1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- -------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998
OR
- -------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File No. 1-12962
GRAND CASINOS, INC.
-------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-1689535
--------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
130 Cheshire Lane
Minnetonka, Minnesota 55305
--------------------- -----
(Address of principal executive offices) (Zip Code)
(612) 449-9092
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of May 8, 1998, there were 42,155,485 shares of Common Stock, $0.01 par value
per share, outstanding.
Page 1 of 29
2
GRAND CASINOS, INC. AND SUBSIDIARIES
INDEX
Page of
Form 10-Q
---------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of 3
March 29, 1998 and December 28, 1997
Consolidated Statements of Earnings 4
for the three months ended March 29, 1998
and March 30, 1997
Consolidated Statements of Cash Flows 5
for the three months ended March 29, 1998
and March 30, 1997
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND 14
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 20
ITEM 6. Exhibits and Reports On Form 8-K 27
- 2 -
3
GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED) *
MARCH 29, 1998 DECEMBER 28, 1997
- ------------------------------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $221,536 $238,635
Current installments of notes receivable 5,525 6,856
Accounts receivable 23,245 15,644
Deferred income taxes 12,602 13,399
Other current assets 15,219 15,087
- --------------------------------------------------------------------------------------------------
Total Current Assets 278,127 289,621
- --------------------------------------------------------------------------------------------------
Property and Equipment-Net 974,605 941,022
- --------------------------------------------------------------------------------------------------
Other Assets:
Cash and cash equivalents-restricted 8,405 4,967
Securities available for sale 16,878 13,110
Notes receivable-less current installments 29,003 26,979
Investments in and notes from unconsolidated affiliates 8,123 8,180
Debt issuance and deferred licensing costs-net 25,012 26,000
Other long-term assets 27,672 23,858
- --------------------------------------------------------------------------------------------------
Total Other Assets 115,093 103,094
- --------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,367,825 $1,333,737
==================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $9,249 $12,947
Current installments of long-term debt 2,912 3,509
Current installments of capital lease obligations 93,873 97,376
Accrued interest 19,926 5,817
Accrued payroll and related expenses 19,823 25,555
Other accrued expenses 34,981 22,398
- --------------------------------------------------------------------------------------------------
Total Current Liabilities 180,764 167,602
- --------------------------------------------------------------------------------------------------
Long-term Liabilities:
Long-term debt-less current installments 566,487 566,434
Deferred income taxes 97,749 97,085
- --------------------------------------------------------------------------------------------------
Total Long-Term Liabilities 664,236 663,519
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 845,000 831,121
- --------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:
Capital stock, $.01 par value; authorized 100,000 shares;
common stock issued and outstanding 42,054 and 41,966
at March 29, 1998 and December 28, 1997, respectively 420 420
Additional paid-in-capital 414,076 413,631
Net unrealized losses on securities available for sale (622) (2,947)
Retained earnings 108,951 91,512
- --------------------------------------------------------------------------------------------------
Total Shareholders' Equity 522,825 502,616
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,367,825 $1,333,737
==================================================================================================
* DERIVED FROM AUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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4
GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
(UNAUDITED)
THREE MONTHS ENDED
-----------------------------------------
MARCH 29, 1998 MARCH 30, 1997
- -----------------------------------------------------------------------------------------------------
REVENUES:
Casino $126,182 $ 108,680
Hotel 9,870 7,063
Food and beverage 17,871 14,605
Management fee income 23,030 19,054
Retail and other income 2,967 2,937
- -----------------------------------------------------------------------------------------------------
Gross Revenues 179,920 152,339
Less: Promotional allowances (13,456) (10,169)
- -----------------------------------------------------------------------------------------------------
NET REVENUES 166,464 142,170
- -----------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Casino 41,323 38,480
Hotel 3,095 1,819
Food and beverage 8,870 7,985
Other operating expenses 2,901 3,061
Depreciation and amortization 14,063 11,551
Lease expense 5,395 4,505
Selling, general and administrative 54,697 43,906
- -----------------------------------------------------------------------------------------------------
Total Costs and Expenses 130,344 111,307
- -----------------------------------------------------------------------------------------------------
EARNINGS FROM OPERATIONS 36,120 30,863
- -----------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 4,067 3,713
Interest expense (11,697) (10,646)
Other (305) (188)
- -----------------------------------------------------------------------------------------------------
Total expense, net (7,935) (7,121)
- -----------------------------------------------------------------------------------------------------
Earnings before income taxes 28,185 23,742
Provision for income taxes 10,746 9,161
- -----------------------------------------------------------------------------------------------------
Net Earnings $ 17,439 $ 14,581
=====================================================================================================
BASIC EARNINGS PER SHARE $ 0.42 $ 0.35
=====================================================================================================
DILUTED EARNINGS PER SHARE $ 0.40 $ 0.34
=====================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 41,984 41,827
=====================================================================================================
WEIGHTED AVERAGE COMMON AND DILUTED
SHARES OUTSTANDING 43,494 42,434
=====================================================================================================
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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5
GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 29, 1998 MARCH 30, 1997
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $17,439 $14,581
