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Exhibit 99.2
Grand Casinos, Inc. (ticker: GND, exchange: New York Stock Exchange) News
Release - Tuesday, October 20, 1998
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GRAND CASINOS ANNOUNCES THIRD-QUARTER EARNINGS OF $0.76 PER SHARE
MINNEAPOLIS, OCTOBER 20, 1998 -- GRAND CASINOS, INC. (NYSE: GND)
today announced basic and diluted earnings of $0.78 per share and
$0.76 per share, respectively, for the third quarter of 1998,
compared with basic and diluted earnings per share of $0.53 and
$0.51, respectively, for the third quarter of 1997. Financial
highlights for the three-month period ended September 27, 1998,
include net revenues of $182.2 million, nine percent higher than
the $167.6 million of revenue earned in the third quarter of 1997.
EBITDA (earnings before interest, taxes, depreciation, and
amortization) for the quarter was $61.4 million, compared with
$56.8 million a year ago, an eight percent increase. Net earnings
increased 48 percent during the quarter to $32.9 million, compared
with $22.2 million a year ago.
EBITDA continues to show strong year-over-year increases at each of
the Mississippi locations. The Gulf Coast EBITDA rose approximately
20 percent over last year to $32.9 million for the third quarter
and 21 percent to $90.4 million for the first nine months of 1998.
Grand Casino Tunica also improved EBITDA to $16.5 million during
the third quarter, a 29 percent increase over the third quarter of
1997, and an increase of 27 percent to $37.1 million for the first
nine months of this year compared with the first three quarters of
1997.
Tom Brosig, Chief Executive Officer and President of Grand Casinos,
stated, "We had a very strong quarter operationally. Grand Casino
Tunica, in particular, contributed excellent quarterly results
driven by high occupancy approaching 98 percent for the resort's
two hotels. Additionally, further amenities were added to the
property during the quarter, including an RV resort and a sporting
clays facility, which combined with our championship golf course
that opened this past spring, are contributing to the resort's
overall appeal and ability to cater to and satisfy a premium
clientele. The Tunica market continues to grow, driven by the
addition of hotel rooms at several properties, and Grand Casinos is
uniquely positioned to capitalize on the increased visitation to
the area."
Earnings per share from operations before the impact of charges
described below were $0.57.
Net earnings for the quarter were positively impacted by a tax
benefit recognized in the quarter from the previous write-off of a
note receivable from Stratosphere Corporation. The result of the
recognition of the tax benefit was a reduction in tax expense or an
increase in net earnings of $13.1 million, or $0.31 per share.
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Net earnings from operations were negatively impacted by an
increase in corporate expenses of approximately $2.6 million, or
$0.06 per share. Those expenses include costs associated with the
company's previously announced merger transaction with Hilton
Hotels, the write-off of expenses associated with development
projects, and an insurance deductible related to Hurricane Georges.
Other than the insurance deductible, third-quarter results were not
impacted by the hurricane.
Net earnings from operations for the quarter were also negatively
impacted by $2.5 million, or $0.06 per share, related primarily to
change in estimates to depreciation for recently completed
construction projects.
Management fee income from Grand Casinos' three managed properties
for the third quarter was $21.6 million, compared with $23.1
million in the year ago period, representing a decrease of less
than $2 million despite the fact that the company is managing one
less resort than a year ago. Grand Casinos' three managed casinos
all contributed strong year-over-year improvements. Progress on a
major expansion continues at Grand Casino Coushatta where a
223-room hotel, an additional 25,000 square feet of gaming space,
and two new restaurants are scheduled to open near the end of the
year.
For the first nine months of 1998, Grand Casinos generated net
revenues of $510.9 million, an 11 percent increase over net
revenues of $460.6 million for the first nine months of 1997.
Consolidated EBITDA for the nine-month period increased eight
percent to $162.8 million, compared with $150.6 million in 1997.
Net earnings grew by 23 percent from $55.1 million to $67.5
million.
Grand Casinos, Inc. is a publicly traded company listed on the New
York Stock Exchange under the trading symbol GND. The company
currently owns and operates the three largest casino hotel resorts
in the state of Mississippi, manages two land-based casinos in
Louisiana, and manages one casino hotel resort in Minnesota.
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements. Certain information
included in this press release (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, such as
statements relating to plan for future expansion and other business
development activities as well as other capital spending, financing
sources and the effects of regulation (including gaming and tax
regulation) and competition. Such forward-looking information
involves important risks and uncertainties that could significantly
affect anticipated results in the future 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 the interest rates), domestic or global economic
conditions, activities of competitors and the presence of new or
additional competition, fluctuations and changes in customer
preferences and attitudes, changes in federal or state tax laws of
the administration of such laws and changes in gaming laws or
regulations (including the legalization of gaming in certain
jurisdictions). For more information, review the Company's filings
with the Securities and Exchange Commission, including the
Company's annual report on Form 10-K and certain registration
statements of the Company.
