**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-Q**

 

**ý****QUARTERLY REPORT UNDER SECTION 13 OR 15(d)**

**OF THE SECURITIES EXCHANGE ACT OF 1934**

 

For the quarterly periodended: June 30, 2002

 

OR

 

**o****TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d)**

**OF THE SECURITIESEXCHANGE ACT OF 1934**

 

For the transitionperiod from                            to

 

 

Commission file number333-53211

 

**Hard Rock Hotel, Inc.**

(Exact name ofregistrant as specified in its charter)

 

| **Nevada**                                |   | **88-0306263**      |
|-------------------------------------------|--------|---------------------|
| (State or other  jurisdiction of          |   | (I.R.S. Employer    |
| incorporation or  organization)           |   | 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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Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ý No o

 

 

APPLICABLE ONLY TOCORPORATE ISSUERS:

 

Indicatethe number of shares outstanding of each of the issuer’s classes of commonstock, as of the latest practicable date.

 

Common Stock outstandingby class as of August 12, 2001

 

| **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                                                                                                   |                |   |
|    |                  |                                                                                                                   |                |   |
|    |                  | Condensed Balance Sheets as of June 30, 2002  (unaudited) and December 31, 2001                                   |                |   |
|    |                  |                                                                                                                   |                |   |
|    |                  | Condensed Statements  of Operations for the three-month and six-month periods ended June 30, 2002  and 2001(unaudited) |                |   |
|    |                  |                                                                                                                   |                |   |
|    |                  | Condensed Statements  of Cash Flows for the six-month period ended June 30, 2002 and 2001  (unaudited)                 |                |   |
|    |                  |                                                                                                                   |                |   |
|    |                  | Notes to Condensed Financial Statements  Unaudited                                                                     |                |   |
|    |                  |                                                                                                                   |                |   |
| Item 2. |                  | Management’s Discussion and Analysis of  Financial Condition and Results of Operations                            |                |   |
|    |                  |                                                                                                                   |                |   |
| Item 3. |                  | Quantitative and Qualitative Disclosures about  Market Risk                                                            |                |   |
|    |                  |                                                                                                                   |                |   |
| PART II | OTHER INFORMATION     |                                                                                                                   |                |
|    |                  |                                                                                                                   |                |   |
| Item 1. |                  | Legal Proceedings                                                                                                      |                |   |
|    |                  |                                                                                                                   |                |   |
| Item 6: |                  | Exhibits and Reports on Form 8-K                                                                                       |                |   |
|    |                  |                                                                                                                   |                |   |
|    |                  | (a)                                                                                                                    | Exhibits            |   |   |
|    |                  |                                                                                                                   |                |   |
|    |                  | (b)                                                                                                                    | Reports on Form 8-K |   |   |
|         |                       |                                                                                                                        |                     |  |  |  |

 

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Part I       FINANCIAL INFORMATION

 

Item1.    Financial Statements

 

HARD ROCK HOTEL, INC.

CONDENSED BALANCE SHEETS(unaudited)

(in thousands, exceptshare amounts)

ASSETS
|                                                                                                                                       |   | **June 30,** |    | **December  31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|-------------------|--------|
|                                                                                                                                       |   | **2002**     |    | **2001**          |   |
| Current assets:                                                                                                                            |   |         |    |              |   |
| Cash and cash  equivalents                                                                                                                 |   | $            | 9,151   |              | $      | 8,591 |   |
| Accounts  receivable, net of allowance for doubtful accounts of $1,716 and $1,904 as of  June 30, 2002 and December 31, 2001, respectively |   | 6,045        |    | 5,445             |   |
| Inventories                                                                                                                                |   | 1,463        |    | 1,640             |   |
| Prepaid expenses  and other current assets                                                                                                 |   | 566          |    | 358               |   |
| Deferred income  taxes                                                                                                                     |   | 881          |    | 881               |   |
| Total current  assets                                                                                                                      |   | 18,106       |    | 16,915            |   |
|                                                                                                                                       |   |         |    |              |   |
| Property and  equipment, net of accumulated depreciation and amortization                                                                  |   | 166,439      |    | 169,357           |   |
|                                                                                                                                       |   |         |    |              |   |
| Other assets                                                                                                                               |   | 3,302        |    | 3,503             |   |
|                                                                                                                                       |   |         |    |              |   |
| TOTAL ASSETS                                                                                                                               |   | $            | 187,847 |              | $      | 189,775 |   |
|                                                                                                                                       |   |         |    |              |   |
| Current  liabilities:                                                                                                                      |   |         |    |              |   |
|                                                                                                                                       |   |         |    |              |   |
| Accounts payable                                                                                                                           |   | $            | 2,540   |              | $      | 2,160 |   |
| Construction  related payables                                                                                                             |   | —       |    | 2,024             |   |
| Related party  payable                                                                                                                     |   | 294          |    | 300               |   |
| Accrued expenses                                                                                                                           |   | 11,088       |    | 11,419            |   |
| Interest payable                                                                                                                           |   | 2,942        |    | 2,963             |   |
| Current portion  of long-term debt                                                                                                         |   | 1,046        |    | 424               |   |
| Total current  liabilities                                                                                                                 |   | 17,910       |    | 19,290            |   |
|                                                                                                                                       |   |         |    |              |   |
| Deferred income  taxes                                                                                                                     |   | 678          |    | 678               |   |
| Long-term debt                                                                                                                             |   | 142,458      |    | 148,259           |   |
| Total long-term  liabilities                                                                                                               |   | 143,136      |    | 148,937           |   |
| Total  liabilities                                                                                                                         |   | 161,046      |    | 168,227           |   |
|                                                                                                                                       |   |         |    |              |   |
| Commitments and  contingencies                                                                                                             |   |         |    |              |   |
|                                                                                                                                       |   |         |    |              |   |
| Preferred stock,  9 1⁄4% Series A Cumulative, no par value, redeemable, 40,000 shares authorized,  28,000 shares issued and outstanding |   | 35,744       |    | 34,167            |   |
| Preferred stock,  9 1⁄4% Series B Cumulative, no par value, redeemable, one share authorized,  issued and outstanding                   |   | 24,154       |    | 23,088            |   |
|                                                                                                                                       |   |         |    |              |   |
| Shareholders’  deficit:                                                                                                               |   |         |    |              |   |
| 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                                                                                                                       |   | (40,605      | )       | (43,215           | )      |
| Total  shareholders’ deficiency                                                                                                       |   | (33,097      | )       | (35,707           | )      |
|                                                                                                                                       |   |         |    |              |   |
| TOTAL  LIABILITIES AND SHAREHOLDERS’ DEFICIENCY                                                                                       |   | $            | 187,847 |              | $      | 189,775 |   |

 

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

 

 

3

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HARD ROCK HOTEL, INC.