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 14,063 11,551
Equity in loss of unconsolidated affiliates 48 188
Deferred income taxes - 1,250
Changes in operating assets and liabilities:
Current assets (7,824) (5,651)
Accounts payable (3,698) (5,801)
Accrued expenses 21,013 3,581
- ----------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 41,041 19,699
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property and equipment (46,058) (36,813)
Increase in notes receivable (2,024) -
Proceeds from repayment of notes receivable 1,331 2,136
Decrease (increase) in cash and cash equivalents-restricted and other (3,438) 826
Decrease (increase) in other long-term assets (4,135) 132
- ----------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (54,324) (33,719)
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock-net 445 256
Debt issuance costs and deferred financing costs (161) 57
Payments on long-term debt and capital lease obligations (4,100) (4,991)
- ----------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (3,816) (4,678)
- ----------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (17,099) (18,698)
Cash and cash equivalents - beginning of year 238,635 147,254
- ----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF YEAR $221,536 $128,556
================================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of capitalized interest $1,526 $890
Income taxes - 10,500
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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6
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 1998
(UNAUDITED)
NOTE 1 UNAUDITED FINANCIAL STATEMENTS
Grand Casinos, Inc. and its subsidiaries, collectively the
Company, develops, constructs, and manages land-based and
dockside casinos and related hotel and entertainment
facilities. The Company owns and operates two dockside casinos
on the Mississippi Gulf Coast and one dockside casino in
Tunica County, Mississippi, and manages two Indian-owned
casinos in Minnesota (the management contract with Grand
Casino Mille Lacs in Onamia, Minnesota, expires on April 2,
1998) and two Indian-owned casinos in Louisiana. Related
hotel, health spa/salon, and convention center facilities at
Company-owned Grand Casino Biloxi, located in Biloxi,
Mississippi, and hotel and health spa/salon facilities at
Grand Casino Tunica, located in Tunica County, Mississippi,
are currently under construction. In addition, related hotel
facilities at Indian-owned Grand Casino Coushatta, located in
Kinder, Louisiana, are currently under construction.
The accompanying unaudited consolidated financial statements
include the accounts of Grand Casinos, Inc. and its
wholly-owned and majority-owned subsidiaries. Investments in
unconsolidated affiliates representing between 20% and 50% of
voting stock are accounted for on the equity method. All
material intercompany balances and transactions have been
eliminated in the consolidation.
The consolidated financial statements have been prepared by
the Company in accordance with generally accepted accounting
principles for interim financial information, in accordance
with the rules and regulations of the Securities and Exchange
Commission. Pursuant to such rules and regulations, certain
financial information and footnote disclosures normally
included in the consolidated financial statements have been
condensed or omitted. In the opinion of management, all
adjustments (consisting of normal recurring adjustments)
considered necessary for fair presentation have been included.
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7
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1 UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
Operating results for the three months ended March 29, 1998,
are not necessarily indicative of the results that may be
expected for the fiscal year ending January 3, 1999. Operating
results for such three months include management fees from the
Company's management of Grand Casino Mille Lacs. The contract
pursuant to which the Company managed Grand Casinos Mille Lacs
expired on April 2, 1998.
The consolidated financial statements should be read in
conjunction with the consolidated financial statements and
notes thereto included in the Company's annual report on Form
10-K for the year ended December 28, 1997.
NOTE 2 ACCOUNTING PRONOUNCEMENTS
The Company adopted FASB Statement No. 130, "Reporting
Comprehensive Income", effective December 29, 1997. Statement
No. 130 establishes standards for reporting and display of
comprehensive earnings and its components in financial
statements; however, the adoption of this Statement had no
impact on the Company's net earnings or shareholders' equity.
Statement No. 130 requires minimum pension liability
adjustments, unrealized gains or losses on the company's
available-for-sale securities and foreign currency translation
adjustments, which prior to adoption were reported separately
in shareholders' equity, to be included in other comprehensive
earnings. Total comprehensive earnings (loss) for the three
months ended March 29, 1998 and March 30, 1997 were $2.3
million and $(1.5) million. Differences between comprehensive
earnings for these periods were due to unrealized holding
gains and losses on securities available for sale.
During April 1998, the Accounting Standards Executive
Committee of the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" (SOP 98-5).
SOP 98-5 requires companies to expense as incurred all
start-up and preopening costs that are not otherwise
capitalizable as long-lived assets. SOP 98-5 is effective for
financial statements for fiscal years beginning after December
15, 1998. The Company expects to adopt the Statement effective
January 3, 1999. The effect of the adoption is not expected to
be significant. Start-up and preopening amounts capitalized as
of March 29, 1998 totaled $.5 million. The Company expects
that all such costs will be fully amortized prior to the end
of 1998.
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8
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
In March, 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1 ("SOP 98-1"),
"Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." The statement is effective for
fiscal years beginning after December 15, 1998. The statement
defines which costs of computer software developed or obtained
for internal use are capital and which costs are expense.
The effect of adoption is not expected to materially effect
the Company's financial position or results of operation.
NOTE 3 INTEREST COSTS
The Company's policy is to capitalize interest incurred on
debt during the course of qualifying construction projects at
Company-owned facilities. Such interest costs are amortized
over the related assets' estimated useful lives. For the three
months ended March 29, 1998 and March 30, 1997, approximately
$3.9 million and $2.4 million, respectively, of interest cost
was capitalized.
