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As filed with the Securities and Exchange Commission on July 7, 1995.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): June 30, 1995
HARRAH'S ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10410 62-1411755
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
1023 Cherry Road
Memphis, Tennessee 38117
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 762-8600
THE PROMUS COMPANIES INCORPORATED
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On June 30, 1995, The Promus Companies Incorporated (the
"Registrant" or "Promus") distributed to the holders of the Registrant's
Common Stock, $0.10 par value (the "Promus Common Stock"), of record on
June 21, 1995 (the "Record Date"), all of the outstanding common stock,
$0.10 par value, of the Registrant's indirect wholly-owned subsidiary,
Promus Hotel Corporation ("PHC"). The distribution (the "Distribution")
was made in the form of a dividend of one share of the common stock of PHC
(the "PHC Common Stock") for every two shares of Promus Common Stock held
on the Record Date. The Registrant did not receive any shares of PHC
Common Stock in respect of Promus Common Stock held by the Registrant as
treasury shares. Fractional shares of PHC Common Stock to which holders of
Promus Common Stock would have been entitled, have been aggregated and
sold, and the cash proceeds will be distributed as promptly as practicable
to the record holders entitled thereto.
Item 5. Other Information.
In connection with the Distribution, the Registrant changed its
corporate name from "The Promus Companies Incorporated" to "Harrah's
Entertainment, Inc." The Registrant's wholly owned subsidiary, Embassy
Suites, Inc., a Delaware corporation, changed its corporate name to
"Harrah's Operating Company, Inc."
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(b) Pro Forma Financial Information.
Fiscal Year 1994: The following information has been previously
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reported by the Registrant in its definitive Proxy Statement on Schedule
14A dated April 25, 1995: pro forma income statement of Harrah's
Entertainment for the year ended December 31, 1994, giving effect to the
Distribution.
First Quarter 1995: On June 30, 1995, the Registrant
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distributed to the holders of Promus Common Stock, $0.10 par value, of
record on June 21, 1995, all of the outstanding common stock, $0.10 par
value, of PHC. The distribution was made in the form of a dividend of one
share of PHC Common Stock for every two shares of Promus Common Stock held
on the Record Date.
The following unaudited Pro Forma Balance Sheet and Statement of
Income give effect to the spin-off of PHC to the stockholders of Promus.
The Unaudited Pro Forma Balance Sheet as of March 31, 1995 gives effect to
the Distribution as though it had occurred on March 31, 1995. The Unaudited
Pro Forma Statements of Income give effect to the Distribution as if it had
occurred at the beginning of the three months ended March 31, 1995. These
Unaudited Pro Forma Financial Statements have been prepared from the
historical financial statements of Promus and should be read in conjunction
therewith. This pro forma information is not necessarily indicative of
future operating results or financial position that will occur after
completion of the Distribution.
HARRAH'S ENTERTAINMENT, INC.
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
HISTORICAL ADJUSTMENTS PRO FORMA
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ASSETS
Current assets
Cash and cash equivalents....................................... $ 71,200 $ (6,560)(a) $ 71,200
6,560 (b)
Receivables, including notes receivable of $658 and less
allowance for doubtful accounts of $10,417.................... 40,932 -- 40,932
Deferred income taxes........................................... 19,363 -- 19,363
Prepayments..................................................... 6,494 -- 6,494
Supplies........................................................ 11,194 -- 11,194
Other........................................................... 16,565 -- 16,565
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Total current assets....................................... 165,748 -- 165,748
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Land, buildings riverboats and equipment.......................... 1,621,398 -- 1,621,398
Less: Accumulated depreciation and amortization................... (489,919) -- (489,919)
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1,131,479 -- 1,131,479
Net assets of discontinued operations............................. 160,332 (5,000)(c) --
(3,170)(d)
(152,162)(e)
Investments in and advance to nonconsolidated affiliates.......... 111,499 -- 111,499
Deferred costs and other.......................................... 174,034 3,170 (d) 177,204
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$ 1,743,092 $ (157,162) $ 1,585,930
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable................................................ $ 56,563 $ -- $ 56,563
Accrued litigation settlement and related costs................. 1,873 -- 1,873
Construction payables........................................... 2,589 -- 2,589
Accrued expenses................................................ 167,321 (2,752)(a) 164,569
Current portion of long-term debt............................... 1,330 -- 1,330
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Total current liabilities.................................. 229,676 (2,752) 226,924
Long-term debt.................................................... 758,150 6,560 (b) 759,710
(5,000)(c)
Deferred credits and other........................................ 73,259 -- 73,259
Deferred income taxes............................................. 8,792 -- 8,792
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1,069,877 (1,192) 1,068,685
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Minority interests................................................ 20,002 -- 20,002
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Stockholders' equity
Common Stock.................................................... 10,252 (5)(f) 10,247
Capital surplus................................................. 358,456 (755)(f) 357,701
Retained earnings............................................... 288,676 (5,000)(a) 131,514
(152,162)(e)
Deferred compensation related to restricted stock............... (4,171) 1,192 (a) (2,219)
760 (f)
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Total stockholders' equity................................. 653,213 (155,970) 497,243
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$ 1,743,092 $ (157,162) $ 1,585,930
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See accompanying notes to pro forma financial statements.
HARRAH'S ENTERTAINMENT, INC.