CONDENSED STATEMENTS OFOPERATIONS

(in thousands, exceptshare and per share amounts)

(unaudited)

 

 
|                                                  |   | **Three  months Ended   June 30** |       | **Six months  Ended   June 30** |       |
|-------------------------------------------------------|--------|-----------------------------------|------------|---------------------------------|------------|
|                                                  |   | **2002**                          |       | **2001**                        |       | **2002** |   | **2001** |   |
| Revenue:                                              |   |                              |       |                            |       |   |   |   |   |
| Casino                                                |   | $                                 | 13,753     |                            | $          | 13,528 |   | $ | 27,146 |   | $ | 26,108 |   |
| Lodging                                               |   | 7,209                             |       | 7,234                           |       | 13,822 |   | 14,409 |   |
| Food and  beverage                                    |   | 11,658                            |       | 10,259                          |       | 21,618 |   | 20,189 |   |
| Retail                                                |   | 2,384                             |       | 2,337                           |       | 4,625 |   | 4,641 |   |
| Other income                                          |   | 1,964                             |       | 1,928                           |       | 3,616 |   | 3,663 |   |
| Gross revenues                                        |   | 36,968                            |       | 35,286                          |       | 70,827 |   | 69,010 |   |
| Less:  promotional allowances                    |   | (2,820                            | )          | (2,567                          | )          | (5,363 | ) | (5,398 | ) |
| Net revenues                                          |   | 34,148                            |       | 32,719                          |       | 65,464 |   | 63,612 |   |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| Costs and  expenses:                                  |   |                              |       |                            |       |   |   |   |   |
| Casino                                                |   | 8,452                             |       | 8,199                           |       | 16,264 |   | 15,639 |   |
| Lodging                                               |   | 1,783                             |       | 1,939                           |       | 3,517 |   | 3,655 |   |
| Food and  beverage                                    |   | 5,557                             |       | 5,206                           |       | 10,587 |   | 10,241 |   |
| Retail                                                |   | 989                               |       | 965                             |       | 1,998 |   | 1,997 |   |
| Other                                                 |   | 1,047                             |       | 956                             |       | 1,918 |   | 1,769 |   |
| Marketing                                             |   | 1,658                             |       | 1,069                           |       | 3,597 |   | 2,432 |   |
| Related party  expenses                               |   | 888                               |       | 948                             |       | 1,778 |   | 1,829 |   |
| General and  administrative                           |   | 4,058                             |       | 4,129                           |       | 8,191 |   | 8,315 |   |
| Depreciation and  amortization                        |   | 2,744                             |       | 3,085                           |       | 5,657 |   | 6,063 |   |
| Total costs and  expenses                             |   | 27,176                            |       | 26,496                          |       | 53,507 |   | 51,940 |   |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| Income from  operations                               |   | 6,972                             |       | 6,223                           |       | 11,957 |   | 11,672 |   |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| Other income  (expense):                              |   |                              |       |                            |       |   |   |   |   |
| Interest  expense, net                                |   | (3,285                            | )          | (3,635                          | )          | (6,660 | ) | (7,843 | ) |
| Other, net                                            |   | 44                                |       | —                          |       | (44 | ) | — |   |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| Income before  provision for income taxes             |   | 3,731                             |       | 2,588                           |       | 5,253 |   | 3,829 |   |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| Income tax  provision                                 |   | —                            |       | 239                             |       | — |   | 239 |   |
| NET INCOME                                            |   | 3,731                             |       | 2,349                           |       | 5,253 |   | 3,590 |   |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| Preferred stock  dividends                            |   | (1,337                            | )          | (1,215                          | )          | (2,643 | ) | (2,399 | ) |
| Income  applicable to common shareholders             |   | $                                 | 2,394      |                            | $          | 1,134 |   | $ | 2,610 |   | $ | 1,191 |   |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| BASIC AND  DILUTED NET INCOME PER SHARE:              |   |                              | ** ** |                            | ** ** |   | ** ** |   | ** ** |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| Applicable to  common shareholders                    |   | $                                 | 31.49      |                            | $          | 14.92 |   | $ | 34.33 |   | $ | 15.67 |   |
|                                                  |   |                              |       |                            |       |   |   |   |   |
| Weighted average  number of common shares outstanding |   | 76,023                            |       | 76,023                          |       | 76,023 |   | 76,023 |   |

 

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

 

 

4

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HARD ROCK HOTEL, INC.

CONDENSED STATEMENTS OFCASH FLOWS

(in thousands, exceptsupplemental schedule)

(unaudited)

 