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9
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4 NOTES RECEIVABLE
Notes receivable consist of the following (in thousands):
Mar. 29, 1998 Dec. 28, 1997
------------- -------------
Notes from the Coushatta Tribe with interest at a defined
reference rate plus 1% (not to exceed 16%), receivable in
monthly installments through January 2002 23,564 22,722
Notes from the Tunica-Biloxi Tribe with interest at a defined
reference rate plus 1% (not to exceed 16%), receivable in
monthly installments through June 2001 10,375 10,409
Other, less allowance for doubtful accounts
of $3,050 and $3,050, respectively 589 704
------- -------
$34,528 $33,835
Less current installments of notes receivable (5,525) (6,856)
------- -------
Notes receivable-less current installments $29,003 $26,979
======= =======
NOTE 5 LONG-TERM DEBT
On November 30, 1995, the Company completed its public
offering of $450.0 million of eight year 10.125% first
mortgage notes due December 1, 2003. The first mortgage notes
are secured by substantially all the assets of Grand Casino
Biloxi and Grand Casino Gulfport as of November 30, 1995,
Grand Casino Tunica assets included in Phase 1 development as
described in the indenture pursuant to which the first
mortgage notes were issued, capital stock of Stratosphere
Corporation owned by the Company, and certain notes receivable
due the Company from Tribes. The first mortgage notes require
semi-annual payments of interest only on June 1 and December 1
of each year commencing June 1, 1996, and continuing until
December 1, 2003, at which time the entire principal plus
accrued interest is due and payable. The first mortgage notes
may be redeemed at the Company's option, in whole or in part,
anytime after December 1, 1999, at a premium, declining
ratably thereafter to par value on December 1, 2002.
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10
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5 LONG-TERM DEBT (CONTINUED)
On May 10, 1996, the Company completed a $120 million capital
lease facility through BA Leasing & Capital Corporation. The
five-year capital lease facility, with varying interest rates
ranging from 1.75% to 2.50% over the LIBO Rate, was used to
fund the continued development of the Company's Grand Casino
Tunica project, located in northern Mississippi, just outside
of Memphis, Tennessee. Approximately $90 million of the loan
was used for furniture, fixtures and equipment for the 340,000
square foot casino complex. The balance of approximately $30
million was used to construct a 600-room hotel at Grand Casino
Tunica. As of March 29, 1998, $93.9 million was the balance
owing under the capital lease facility. That balance was paid
in full on March 31, 1998. (See Note 7)
On September 30, 1997, the Company completed a $100.0 million
revolving loan facility through BA Leasing & Capital
Corporation. The five-year revolving capital lease facility,
with interest rates ranging from 1.75% to 2.50% over the LIBO
Rate, will be used for the continued development of Grand
Casino Tunica and Grand Casino Gulfport, as well as other
general corporate purposes. As of March 29, 1998, no advances
relating to this financing had been made.
On October 14, 1997, the Company completed a $115.0 million,
9.0%, seven-year, senior unsecured note offering due 2004. The
majority of the proceeds from the offering were used to
refinance the $120.0 million capital lease facility (described
above) on March 31, 1998. The notes require semi-annual
payments of interest only on April 15 and October 15 of each
year commencing April 15, 1998 and continuing until October
15, 2004, at which time the entire principal plus accrued
interest is due and payable. The notes may be redeemed in
whole or in part, anytime after October 15, 2001, at a
premium, declining ratably thereafter to par value on October
15, 2003.
NOTE 6 COMMITMENTS AND CONTINGENCIES
STRATOSPHERE CORPORATION
The Company owns approximately 38% of the common stock issued
by Stratosphere Corporation ("Stratosphere"). Stratosphere and
its wholly-owned operating subsidiary developed and operate
the Stratosphere
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11
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
STRATOSPHERE CORPORATION (CONTINUED)
Tower, Hotel and Casino in Las Vegas, Nevada. In January 1997,
Stratosphere and its wholly-owned operating subsidiary filed
for reorganization under Chapter 11 of the U.S. Bankruptcy
Code.
In October 1997, the Company announced that it had not been
able to reach an agreement with holders of a significant
portion of Stratosphere's first mortgage notes for a
consensual reorganization of Stratosphere that would involve
the Company's participation. The Company also announced that
it had no intention of participating in any plan or
reorganization for Stratosphere.
In March 1995, in connection with Stratosphere's issuance of
its first mortgage notes, the Company entered into a Standby
Equity Commitment Agreement (the "Standby Equity Commitment")
between Stratosphere and the Company. The Company agreed in
the Standby Equity Commitment, subject to the terms and
conditions stated in the Standby Equity Commitment, to
purchase up to $20.0 million of additional equity in
Stratosphere during each of the first three years Stratosphere
is operating (as defined in the Standby Equity Commitment) to
the extent Stratosphere's consolidated cash flow (as defined
in the Standby Equity Commitment) during each of such years
does not exceed $50.0 million.
Based on provisions of the U.S. Bankruptcy Code that the
Company contends apply to the Standby Equity Commitment, the
Company has asserted that the enforceability of the Standby
Equity Commitment is in question. Both the Official Committee
of Noteholders in the Stratosphere Bankruptcy case (the
"Official Committee") and the current trustee under the
indenture pursuant to which Stratosphere issued its first
mortgage notes (the "Trustee") claim that the Standby Equity
Commitment is enforceable.
