**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-Q**

 

**ý**** QUARTERLY REPORTUNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended: March 31, 2005**

 

**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**

 

**HardRock 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 allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing 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 11, 2005

 

| **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,  2005 and December 31, 2004                      |   |
|         |                   |                                                                                                |   |
|         |                   | Condensed Statements of Operations for the  three-month periods ended March 31, 2005 and 2004  |   |
|         |                   |                                                                                                |   |
|         |                   | Condensed  Statements of Cash Flows for the three-month periods ended March 31, 2005  and 2004 |   |
|         |                   |                                                                                                |   |
|         |                   | 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 1.      |                   | Legal Proceedings                                                                                   |   |
|         |                   |                                                                                                |   |
| Item  6.     |                   | Exhibits  and Reports on Form 8-K                                                              |   |
|         |                   |                                                                                                |   |
|         |                   | (a)  Exhibits                                                                                  |   |
|         |                   |                                                                                                |   |
|         |                   | (b)  Reports on Form 8-K                                                                  |   |

 

1

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Part I                    FINANCIALINFORMATION

 

Item 1.                                     FinancialStatements

 

HARD ROCK HOTEL, INC.

CONDENSED BALANCE SHEETS(unaudited)

(inthousands, except share amounts)

 
| ** **                                                                                                                                        | ** ** | **March 31,  2005** | ** ** | **December 31,  2004** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ASSETS                                                                                                                                            |       |                     |       |                        |       |
|                                                                                                                                              |       |                     |       |                        |       |
| Current assets:                                                                                                                                   |       |                     |       |                        |       |
| Cash and cash equivalents                                                                                                                         |       | $                        | 18,340     |                        | $          | 10,655 |   |
| Accounts receivable, net of allowance for  doubtful accounts of $762 and $656 as of March 31, 2005 and December 31,  2004, respectively |       | 7,512                    |       | 5,921                       |       |
| Inventories                                                                                                                                       |       | 1,914                    |       | 2,234                       |       |
| Prepaid expenses and other current assets                                                                                                         |       | 2,654                    |       | 2,429                       |       |
| Related party receivable                                                                                                                          |       | 255                      |       | 122                         |       |
| Total current assets                                                                                                                              |       | 30,675                   |       | 21,361                      |       |
|                                                                                                                                              |       |                     |       |                        |       |
| Property and equipment, (net)                                                                                                                     |       | 168,357                  |       | 168,694                     |       |
| Deferred income taxes                                                                                                                             |       | 1,408                    |       | 1,408                       |       |
| Other assets, (net)                                                                                                                               |       | 4,491                    |       | 4,619                       |       |
|                                                                                                                                              |       |                     |       |                        |       |
| TOTAL ASSETS                                                                                                                                      |       | $                        | 204,931    |                        | $          | 196,082 |   |
|                                                                                                                                              |       |                     |       |                        |       |
| LIABILITIES AND SHAREHOLDERS’ DEFICIENCY                                                                                                     |       |                     |       |                        |       |
|                                                                                                                                              |       |                     |       |                        |       |
| Current liabilities:                                                                                                                              |       |                     |       |                        |       |
| Accounts payable                                                                                                                                  |       | $                        | 4,223      |                        | $          | 2,105 |   |
| Construction related payable                                                                                                                      |       | —                   |       | 119                         |       |
| Related party payable                                                                                                                             |       | —                   |       | 298                         |       |
| Accrued expenses                                                                                                                                  |       | 14,562                   |       | 13,282                      |       |
| Interest payable                                                                                                                                  |       | 5,413                    |       | 3,620                       |       |
| Current portion of long-term debt                                                                                                                 |       | 4,409                    |       | 5,173                       |       |
| Total current liabilities                                                                                                                         |       | 28,607                   |       | 24,597                      |       |
|                                                                                                                                              |       |                     |       |                        |       |
| Deferred income taxes                                                                                                                             |       | 1,155                    |       | 1,155                       |       |
| Deferred Compensation                                                                                                                             |       | 1,469                    |       | 1,161                       |       |
| Junior notes                                                                                                                                      |       | 54,428                   |       | 53,036                      |       |
| Long-term debt                                                                                                                                    |       | 151,250                  |       | 152,528                     |       |
| Total long-term liabilities                                                                                                                       |       | 208,302                  |       | 207,880                     |       |
| Total liabilities                                                                                                                                 |       | 236,909                  |       | 232,477                     |       |
|                                                                                                                                              |       |                     |       |                        |       |
| 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                                                                                                                               |       | (39,486                  | )          | (43,903                     | )          |
| Total shareholders’ deficiency                                                                                                               |       | (31,978                  | )          | (36,395                     | )          |
|                                                                                                                                              |       |                     |       |                        |       |
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY                                                                                               |       | $                        | 204,931    |                        | $          | 196,082 |   |

 

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

 

2

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HARD ROCK HOTEL, INC.

