to 69% from 61%, an increase of 8percentage points between comparative periods, 7 percentage points of which aredue to the decrease in table games hold percentage.

 

HOTELEXPENSES.  Hotel expenses in relation to hotel revenues, prior toreclassifying the cost of complimentaries to casino expense or departmentcomplimentaries to promotional allowances, decreased to 31% from 32% in theprior year due primarily to a higher ADR while total operating expenses priorto reclassifying complimentaries to casino expense increased approximately$0.4 million primarily related to a $0.2 million increase in laborand related expenses and a $0.2 million increase in laundry and amenitiesexpenses due to upgrading their quality.

 

FOODAND BEVERAGE COSTS AND EXPENSES.  Food and beverage costs andexpenses in relation to food and beverage revenues, prior to reclassifying thecost of complimentaries to casino expense or department complimentaries topromotional allowances increased to 62% from 60% in the prior year period dueto fixed banquet department costs in relation to a $0.4 million or 20% decreasein banquet revenues and $0.6 million decrease in Baby’s revenue due to renovationwhich ran at a 63% operating profit margin in the prior year.

 

RETAILCOSTS AND EXPENSES.  Retail costs and expenses in relation to retailrevenues, prior to reclassifying the cost of complimentaries to casino expenseor department complimentaries to promotional allowances, remained constant at49% between comparative periods.

 

OTHERCOSTS AND EXPENSES.  Other costs and expenses in relation to otherincome increased to 53% from 52% in the prior year period due to the opening ofLove Jones lingerie store which operated at a lower margin than the arcade itreplaced.

 

MARKETING,GENERAL AND ADMINISTRATIVE.  Marketing, general and administrativeexpenses in relation to gross revenues increased to 19% from 16%.  The $1.4 million increase in theseexpenses was primarily due to a $0.5 million increase in entertainment costsassociated with the Joint, a $0.5 million increase in customer promotions, a$0.5 million increase in payroll and related expenses, including managementincentives and 1999 Performance Awards Plan expenses, a $0.2 million increasein related party expenses and a $0.1 million increase in insurance costs.  These increases were offset partially by a$0.4 million decrease in miscellaneous general and administrative expenses.

 

DEPRECIATIONAND AMORTIZATION.  Depreciation and amortization expense increased to$3.0 million from $2.9 million between comparative periods due to theaddition of various assets since March 31, 2003 including, among otherassets, four full color live video LED sign systems for $1.4 million, a“mega-suite” of approximately 4,500 square feet with 3 bedrooms, 4 bathrooms, adining room, a kitchen, a spa room, a billiard room and a professional stylebowling alley for approximately $2.6 million and an addition to theparking garage of approximately $4.7 million.

 

INTERESTEXPENSE.  Interest expense increased to $4.7 million from$3.3 million, an increase of $1.4 million or 43%.  The increase is primarily due to theincrease in outstanding borrowings, including debt issued to pay$15.0 million of accrued dividends on the Company’s preferred stock andinterest on the $50.0 million of qualified subordinated debt issued inexchange for the Company’s outstanding preferred stock and remaining accrueddividends during May 2003.

 

INCOMETAXES.  The Company has recorded a tax benefit of $0.1 millionin the quarter ended March 31, 2003 due to an adjustment of its deferred tax assets.  The Company did not have an adjustmentduring the quarter  ended March 31,2004.

 

LOSSAPPLICABLE TO COMMON SHAREHOLDERS.  Loss applicable to commonshareholders was $1.3 million compared to net income of $1.2 millionduring the prior year period.  Thedecrease in net results for common shareholders was due to the factorsdescribed above in addition to a $1.4 million decrease in preferred stockdividends.  Preferred dividendsdecreased due to the replacement of the preferred stock and remaining accrueddividends with qualified subordinated debt during May 2003.

 

10

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LIQUIDITYAND CAPITAL RESOURCES

 

For the three-month periodended March 31, 2004 our principal sources of funds were cash on-hand atDecember 31, 2003, and cash provided by operating activities of $5.1million.  The amount of cash provided byoperating activities primarily includes net loss of $1.3 million, depreciationand amortization of $3.0 million, provision for losses on accounts receivableof $0.1 million, amortization of loan fees of $0.1 million and net changes inoperating assets and liabilities of $3.1 million.  Other uses of funds were capital expenditures of $3.8 million, adecrease in construction payables of $0.4 million and combined debt issuancecosts and payments on debt of $0.2 million. As a result, as of March 31, 2004, we had cash and cash equivalentsof $11.5 million.