The enforceability of the Standby Equity Commitment is the
subject of litigation to which the Company is a party in (i)
the Stratosphere bankruptcy case (as a result of a motion
brought by the Official Committee), and (ii) the U.S. District
Court for the district of Nevada (as a result of an action
brought by the Trustee). On February 19, 1998, the Bankruptcy
Court ruled that the Standby Equity Commitment is not
enforceable in the Stratosphere bankruptcy proceeding as a
matter of law.
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12
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
LOAN GUARANTY AGREEMENTS
The Company has guaranteed two loan and security agreements
entered into by the Tunica-Biloxi Tribe of Louisiana for $14.1
million for the purpose of financing casino equipment, and for
$16.5 million for the purpose of purchasing a hotel and
additional casino equipment. The agreements extend through
1998 and 2000, respectively, and as of March 29, 1998, the
amounts outstanding were $2.0 million and $11.4 million,
respectively.
The Company has also guaranteed loan and security agreements
entered into by the Coushatta Tribe of Louisiana for $22.3
million for the purpose of financing casino equipment. The
agreements are for three years and have various maturity dates
through 1998, and as of March 29, 1998, the amounts
outstanding were $1.6 million. In addition, on May 1, 1997,
the Company guaranteed a loan agreement entered into by the
Coushatta Tribe in the amount of $25.0 million, for the
purpose of constructing a hotel and acquiring additional
casino equipment. The guaranty will remain in effect until the
loan is paid. The loan term is approximately five years. As of
March 29, 1998, $5.1 million have been advanced under this
loan agreement.
The Company has entered into a master hotel development
agreement with Casino Resource Corporation for the Grand
Casino Hinckley Inn adjacent to Grand Casino Hinckley. The
Company has guaranteed the mortgage for the hotel which had an
unpaid principal balance of $2.4 million as of March 29, 1998.
OTHER
The Company is a defendant in various pending litigation. In
management's opinion, the ultimate outcome of such litigation
will not have a material adverse effect on the results of
operations or the financial position of the Company. See Part
II - Item 1. Legal Proceedings of this Form 10-Q.
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13
GRAND CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 7 SUBSEQUENT EVENTS
On March 31, 1998, the Company used cash proceeds received
from the $115.0 million, senior unsecured note offering which
closed on October 14, 1997, to pay off the $94.6 million
balance of principal and interest, remaining under the $120.0
million capital lease facility dated May 10, 1996. Unamortized
debt issuance costs of $2.6 million will be classified as
extraordinary loss relating to early extinguishment of debt
for the quarter ended June 28, 1998.
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14
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company develops, constructs and manages land-based and
dockside casinos and related hotel and entertainment
facilities in emerging and established gaming jurisdictions.
The Company's revenues are derived from the Company-owned
casinos of Grand Casino Biloxi, Grand Casino Gulfport, and
Grand Casino Tunica, and from management fee income from Grand
Casino Mille Lacs, Grand Casino Hinckley, Grand Casino
Avoyelles, and Grand Casino Coushatta.
Pursuant to the Mille Lacs, Hinckley, Avoyelles, and Coushatta
management contracts, the Company receives a fee based on the
net distributable profits (as defined in the contracts)
generated by Grand Casino Mille Lacs, Grand Casino Hinckley,
Grand Casino Avoyelles, and Grand Casino Coushatta. The
management agreement for Grand Casino Mille Lacs expired on
April 2, 1998. The Company believes that the management
agreement for Grand Casino Hinckley, which expires in June
1999, will not be renewed.
The Company commenced operations in August 1990, and opened
its Company-owned casinos, Grand Casino Gulfport, Grand Casino
Biloxi and Grand Casino Tunica in May 1993, January 1994 and
June 1996, respectively.
Therefore, the Company's limited operating history may not be
indicative of the Company's future performance. In addition, a
comparison of results from year to year may not be meaningful
due to the opening of new facilities during such years. The
Company's growth strategy contemplates expanding existing
operations and establishing additional gaming operations.
The successful implementation of this growth strategy is
contingent upon the satisfaction of various conditions and the
occurrence of certain events, including obtaining governmental
approvals and increased competition, many of which are beyond
the control of the Company. The Company expects that Grand
Casino Biloxi and Grand Casino Gulfport may be affected by the
addition of new competition on the Mississippi Gulf Coast.
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15
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
OVERVIEW (CONTINUED)
The following discussion and analysis should be read in
conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 28, 1997.
Revenues from owned and operated casinos are calculated in
accordance with generally accepted accounting principles and
are presented in a manner consistent with industry practice.
Net distributable profits from Grand Casino Mille Lacs, Grand
Casino Hinckley, Grand Casino Avoyelles, and Grand Casino
Coushatta are computed using a modified cash basis of
accounting in accordance with the management contracts. The
effect of the use of the modified cash basis of accounting is
to accelerate the write-off of capital equipment and leased
assets, which thereby impacts the timing of net distributable
profits.
As of May 1, 1998, the Louisiana legislature is considering
various proposals for state constitutional amendments and/or
legislation that attempt to impose certain taxes, including
excise taxes on certain activities conducted on Indian
reservations. It appears that the proposals are contemplated
to become effective after the expiration dates of the existing
compacts between the State of Louisiana and the Indian tribes
that own and operate casinos in the State of Louisiana. The
issue of the enforceability of such taxes, however, will
involve complex legal issues, the resolution of which cannot
be predicted with certainty.