CONDENSED STATEMENTSOF OPERATIONS

(in thousands,except share and per share amounts)

(unaudited)

 
| ** **                                            | ** ** | **Three months ended  March 31,** | ** ** |
|-------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                            | ** ** | **2005**                               | ** ** | **2004** | ** ** |
| Revenue:                                              |       |                                   |       |   |   |
| Casino                                                |       | $                                      | 16,609     |   | $ | 13,607 |   |
| Lodging                                               |       | 9,286                                  |       | 8,626 |   |
| Food and beverage                                     |       | 15,552                                 |       | 11,295 |   |
| Retail store                                          |       | 1,743                                  |       | 1,952 |   |
| Other                                                 |       | 2,240                                  |       | 1,835 |   |
| Gross revenues                                        |       | 45,430                                 |       | 37,315 |   |
| Less:   promotional allowances                   |       | (3,174                                 | )          | (2,822 | ) |
| Net revenues                                          |       | 42,256                                 |       | 34,493 |   |
|                                                  |       |                                   |       |   |   |
| Costs and expenses:                                   |       |                                   |       |   |   |
| Casino                                                |       | 8,362                                  |       | 9,364 |   |
| Lodging                                               |       | 2,281                                  |       | 2,199 |   |
| Food and beverage                                     |       | 7,643                                  |       | 6,057 |   |
| Retail store                                          |       | 797                                    |       | 885 |   |
| Other                                                 |       | 1,183                                  |       | 965 |   |
| Marketing, advertising and entertainment              |       | 2,361                                  |       | 2,291 |   |
| General and administrative                            |       | 5,781                                  |       | 4,893 |   |
| Related party expenses                                |       | 1,577                                  |       | 1,187 |   |
| Depreciation and amortization                         |       | 2,952                                  |       | 3,010 |   |
| Pre-opening expenses                                  |       | 72                                     |       | 200 |   |
| Total costs and expenses                              |       | 33,009                                 |       | 31,051 |   |
|                                                  |       |                                   |       |   |   |
| Income from operations                                |       | 9,247                                  |       | 3,442 |   |
|                                                  |       |                                   |       |   |   |
| Other income (expense):                               |       |                                   |       |   |   |
| Interest income                                       |       | 40                                     |       | 7 |   |
| Interest expense                                      |       | (4,870                                 | )          | (4,705 | ) |
|                                                  |       |                                   |       |   |   |
| Income (loss) before benefit for income  taxes        |       | 4,417                                  |       | (1,256 | ) |
|                                                  |       |                                   |       |   |   |
| Income tax                                            |       | —                                 |       | — |   |
| Net income (loss) applicable to common  shareholders  |       | $                                      | 4,417      |   | $ | (1,256 | ) |
|                                                  |       |                                   |       |   |   |
| BASIC AND DILUTED NET INCOME (LOSS) PER  SHARE:       |       |                                   |       |   |   |
|                                                  |       |                                   |       |   |   |
| Applicable to common shareholders                     |       | $                                      | 58.10      |   | $ | (16.52 | ) |
|                                                  |       |                                   |       |   |   |
| Weighted average number of common shares  outstanding |       | 76,023                                 |       | 76,023 |   |

 

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

 

3

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HARD ROCK HOTEL, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(inthousands, except supplemental schedule)

(unaudited)

 
| ** **                                                                                                           | ** ** | **March 31,  2005** | ** ** | **March 31,  2004** | ** ** |
|----------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|--------------------------|------------|
| Cash flows from operating activities:                                                                                |       |                     |       |                     |       |
| Net income (loss)                                                                                                    |       | $                        | 4,417      |                     | $          | (1,256 | ) |
| Adjustments to reconcile net income (loss)  to net cash provided by operating activities:                            |       |                     |       |                     |       |
| Depreciation and amortization                                                                                        |       | 2,952                    |       | 3,010                    |       |
| Provision for losses on accounts receivable                                                                          |       | 96                       |       | 147                      |       |
| Amortization of bond offering fees and  costs                                                                        |       | 128                      |       | 137                      |       |
| Changes in operating assets and liabilities:                                                                         |       |                     |       |                     |       |
| Accounts receivable                                                                                                  |       | (1,687                   | )     | 672                      |       |
| Inventories                                                                                                          |       | 320                      |       | (4                       | )          |
| Prepaid expenses and other current assets                                                                            |       | (225                     | )     | 892                      |       |
| Related party receivable                                                                                             |       | (133                     | )          | (810                     | )          |
| Accounts payable                                                                                                     |       | 2,118                    |       | (583                     | )          |
| Related party payable                                                                                                |       | (298                     | )     | 29                       |       |
| Accrued expenses                                                                                                     |       | 1,280                    |       | (23                      | )          |
| Long term deferred compensation                                                                                      |       | 308                      |       | —                   |       |
| Interest payable                                                                                                     |       | 3,186                    |       | 2,910                    |       |
| Net cash provided by operating activities                                                                            |       | 12,462                   |       | 5,121                    |       |
|                                                                                                                 |       |                     |       |                     |       |
| Cash flows used in investing activities:                                                                             |       |                     |       |                     |       |
| Purchases of property and equipment                                                                                  |       | (2,615                   | )          | (3,841                   | )          |
| Construction related payables                                                                                        |       | (119                     | )          | (438                     | )          |
| Net cash used in investing activities                                                                                |       | (2,734                   | )          | (4,279                   | )          |
|                                                                                                                 |       |                     |       |                     |       |
| Cash flows used in financing activities:                                                                             |       |                     |       |                     |       |
| Other debt issuance expenses                                                                                         |       | —                   |       | (149                     | )          |
| Payments on debt                                                                                                     |       | (2,043                   | )          | (44                      | )          |
| Net cash used in financing activities                                                                                |       | (2,043                   | )          | (193                     | )          |
|                                                                                                                 |       |                     |       |                     |       |
| Net increase in cash and cash equivalents                                                                            |       | 7,685                    |       | 649                      |       |
| Cash and cash equivalents, beginning of  period                                                                      |       | 10,655                   |       | 10,882                   |       |
|                                                                                                                 |       |                     |       |                     |       |
| Cash and cash equivalents, end of period                                                                             |       | $                        | 18,340     |                     | $          | 11,531 |   |
|                                                                                                                 |       |                     |       |                     |       |
| Supplemental disclosures of cash flow  information:                                                                  |       |                     |       |                     |       |
| Cash paid during the period for interest, (net  of amount capitalized of $0 in the period ended March 31, 2005) |       | $                        | 1,557      |                     | $          | 1,658 |   |
| Cash paid during the period for income  taxes, net                                                                   |       | $                        | —     |                     | $          | — |   |