|                                                                                         |   | **Six Months  Ended   June 30,** |   |
|----------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                         |   | **2002**                         |   | **2001** |   |
| Cash flows from  operating activities:                                                       |   |                             |   |   |   |
| Net income                                                                                   |   | $                                | 5,253  |   | $ | 3,590 |   |
| Adjustments to  reconcile net income to net cash provided by (used in) operating activities: |   |                             |   |   |   |
| Depreciation and  amortization                                                               |   | 5,657                            |   | 6,063 |   |
| Provision for  losses on accounts Receivable                                                 |   | (21                              | )      | 847 |   |
| Amortization of  loan fees                                                                   |   | 369                              |   | 580 |   |
| Loss on sales of  property and Equipment                                                     |   | 44                               |   | — |   |
| Changes in  operating assets and liabilities:                                                |   |                             |   |   |   |
| Accounts  receivable                                                                         |   | (579                             | )      | 456 |   |
| Inventories                                                                                  |   | 177                              |   | 216 |   |
| Prepaid expenses  and other current assets                                                   |   | (208                             | )      | 463 |   |
| Accounts payable                                                                             |   | 380                              |   | (605 | ) |
| Related party  payable                                                                       |   | (6                               | )      | 58 |   |
| Accrued expenses                                                                             |   | (331                             | )      | (3,426 | ) |
| Interest payable                                                                             |   | (21                              | )      | 15 |   |
| Net cash  provided by (used in) operating activities                                         |   | 10,714                           |   | 8,257 |   |
| Cash flow from  investing activities:                                                        |   |                             |   |   |   |
| Purchases of  property and equipment                                                         |   | (1,725                           | )      | (1,626 | ) |
| Proceeds from  sales of property and Equipment                                               |   | 52                               |   | 77 |   |
| Construction  payables                                                                       |   | (2,024                           | )      | (2,180 | ) |
| Decrease  (increase) in other assets                                                         |   | (168                             | )      | (154 | ) |
| Net cash  provided by (used in) investing activities                                         |   | (3,865                           | )      | (3,883 | ) |
|                                                                                         |   |                             |   |   |   |
| Cash flows from  financing activities:                                                       |   |                             |   |   |   |
| Principal  payments on long-term debt                                                        |   | (6,289                           | )      | (4,600 | ) |
| Net cash  provided by (used in) financing activities                                         |   | (6,289                           | )      | (4,600 | ) |
|                                                                                         |   |                             |   |   |   |
| Net increase  (decrease) in cash and cash Equivalents                                        |   | 560                              |   | (226 | ) |
| Cash and cash  equivalents, beginning of Period                                              |   | 8,591                            |   | 7,979 |   |
| Cash and cash  equivalents, end of period                                                    |   | $                                | 9,151  |   | $ | 7,753 |   |
|                                                                                         |   |                             |   |   |   |
| Supplemental  disclosures of cash flow information:                                          |   |                             |   |   |   |
| Cash paid during  the period for interest                                                    |   | $                                | 6,313  |   | $ | 7,248 |   |
| Cash paid  (received) during the period for income taxes, net                                |   | $                                | — |   | $ | 232 |   |
|                                                                                         |   |                             |   |   |   |

 

 

5

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HARD ROCK HOTEL, INC.

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

 

SupplementalSchedule of Non-Cash Investing and Financing Activities:

 

                The value of the 9 1/4% Series ACumulative Preferred Stock increased by approximately $1,577,000 and $1,432,000in unpaid accrued dividends for the three-month periods ended June 30, 2002 and2001, respectively.

 

 

                The value of the 9 1/4% Series BCumulative Preferred Stock increased by approximately $1,066,000 and $967,000in unpaid accrued dividends for the three-month periods ended June 30, 2002 and2001, respectively.

 

TheCompany purchased $1,110,000 of equipment in exchange for indebtedness for thethree-month period ended June 30, 2002.

 

 

 

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

 

 

 

6

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1.             BASIS OF PRESENTATION

 

**                The accompanying unauditedfinancial statements of Hard Rock Hotel, Inc. (the “Company”) have beenprepared in accordance with generally accepted accounting principles forinterim financial information and with instructions to Form 10-Q and Article 10of Regulation S-X.   Accordingly,certain notes and other information have been condensed or omitted from theinterim financial statements presented in this Quarterly Report on Form 10-Qand they do not include all information required by generally acceptedaccounting principles for complete financial statements.  In the opinion of management, alladjustments (consisting of normal recurring adjustments) considered necessaryfor a fair presentation have been included. The preparation of financial statements in conformity with generallyaccepted accounting principles requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the amounts of revenues and expenses during the reportingperiod.  Actual results could differfrom these estimates.  Operating resultsfor the three-month and six-month periods ended June 30, 2002 are notnecessarily indicative of future financial results or the results that may beexpected for the year ending December 31, 2002.  The unaudited interim financial statements contained hereinshould be read in conjunction with the audited financial statements and footnotesfor the year ended December 31, 2001. The Company has made certain financial statement reclassifications forthe 2001 financial statements in order to classify amounts in a mannerconsistent with the 2002 financial statements which have had no effect upon netincome.**

** **

** **

2.             LONG-TERM DEBT

 

                InMarch 1998, the Company offered $120 million aggregate principal amount of its9.25%, Senior Subordinated Notes due in 2005 (the “Notes”).  Concurrent with the execution of the Notes,the Company secured a senior secured reducing revolving line of credit under anew credit facility (the “Credit Facility”) through a group of banks.  As of June 30, 2002, the Company had $120.0million outstanding in Notes and $21.9 million outstanding on its CreditFacility.  In addition, the Company hasfinanced certain gaming equipment with the respective manufacturers.  As of June 30, 2002, the Company had $1.6million of gaming equipment financing outstanding.

 

Notes

 

                Interest on the Notes is payableon each April 1 and October 1.  TheNotes are general unsecured obligations of the Company, subordinated in rightof payment to all existing and future senior indebtedness, including allborrowings under the Credit Facility. The Notes are subject to redemption at the option of the Company, inwhole or in part, at any time on or after April 1, 2002, at a premium tothe face amount ($120 million) which decreases on each subsequent anniversarydate, plus accrued interest to the date of redemption.  The Notes contain covenants restricting orlimiting the ability of the Company to, among other things, pay dividends,incur additional indebtedness, issue certain preferred stock and enter intotransactions with affiliates.

 

 

7

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### Credit Facility

 

                Effective June 2000, the Companyentered into an amendment with regard to the Credit Facility whereby, amongother things the commitment amount available under the Credit Facility wasreduced to $42.0 million, the commitment further reduces by $2.0 million on thelast day of each fiscal quarter commencing March 31, 2001, and alsoreduces, beginning September 30, 2001 and on each succeeding September 30, by50% of excess cash flow, as defined, for the then most recently completedfiscal year.  Based on our calculations,we generated approximately $3.2 million excess cash flow as defined for theyear ended December 31, 2001. Accordingly, we expect the commitment will reduce by a total ofapproximately $3.6 million on September 30, 2002.

 

                Effective March 2001, theCompany entered into another amendment with regard to the Credit Facilitywhereby the $2.0 million quarterly commitment reduction was deferred tocommence with the quarter ending September 30, 2001.