 

During January 2004, the Company entered into various agreementsto remodel and expand its nightclub formally called Baby’s.  Total costs of the remodel and expansion areestimated to be between $6.5 million and $7.0 million, of which approximately$1.1 million has been paid in cash as of March 31, 2004.

 

During March 2004, the Company entered into various agreements toremodel its Race and Sports Book.  Totalcosts of the remodel are estimated to be approximately $0.7 million of whichapproximately $0.4 million has been paid in cash as of March 31, 2004.

 

Webelieve that our current cash balances and cash flow from operations and othersources of cash including the available borrowings under our $20.0 millionRevolving Credit Facility ($20.0 million as of March 31, 2004) will besufficient to provide operating and investing liquidity during the next 12months.  We may, however, need to raiseadditional funds prior to April 1, 2005. Our ability to raise additional funds is limited by restrictions on ourfinancing activities under our Facility and the 2013 Notes.  We cannot be certain that additionalfinancing will be available to us on favorable terms when required, if at all.

 

Interest on the 2013 Notes is payable on eachJune 1 and December 1 beginning December 1, 2003.  The 2013 Notes are secured by a securityinterest in substantially all of the Company’s existing and future assets,other than licenses which may not be pledged under applicable law.  The 2013 Notes are contractually subordinated in right of payment to allindebtedness incurred pursuant to the Facility.  The liens and security interests securing the obligations of theCompany under the 2013 Notes are contractually subordinated to the lienssecuring the obligations of the Company under the Facility and exceptfor permitted secured purchase money indebtedness.  The 2013 Notes are subject to redemption at the option of theCompany, in whole or in part, at any time on or after June 1, 2008, at apremium to the face amount ($140 million) that decreases on each subsequentanniversary date, plus accrued interest to the date of redemption.  The 2013 Notes contain covenants restrictingor limiting the ability of the Company to, among other things, pay dividends, createliens or other encumbrances, incur additional indebtedness, issue certainpreferred stock, sell or otherwise dispose of a portion of its assets, makeacquisitions or merge or consolidate with another entity and enter intotransactions with affiliates.  The Company was in compliance withthese covenants as of March 31, 2004.

 

Interest on the Facility accrues on all individual borrowings at aninterest rate determined at the option of the Company, at either the LIBORIndex plus an applicable margin (not to exceed 3.5% (applicable margin was2.75% at March 31, 2004) and aggregating 4.4% at March 31, 2004), orthe Base Rate, defined as the higher of the Federal Funds Rate plus 0.5%, orthe reference rate, as defined, plus an applicable margin (not to exceed2.25%).  The Company chose the LIBORIndex for all of its borrowings outstanding at March 31, 2004.  These margins are dependent upon theCompany’s total debt to EBITDA ratio, as defined.  Interest accrued on the Base Rate borrowings is due monthly, up tothe maturity date, while interest on LIBOR borrowings is due quarterly up tothe maturity date.  The Facility issecured by substantially all of the Company’s property at the Las Vegas site.  The Facility contains certain covenantsincluding, among other things, financial covenants, limitations on the Companyfrom disposing of capital stock, entering into mergers and certainacquisitions, incurring liens or indebtedness, issuing dividends on stock, andentering into transactions with affiliates. The Company is in compliance with these covenants as of March 31,2004.