 

4

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Supplemental Schedule of Non-Cash Investing and FinancingActivities:

 

In accordance with the terms of the Junior Notes, the Company paidinterest in kind of $1.4 million during the three month period ended March 31,2005 and increased the principal amount of the Junior Notes.

 

In accordance with the terms of the Junior Notes, the Company paidinterest in kind of $1.6 million during the three month period ended March 31,2004 and increased the principal amount of the Junior Notes.

 

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

 

5

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HARD ROCK HOTEL, INC.

NOTES TO CONDENSED FINANCIALSTATEMENTS

 

1.                                       BASIS OF PRESENTATION

 

HardRock Hotel, Inc. (the “Company”), a Nevadacorporation incorporated on August 30, 1993, operates a hotel-casino inLas Vegas, Nevada (the “Resort”).  LilyPond Investments, Inc. (“Lily Pond”), a Nevada corporation controlled andmajority owned by Peter Morton, owns all of the voting shares and 93% of thenon-voting shares of the Company.  Mr. Mortonhas granted a sublicense to the Company, pursuant to which the Company holdsthe exclusive right to use the “Hard Rock Hotel” trademark for the Company’soperations in Las Vegas.  These condensedfinancial 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 otherinformation have been condensed or omitted from the interim financialstatements presented in this Quarterly Report on Form 10-Q and they do notinclude all information required by accounting principles generally accepted inthe United States of America for complete financial statements.  In the opinion of management, all adjustments(consisting of normal recurring adjustments) considered necessary for a fairpresentation have been included.  Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the amounts of revenues and expenses during thereporting period.  Actual results coulddiffer from these estimates.  Operatingresults for the three-month period ended March 31, 2005 are notnecessarily indicative of future financial results or the results that may be expectedfor the year ending December 31, 2005. The unaudited interim financial statements contained herein should beread in conjunction with the audited financial statements and notes in ourannual report on Form 10-K for the year ended December 31, 2004.

 

2.                                       AGREEMENTS WITH RELATED PARTIES

 

TheCompany entered into a twenty-five year Amended and Restated SupervisoryAgreement with Peter Morton, Chairman and Chief Executive Officer, whichprovides for the supervision of the development, improvement, operation, andmaintenance of the Company through 2022. Mr. Morton has the option to renew the agreement for two successivefifteen year terms.  Pursuant to theterms of the Supervisory Agreement, Mr. Morton is to provide consultingand supervisory services to the Company. In the event either we are or Mr. Mortonis in Default (as defined in the Supervisory Agreement), the non-defaultingparty may terminate the agreement after the other party has received theopportunity to cure such default.  Aspart of this agreement, the Company pays to Mr. Morton a supervisory feeequal to two percent of annual gross revenues (as defined in the SupervisoryAgreement), net of complimentaries for each year.  Total supervisory fee expenses for theseservices for the three months ended March 31, 2005 and 2004 amounted to $843,000and $678,000, respectively.  Theseexpenses are included in related party expenses in the accompanying statementsof operations.  At March 31, 2005, $7,000was due from Mr. Morton for prepaid supervisory fee and is included inrelated party receivable in the accompanying balance sheet.  The unpaid amount at December 31, 2004 was$224,000, and is included in related party payable in the accompanying balancesheet.

 

Entitiescontrolled by Mr. Morton have provided additional technical supportservices for the development, ongoing improvement and operation of theCompany.  The Company reimburses theseentities for all costs and expenses incurred in connection with these services,including, without limitation, employee salary and benefits and allocatedoverhead.  These expenses aggregatedapproximately $734,000 and $509,000 for the three months ended March 31,2005 and 2004, respectively, and are included in the accompanying statements ofoperations.  At March 31, 2005, $176,000was due from these entities for expenses paid in advance and is included inrelated party receivable in the accompanying balance sheet.  At December 31, 2004, $74,000 was due tothese entities for expenses and is included in related party payable in theaccompanying balance sheet.

 

TheCompany provides technical support services and pays certain overhead expensesfor the development and operation of PM Realty, LLC, a development entity ownedby Mr. Morton.  PM Realty, LLCreimburses the Company for all of these costs and expenses, which aggregatedapproximately $94,000 for the three months ended March 31, 2005.  The unpaid amounts at March 31,2005 and December 31, 2004are $72,000 and $122,000, respectively, and are included in related party receivablein the accompanying balance sheets.