 

                Effective December 2001, theCompany entered into another amendment with regard to the Credit Facilitywhereby the $2.0 million quarterly commitment reduction for the quarter endingDecember 31, 2001 was waived.

 

                The total commitment under theCredit Facility as of June 30, 2002 was $36.0 million.  The reduction provisions above shall terminateon the date upon which the commitment available under the Credit Facility isreduced to $25.0 million.  The CreditFacility expires on March 23, 2004.

 

                The Credit Facility containscertain covenants including, among other things, financial covenants, limitationson the Company from disposing of capital stock, entering into mergers andcertain acquisitions, incurring liens or indebtedness, issuing dividends onstock, and entering into transactions with affiliates.  The Credit Facility is secured by substantiallyall of the Company’s property at the Las Vegas site.  Interest on the credit facility accrues on all individualborrowings at an interest rate determined at the option of the Company, ateither the LIBOR Index plus an applicable margin (not to exceed 3.5%(applicable margin was 3.0% at June 30, 2002) and aggregating 5.1% at June 30,2002), or the Base Rate, defined as the higher of the Federal Funds Rate plus..5%, or the reference rate, as defined, plus an applicable margin (not toexceed 2.25%).  The Company chose theLIBOR Index for all borrowings outstanding at June 30, 2002.  These margins are dependent upon theCompany’s 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.

 

 

3.             LEGALAND REGULATORY PROCEEDINGS

 

                The Company is a defendant invarious lawsuits relating to routine matters incidental to its business.

 

                During July 2002, the NevadaGaming Commission served the Company with a complaint for disciplinary actionpursuant to NRS 463.310(2) and NRS 463.312 charging violations of the NevadaGaming Control Act and State Gaming Control Board and Nevada Gaming CommissionRegulations.  During July 2002, theCompany entered into a stipulated agreement for settlement with the NevadaGaming Commission and agreed to pay a fine of $100,000 which was properlyaccrued for 

 

 

8

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in the Company’s results of operationsduring the three-month period ended June 30, 2002.

 

Management providesan accrual for estimated losses that may occur and does not believe that theoutcome of any pending claims or litigation, in the aggregate, will have amaterial adverse effect on the Company’s financial position, results ofoperations or liquidity beyond the amounts recorded in the accompanying balancesheet as of June 30, 2002.

 

 

4.RECENTACCOUNTING PRONOUNCEMENTS

 

                InJune 2001, the FASB issued SFAS No. 143, Accounting for Asset RetirementObligations.  This statement addressesfinancial accounting and reporting for obligations associated with theretirement of tangible long-lived assets and the associated asset retirementcosts.  This statement applies to allentities and applies to all legal obligations associated with the retirement oflong-lived assets that result from the acquisition, construction, developmentand the normal operation of a long-lived asset, except for certain obligationsof lessees.  This statement is effectivefor our 2003 fiscal year and early adoption is permitted.  We expect to adopt this statement on January1, 2003 and do not expect the initial adoption to have a material effect on ourfinancial statements.

 

In April 2002, theFASB issued SFAS No. 145, *Rescission of FASBStatements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and TechnicalCorrections. * The most significant provisions of thisstatement relate to the rescission of Statement No. 4, *Reporting Gains and Losses from Extinguishment ofDebt*and it also amends other existing authoritative pronouncementsto make various technical corrections, clarify meanings, or describe theirapplicability under changed conditions. Under this new statement, any gain or loss on extinguishment of debt thatwas classified as an extraordinary item in prior periods presented that doesnot meet certain defined criteria must be reclassified.   Generally, SFAS No. 145 is effective forour 2003 fiscal year and may be adopted early. We expect to adopt this statement on January 1, 2003 and do not expectits adoption to have a material effect on our financial statements.

 

In June 2002, theFASB issued SFAS No. 146, Accounting for Costs Associated with Exit or DisposalActivities.  This statement addressfinancial accounting and reporting for costs associated with exit or disposalactivities and nullifies EITF No. 94-3 Liability Recognition for CertainEmployee Termination Benefits and Other Costs to Exit an Activity (includingCertain Costs Incurred in a Restructuring). The statement requires that a liability for a cost associated with anexit or disposal activity be recognized when the liability is incurred.  A fundamental conclusion reached by the FASBin this statement is than an entity’s commitment to a plan, by itself, does notcreate a present obligation to others that meets the definition of aliability.  This statement alsoestablishes that fair value is the objective for initial measurement of theliability.  The provisions of thisstatement are effective for exit or disposal activities that are initiatedafter December 31, 2002 with early application encouraged.  We currently do not expect the adoption ofthis standard to have a material impact on our financial statements.

 

9

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Item 2.    Management’sDiscussion and Analysis of Financial 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 auditedfinancial statements and footnotes for the year ended December 31, 2001, whichmay be obtained upon request from the Company.

 

 

SPECIALNOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Allstatements contained herein that are not historical facts, including but notlimited to, statements regarding our business strategies and expectationsconcerning future operations, margins, profitability, liquidity, capital expendituresand capital resources, are based on current expectations.  These statements are forward-looking innature and involve a number of risks and uncertainties.  Generally, the words “anticipates,”“believes,” “estimates,” “expects” and similar expressions as they relate tothe Company and its management are intended to identify forward-lookingstatements. Although management believes that the expectations in suchforward-looking statements are reasonable, it can give no assurance that anyforward looking statements will prove to be correct and actual results maydiffer materially. Among the factors that could cause actual results to differmaterially are the following: competition in Las Vegas, government regulationrelated to the gaming industry, uncertainty of casino customer spending andvacationing in casino resorts in Las Vegas, occupancy rates and average roomrates in Las Vegas, the popularity of Las Vegas as a convention and trade showdestination, the completion of infrastructure improvements in Las Vegas, andgeneral economic and business conditions that may affect levels of disposableincome and pricing of hotel rooms, and other factors described at various timesin the Company’s reports filed with the Securities and Exchange Commission,including further terrorist attacks such as those experienced by the Country onSeptember 11, 2001.  The Company wishesto caution readers not to place undue reliance on any forward-lookingstatements, which statements are made pursuant to the Private Litigation ReformAct of 1995.  The forward-lookingstatements contained in this quarterly report on Form 10-Q speak only as of thedate that we have filed the report. We expressly disclaim any obligation orundertaking to disseminate any updates or revisions to any forward-lookingstatement contained in this report, including to reflect any change in ourexpectations with regard to that forward-looking statement or any change inevents, conditions or circumstances on which that forward-looking statement isbased.  For more information regardingrisks inherent in an investment in the Company, see the section “Business —Risk Factors” in our annual Report on Form 10-K filed with the SEC

onApril 1, 2002.