 

Interest on the Junior Notes is payable oneach January 15 and July 15, commencing on January 15, 2004, and may be paid incash or in kind at the Company’s option, provided that interest will be paid inkind if a payment of such interest in cash would cause a default under the 2013Notes or the Facility.  The Junior Notesrequire that any semi-annual interest payment in cash be equal to the lesser of(x) 50% of the amount of interest accrued on the Junior Notes since the mostrecent interest payment date and (y) the amount of interest that the Company ispermitted to pay in cash without causing a default under the 2013 Notes or theFacility.  For interest payments payablein cash, interest accrues at a rate per annum equal to 9.875%, and for interestpayments payable in kind, interest accrues at a rate per annum equal to10.50%.  On January 15, 2004, theCompany paid in cash $1.5 million of interest on the Junior SubordinatedNotes.  This represents 50% of theaccrued interest at 9.875% due as of December 31, 2003.  The remaining accrued interest was paid inkind at a rate of 10.50%.  The JuniorNotes are contractually subordinated to the 2013 Notes and the Facility and anyother senior debt of the Company.  TheJunior Notes mature on January 15, 2014 but are subject to redemption at theoption of the Company, in whole or in part, at any time on or after January 15,2009, at a premium to the principal amount thereof that decreases on eachsubsequent anniversary date, plus accrued interest to the date ofredemption.  The Junior Notes containcovenants restricting the Company’s ability to, among other things, sell orotherwise dispose of its assets, pay dividends, incur additional indebtedness,make acquisitions or merge or consolidate with another entity and enter intotransactions with affiliates.  TheCompany is in compliance with these covenants as of March 31, 2004.

 

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DuringJanuary 2004, the Nevada Gaming Commission served us with a complaint fordisciplinary action pursuant to NRS 463.310(2) and NRS 463.312charging violations of the Nevada Gaming Control Act and State Gaming ControlBoard and Nevada Gaming Commission Regulations.  The complaint contains three counts each carrying a penalty of upto $100,000.  Subsequent toMarch 31, 2004, the Company tentatively agreed to pay the State $300,000related to the complaint.

 

**Off-Balance Sheet Arrangements**

 

Wedo not have any off-balance sheet arrangements that have, or are reasonablylikely to have, a current or future effect on our financial condition, changesin financial condition, revenues or expenses, results of operations, liquidity,capital expenditures or capital resources that are material.  Currently, we have no guarantees, such asperformance guarantees, keep-well agreements or indemnity.  We are not engaged in derivatives.

 

**Contractual Obligations and Commitments**

 

Wehave various contractual obligations which we record as liabilities in ourconsolidated financial statements.  Wealso enter into other purchase commitments and other executory contracts thatare not recognized as liabilities until services are performed or goods arereceived.  Additionally, we enter intocontracts for goods and services such as food, inventory andentertainment.  Such liabilities arerecorded as liabilities when so incurred and we expect that such contracts willgenerate revenue in excess of such liabilities.  As of March 31, 2004, there have been no material changes tothe table of contractual obligations and commitments on our most recently filedForm 10-K except as described above related to remodeling and expanding Baby’sand remodeling the Race and Sports Book.

 

Wemade cash interest payments on long-term debt, including capitalized interest,of $1.8 million and $0.3 million during the three month periods endedMarch 31, 2004 and 2003, respectively. We anticipate our cash interest payments for the remainder of 2004 to bein excess of these levels due to the timing of payments and higher averageoutstanding borrowings projected for the full year.  We have not made significant cash tax payments during the threemonth periods ended March 31, 2004 and 2003 and, due to available netoperating loss and AMT tax credit carryforwards, we do not anticipate makingsignificant cash tax payments in the remainder of 2004.  Total supervisory fee expenses for theseservices for the three month periods ended March 31, 2004 and 2003amounted to $0.7 million and $0.7 million, respectively, under the Company’s 25year Amended and Restated Supervisory Agreement with Peter Morton.  The supervisory fee is equal to two percentof annual gross revenues (as defined), net of complimentaries for each year.

 

Ourability to service our contractual obligations and commitments will bedependent on our future performance, which will be affected by, among otherthings, prevailing economic conditions and financial, business and otherfactors, certain of which are beyond our control.

 

TheCompany is a defendant in various lawsuits relating to routine mattersincidental to its business.  Managementprovides an accrual for estimated losses that may occur and does not believethat the outcome of any pending claims or litigation, in the aggregate, willhave a material adverse effect on the Company’s financial position, results ofoperations or liquidity.

 

CRITICALACCOUNTING POLICIES

 

Therehave been no changes in the Company’s critical accounting policies from thosedescribed in the Company’s most recently filed Form 10-K.