 

OnDecember 24, 2004, PM Realty LLC and the Company entered into a lease fora ten year initial term with Mr. Chow of Las Vegas, LLC, a Nevada limitedliability company, for commercial space anticipated to be developed on landcontiguous to the Resort.

 

Ourpreferred stock was, and a substantial portion of the junior subordinated notesare, held by Mr. Morton or affiliates of Mr. Morton (see Note 3below).

 

3.                                       LONG-TERM DEBT

 

As of March 31, 2005,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, 2005, the Company had $15.5million outstanding on its Term Loan and had no balance outstanding on itsRevolving Credit Facility.  As of March 31,2005, the Company also has approximately $54.4 million outstanding of juniorsubordinated notes (the “Junior Notes”), including $1.4 million of interestpaid in kind during the three month period ended March 31, 2005.

 

6

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2013 Notes

 

Interest on the 2013 Notes is payable on each June 1and 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 Revolving Credit Facility.  The 2013 Notes are subject toredemption at the option of the Company, in whole or in part, at any time on orafter June 1, 2008, at a premium to the face amount ($140 million) thatdecreases on each subsequent anniversary date, plus accrued interest to thedate of redemption.  The 2013 Notescontain covenants restricting or limiting the ability of the Company to, amongother things, pay dividends, create liens or other encumbrances, incuradditional indebtedness, issue certain preferred stock, sell or otherwisedispose of a portion of its assets, make acquisitions or merge or consolidatewith another entity and enter into transactions with affiliates.  TheCompany was in compliance with these covenants as of March 31, 2005.

 

# Revolving Credit Facility

 

Interest on the Revolving Credit Facility accrues on all individual borrowings atan interest rate determined at the option of the Company, at either the LIBORIndex plus an applicable LIBOR margin (not to exceed 3.5% (applicable marginwas 2.75% at March 31, 2005) and aggregating 5.3% at March 31, 2005),or the 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, 2005.  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 Revolving Credit Facility is secured bysubstantially all of the Company’s property at the Las Vegas site.  The RevolvingCredit Facility contains certain covenants including, among otherthings, financial covenants, limitations on the Company from disposing ofcapital stock, entering into mergers and certain acquisitions, incurring liensor indebtedness, issuing dividends on stock, and entering into transactionswith affiliates.  The Company was incompliance with these covenants as of March 31, 2005.

 

JuniorNotes

 

Interest on the Junior Notes is payable on each January 15 and July 15,commencing on January 15, 2004, and may be paid in cash or in kind at theCompany’s option, provided that interest will be paid in kind if a payment ofsuch interest in cash would cause a default under the 2013 Notes or the Revolving Credit Facility.  The Junior Notes require that any semi-annualinterest payment in cash be equal to the lesser of (x) 50% of the amount ofinterest accrued on the Junior Notes since the most recent interest paymentdate and (y) the amount of interest that the Company is permitted to pay incash without causing a default under the 2013 Notes or the Revolving Credit Facility.  For interest payments payable in cash,interest accrues at a rate per annum equal to 9.875%, and for interest paymentspayable in kind, interest accrues at a rate per annum equal to 10.50% andincreases the principal amount of the Junior Notes.  On January 15, 2005, the Company paid incash $1.3 million of interest on the Junior Notes.  The remaining $1.4 million of accruedinterest was paid in kind at a rate of 10.50%. The Junior Notes are contractually subordinated to the 2013 Notes andthe Revolving Credit Facility andany other senior debt of the Company.

 

The Junior Notes mature on January 15, 2014 butare subject to redemption at the option of the Company, in whole or in part, atany time on or after January 15, 2009, at a premium to the principalamount thereof that decreases on each subsequent anniversary date, plus accruedinterest to the date of redemption.  TheJunior Notes contain covenants restricting the Company’s ability to, amongother things, sell or otherwise dispose of its assets, pay dividends, incuradditional indebtedness, make acquisitions or merge or consolidate with anotherentity and enter into transactions with affiliates.  The Company was in compliance with thesecovenants as of March 31, 2005.

 

4.                                       LEGALAND 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, 2005.

 

7

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5.                                       CONSTRUCTIONCOMMITMENT

 

During January 2005, the Company entered into an agreement toinstall a new hotel reservation system. Total costs of the project are estimated to be $0.8 million of which $0.3million has been paid in cash as of March 31, 2005. 

 

Item 2.                                     Management’sDiscussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with, and isqualified in its entirety by the Company’s financial statements, including thenotes thereto, and the other financial information appearing elsewhere hereinand the Annual Report to Shareholders on Form 10-K for the year ended December 31,2004, which may be obtained upon request from 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 periodic reports onForms 10-K and 10-Q filed with the Securities and Exchange Commission areintended 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.  Such factorsinclude, without limitation, the following: increased competition in existing markets or the opening of new gamingjurisdictions; a decline in the public acceptance of gaming; the limitation,conditioning or suspension of any of our gaming licenses; increases in or newtaxes imposed on gaming revenues or gaming devices; a finding of unsuitabilityby regulatory authorities with respect to our officers, directors or keyemployees; loss or retirement of key executives; significant increases in fuelor transportation prices; adverse economic conditions in our key markets;severe and unusual weather in our key markets; and adverse results ofsignificant litigation matters.  Readersare cautioned not to place undue reliance on forward-looking statements, whichspeak only as of the date thereof.  Weexpressly disclaim any obligation or undertaking to disseminate any updates orrevisions to any forward-looking statement contained in this report, including to reflect any change in our expectations with regard tothat forward-looking statement or any change in events, conditions orcircumstances on which that forward-looking statement is based.  For more information regarding risks inherentin an investment in the Company, see the section ”Business— Risk Factors” in our Annual Report to Shareholders on Form 10-K for theyear ended December 31, 2004 filed with the SEC on March 31, 2005.