 

 

OVERVIEW

 

HardRock Hotel, Inc.’s (the “Company”) sole business is the operation of the HardRock Hotel and Casino in Las Vegas, Nevada, which commenced operations on March9, 1995.

 

 

10

RESULTSOF OPERATIONS

 

ThreeMonths Ended June 30, 2002 and 2001

 

NET REVENUES.  Netrevenues increased 4% for the three month period ended June 30, 2002 to $34.1million compared to $32.7 million for the three month period endedJune 30, 2001.  The increase in revenuesis primarily attributable to a $1.4 million or 14% increase in food andbeverage revenues and a $0.3 million or 2% increase in casino revenues.  These increases were partially offset by a$0.2 million or 8% increase in promotional allowances related to itemsfurnished to customers on a complimentary basis.

 

CASINO REVENUES.  The $0.3 million increase in casino revenueswas primarily due to a $1.8 million or 21% increase in table game revenuesoffset partially by a $1.4 million or 30% decrease in slot machine revenues anda $0.1 million or 50% decrease in race and sports revenues.  The increase in table games revenues was dueto both an increase in table games drop and hold percentage.  Table games drop increased 15% to $78.5 millionfrom $68.2 million.  Table games holdpercentage increased 0.5 percentage points to 13.3% from 12.8%.  The average number of table games inoperations increased 11% to 93 from 84. The net result of these changes in drop, hold percentage and averagenumber of table games in operation was an increase in win per table game perday to $1,236 from $1,139, an increase of $97 or 9%.  We have historically reported table games hold percentage usingthe gross method, while casinos on the Strip report hold percentage using thenet method (which reduces the table game drop by marker repayments made in thegaming pit area).  For the purpose ofcomparison to properties on the Strip, our net hold percentage for the threemonth period ended June 30, 2002 was 16.0% compared to 14.8% for the threemonth period ended June 30, 2001.  Slotmachine revenues decreased due to a decrease in handle and win percentage.  Slot machine handle decreased 4% to $88.6million from $92.0 million.  Slotmachine net win percentage decreased 1.4 percentage points to 3.6% from5.0%.  We decreased the average numberof slot machines in operation to 566 from 643, a decrease of 77 or 12% betweencomparative periods.  The net result ofthese changes in slot machine handle, win percent and average number of slotmachines in operation was a decrease in net win per slot machine per day to $63from $80, a decrease of $17 or 21%.  The$0.1 million decrease in race and sports revenues was due primarily to adecrease in sports hold percentage.

 

LODGINGREVENUES.  Lodging revenues remainedconstant at $7.2 million between comparative periods.  Average daily room rate (“ADR”) increased to $118 from $117, anincrease of $1 or 1% while miscellaneous hotel revenues declined slightly.  The occupancy percentage remained constantbetween periods at 98%.

 

FOODAND BEVERAGE REVENUES.  The $1.4 millionincrease in food and beverage revenues was due to food revenues increasingapproximately $0.9 million and beverage revenues increasing by approximately$0.6 million.  The increase in foodrevenues was primarily due to a $0.5 million increase in banquet food revenue,$0.2 million of revenue contributed by our Starbucks coffee bar that openedduring July 2001, a $0.1 million increase in Pink Taco food revenue and a $0.1million increase in beach club food revenue. The increase in beverage revenues was primarily due to a $0.3 millionincrease in beach club beverage revenue, a $0.1 million increase in banquetbeverage revenue, a $0.1 million beverage revenue increase in each of theCenter Bar, the Las Vegas Lounge and the Pink Taco offset partially by a $0.1million decrease in service bar beverage revenue.  The increases in beach club food and beverage revenues were duein part to longer operating hours and offering weekly beach parties promoted as“Pink Beach — Women on Top.”

 

 

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RETAILREVENUES AND OTHER INCOME.  Retailrevenues and other income remained approximately constant at $1.0 million and$1.0 million, respectively, between comparative periods.

 

PROMOTIONALALLOWANCES.  Promotional allowancesincreased to $2.8 million from $2.6 million, an increase of $0.2 million or8%.  The amount of complimentary itemsoffered to table games customers is based on a percentage of the amountswagered.  The increase was due primarilyto the 15% increase in table games volume offset partially by the decrease inslot volume.

 

CASINOEXPENSES.  Casino expenses increased$0.3 million or 4% to $8.5 million from $8.2 million.  The increase was primarily due to a $0.7 million increase inplayer development marketing costs and a $0.1 million increase in the cost ofcomplimentaries furnished to customers. These increases were offset partially by a $0.3 million decrease incredit discount arrangements made with customers to promote goodwill or securetimely payment and a $0.2 million decrease in bad debt expenses related topotentially uncollectible credit extended to casino customers.  Casino expenses as a percentage of casinorevenues remained constant between comparative periods at approximately 61%.

 

LODGINGEXPENSES. Lodging expenses in relation to lodging revenues, prior toreclassifying the cost of complimentaries to casino expense, decreased to 31%from 32%, a decrease of 1 percentage points due in part to the increase in ADRwhile the occupancy percentage remained constant.

 

FOODAND BEVERAGE COSTS AND EXPENSES.  Foodand beverage costs and expenses in relation to food and beverage revenues,prior to reclassifying the cost of complimentaries to casino expense, decreasedto 56% from 59%, a decrease of 3 percentage points.  Food costs and expenses in relation to food revenues, prior toreclassifying the cost of complimentaries to casino expense, decreased to 73%from 83%, a decrease of 10 percentage points due primarily to reduced laborcosts overall, increased banquet net production revenue and higher netoperating margins by our Starbucks coffee bar that opened during July 2001compared to the overall food net operating margin.  Beverage costs and expenses in relation to beverage revenues,prior to reclassifying the cost of complimentaries to casino expense, decreasedto 42% from 43%, a decrease of 1 percentage point due primarily to higherbanquet beverage operating margins offset partially by lower Baby’s nightcluboperating margins during the current year three month period.