If any such proposal results in a legally-enforceable tax on
the activities of the Company's subsidiaries that manage Grand
Casino Avoyelles and/or Grand Casino Coushatta, and that tax
is effective during any time that such subsidiaries manage
such casinos, the tax may have an adverse effect on the
Company.
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16
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 29, 1998 COMPARED TO THE THREE MONTHS
ENDED MARCH 30, 1997
Earnings Per Common Share and Net Earnings
Basic and diluted earnings per common share were $.42 per
share and $.40 per share, respectively, for the three months
ended March 29, 1998, compared to $.35 per share and $.34 per
share, respectively for the prior year's comparable period.
Net earnings increased $2.9 million to $17.4 million for the
three months ended March 28, 1998 compared to the same period
in the prior year.
Revenues
Grand Casino Biloxi, Grand Casino Gulfport, and Grand Casino
Tunica generated $126.2 million in gross casino revenue and
$30.7 million in gross hotel, food, beverage, retail, and
entertainment revenue during the three months ended March 29,
1998. During the three months ended March 30, 1997, Grand
Casino Biloxi, Grand Casino Gulfport and Grand Casino Tunica
generated $108.7 million in gross casino revenue and $24.6
million in gross hotel, food, beverage and retail revenue.
The increase in gross revenues is attributable to increased
revenue at all properties. Grand Casino Tunica's gross
revenues increased $14.5 million to $53.7 million, an increase
of 37.1%, for the three months ended March 29, 1998.
Contributing to this increase at Grand Casino Tunica, the
Veranda Hotel and Convention Center, which were not open
during the first quarter of 1997, were open during the entire
first quarter of 1998. In addition, other new amenities added
in the Tunica market appear to have increased the overall
Tunica market capacity. Combined gross revenues for Grand
Casino Biloxi and Grand Casino Gulfport increased $9.7 million
for the three months ended March 29, 1998, compared to the
same period in the prior year. Contributing to this increase
was the opening of a 500-room hotel at Grand Casino Biloxi in
mid-February 1998. Finally, the Company's management fees from
Indian-owned casinos increased $4.0 million or 20.9% for the
three months ended March 29, 1998, compared to the same period
in the prior year.
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17
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
Costs and Expenses
Total costs and expenses increased $19.0 million, from $111.3
million for the three months ended March 30, 1997, to $130.0
million for the three months ended March 29, 1998. Casino
expenses were $41.3 million for the three month period ended
March 29, 1998, compared to $38.5 million for the comparable
period in 1997. This increase of $2.8 million relates to a
$17.5 million increase in casino revenue for such three-month
period, compared to the same period in the prior year. Food
and beverage expenses increased $.9 million to $8.9 million
for the three month period ended March 29, 1998. The increase
relates to a $3.3 million increase in food and beverage
revenues.
Selling, general, and administrative expenses increased $10.8
million from $43.9 million for the three months ended March
30, 1997 to $54.7 million for the three months ended March 29,
1998. Grand Casino Tunica's selling, general, and
administrative expenses increased $3.0 million. In addition,
combined selling, general, and administrative expenses for
Grand Casino Biloxi and Grand Casino Gulfport increased $1.5
million. The increases relate primarily to an increase in
marketing and health insurance costs. Corporate expenses for
the three months ended March 29, 1998 increased by $6.3
million from the same period in 1997. Costs associated with
the relocation of the corporate headquarters and additional
litigation reserves accounted for $5.7 million of the
increase.
Other
Interest income increased by $1.4 million to $4.1 million for
the three months ended March 29, 1998 as a result of
additional cash available for investment. Interest expense
increased by $1.1 million to $11.7 million for the three
months ended March 29, 1998. The increase is the result of the
$115.0 million senior unsecured notes being outstanding, and
the proceeds of which being unused, during the three month
period ended March 29, 1998, offset by an increase in
capitalized interest for the same period. Capitalized interest
was $3.9 million and $2.4 million for the three months ended
March 29, 1998 and March 30, 1997, respectively.
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18
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
CAPITAL RESOURCES, CAPITAL SPENDING, AND LIQUIDITY
At March 29, 1998, the Company had $221.5 million in cash and
cash equivalents, of which $94.6 million was used to pay
off an existing capital lease facility and related interest on
March 31, 1998.
Net cash provided by operating activities totaled $41.0
million for the three month period ended March 29, 1998,
compared with $19.7 million for the three month period ended
March 30, 1997. During the three month periods ended March 29,
1998 and March 30, 1997, the Company's capital expenditures
totaled $46.1 and $36.8 million, respectively. Capital
expenditures related primarily to constructing new 600-room
hotels at Grand Casino Tunica and Grand Casino Gulfport and
completion of a new 500-room hotel at Grand Casino Biloxi.
At March 29, 1998, the Company's long-term debt included
10.125% first mortgage notes due in 2003 in the amount of
$450.0 million and 9% senior unsecured notes in the amount of
$115.0 million due in 2004 (which the Company secured for
refinancing an existing capital lease facility). The first
mortgage notes are redeemable on December 1, 1999, or
thereafter based on a stated premium that declines ratably to
par value. The senior unsecured notes are redeemable on
October 15, 2001, or thereafter based on a stated premium that
declines ratably to par value.
As of March 29, 1998, $93.9 million remained outstanding on
the capital lease facility and is classified as a current
liability on the March 29, 1998 balance sheet. The balance was
paid in full on March 31, 1998 using proceeds from the senior
unsecured notes. The Company also has available a $100.0
million revolving capital lease facility for continued
development of Grand Casino Gulfport and Grand Casino Tunica.