 

OVERVIEW

 

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

 

RESULTSOF OPERATIONS

 

QUARTERENDED MARCH 31, 2005 COMPARED TO QUARTER ENDED MARCH 31, 2004

 

NET REVENUES.  Net revenues increased 23% for thequarter ended March 31, 2005 to $42.3 million compared to $34.5 millionfor the quarter ended March 31, 2004. The $7.8 million increase in net revenues was primarilyattributable to a $4.3 million or a 38% increase in food and beverage revenue, a$3.0 million or 22% increase in casino revenues, a $0.7 million or 8%increase in lodging revenue and a $0.4 million or 22% increase in otherrevenues.  These increases in revenuewere partially offset by a $0.2 million or 11% decrease in retail revenueand a $0.4 million or 12% increase in promotional allowances related to itemsfurnished to customers on a complimentary basis.

 

CASINO REVENUES.  The $3.0 million increase incasino revenues was primarily due to a $2.5 million or 28% increase intable games revenues, a $0.3 million or 7% increase in slot machinerevenues and a $0.2 million or 48% increase in race and sports bookrevenue.  The increase in table gamesrevenues was due to an increase in hold percentage of 3.0 percentagepoints to 14.0% from 11.0%.  Table games drophad an increase of $0.4 million or less than 1% to $81.3 million from$81.0 million.  The average number oftable games in operations decreased to 88 from 93, a decrease of 5 or 5%.  The net result of these changes in drop, holdpercentage and change in number of games in operation was an increase in winper table game per day to $1,436 from $1,061, an increase of $375 or 35%.  We have historically reported table gameshold percentage using the gross method, while casinos on the Strip report holdpercentage using the net method (which reduces the table game drop by markerrepayments made in the gaming pit area). For the purpose of comparison to

 

8

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properties on the Strip, our net hold percentage for thequarter ended March 31, 2005 was 17.0% compared to 13.0% for the quarterended March 31, 2004.  The increasein slot machine revenues was due to an increase in slot machine hold percentageand an increase in slot machine handle.  Slotmachine hold percentage increased 0.3 percentage points to 5.1% from 4.8%.  Slot machine handleincreased $1.3 million or 1% to $90.0 million from $88.7 million.  The average number of slot machines inoperation decreased to 552 from 557, a decrease of 5 machines or 1%.  The net result of these changes in handle,hold percentage and average number of slot machines in operation was anincrease in win per slot machine per day to $92 from $85, an increase of $7 or8%.  The increase in race and sportsrevenues was due to an increase in race and sports hold percentage and an increasein race and sports handle.  Race andsports hold percentage increased 3.1 percentage points to 12.0% from 8.9%.  Race and sports handle increased$0.6 million or 11% to $5.9 million from $5.3 million.

 

LODGING REVENUES.  The $0.7 million increase inhotel revenues to $9.3 million was primarily due to an increase in averagedaily rate (“ADR”) to $164 from $152. Hotel occupancy increased to 93.4% from 91.6% between periods.

 

FOOD AND BEVERAGE REVENUES.  The$4.3 million increase in food and beverage revenues was due to foodrevenues increasing by approximately $0.9 million and beverage revenuesincreasing by approximately $3.4 million. Food revenues increased due primarily to a $0.6 million increase inbanquet food revenue, a $0.1 million increase in each of Mr. Lucky’s,room service and Pink Taco.  Every foodoutlet except for Simon Kitchen and Bar had anincrease in revenue year over year.  SimonKitchen and Bar had several competitors open in the surrounding Las Vegas area inthe last 12 months.  Beverage revenuesincreased due primarily to a $2.6 million increase in Body English, whichis our new club replacing Baby’s, a $0.3 million increase in banquet bar,a $0.2 million increase in the Joint bar, a $0.2 million increase in casinobars and a $0.1 million increase in Sports Deluxe Bar.  

 

RETAIL REVENUES.  We believe the $0.2 milliondecrease in retail revenues was due in part to continued general market declinein the themed merchandise segment and the addition of other retail operationsin Las Vegas.

 

OTHER INCOME.  Other income increased $0.4 millionprimarily due to a $0.1 million increase in each of Rock Spa, chip andtoken float taken to income, box office service fees and sundry store sales.

 

PROMOTIONAL ALLOWANCES.  Promotional allowances decreasedas a percentage of casino revenues to 19% from 21%.  This decrease is due to the 3.0 percentagepoint increase in table hold percentage. The increase in table games hold percentageincreases revenue without increasing promotional allowances.