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GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED) *
ASSETS SEPTEMBER 27, 1998 DECEMBER 28, 1997
Current Assets:
Cash and cash equivalents $ 112,126 $ 238,635
Current installments of notes receivable 7,659 6,856
Accounts receivable 20,276 15,644
Deferred income taxes 12,644 13,399
Other current assets 16,074 15,087
Total Current Assets 168,779 289,621
Property and Equipment-Net 1,065,430 941,022
Other Assets:
Cash and cash equivalents-restricted 7,571 4,967
Securities available for sale 13,619 13,110
Notes receivable-less current installments 24,680 26,979
Investments in and notes from unconsolidated affiliates 8,351 8,180
Debt issuance and deferred licensing costs-net 20,867 26,000
Other long-term assets 31,448 23,858
Total Other Assets 106,536 103,094
TOTAL ASSETS $ 1,340,745 $ 1,333,737
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 11,118 $12,947
Current installments of long-term debt 422 3,509
Current installments of capital lease obligations -- 97,376
Accrued interest 19,192 5,817
Accrued payroll and related expenses 24,312 25,555
Other accrued expenses 47,868 22,398
Total Current Liabilities 102,912 167,602
Long-term Liabilities:
Long-term debt-less current installments 566,430 566,434
Deferred income taxes 97,093 97,085
Total Long-Term Liabilities 663,523 663,519
TOTAL LIABILITIES 766,435 831,121
COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:
Capital stock, $.01 par value; authorized 100,000 shares; common stock
issued and outstanding 42,294 and 41,966
at September 27, 1998 and December 28, 1997, respectively 423 420
Additional paid-in-capital 416,590 413,631
Net unrealized losses on securities available for sale (1,750) (2,947)
Retained earnings 159,047 91,512
Total Shareholders' Equity 574,310 502,616
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,340,745 $ 1,333,737
* FROM AUDITED CONSOLIDATED FINANCIAL STATEMENTS
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(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997
REVENUES:
Casino $ 137,953 $ 125,764
Hotel 12,879 10,074
Food and beverage 19,184 17,546
Management fee income 21,582 23,133
Retail and other income 4,119 3,715
Gross Revenues 195,717 180,232
Less: Promotional allowances (13,533) (12,651)
NET REVENUES 182,184 167,581
COSTS AND EXPENSES:
Casino 44,626 42,972
Hotel 4,361 2,462
Food and beverage 9,771 8,753
Other operating expenses 3,967 3,205
Depreciation and amortization 20,460 12,206
Lease expense 6,061 4,993
Selling, general and administrative 51,967 48,371
Total Costs and Expenses 141,213 122,962
EARNINGS FROM OPERATIONS 40,971 44,619
OTHER INCOME (EXPENSE):
Interest income 1,883 2,846
Interest expense (8,245) (10,954)
Other (1,901) (529)
Total other expenses, net (8,263) (8,637)
Earnings before income taxes 32,708 35,982
Provision for income taxes (206) 13,817
Net Earnings $ 32,914 $ 22,165
Basic Earnings per Share $ 0.78 $ 0.53
Diluted Earnings per Share $ 0.76 $ 0.51
Weighted Average Common Shares Outstanding 42,293 41,910
Weighted Average Common and Diluted Shares Outstanding 42,645 43,606
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GRAND CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997
REVENUES:
Casino $ 385,225 $ 348,072
Hotel 35,351 26,650
Food and beverage 55,127 48,498
Management fee income 64,330 62,001
Retail and other income 10,692 10,139
Gross Revenues 550,725 495,360
Less: Promotional allowances (39,790) (34,774)
NET REVENUES 510,935 460,586
COSTS AND EXPENSES:
Casino 126,559 121,040
Hotel 11,553 6,572
Food and beverage 28,288 25,272
Other operating expenses 10,126 9,655
Depreciation and amortization 48,471 36,167
Lease expense 16,811 14,173
Selling, general and administrative 154,812 133,271
Total Costs and Expenses 396,620 346,150
EARNINGS FROM OPERATIONS 114,315 114,436
OTHER INCOME (EXPENSE):
Interest income 8,734 9,540
Interest expense (30,060) (33,572)
Other (2,788) (841)
Total expense, net (24,114) (24,873)
Earnings before income taxes 90,201 89,563
Provision for income taxes 21,106 34,503
Earnings before extraordinary charge 69,095 55,060
Extraordinary charge-net of taxes (1,560) --