As of March 29, 1998, no advance relating to this financing
had been made.
Pursuant to the Company's covenants related to the 10.125%
first mortgage notes and the 9% senior unsecured notes and to
provide funds for the growth of the Company, no cash dividends
are expected to be paid on common shares in the foreseeable
future.
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19
GRAND CASINOS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(UNAUDITED)
FORWARD-LOOKING STATEMENTS
Certain information included in this Form 10-Q and other
materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information
included in oral statements or other written statements made
or to be made by the Company) contains statements that are
"forward-looking" under the Federal Private Securities
Litigation Reform Act of 1995.
Forward-looking statements are those which include statements
regarding projections, plans and objectives, and future
economic performance, together with statements regarding any
assumptions pertaining to such projections, plans and
objectives, and future economic performance. While these
forward-looking statements reflect the best judgment of the
Company, based on information available on the date when such
statements are made, such statements are all subject to risks
and uncertainties that could cause actual results to vary from
the forward-looking statements made. Those variances could be
significant.
Such forward-looking statements involve risks and
uncertainties that could significantly affect future results,
and accordingly, such results may differ from those expressed
in any forward-looking statements made by or on behalf of the
Company. These risks and uncertainties include, but are not
limited to, those relating to development and construction
activities, dependence on existing management, leverage and
debt service (including sensitivity to fluctuations in
interest rates), changes in competitive conditions, domestic
or global economic conditions, changes in federal or state tax
laws or the administration of such laws and changes in gaming
laws or regulations (including the legalization of gaming in
certain jurisdictions). In addition to any specific risks and
uncertainties mentioned or discussed in this Form 10-Q, the
risks and uncertainties discussed in detail in the Company's
1997 Form 10-K provide information which should be considered
in evaluating any of the Company's forward-looking statements.
In addition, you should be aware that the facts and
circumstances which exist when any forward-looking statements
are made and on which those forward-looking statements are
based may significantly change in the future, thereby
rendering obsolete the forward-looking statements on which
such facts and circumstances were based.
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20
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following descriptions are summaries of the status of each
of the following legal proceedings as of May 1, 1998. More
complete and/or updated information may be obtained by
reviewing the court files pertaining to such proceedings.
COHEN - STATE ACTION
In August 1995, Harvey Cohen brought a legal action in the
District Court for Clark County, Nevada -- Harvey J. Cohen, et
al. v. Stratosphere Corporation, et al. - Case No. A349985 --
against various defendants, including Grand Casinos Resorts,
Inc., a wholly owned subsidiary of the Company. Cohen alleges
securities law violations and various state law claims in
connection with the initial public offering (the "IPO") for
Stratosphere Corporation ("Stratosphere"). Cohen brought the
action as a class action, and alleges that the defendants
deprived the plaintiffs of the opportunity to purchase
Stratosphere common stock in the IPO.
The state action was, by agreement of the parties, stayed
pending a decision in a similar action brought by Cohen in
1994 in U.S. District Court for the District of Nevada. Cohen
alleged securities law violations and various state law claims
in the federal action. The federal action was dismissed by the
U.S. District Court, and that dismissal was affirmed by the
U.S. Court of Appeals.
The Company has requested that the state action be dismissed
based on the decision in the federal action.
SLOT MACHINE LITIGATION - NEVADA
In April 1994, William H. Poulos brought a legal action in the
U.S. District Court for the Middle District of Florida,
Orlando Division -- William H. Poulos, et al. vs. Caesars
World, Inc. et al. - Case No. 39-478-CIV-ORL-22 -- in which
various parties (including the Company) alleged to operate
casinos or be slot machine manufacturers were named as
defendants. The plaintiff sought to have the action certified
as a class action.
A subsequently filed action -- William Ahearn, et al. vs.
Caesars World, Inc., et al. - Case No. 94-532-CIV-ORL-22 --
made similar allegations and was consolidated with the Poulos
action.
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21
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
SLOT MACHINE LITIGATION - NEVADA (CONTINUED)
Both actions included claims under the federal
Racketeering-Influenced and Corrupt Organizations Act and
under state law, and sought compensatory and punitive damages.
The plaintiffs claimed that the defendants are involved in a
scheme to induce people to play electronic video poker and
slot machines based on false beliefs regarding how such
machines operate and the extent to which a player is likely to
win on any given play.
In December 1994, the consolidated actions were transferred to
the U.S. District Court for the District of Nevada.
In September 1995, Larry Schreier brought an action in the
U.S. District Court for the District of Nevada -- Larry
Schreier, et al. vs. Caesars World, Inc., et al. - Case No.
CV-S-95-00923-DWH (RJJ).
The plaintiffs' allegations in the Schreier action were
similar to those made by the plaintiffs in the Poulos and
Ahearn actions, except that Schreier claimed to represent a
more precisely defined class of plaintiffs than Poulos or
Ahearn.
In December 1996, the court ordered the Poulos, Ahearn and
Schreier actions consolidated under the title William H.
Poulos, et al. vs. Caesars World, Inc., et al. - Case No.
CV-S-94-1126 - DAE (RJJ) - (Base File), and required the
plaintiffs to file a consolidated and amended complaint. In
February 1997, the plaintiffs filed a consolidated and amended
complaint.