 

CASINO EXPENSES.  Casino expenses decreased $1.0 millionor 12% to $8.4 million.  The decreasewas primarily due to a $0.4 million decrease in gaming taxes, a $0.3 milliondecrease in bad debt expenses related to potentially uncollectible creditextended to casino customers, a $0.2 million decrease in discounts on creditissued by the casino, a $0.2 million decrease in concert tickets given toguests and a $0.1 million decrease in customer promotions.  These decreases were offset partially by a$0.1 million increase in payroll and related expenses and a $0.1 millionincrease in gaming supplies.  The Company’sprovision and allowance for doubtful accounts are based on estimates bymanagement of the collectability of the receivable balances at each periodend.  Management’s estimates consider,among other factors, the age of the receivables, the type or source of thereceivables and the results of collection efforts to date, especially withregard to significant accounts.  Casinoexpenses as a percentage of casino revenues decreased to 50% from 69%, a decreaseof 19 percentage points between comparative periods due to an increase in tablegames hold percentage, which increased revenue without adding additionalexpenses. 

 

LODGING EXPENSES.  Hotel expenses in relation tohotel revenues, prior to reclassifying the cost of complimentaries to casinoexpense or department complimentaries to promotional allowances, decreased to29% from 31% in the prior year due primarily to a higher ADR while totaloperating expenses prior to reclassifying complimentaries to casino expense remainedconstant.

 

FOOD AND 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 decreased to 57% from 62% in the prior year period dueto the opening of Body English Nightclub, which runs at a much higher profitmargin than other food and beverage outlets.

 

RETAIL COSTS AND EXPENSES.  Retail costs and expenses inrelation to retail revenues, prior to reclassifying the cost of complimentariesto casino expense or department complimentaries to promotional allowances,increased to 51% from 49% due to less retail revenue in relation to fixedretail costs.

 

OTHER COSTS AND EXPENSES.  Other costs and expenses inrelation to other income remained constant at 53%.

 

MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and administrative expenses in relation to grossrevenues decreased to 18% from 19%. Marketing, general and administrative expenses increased $1.0million.  This increase is due to anincrease of payroll and related expenses of $0.4 million, a $0.2 millionincrease in professional and contract services, a $0.1 million

 

9

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increase inrepairs and maintenance, a $0.1 million increase in utilities and a $0.1million increase in property insurance.

 

DEPRECIATION AND AMORTIZATION.  Depreciation and amortization remainedconstant at $3.0 million.

 

INTEREST EXPENSE.  Interest expense increased to $4.9 millionfrom $4.7 million, an increase of $0.2 million or 4%.  The amount of outstanding Junior Notes increasedcausing the additional interest expense.

 

INCOME TAXES.  The Company did not have income tax expenseduring the quarters ended March 31, 2005 and 2004 due to being able tooffset 100% of its income with net operating loss carryforwards (“NOL”) fromprevious periods against which a valuation allowance has been placed. 

 

NET INCOME APPLICABLE TO COMMON SHAREHOLDERS.  Net income applicable to commonshareholders was $4.4 million compared to net loss of $1.3 millionduring the prior year period.  Theincrease in net results for common shareholders was due to the factorsdescribed above.

 

LIQUIDITYAND CAPITAL RESOURCES

 

For the three-month periodended March 31, 2005 our principal sources of funds were cash on-hand at December 31,2004, and cash provided by operating activities of $12.5 million.  The amount of cash provided by operatingactivities primarily included net income of $4.4 million, depreciation andamortization of $3.0 million, provision for losses on accounts receivable of$0.1 million, amortization of loan fees of $0.1 million and net changes inoperating assets and liabilities of $4.9 million.  Other sources and uses of funds were capitalexpenditures of $2.6 million, a decrease in construction payables of $0.1million and payments on debt of $2.0 million. As a result, as of March 31, 2005, we had cash and cash equivalentsof $18.3 million.

 

During January 2005, the Company entered into an agreement toinstall a new hotel system.  Total costsof the project are estimated to be $0.8 million of which $0.3 million has beenpaid in cash as of March 31, 2005.

 

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 available as of March 31, 2005)will be sufficient to provide operating and investing liquidity during the next12 months.  We may, however, need toraise additional funds prior to April 1, 2006.  Our ability to raise additional funds islimited by restrictions on our financing activities under our Revolving Credit Facilityand the 2013 Notes.  We cannot be certainthat additional financing will be available to us on favorable terms whenrequired, if at all.

 

Interest on the 2013 Notes ispayable on each June 1 and December 1 which began on December 1,2003.  The 2013 Notes are secured by asecurity interest in substantially all of the Company’s existing and futureassets, other than licenses which may not be pledged under applicable law.  The 2013 Notes are contractually subordinatedin right of payment to all indebtedness incurred pursuant to the RevolvingCredit Facility.  The 2013 Notes aresubject to redemption at the option of the Company, in whole or in part, at anytime on or after June 1, 2008, at a premium to the face amount ($140million) that decreases on each subsequent anniversary date, plus accruedinterest to the date of redemption.  The2013 Notes contain covenants restricting or limiting the ability of the Companyto, among other things, pay dividends, create liens or other encumbrances,incur additional indebtedness, issue certain preferred stock, sell or otherwisedispose of a portion of its assets, make acquisitions or merge or consolidatewith another entity and enter into transactions with affiliates.  The Company was in compliance with thesecovenants as of March 31, 2005.