 

RETAILCOSTS AND EXPENSES.  Retail costs andexpenses in relation to retail revenues, prior to reclassifying the cost ofcomplimentaries to casino expense, increased to 47% from 46%, an increase of 1percentage point.  This increase was dueto an increase in the cost of retail items offset partially by decreased creditcard processing fees.

 

OTHERCOSTS AND EXPENSES.  Other costs andexpenses in relation to other income increased to 53% from 50%, an increase of3 percentage points.  The increase isprimarily due to a decrease in other revenues from gaming chips purchased bycustomers that are not expected to be redeemed and in ATM commissions for whichthere were no corresponding decreases in costs or expenses and were offsetpartially by an increase in beach club cabana rentals for which there is noincremental cost and a decrease in the cost of cigar sales in Cuba Libre.

 

MARKETING,GENERAL AND ADMINISTRATIVE.  Marketing,general and administrative expenses in relation to gross revenues remainedconstant at 15% between comparative periods. An increase in marketing expenditures for the 

 

 

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Company’snew national advertising campaign and higher caliber entertainmentofferings in the Joint were offset by a reduction in claimsexpense and legal matters.

 

DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expensedecreased by $0.4 million.  The decreasewas due to a decrease in depreciation related to short-lived property whichbecame fully depreciated in March 2002 at the seventh anniversary of theCompany’s operations offset partially by increased depreciation related to thecompletion of the second phase of the hotel room remodel completed during thefourth quarter of 2001.

 

NET INTEREST EXPENSE. Net interest expense decreased to $3.3 million from $3.6 million, adecrease of $0.3 million or 8%.  Thedecrease is primarily due to the decrease in outstanding borrowings and adecrease in the effective interest rate on the Company’s Credit Facility.

 

INCOMEAPPLICABLE TO COMMON SHAREHOLDERS. Income applicable to common shareholders was $2.4 million compared to$1.1 million during the prior year three month period. The increase was due tothe factors described above and a decrease in income tax expense and was offsetpartially by a $0.1 million increase in preferred stock dividends.  Preferred dividends declared increased dueto compounding returns on dividends that were not distributed.

 

SixMonths Ended June 30, 2002 and 2001

 

NET REVENUES. Net revenues increased 3% for the six month period ended June 30, 2002to $65.5 million compared to $63.6 million for the six month period ended June30, 2001.  The increase in revenues isprimarily attributable to a $1.4 million or 7% increase in food and beveragerevenues and a $1.0 million or 4% increase in casino revenues.  These changes were partially offset by a$0.6 million or 4% decrease in lodging revenues.

 

CASINO REVENUES. The $1.0 million increase in casino revenues was primarily due to a $2.5million or 14% increase in table game revenues offset partially by a $1.3million or 17% decrease in slot machine revenues and a $0.1 million or 25%decrease in race and sports revenues. The increase in table games revenues was due to both an increase intable games drop and hold percentage. Table games drop increased 8% to $150.6 million from $140.0million.  Table games hold percentageincreased 0.8 percentage points to 13.5% from 12.7%.  The average number of table games in operations increased 12% to91 from 81.  The net result of thesechanges in drop, hold percentage and average number of table games in operationwas an increase in win per table game per day to $1,234 from $1,215, anincrease of $19 or 2%.  We havehistorically reported table games hold percentage using the gross method, whilecasinos on the Strip report hold percentage using the net method (which reducesthe table game drop by marker repayments made in the gaming pit area).  For the purpose of comparison to propertieson the Strip, our net hold percentage for the six month period ended June 30,2002 was 15.7% compared to 14.8% for the six month period ended June 30,2001.  Slot machine revenues decreaseddue to a decrease in win percentage offset partially by an increase inhandle.  Slot machine handle increased1% to $167.4 million from $165.4 million. Slot machine net win percentage decreased 0.9 percentage points to 3.9%from 4.8%.  We decreased the averagenumber of slot machines in operation to 567 from 655, a decrease of 88 or 13%between comparative periods.  The netresult of these changes in slot machine handle, win percent and average numberof slot machines in operation was a decrease in net win per slot machine perday to $64 from $66, a decrease of $2 or 3%. The $0.1 million decrease in race and sports revenues was due primarilyto a decrease in sports hold percentage.

 

 

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LODGINGREVENUES.  The $0.6 million decrease inlodging revenues to $13.8 million from $14.4 million was primarily due to adecrease in the average daily room rate (“ADR”).  ADR decreased to $116 from $119, a decrease of $3 or 3%.  We believe the decrease in ADR was primarilydue to competitive pressure in the market created by the larger hotels on theLas Vegas Strip during the first quarter of 2002.  The occupancy percentage remained constant between periods at96%.

 

FOODAND BEVERAGE REVENUES.  The $1.4 millionincrease in food and beverage revenues was due to food revenues increasingapproximately $1.3 million and beverage revenues increasing by approximately$0.1 million.  The increase in foodrevenues was primarily due to a $0.4 million increase in banquet food revenue,$0.4 million of revenue contributed by our Starbucks coffee bar that openedduring July 2001, a $0.2 million increase in Pink Taco food revenue and a $0.1million increase in Mr. Lucky’s food revenue. The increase in beverage revenues was primarily due to a $0.3 millionincrease in beach club beverage revenue and a $0.2 million increase Center Barbeverage revenue.  These increases wereoffset partially due to a $0.2 million decrease in banquet beverage revenue, a$0.1 million decrease in Baby’s nightclub admissions revenue and a $0.1 milliondecrease in room service beverage revenue. The increase in beach club beverage revenue was due in part to longeroperating hours and offering weekly beach parties promoted as “Pink Beach —Women on Top."

 

RETAILREVENUES, OTHER INCOME AND PROMOTIONAL ALLOWANCES.  Retail revenues, other income and promotional allowances remainedapproximately constant at $4.6 million, $3.6 million and $5.4 million,respectively, between comparative periods.