 

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Item 3.                                                     Quantitative and Qualitative Disclosures AboutMarket Risk

 

Marketrisks relating to our operations result primarily from changes in short-termLIBOR interest rates.  We do not haveany foreign exchange or other significant market risk.  We did not have any derivative financialinstruments at March 31, 2004.

 

Ourexposure to market risk for changes in interest rates relates primarily to ourcurrent Facility.  In accordance withthe Facility, we enter into variable rate debt obligations to support generalcorporate purposes, including capital expenditures and working capitalneeds.  We continuously evaluate ourlevel of variable rate debt with respect to total debt and other factors,including assessment of the current and future economic environment.

 

We had $20.0 million in variable rate debtoutstanding at March 31, 2004 and December 31, 2003.  Based upon these variable rate debt levels,a hypothetical 10% adverse change in the effective interest rate (approximatelya 44 basis point increase) would increase interest expense by approximately$0.1 million on an annual basis, and likewise decrease our earnings and cashflows.  We cannot predict marketfluctuations in interest rates and their impact on our variable rate debt, norcan there be any assurance that fixed rate long-term debt will be available tous at favorable rates, if at all. Consequently, future results may differ materially from the estimatedadverse changes discussed above.

 

Thefair value of the Company’s $140 million of 8.875% Second Lien Notes, which aredue in 2013 and are publicly traded, approximated $149.8 million atMarch 31, 2004 based on published bid prices.  The fair value of the Company’s $50.0 million of Junior Notescannot be estimated as they are held by Mr. Morton or affiliates of Mr. Mortonand there is no established market nor published bid prices.

 

Item 4.  Controls and Procedures

 

 (a) Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s ChiefExecutive Officer and Chief Financial Officer, has evaluated the effectivenessof the Company’s disclosure controls and procedures (as such term is defined inRules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, asamended (the “Exchange Act”)) as of the end of the period covered by thisreport.  Based on such evaluation, theCompany’s Chief Executive Officer and Chief Financial Officer have concludedthat, as of the end of such period, the Company’s disclosure controls andprocedures are effective in recording, processing, summarizing and reporting,on a timely basis, information required to be disclosed by the Company in thereports that it files or submits under the Exchange Act.

 

(b)  Internal Control Over FinancialReporting.  There have not been anychanges in the Company’s internal control over financial reporting (as suchterm is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) duringthe fiscal quarter to which this report relates that have materially affected,or are reasonably likely to materially affect, the Company’s internal controlover financial reporting.

 

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PART II    OTHER INFORMATION

 

Item 1.                 Legal Proceedings

 

During January 2004, the Nevada GamingCommission served us with a complaint for disciplinary action pursuant to NRS463.310(2) and NRS 463.312 charging violations of the Nevada Gaming Control Actand State Gaming Control Board and Nevada Gaming Commission Regulations.  The complaint contains three counts eachcarrying a penalty of up to $100,000. Subsequent to March 31, 2004, the Company tentatively agreed to pay theState $300,000 related to the complaint.

 

Item 6.                                                   Exhibits and Reports on Form 8-K

 