In March 1997, various defendants (including the Company)
filed motions to dismiss or stay the consolidated action until
the plaintiffs submitted their claims to gaming authorities
and those authorities considered the claims submitted by the
plaintiffs.
In December 1997, the court denied all of the motions
submitted by the defendants, and ordered the plaintiffs to
file a new consolidated and amended complaint. That complaint
has been filed. The Company has filed its answer to the new
complaint.
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22
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STRATOSPHERE SECURITIES LITIGATION - FEDERAL
In August 1996, a complaint was filed in the U.S. District
Court for the District of Nevada -- Michael Caesar, et al. v.
Stratosphere Corporation, et al. -- against Stratosphere
Corporation and others, including the Company. The complaint
was filed as a class action, and sought relief on behalf of
Stratosphere shareholders who purchased their stock between
December 19, 1995 and July 22, 1996. The complaint included
allegations of misrepresentations, federal securities law
violations and various state law claims.
In August through October 1996, several other nearly identical
complaints were filed by various plaintiffs in the U.S.
District Court for the District of Nevada.
The defendants in the actions submitted motions requesting
that all of the actions be consolidated. Those motions were
granted in January 1997, and the consolidated action is
entitled In Re: Stratosphere Corporation Securities Litigation
- Master File No. CV-S-96-00708 PMP (RLH).
In February 1997, the plaintiffs filed a consolidated and
amended complaint naming various defendants, including the
Company and certain current and former officers and directors
of the Company. The amended complaint included claims under
federal securities laws and Nevada laws based on acts alleged
to have occurred between December 19, 1995 and July 26, 1996.
In February 1997, various defendants, including the Company
and the Company's officers and directors named as defendants,
submitted motions to dismiss the amended complaint. Those
motions were made on various grounds, including the Company's
claim that the amended complaint failed to state a valid cause
of action against the Company and the Company's officers and
directors.
In May 1997, the court dismissed the amended complaint. The
dismissal order did not allow the plaintiffs to further amend
their complaint in an attempt to state a valid cause of
action.
In June 1997, the plaintiffs asked the court to reconsider its
dismissal order, and to allow the plaintiffs to submit a
second amended complaint in an attempt to state a valid cause
of action. In July 1997, the court allowed the plaintiffs to
submit a second amended complaint.
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23
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STRATOSPHERE SECURITIES LITIGATION - FEDERAL (CONTINUED)
In August 1997, the plaintiffs filed a second amended
complaint. In September 1997, certain of the defendants,
including the Company and the Company's officers and directors
named as defendants, submitted a motion to dismiss the second
amended complaint. The motion was based on various grounds,
including the Company's claim that the second amended
complaint failed to state a valid cause of action against the
Company and those officers and directors.
In April 1998, the court granted the Company's motion to
dismiss in part, and denied the motion in part. Thus, the
plaintiffs are pursuing the claims in the second amended
complaint that survived the Company's motion to dismiss.
STRATOSPHERE SECURITIES LITIGATION - STATE
In August 1996, a complaint was filed in the District Court
for Clark County, Nevada -- Victor M. Opitz, et al. v. Robert
E. Stupak, et al. - Case No. A363019 -- against various
defendants, including the Company. The complaint seeks relief
on behalf of Stratosphere Corporation shareholders who
purchased stock between December 19, 1995 and July 22, 1996.
The complaint alleges misrepresentations, state securities law
violations and other state claims.
The Company and certain defendants submitted motions to
dismiss or stay the state court action pending resolution of
the federal court action described above. The court has stayed
further proceedings pending the resolution of In Re:
Stratosphere Securities Litigation.
GRAND SECURITIES LITIGATION - FEDERAL
In September and October 1996, two actions were filed by
Company shareholders in the U.S. District Court for the
District of Minnesota against the Company and certain of the
Company's current and former directors and officers.
The complaints allege misrepresentations, federal securities
law violations and other claims in connection with the
Stratosphere project.
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24
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
GRAND SECURITIES LITIGATION - FEDERAL (CONTINUED)
The actions have been consolidated as In Re: Grand Casinos,
Inc. Securities Litigation - Master File No. 4-96-890 -- and
the plaintiffs filed a consolidated complaint. The defendants
submitted a motion to dismiss the consolidated complaint,
based in part on the Company's claim that the consolidated
complaint failed to properly state a cause of action.
In December 1997, the court granted the Company's motion to
dismiss in part, and denied the motion in part. Thus, the
plaintiffs are pursuing the claims in the consolidated
complaint that survived the Company's motion to dismiss.
Discovery has begun.
DERIVATIVE ACTION
In February 1997, certain shareholders of the Company brought
an action in the Hennepin County, Minnesota District Court --
Lloyd Drilling, et al. v. Lyle Berman, et al. - Court File No.
MC97-002807 -- against certain current and former officers and
directors of the Company. The plaintiffs allege that those
officers and directors breached certain fiduciary duties to
the shareholders of the Company as a result of certain
transactions involving the Stratosphere project.
Pursuant to Minnesota law, the Company's Board of Directors
appointed an independent special litigation committee to
evaluate whether the Company should pursue the claims made in
the action against the officers and directors. The special
litigation committee completed its evaluation in December
1997, and filed a report with the court recommending that such
claims not be pursued.