 

CASINOEXPENSES.  Casino expenses increased$0.7 million or 4% to $16.3 million from $15.6 million.  The increase was primarily due to a $0.8million increase in player development marketing costs, a $0.3 million increasein casino labor and benefit costs, a $0.3 million increase in gaming taxes andlicense expense and a $0.1 million increase in the cost of slot machineconversions to different game types. These increases were offset partially by a $0.8 million decrease in baddebt expenses related to potentially uncollectible credit extended to casinocustomers and a $0.1 million decrease in credit discount arrangements made withcustomers to promote goodwill or secure timely payment.  Casino expenses as a percentage of casinorevenues remained constant between comparative periods at approximately 60%.

 

LODGINGEXPENSES. Lodging expenses in relation to lodging revenues, prior to reclassifyingthe cost of complimentaries to casino expense remained constant betweencomparative periods at approximately 31%.

 

FOODAND BEVERAGE COSTS AND EXPENSES.  Foodand beverage costs and expenses in relation to food and beverage revenues,prior to reclassifying the cost of complimentaries to casino expense, decreasedto 58% from 60%, a decrease of 2 percentage points.  Food costs and expenses in relation to food revenues, prior toreclassifying the cost of complimentaries to casino expense, decreased to 75%from 83%, a decrease of 8 percentage points due primarily to increased banquetnet production revenue, a relative reduction in the cost of food items sold andto reduced labor costs overall. Beverage costs and expenses in relation to beverage revenues, prior toreclassifying the cost of complimentaries to casino expense remained constantat approximately 43%.

 

 

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RETAILCOSTS AND EXPENSES.  Retail costs andexpenses in relation to retail revenues, prior to reclassifying the cost ofcomplimentaries to casino expense, remained constant at approximately 48%.

 

OTHERCOSTS AND EXPENSES.  Other costs andexpenses in relation to other income increased to 53% from 48%, an increase of5 percentage points.  The increase isprimarily due to a decrease in other revenues from gaming chips purchased bycustomers that are not expected to be redeemed and in ATM commissions for whichthere were no corresponding decreases in costs or expenses and were offsetpartially by an increase in beach club cabana rentals for which there is noincremental cost.

 

MARKETING,GENERAL AND ADMINISTRATIVE.  Marketing,general and administrative expenses in relation to gross revenues increased to17% from 16%, an increase of 1 percentage point due primarily to higher caliberentertainment offerings in the Joint,an increase in marketing expenditures for the Company’s new nationaladvertising campaign, an increase in marketingexpenditures associated with the Howard Stern broadcast live from the casinoin February 2002 and an increase in the cost of property and casualty insuranceand were offset partially by a reduction inclaims expense and legalmatters.

 

DEPRECIATIONAND AMORTIZATION.  Depreciation andamortization expense decreased by $0.4 million.  The decrease was due to a decrease in depreciation related toshort-lived property which became fully depreciated in March 2002 at theseventh anniversary of the Company’s operations offset partially by increaseddepreciation related to the completion of the second phase of the hotel roomremodel completed during the fourth quarter of 2001.

 

NETINTEREST EXPENSE.  Net interest expensedecreased to $6.7 million from $7.8 million, a decrease of $1.1 million or14%.  The decrease is primarily due tothe decrease in outstanding borrowings and a decrease in the effective interestrate on the Company’s Credit Facility.

 

INCOMEAPPLICABLE TO COMMON SHAREHOLDERS. Income applicable to common shareholders was $2.6 million compared to$1.2 million during the prior year six month period. The increase was due tothe factors described above and a decrease in income tax expense and was offsetpartially by a $0.2 million increase in preferred stock dividends.  Preferred dividends declared increased dueto compounding returns on dividends that were not distributed.

 

 

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LIQUIDITYAND CAPITAL RESOURCES

For the six month period ended June 30,2002, our principal sources of funds were cash on-hand at December 31, 2001 andcash provided by operating activities of $10.7 million.  The amount of cash provided by operatingactivities primarily includes net income of $5.3 million, net of depreciationand amortization of $5.6 million and amortization of loan fees of $0.4 million.  The primary uses of funds were capitalexpenditures of $1.8 million, a $2.0 million decrease in construction payables,a $6.3 million reduction in the outstanding borrowings and a $0.6 million netchange in operating assets and liabilities. As a result, as of June 30, 2002, we had cash and cash equivalents of$9.2 million.

We believe that our current cash balancesand cash flow from operations and other sources of cash including the availableborrowings under our $36 million Credit Facility ($14.1 million as of June 30,2002) will be sufficient to provide operating and investing liquidity duringthe next 12 months.  We may, however,need to raise additional funds prior to July 1, 2003.  Our ability to raise additional funds is limited by restrictions on our financing activities under ourcredit facility and the Notes.  Wecannot be certain that additional financing will be available to us onfavorable terms when required, if at all.

 

The amountavailable under the Credit Facility began reducing by $2.0 million on September30, 2001 and will continue to reduce by $2.0 million on the last day of eachsubsequent fiscal quarter until it reaches $25.0 million.  Effective December 2001, the Company enteredinto an amendment with regard to the Credit Facility whereby the $2.0 millionquarterly commitment reduction for the quarter ending December 31, 2001 waswaived.  Beginning September 30, 2001and on each succeeding September 30, the credit line reduces by 50% of ExcessCash Flow, as defined, for the then most recently completed fiscal year.  Based on our calculations, we generatedapproximately $3.2 million excess cash flow as defined for the year endedDecember 31, 2001.  Accordingly, weexpect the commitment will reduce by a total of approximately $3.6 million onSeptember 30, 2002.

Thecredit facility contains certain covenantsincluding, among other things, financial covenants, limitations on our abilityto dispose of capital stock, enter into mergers and certain acquisitions, incurliens or indebtedness, issue dividends on stock, and enter into transactionswith affiliates.  The credit facility issecured by substantially all of our property and equipment.

As of June 30, 2002, $11.9 millionaggregate in dividends have accrued on our 9 1/4% Series A CumulativePreferred Stock and 9 1/4% Series B Cumulative Preferred Stock.