(a)                                  Exhibits

 
| **EXHIBIT NUMBER** |   | **DESCRIPTION**                                                                                                                                                                                                 |
|--------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |   |                                                                                                                                                                                                            |
| 3.                 |   | CERTIFICATE OF INCORPORATION AND BY-LAWS                                                                                                                                                                        |
|               |   |                                                                                                                                                                                                            |
| (1)3.1             |   | Second Amended and Restated Certificate  of Incorporation of the Company.                                                                                                                                       |
|               |   |                                                                                                                                                                                                            |
| (2)3.2             |   | Certificate of Amendment of Second  Amended and Restated Articles of Incorporation.                                                                                                                             |
|               |   |                                                                                                                                                                                                            |
| (1)3.3             |   | Second Amended and Restated By-Laws of  the Company                                                                                                                                                             |
|               |   |                                                                                                                                                                                                            |
| 4.                 |   | INSTRUMENTS DEFINING THE RIGHT OF  SECURITY HOLDERS, INCLUDING INDENTURES.                                                                                                                                      |
|               |   |                                                                                                                                                                                                            |
| (5)4.1             |   | Indenture dated as of May 30, 2003, by  and between the Company and U.S. Bank National Association, as trustee,  relating to the 8 7/8% Second Lien Notes due 2013.                                             |
|               |   |                                                                                                                                                                                                            |
| (5)4.2             |   | Form  of Global 8 7/8% Second Lien Notes due 2013 (included in Exhibit 4.1)                                                                                                                                     |
|               |   |                                                                                                                                                                                                            |
| (5)4.3             |   | Registration  Rights Agreement, dated as of May 30, 2003, by and between the Company  and Banc of America Securities LLC, as representative of the Initial  Purchasers.                                    |
|               |   |                                                                                                                                                                                                            |
| (5)4.4             |   | Intercreditor  Agreement, dated as of May 30, 2003, among the Company, U.S. Bank, N.A.  and Bank of America, N.A.                                                                                          |
|               |   |                                                                                                                                                                                                            |
| (5)4.5             |   | Form  of Junior Subordinated Notes.                                                                                                                                                                             |
|               |   |                                                                                                                                                                                                            |
| (7)4.6             |   | First  Supplemental Indenture to Indenture, dated as of November 20, 2003, by  and between the Company and U.S. Bank National Association, as trustee,  relating to the 87/8% Second Lien Notes due 2013.  |
|               |   |                                                                                                                                                                                                            |
| (7)4.7             |   | Second  Supplemental Indenture to Indenture, dated as of November 24, 2003, by  and between the Company and U.S. Bank National Association, as trustee,  relating to the 87/8% Second Lien Notes due 2013. |
|               |   |                                                                                                                                                                                                            |
| 9.                 |   | VOTING TRUST AGREEMENTS.                                                                                                                                                                                        |
|               |   |                                                                                                                                                                                                            |
| (1)9.1             |   | Amendment, dated as of July 1, 1997  to Stockholder Agreement, dated August 30, 1993, among the Company and  certain stockholders listed therein.                                                     |
|               |   |                                                                                                                                                                                                            |
| (1)9.2             |   | Stockholder Agreement, dated as of  August 30, 1993, among the Company and certain stockholders listed  therein.                                                                                           |
|               |   |                                                                                                                                                                                                            |
| 10.                |   | MATERIAL CONTRACTS.                                                                                                                                                                                             |
|               |   |                                                                                                                                                                                                            |
| (5)10.1            |   | Credit  Agreement, dated as of May 30, 2003, between the Company, Bank of  America, N.A. and the lenders referred to therein.                                                                              |
|               |   |                                                                                                                                                                                                            |
| (5)10.2            |   | Second  Lien Notes Security Agreement, dated as of May 30, 2003, between the  Company and U.S. Bank, N.A.                                                                                                  |
|               |   |                                                                                                                                                                                                            |
| (5)10.3            |   | Second  Lien Notes Trademark Security Interest Assignment, dated as of May 30,  2003, between the Company and U.S. Bank, N.A.                                                                              |
|               |   |                                                                                                                                                                                                            |
| (5)10.4            |   | Second  Lien Notes Copyright Security Interest Assignment, dated as of May 30,  2003, between the Company and U.S. Bank, N.A.                                                                              |
|               |   |                                                                                                                                                                                                            |
| (5)10.5            |   | Exchange  Agreement, dated as of May 30, 2003, between the Company, Peter A.  Morton and Desert Rock, Inc.                                                                                                 |
|               |   |                                                                                                                                                                                                            |
| (1)10.6            |   | Amended  and Restated Supervisory Agreement, dated as of October 21, 1997,  between the Company and Peter A. Morton.                                                                                       |
|               |   |                                                                                                                                                                                                            |
| (3)10.7            |   | Employment  Agreement, dated November 8, 2000, between the Company and James D.  Bowen.                                                                                                                    |
|               |   |                                                                                                                                                                                                            |
| (4)10.8            |   | Amendment  to Employment Agreement, dated September 7, 2001, between the Company  and James D. Bowen.                                                                                                      |

 