 

Intereston the Revolving Credit Facility accrues on all individual borrowings at aninterest rate determined at the option of the Company, at either the LIBORIndex plus an applicable LIBOR margin (not to exceed 3.5% (applicable margin was2.75% at March 31, 2005) and aggregating 5.3% at March 31, 2005), 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, 2005.  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 Revolving Credit Facilityis secured by substantially all of the Company’s property at the Las Vegassite.  The Revolving Credit Facilitycontains certain covenants including, among other things, financial covenants,limitations on the Company from disposing of capital stock, entering intomergers and certain acquisitions, incurring liens or indebtedness, issuingdividends on stock, and entering into transactions with affiliates.  The Company was in compliance with thesecovenants as of March 31, 2005.

 

Interest on the Junior Notes is payable on each January 15 and July 15,which commenced on January 15, 2004, and may be paid in cash or in kind atthe Company’s option, provided that interest will be paid in kind if a paymentof such interest in cash would cause a default under the 2013 Notes or the Revolving Credit Facility.  The Junior Notes require that any semi-annualinterest payment in cash be equal to the lesser of (x) 50% of the amount ofinterest accrued on the Junior Notes since the most recent interest paymentdate and (y) the amount of interest that the Company is permitted to pay incash without causing a default under the 2013 Notes or the Facility.  For interest payments payable in cash,interest accrues at a rate per annum equal to 9.875%, and for interest paymentspayable in kind, interest accrues at a rate per annum equal to 10.50% andincreases the principal amount of the Junior Notes.  On January 15, 2005, the Company paid incash $1.3 million of interest on the Junior Notes.  The remaining $1.4 million of accruedinterest was paid in kind at a rate of 10.50%. The Junior Notes are contractually subordinated to the 2013 Notes andthe Revolving Credit Facility andany other senior debt of the Company.

 

10

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The Junior Notes are contractually subordinated to the 2013 Notes andthe RevolvingCredit Facility and any other senior debt of the Company.  The Junior Notes mature on January 15,2014 but are subject to redemption at the option of the Company, in whole or inpart, at any time on or after January 15, 2009, at a premium to theprincipal amount thereof that decreases on each subsequent anniversary date,plus accrued interest to the date of redemption.  The Junior Notes contain covenantsrestricting the Company’s ability to, among other things, sell or otherwisedispose of its assets, pay dividends, incur additional indebtedness, makeacquisitions or merge or consolidate with another entity and enter intotransactions with affiliates.  TheCompany was in compliance with these covenants as of March 31, 2005.

 

**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 that we record as liabilities in ourfinancial statements.  We also enter intoother purchase commitments and other executory contracts that are notrecognized 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, 2005, there have been no material changes to thetable of contractual obligations and commitments in our most recently filed Form 10-K.

 

Wemade cash interest payments on long-term debt, including capitalized interest,of $1.6 million and $1.7 million in the three month periods ended March 31,2005 and 2004, respectively.  Weanticipate our cash interest payments for the remainder of 2005 to be in excessof these levels due to the timing of payments. We have not made significant cash tax payments during the three monthperiods ended March 31, 2005 and 2004 and, due to available net operatingloss and AMT tax credit carryforwards, we do not anticipate making significantcash tax payments in the remainder of 2005. Total supervisory fee expense for the three month periods ended March 31,2005 and 2004 amounted to $0.8 million and $0.7 million, respectively, underthe Company’s Amended and Restated Supervisory Agreement with PeterMorton.  The supervisory fee is equal totwo percent of annual gross revenues (as defined in the Supervisory Agreement),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 About Market Risk

 

Marketrisks relating to our operations result primarily from changes in short-termLIBOR interest rates.  We do not have anyforeign exchange or other significant market risk.  We did not have any derivative financialinstruments at March 31, 2005.

 

Ourexposure to market risk for changes in interest rates relates primarily to ourcurrent Revolving Credit Facility. In accordance with the RevolvingCredit Facility, we enter intovariable rate debt obligations to support general corporate purposes, includingcapital expenditures and working capital needs. We continuously evaluate our level of variable rate debt with respect tototal debt and other factors, including assessment of the current and futureeconomic environment.

 

We had $15.5 million in variable rate debtoutstanding at March 31, 2005. Based upon these variable rate debt levels, a hypothetical 10% adversechange in the effective interest rate (approximately a 53 basis point increase)would increase interest expense by approximately $0.1 million on an annualbasis, 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.

 

Thefair value of the Company’s $140 million of 8.875% Second Lien Notes, which aredue in 2013 and are publicly traded, approximated $151.2 million at March 31,2005 based on published bid prices.  Thefair value of the Company’s $54.4 million of Junior Notes cannot be estimatedas a substantial portion were held by Mr. Mortonor affiliates of Mr. Morton and there was no established market norpublished bid prices.

 

Item 4.            Controls and Procedures

 

(a) Disclosure Controls and Procedures.  TheCompany’s management, with the participation of the Company’s Chief ExecutiveOfficer and Chief Financial Officer, has evaluated the effectiveness of theCompany’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”)) as of the end of the period covered by this report.  Based on such evaluation, the Company’s ChiefExecutive Officer and Chief Financial Officer have concluded that, as of theend of such period, the Company’s disclosure controls and procedures areeffective in recording, processing, summarizing and reporting, on a timelybasis, information required to be disclosed by the Company in the reports thatit files or submits under the Exchange Act.