The Company is providing the defense for the Company's current
and former officers and directors who are defendants in the
action pursuant to the Company's indemnification obligations
to such defendants.
The Company has submitted a motion to dismiss the action based
on the special litigation committee's report. The plaintiffs
have opposed that motion. As of May 1, 1998, the court has not
ruled on the motion.
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25
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STRATOSPHERE VACATION CLUB LITIGATION
In late April 1997, the Company and Grand Casinos Resorts,
Inc. ("Resorts"), a wholly-owned subsidiary of the Company,
were made defendants in an action in District Court in Clark
County, Nevada -- Richard Duncan, et al. vs. Bob and Jane Doe
Stupak, et al. - Case No. A370127. The plaintiffs allege that
the defendants, including the Company and Resorts, engaged in
acts that constitute "consumer fraud" under Nevada law in
connection with vacation packages which the defendants claim
to have purchased from Bob Stupak. The plaintiffs also allege
"unjust enrichment", breach of contract and other claims under
Nevada law. The plaintiffs seek to pursue their claims as a
class action, and ask for various remedies including
compensatory damages and punitive damages.
The Company submitted a motion to dismiss the complaint as it
pertains to Company and Resorts. The court denied the motion
to dismiss. Discovery has begun.
In April 1998, the court preliminarily approved a proposed
settlement of the action. The terms and conditions of the
settlement are described in a settlement agreement filed with
the court. As of May 1, 1998, the proposed settlement remains
subject to certain conditions described in the settlement
agreement, including final court approval.
STRATOSPHERE NOTEHOLDER COMMITTEE BANKRUPTCY COURT ACTION
In June 1997, the Official Committee of Noteholders (the
"Committee") in the Chapter 11 bankruptcy proceeding for
Stratosphere Corporation ("Stratosphere") pending in the U.S.
Bankruptcy Court for the District of Nevada (the "Bankruptcy
Court") filed a motion by which the Committee sought
Bankruptcy Court approval for assumption (on behalf of
Stratosphere's bankruptcy estate) of the March 1995 Standby
Equity Commitment (the "Standby Equity Commitment") between
Stratosphere and the Company.
In the motion, the Committee sought Bankruptcy Court
authorization to compel the Company to fund up to $60 million
in "capital contributions" to Stratosphere over three years,
based on the Committee's claim that such "contributions" are
required by the Standby Equity Commitment.
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26
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STRATOSPHERE NOTEHOLDER COMMITTEE BANKRUPTCY COURT ACTION
(CONTINUED)
The Company opposed the Committee's motion. The Company
asserted, in its opposition to the Committee's motion, that
the Standby Equity Commitment is not enforceable in the
Stratosphere bankruptcy proceeding as a matter of law.
The Bankruptcy Court held a preliminary hearing on the
Committee's motion in June 1997, and an evidentiary hearing in
February 1998 on the issues raised by the Committee's motion
and the Company's opposition to that motion.
In February 1998, the Bankruptcy Court denied the Committee's
motion, and determined that the Standby Equity Commitment
cannot be assumed (or enforced) by Stratosphere under
applicable bankruptcy law.
STANDBY EQUITY COMMITMENT LITIGATION
In September 1997, the successor trustee (the "Stratosphere
Trustee") under the indenture pursuant to which Stratosphere
Corporation issued Stratosphere Corporation's first mortgage
notes filed a complaint in the U.S. District Court for the
District of Nevada - - IBJ Schroeder Bank & Trust Company,
Inc. vs. Grand Casinos, Inc. - File No. CV-S- 97-01252-DWH
(RJJ) - - naming the Company as defendant.
The complaint alleges that the Company failed to perform under
the Standby Equity Commitment entered into between
Stratosphere Corporation and the Company in connection with
Stratosphere Corporation's issuance of such first mortgage
notes in March 1995. The complaint seeks an order compelling
specific performance of what the Committee claims are the
Company's obligations under the Standby Equity Commitment. The
Stratosphere Trustee filed the complaint in its alleged
capacity as a third party beneficiary under the Standby Equity
Commitment.
The Company has submitted a motion requesting that the
district court stay further proceedings pending resolution of
the standby equity commitment issues pending in the
Stratosphere bankruptcy case.
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27
GRAND CASINOS, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
(CONTINUED)
STRATOSPHERE PREFERENCE CLAIM
In April 1998, Stratosphere served on the Company and Grand
Media & Electronics Distributing, Inc., a wholly-owned
subsidiary of the Company ("Grand Media"), a complaint in the
Stratosphere bankruptcy case seeking recovery of certain
amounts paid by Stratosphere to (i) the Company as management
fees and for costs and expenses under a management agreement
between Stratosphere and the Company, and (ii) Grand Media for
electronic equipment purchased by Stratosphere from Grand
Media.
Stratosphere claims in its complaint that such amounts are
recoverable by Stratosphere as preferential payments under
bankruptcy law.
As of May 1, 1998, the Company and Grand Media are preparing
their response to Stratosphere's complaint.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No reports on Form 8-K were filed during the
quarterly period ended March 29, 1998.
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28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 13, 1998 GRAND CASINOS, INC.
-------------------
Registrant
By/ S /THOMAS J. BROSIG
-----------------------
Thomas J. Brosig
President and
Chief Executive Officer
/ S / TIMOTHY J. COPE
---------------------
Timothy J. Cope
Executive Vice President and
Chief Financial Officer
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