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| (1)10.9  |   | Trademark  Sublicense Agreement, dated October 24, 1997, between the Company and  Peter A. Morton.                                                                                   |
|----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                                                                      |
| (1)10.10 |   | Amendment  No. 1 to Trademark Sublicense Agreement, dated as of March 23, 1998,  between the Company and Peter A. Morton.                                                            |
|     |   |                                                                                                                                                                                      |
| (5)10.11 |   | Amendment  No. 2 to Trademark Sublicense Agreement, dated as of May 30, 2003,  between the Company and Peter A. Morton.                                                              |
|     |   |                                                                                                                                                                                      |
| (5)10.12 |   | Security  Agreement, dated as of May 30, 2003, between the Company, Bank of  America, N.A. and the lenders referred to therein.                                                      |
|     |   |                                                                                                                                                                                      |
| (5)10.13 |   | Trademark  Security Interest Assignment, dated as of May 30, 2003, between the  Company and Bank of America, N.A.                                                                    |
|     |   |                                                                                                                                                                                      |
| (5)10.14 |   | Copyright  Security Interest Assignment, dated as of May 30, 2003, between the  Company and Bank of America, N.A.                                                                    |
|     |   |                                                                                                                                                                                      |
| (5)10.15 |   | Form  of Hard Rock Hotel, Inc. 1999 Performance Awards Plan                                                                                                                               |
|     |   |                                                                                                                                                                                      |
| (6)10.16 |   | Employment  Agreement, dated June 19, 2003, between the Company and Kevin Kelley                                                                                                     |
|     |   |                                                                                                                                                                                      |
| 31.      |   | CERTIFICATIONS.                                                                                                                                                                           |
|     |   |                                                                                                                                                                                      |
| 31.1     |   | Certification of Chief Executive Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                  |
|     |   |                                                                                                                                                                                      |
| 31.2     |   | Certification of Chief Financial Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                  |
|     |   |                                                                                                                                                                                      |
| 32.1     |   | Certification of Chief Executive Officer  and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

 

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(1)                                  Incorporated by reference to designatedexhibit to our Registration Statement on Form S-4, filed with the Securities andExchange Commission on May 21, 1998 (File No. 333- 53211).

 

(2)                                  Incorporated by reference to designatedexhibit to our Report on Form 10-Q, filed with the Securities and ExchangeCommission for the quarter ended August 31, 1999 (File No. 333-53211).

 

(3)                                  Incorporated by reference to designatedexhibit to our Report on Form 10-Q, filed with the Securities and ExchangeCommission for the quarter ended September 30, 2000 (File No. 333-53211).

 

(4)                                  Incorporated by reference to designatedexhibit to our Report on Form 10-Q, filed with the Securities and ExchangeCommission for the quarter ended September 30, 2001 (File No. 333-53211).

 

(5)                                  Incorporated by reference to designatedexhibit to our Registration Statement on Form S-4, filed with the Securitiesand Exchange Commission on July 8, 2003 (File No. 333- 106863).

 

(6)                                  Incorporated by reference to designatedexhibit to our Report on Form 10-Q, filed with the Securities and ExchangeCommission for the quarter ended June 30, 2003 (File No. 333-53211).

 

(7)                                  Incorporated by reference to designatedexhibit to our Registration Statement on Amendment No. 1 to Form S-4, filedwith the Securities and Exchange Commission on November 26, 2003 (File No.333- 106863).

 

(b)                                 Reports on Form 8-K

 

(1)           Current Report ofForm 8-K, dated March 9, 2004 (date of earliest reported event), filed on March10, 2004, for the purpose of reporting under Item 12, Hard Rock Hotel’s resultsof operations for the three and twelve month periods ended December 31, 2003.

 

(2)           Current Report on Form 8-K, dated May5, 2004 (date of earliest event reported), filed on May 6, 2004, for thepurpose of reporting under Item 12, Hard Rock Hotel’s results of operations forthe quarter ended March 31, 2004.

 

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SIGNATURES

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, as amended, the Registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.