Net Earnings $ 67,535 $ 55,060
Basic Earnings per Share before Extraordinary Charge $ 1.64 $ 1.31
Basic Loss per Share - Extraordinary Charge ($0.04) --
BASIC EARNINGS PER SHARE $ 1.60 $ 1.31
Diluted Earnings per Share before Extraordinary Charge $ 1.60 $ 1.28
Diluted Loss per Share - Extraordinary Charge ($0.04) --
DILUTED EARNINGS PER SHARE $ 1.57 $ 1.28
Weighted Average Common Shares Outstanding 42,165 41,876
Weighted Average Common and Diluted Shares Outstanding 43,066 42,941
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GRAND CASINOS, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PERCENTAGES AND HOTEL STATISTICS)
THREE MONTHS ENDED
SEPTEMBER 27, 1998 SEPTEMBER 28, 1998
REVENUES
Gulf Coast $ 111,688 $ 102,409
Tunica 62,447 54,689
Management Fee Income/Other 21,582 23,134
Gross Revenues 195,717 180,232
Promotional Allowances (13,533) (12,651)
Net Revenues 182,184 167,581
COSTS AND EXPENSES
Gulf Coast 78,869 73,750
Tunica 51,535 41,939
Corporate Expenses 10,809 7,273
Total Costs and Expenses 141,213 122,962
EARNINGS (LOSS) FROM OPERATIONS $ 40,971 $ 44,619
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GRAND CASINOS, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PERCENTAGES AND HOTEL STATISTICS)
THREE MONTHS ENDED
SEPT. 27, 1998 SEPT. 28, 1997
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REVENUES
Gulf Coast $ 111,688 $ 102,409
Tunica 62,447 54,689
Management Fee Income/Other 21,582 23,134
Gross Revenues 195,717 180,232
Promotional Allowances (13,533) (12,651)
Net Revenues 182,184 167,581
COSTS AND EXPENSES
Gulf Coast 78,869 73,750
Tunica 51,535 41,939
Corporate Expenses 10,809 7,273
Total Costs and Expenses 141,213 122,962
EARNINGS (LOSS) FROM OPERATIONS $ 40,971 $ 44,619
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SUPPLEMENTAL DISCLOSURE
GULF COAST
Gaming Revenue $ 86,864 $ 81,310
EBITDA 32,918 27,456
EBITDA % 31.7% 29.0%
Hotel Occupancy % 94.0% 99.5%
Hotel Average Daily Rate $ 77 $ 78
TUNICA
Gaming Revenue $ 51,089 $ 44,454
EBITDA 16,514 12,807
EBITDA % 29.1% 25.8%
Hotel Occupancy % 97.5% 92.0%
Hotel Average Daily Rate $ 57 $ 56
CONSOLIDATED
EBITDA $ 61,430 $ 56,825
EBITDA % 33.7% 33.9%
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GRAND CASINOS, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PERCENTAGES AND HOTEL STATISTICS)
NINE MONTHS ENDED
SEPT. 27, 1998 SEPT. 28, 1997
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REVENUES
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Gulf Coast $ 318,233 $ 292,039
Tunica 168,162 141,321
Management Fee Income/Other 64,330 62,001
Gross Revenues 550,725 495,361
Promotional Allowances (39,790) (34,774)
Net Revenues 510,935 460,587
COSTS AND EXPENSES
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Gulf Coast 226,094 213,507
Tunica 137,610 114,102
Corporate Expenses 32,916 18,541
Total Costs and Expenses 396,620 346,150
EARNINGS FROM OPERATIONS $ 114,315 $ 114,437
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SUPPLEMENTAL DISCLOSURE
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GULF COAST
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Gaming Revenue $ 248,599 $ 231,743
EBITDA 90,385 74,970
EBITDA % 30.6% 27.7%
Hotel Occupancy % 93.6% 98.3%
Hotel Average Daily Rate $ 74 $ 75
TUNICA
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Gaming Revenue $ 136,626 $ 116,330
EBITDA 37,088 29,256
EBITDA % 24.5% 22.8%
Hotel Occupancy % 91.7% 88.9%
Hotel Average Daily Rate $ 56 $ 53
CONSOLIDATED
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EBITDA $ 162,786 $ 150,604
EBITDA % 31.9% 32.7%
"Safe Harbor" Statement under the private Securities Litigation Reform Act of
1995: Statements in this press release regarding Grand Casinos, Inc.'s
business which are not historical facts are "forward-looking statements" that
involve risks and uncertainties. For a discussion of such risks and
uncertainties, which could cause actual results to differ from those
contained in the forward-looking statements, see "Risk Factors" in the
Company's Annual Report or Form 10-K for the most recently ended fiscal year.
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