 

(b) Internal Control Over Financial Reporting.  There have not been any changes in theCompany’s internal control over financial reporting (as such term is defined inRules 13a-15(f) and 15d-15(f) under the Exchange Act) during thefiscal quarter to which this report relates that have materially affected, orare reasonably likely to materially affect, the Company’s internal control overfinancial reporting.

 

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PART II OTHER INFORMATION

 

Item 1.                                     Legal Proceedings

 

We are a defendant in various lawsuits relating to routine mattersincidental to our business.  Managementdoes not believe that the outcome of any litigation, in the aggregate, willhave a material adverse effect on our business or results of operations.

 

Item6.                                     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.                                                                                                                                      |
|                |       |                                                                                                                                                                                                            |
| (3)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.                                       |
|                |       |                                                                                                                                                                                                            |
| (3)4.2              |       | Form of  Global 8 7/8% Second Lien Notes due 2013 (included in Exhibit 4.1)                                                                                                                           |
|                |       |                                                                                                                                                                                                            |
| (3)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.                                    |
|                |       |                                                                                                                                                                                                            |
| (3)4.4              |       | Intercreditor  Agreement, dated as of May 30, 2003, among the Company, U.S. Bank, N.A.  and Bank of America, N.A.                                                                                          |
|                |       |                                                                                                                                                                                                            |
| (3)4.5              |       | Form of  Junior Subordinated Notes.                                                                                                                                                                        |
|                |       |                                                                                                                                                                                                            |
| (4)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.  |
|                |       |                                                                                                                                                                                                            |
| (4)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. |
|                |       |                                                                                                                                                                                                            |
| 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                       |
|                |       |                                                                                                                                                                                                            |
| 10.                 |       | MATERIAL  CONTRACTS.                                                                                                                                                                                            |
|                |       |                                                                                                                                                                                                            |
| 10.1                |       | Lease  by and between the Company, PM Realty, LLC and Mr. Chow of Las Vegas,  LLC dated December 24, 2004.                                                                                            |

 

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(1)                                  Incorporated byreference to designated exhibit to our Registration Statement on Form S-4,filed with the Securities and Exchange Commission on May 21, 1998 (File No. 333-53211).

 

(2)                                  Incorporated byreference to designated exhibit to our Report on Form 10-Q, filed with theSecurities and Exchange Commission for the quarter ended August 31, 1999(File No. 333-53211).

 

(3)                                  Incorporated byreference to designated exhibit to our Registration Statement on Form S-4,filed with the Securities and Exchange Commission on July 8, 2003 (File No. 333-106863).

 

(4)                                  Incorporated byreference to designated exhibit to our Registration Statement on Amendment No. 1to Form S-4, filed with the Securities and Exchange Commission on November 26,2003 (File No. 333- 106863).

 

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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 11, 2005 | /s/ JAMES D. BOWEN                                         |   |
|                          | James D. Bowen                                             |
|                          | CHIEF FINANCIAL OFFICER                                    |
|                          | (PRINCIPAL FINANCIAL OFFICER AND DULY  AUTHORIZED OFFICER) |

 

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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.                                                                                                                                     |
|                |       |                                                                                                                                                                                                           |
| (3)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.                                       |
|                |       |                                                                                                                                                                                                           |
| (3)4.2              |       | Form of Global 8 7/8% Second Lien Notes due 2013 (included in Exhibit 4.1)                                                                                                                           |
|                |       |                                                                                                                                                                                                           |
| (3)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.                                    |
|                |       |                                                                                                                                                                                                           |
| (3)4.4              |       | Intercreditor Agreement, dated as of May 30, 2003, among the  Company, U.S. Bank, N.A. and Bank of America, N.A.                                                                                          |
|                |       |                                                                                                                                                                                                           |
| (3)4.5              |       | Form of Junior Subordinated Notes.                                                                                                                                                                        |
|                |       |                                                                                                                                                                                                           |
| (4)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.  |
|                |       |                                                                                                                                                                                                           |
| (4)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. |
|                |       |                                                                                                                                                                                                           |
| 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                      |
|                |       |                                                                                                                                                                                                           |
| 10.                 |       | MATERIAL CONTRACTS.                                                                                                                                                                                            |
|                |       |                                                                                                                                                                                                           |
| 10.1                |       | Lease by and between the Company, PM Realty, LLC and Mr. Chow of  Las Vegas, LLC dated December 24, 2004.                                                                                            |

 

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(1)                                  Incorporated byreference to designated exhibit to our Registration Statement on Form S-4,filed with the Securities and Exchange Commission on May 21, 1998 (File No. 333-53211).

 

(2)                                  Incorporated byreference to designated exhibit to our Report on Form 10-Q, filed with theSecurities and Exchange Commission for the quarter ended August 31, 1999(File No. 333-53211).

 

(3)                                  Incorporated byreference to designated exhibit to our Registration Statement on Form S-4,filed with the Securities and Exchange Commission on July 8, 2003 (File No. 333-106863).

 

(4)                                  Incorporated byreference to designated exhibit to our Registration Statement on Amendment No. 1to Form S-4, filed with the Securities and Exchange Commission on November 26,2003 (File No. 333- 106863).

 

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