 

 
|                          | HARD ROCK HOTEL, INC.                                      |
|-------------------------------|------------------------------------------------------------|
|                          |                                                       |
| Date:  May 17, 2004 | /s/ JAMES D. BOWEN                                         |   |
|                          | James D. Bowen                                             |
|                          | CHIEF FINANCIAL OFFICER                                    |
|                          | (PRINCIPAL FINANCIAL OFFICER AND DULY  AUTHORIZED OFFICER) |

 

16

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Exhibit Index

 
| **EXHIBIT  NUMBER** |   | **DESCRIPTION**                                                                                                                                                                                                 |
|---------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                            |
| 3.                  |   | CERTIFICATE OF INCORPORATION AND BY-LAWS                                                                                                                                                                        |
|                |   |                                                                                                                                                                                                            |
| (1)3.1              |   | Second Amended and Restated Certificate  of Incorporation of the Company.                                                                                                                                       |
|                |   |                                                                                                                                                                                                            |
| (2)3.2              |   | Certificate of Amendment of Second  Amended and Restated Articles of Incorporation.                                                                                                                             |
|                |   |                                                                                                                                                                                                            |
| (1)3.3              |   | Second Amended and Restated By-Laws of the  Company                                                                                                                                                             |
|                |   |                                                                                                                                                                                                            |
| 4.                  |   | INSTRUMENTS DEFINING THE RIGHT OF  SECURITY HOLDERS, INCLUDING INDENTURES.                                                                                                                                      |
|                |   |                                                                                                                                                                                                            |
| (5)4.1              |   | Indenture dated as of May 30, 2003, by  and between the Company and U.S. Bank National Association, as trustee,  relating to the 8 7/8% Second Lien Notes due 2013.                                             |
|                |   |                                                                                                                                                                                                            |
| (5)4.2              |   | Form  of Global 8 7/8% Second Lien Notes due 2013 (included in Exhibit 4.1)                                                                                                                                     |
|                |   |                                                                                                                                                                                                            |
| (5)4.3              |   | Registration  Rights Agreement, dated as of May 30, 2003, by and between the Company  and Banc of America Securities LLC, as representative of the Initial  Purchasers.                                    |
|                |   |                                                                                                                                                                                                            |
| (5)4.4              |   | Intercreditor  Agreement, dated as of May 30, 2003, among the Company, U.S. Bank, N.A.  and Bank of America, N.A.                                                                                          |
|                |   |                                                                                                                                                                                                            |
| (5)4.5              |   | Form  of Junior Subordinated Notes.                                                                                                                                                                             |
|                |   |                                                                                                                                                                                                            |
| (7)4.6              |   | First  Supplemental Indenture to Indenture, dated as of November 20, 2003, by  and between the Company and U.S. Bank National Association, as trustee,  relating to the 87/8% Second Lien Notes due 2013.  |
|                |   |                                                                                                                                                                                                            |
| (7)4.7              |   | Second  Supplemental Indenture to Indenture, dated as of November 24, 2003, by  and between the Company and U.S. Bank National Association, as trustee,  relating to the 87/8% Second Lien Notes due 2013. |
|                |   |                                                                                                                                                                                                            |
| 9.                  |   | VOTING TRUST AGREEMENTS.                                                                                                                                                                                        |
|                |   |                                                                                                                                                                                                            |
| (1)9.1              |   | Amendment, dated as of July 1, 1997  to Stockholder Agreement, dated August 30, 1993, among the Company and  certain stockholders listed therein.                                                     |
|                |   |                                                                                                                                                                                                            |
| (1)9.2              |   | Stockholder Agreement, dated as of  August 30, 1993, among the Company and certain stockholders listed  therein.                                                                                           |
|                |   |                                                                                                                                                                                                            |
| 10.                 |   | MATERIAL CONTRACTS.                                                                                                                                                                                             |
|                |   |                                                                                                                                                                                                            |
| (5)10.1             |   | Credit  Agreement, dated as of May 30, 2003, between the Company, Bank of  America, N.A. and the lenders referred to therein.                                                                              |
|                |   |                                                                                                                                                                                                            |
| (5)10.2             |   | Second  Lien Notes Security Agreement, dated as of May 30, 2003, between the  Company and U.S. Bank, N.A.                                                                                                  |
|                |   |                                                                                                                                                                                                            |
| (5)10.3             |   | Second  Lien Notes Trademark Security Interest Assignment, dated as of May 30,  2003, between the Company and U.S. Bank, N.A.                                                                              |
|                |   |                                                                                                                                                                                                            |
| (5)10.4             |   | Second  Lien Notes Copyright Security Interest Assignment, dated as of May 30,  2003, between the Company and U.S. Bank, N.A.                                                                              |
|                |   |                                                                                                                                                                                                            |
| (5)10.5             |   | Exchange  Agreement, dated as of May 30, 2003, between the Company, Peter A.  Morton and Desert Rock, Inc.                                                                                                 |
|                |   |                                                                                                                                                                                                            |
| (1)10.6             |   | Amended  and Restated Supervisory Agreement, dated as of October 21, 1997,  between the Company and Peter A. Morton.                                                                                       |
|                |   |                                                                                                                                                                                                            |
| (3)10.7             |   | Employment  Agreement, dated November 8, 2000, between the Company and James D.  Bowen.                                                                                                                    |
|                |   |                                                                                                                                                                                                            |
| (4)10.8             |   | Amendment  to Employment Agreement, dated September 7, 2001, between the Company  and James D. Bowen.                                                                                                      |