 

                Our abilityto service our contractual obligations and commitments will be dependent on ourfuture performance, which will be affected by, among other things, prevailingeconomic conditions and financial, business and other factors, certain of whichare beyond our control.

 

The Company is adefendant in various lawsuits relating to routine matters incidental to itsbusiness.

 

Management providesan accrual for estimated losses that may occur and does not believe that theoutcome of any pending claims or litigation, in the aggregate, will have amaterial adverse effect on the Company’s financial 

 

 

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position, resultsof operations or liquidity beyond the amounts recorded in the accompanyingbalance sheet as of June 30, 2002.

 

In June 2001, the FASB issued SFAS No. 143, Accountingfor Asset Retirement Obligations.  Thisstatement addresses financial accounting and reporting for obligationsassociated with the retirement of tangible long-lived assets and the associatedasset retirement costs.  This statementapplies to all entities and applies to all legal obligations associated withthe retirement of long-lived assets that result from the acquisition,construction, development and the normal operation of a long-lived asset,except for certain obligations of lessees. This statement is effective for our 2003 fiscal year and early adoptionis permitted.  We expect to adopt thisstatement on January 1, 2003 and do not expect the initial adoption to have amaterial effect on our financial statements.

 

In April 2002, theFASB issued SFAS No. 145, *Rescission of FASBStatements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and TechnicalCorrections. * The most significant provisions of thisstatement relate to the rescission of Statement No. 4, *Reporting Gains and Losses from Extinguishment ofDebt*and it also amends other existing authoritative pronouncementsto make various technical corrections, clarify meanings, or describe theirapplicability under changed conditions. Under this new statement, any gain or loss on extinguishment of debtthat was classified as an extraordinary item in prior periods presented thatdoes not meet certain defined criteria must be reclassified.   Generally, SFAS No. 145 is effective forour 2003 fiscal year and may be adopted early. We expect to adopt this statement on January 1, 2003 and do not expectits adoption to have a material effect on our financial statements.

 

In June 2002, theFASB issued SFAS No. 146, Accounting for Costs Associated with Exit or DisposalActivities.  This statement addressfinancial accounting and reporting for costs associated with exit or disposalactivities and nullifies EITF No. 94-3 Liability Recognition for CertainEmployee Termination Benefits and Other Costs to Exit an Activity (includingCertain Costs Incurred in a Restructuring). The statement requires that a liability for a cost associated with anexit or disposal activity be recognized when the liability is incurred.  A fundamental conclusion reached by the FASBin this statement is than an entity’s commitment to a plan, by itself, does notcreate a present obligation to others that meets the definition of aliability.  This statement alsoestablishes that fair value is the objective for initial measurement of theliability.  The provisions of thisstatement are effective for exit or disposal activities that are initiatedafter December 31, 2002 with early application encouraged.  We currently do not expect the adoption ofthis standard to have a material impact on our financial statements.

 

 

 

 

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Item 3.    Quantitative and Qualitative DisclosuresAbout Market Risk

 

Market risks relating to our operations resultprimarily from changes in short-term LIBOR interest rates.  We do not have any foreign exchange or othersignificant market risk.  We did nothave any derivative financial instruments at June 30, 2002.

 

Our exposure to marketrisk for changes in interest rates relates primarily to our current CreditFacility.  In accordance with the CreditFacility, 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.

 

Wehad $23.5 million and $28.7. million in variable rate debt outstanding at June30, 2002 and December 31, 2001, respectively. Based upon these variable rate debt levels, a hypothetical 10% adversechange in interest rates (approximately a 53 basis point increase in the effectiveinterest rate) would increase interest expense by approximately $0.1 million onan annual basis, and likewise decrease our earnings and cash flows.  We cannot predict market fluctuations ininterest rates and their impact on our variable rate debt, nor can there be anyassurance that fixed rate long-term debt will be available to us at favorablerates, if at all.  Consequently, futureresults may differ materially from the estimated adverse changes discussedabove.

 

 

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PARTII                                                    OTHERINFORMATION

 

 

Item1.                                                             LegalProceedings

 

                We are a defendant in variouslawsuits relating to routine matters incidental to our business.  Management does not believe that the outcomeof any litigation, in the aggregate, will have a material adverse effect on ourbusiness or results of operations.

 

                During July 2002, the NevadaGaming Commission served the Company with a complaint for disciplinary actionpursuant to NRS 463.310(2) and NRS 463.312 charging violations of the NevadaGaming Control Act and State Gaming Control Board and Nevada Gaming CommissionRegulations.  During July 2002, theCompany entered into a stipulated agreement for settlement with the NevadaGaming Commission and agreed to pay a fine of $100,000 which was properlyaccrued for in the Company’s results of operations during the three-monthperiod ended June 30, 2002.

 

Item 6.                                                             Exhibitsand 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. |
|    |           |        |   |
| (2)     | 3.3            |        | Certificate of  Designation of 9 1/4% Series A Cumulative Preferred Stock, no par value per share. |
|    |           |        |   |
| (3)     | 3.4            |        | Certificate of  Designation of 9 1/4% Series B Cumulative Preferred Stock, no par value per  share. |
|    |           |        |   |
| (1)     | 3.5            |        | Second Amended  and Restated By-Laws of the Company |
|    |           |        |   |
|    | 99.1           |        | Certification of  Chief Executive Officer and Chief Financial Officer. |

 

 

(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 Exchange Commissionfor the quarter ended June 30, 2000 (File No. 333-53211).

 

 

(b)                                 Reportson Form 8-K

 

None.

 

 

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SIGNATURES

 

Pursuantto the requirements of the Securities Exchange Act of 1934, as amended, the Registranthas duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.

 

 

|                        |   | HARD  ROCK HOTEL, INC.         |
|-----------------------------|--------|--------------------------------|
|                        |   |                           |
| Date:  August 12, 2002 |   | /s/  James D. Bowen            |
|                        |   | James  D. Bowen                |
|                        |   | DULY  AUTHORIZED OFFICER       |
|                        |   |                           |
|                        |   | /s/  JAMES D. BOWEN            |
|                        |   | James  D. Bowen                |
|                        |   | CHIEF  FINANCIAL OFFICER       |
|                        |   | (PRINCIPAL  FINANCIAL OFFICER) |

 

 

 

 

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