 

17

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| (1)10.9  |   | Trademark  Sublicense Agreement, dated October 24, 1997, between the Company and  Peter A. Morton.                                                                                   |
|----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                                                                      |
| (1)10.10 |   | Amendment  No. 1 to Trademark Sublicense Agreement, dated as of March 23, 1998,  between the Company and Peter A. Morton.                                                            |
|     |   |                                                                                                                                                                                      |
| (5)10.11 |   | Amendment  No. 2 to Trademark Sublicense Agreement, dated as of May 30, 2003,  between the Company and Peter A. Morton.                                                              |
|     |   |                                                                                                                                                                                      |
| (5)10.12 |   | Security  Agreement, dated as of May 30, 2003, between the Company, Bank of  America, N.A. and the lenders referred to therein.                                                      |
|     |   |                                                                                                                                                                                      |
| (5)10.13 |   | Trademark  Security Interest Assignment, dated as of May 30, 2003, between the  Company and Bank of America, N.A.                                                                    |
|     |   |                                                                                                                                                                                      |
| (5)10.14 |   | Copyright  Security Interest Assignment, dated as of May 30, 2003, between the  Company and Bank of America, N.A.                                                                    |
|     |   |                                                                                                                                                                                      |
| (5)10.15 |   | Form  of Hard Rock Hotel, Inc. 1999 Performance Awards Plan                                                                                                                               |
|     |   |                                                                                                                                                                                      |
| (6)10.16 |   | Employment  Agreement, dated June 19, 2003, between the Company and Kevin Kelley                                                                                                     |
|     |   |                                                                                                                                                                                      |
| 31.      |   | CERTIFICATIONS.                                                                                                                                                                           |
|     |   |                                                                                                                                                                                      |
| 31.1     |   | Certification of Chief Executive Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                  |
|     |   |                                                                                                                                                                                      |
| 31.2     |   | Certification of Chief Financial Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                  |
|     |   |                                                                                                                                                                                      |
| 32.1     |   | Certification of Chief Executive Officer  and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

 

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(1)                                  Incorporated by reference to designatedexhibit to our Registration Statement on Form S-4, filed with the Securitiesand Exchange Commission on May 21, 1998 (File No. 333- 53211).

 

(2)                                  Incorporated by reference to designatedexhibit to our Report on Form 10-Q, filed with the Securities and ExchangeCommission for the quarter ended August 31, 1999 (File No. 333-53211).

 

(3)                                  Incorporated by reference to designatedexhibit to our Report on Form 10-Q, filed with the Securities and ExchangeCommission for the quarter ended September 30, 2000 (File No. 333-53211).

 

(4)                                  Incorporated by reference to designatedexhibit to our Report on Form 10-Q, filed with the Securities and ExchangeCommission for the quarter ended September 30, 2001 (File No. 333-53211).

 

(5)                                  Incorporated by reference to designatedexhibit to our Registration Statement on Form S-4, filed with the Securitiesand Exchange Commission on July 8, 2003 (File No. 333- 106863).

 

(6)                                  Incorporated by reference to designatedexhibit to our Report on Form 10-Q, filed with the Securities and ExchangeCommission for the quarter ended June 30, 2003 (File No. 333-53211).

 

(7)                                  Incorporated by reference to designatedexhibit to our Registration Statement on Amendment No. 1 to Form S-4, filedwith the Securities and Exchange Commission on November 26, 2003 (File No.333- 106863).

 

18

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