PRO FORMA STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
HISTORICAL ADJUSTMENTS PRO FORMA
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Revenues
Casino............................................................... $ 298,532 $ -- $ 298,532
Rooms................................................................ 24,654 -- 24,654
Food and beverage.................................................... 41,885 -- 41,885
Management fees...................................................... 2,977 -- 2,977
Other................................................................ 23,390 -- 23,390
Less: casino promotional allowances.................................. (34,957) -- (34,957)
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Total revenues.................................................. 356,481 -- 356,481
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Operating expense
Direct
Casino............................................................ (144,550) -- (144,550)
Rooms............................................................. (7,640) -- (7,640)
Food and beverage................................................. (18,942) -- (18,942)
Depreciation of buildings and equipment.............................. (18,249) -- (18,249)
Development costs.................................................... (4,248) -- (4,248)
Other................................................................ (85,049) (600)(g) (85,649)
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Total operating expenses........................................ (278,678) (600) (279,278)
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77,803 (600) 77,203
Corporate expense...................................................... (5,382) 288 (g) (5,094)
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Operating income....................................................... 72,421 (312) 72,109
Interest expense, net of interest capitalized.......................... (22,064) (123)(h) (22,187)
Other.................................................................. 2,033 -- 2,033
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Income before income taxes and minority interest....................... 52,390 (435) 51,955
Provision for income taxes............................................. (20,357) 170 (i) (20,187)
Minority interest...................................................... (3,337) -- (3,337)
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Income from continuing operations...................................... $ 28,696 $ (265) $ 28,431
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Income from continuing operations per share............................ $ 0.28 $ -- $ 0.28
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Average shares outstanding............................................. 103,014 -- 103,014
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See accompanying notes to pro forma financial statements.
HARRAH'S ENTERTAINMENT, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1995
(a) Reflects estimated incremental costs of the Distribution to be paid by
Harrah's Entertainment and reported as a component of income from
discontinued hotel operations in the second quarter 1995 consolidated income
statement of Harrah's Entertainment and are not included in the pro forma
statement of income.
(b) Reflects additional revolver borrowings incurred to fund payments made in
(a).
(c) Records the allocation of an additional $5.0 million of existing corporate
debt to PRH by Promus prior to the Distribution.
(d) Records the transfer to Harrah's Entertainment of the March 31, 1995,
deferred finance charge balance which had been allocated to PRH.
(e) Reflects Distribution of PRH Common Stock to Promus' stockholders.
(f) Reflects cancellation of unvested RSP shares of PRH employees.
(g) Reflects estimated net incremental operating costs of Harrah's Entertainment
of approximately $0.3 million, before income taxes, expected to be incurred
after the Distribution primarily related to information technology and risk
management functions.
(h) Reflects additional interest expense incurred as a result of additional
revolver borrowings in (b).
(i) Reflects income tax effect of the pro forma adjustments to income at a 39.0%
marginal tax rate.
(c) Exhibits
99.1 Promus Press Release issued June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: July 7, 1995 HARRAH'S ENTERTAINMENT, INC.
By /s/ Michael N. Regan
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Name: Michael N. Regan
Its: Vice President and Controller
(Chief Accounting Officer)
Exhibit Index
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99.1 Promus Press Release issued June 30, 1995.
Exhibit 99.1
Ralph Berry, Harrah's Entertainment, Inc. Margo Isbell or Kathleen Eyman
(901) 762-8629 Promus Hotel Corporation
Release # PRI-06-95-0211 Meltzer & Martin Public Relations
(214) 953-0808
PROMUS ANNOUNCES SPIN-OFF OF HOTEL BUSINESS:
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CORPORATION RENAMED HARRAH'S ENTERTAINMENT, INC.
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MEMPHIS, June 30, 1995 -- The Promus Companies Incorporated (NYSE:PRI)
today announced the consummation of the spin-off of its wholly-owned subsidiary,
Promus Hotel Corporation (NYSE:PRH).
Today, Promus distributed to its stockholders one share of the new hotel
company for each two shares of The Promus Companies owned on June 21, 1995, the
record date for the distribution. Cash will be paid in lieu of fractional
shares, as described in the proxy statement for the annual meeting of Promus
stockholders. Also effective today, The Promus Companies has changed its name
to Harrah's Entertainment, Inc. (NYSE:HET). Promus Hotel common stock and
Harrah's Entertainment common stock will each trade on the New York Stock
Exchange beginning Monday, July 3, 1995. The Promus Companies stock will
continue to trade through the end of the day today.
Following the spin-off, Harrah's Entertainment retains the Harrah's casino
business with 16 casinos in eight states. The largest casino company in the
United States, Harrah's is also the only company operating in all four segments
of the industry: traditional land-based casinos, riverboat and dockside
casinos, limited stakes casinos and casinos for Indian communities. Harrah's
was founded in 1937 in Reno, Nevada, and now operates more than 600,000 square
feet of casino space and employs more than 24,000 people.
With more than 600 franchised, owned and managed hotels offering
approximately 85,000 rooms and suites, Promus Hotel Corporation includes the
Embassy Suites, Hampton Inn, Hampton Inn & Suites, and Homewood Suites hotel
chains. More than 7,500 people are employed at its headquarters and company-
owned and -managed hotels, and there are a total of more than 25,000 employees
throughout its franchised hotel system.
-more-
Harrah's Entertainment, Promus Hotel Corporation page 2
"Today's transaction marks the beginning of a new era for our companies,
and we look forward to the opportunities that lie ahead," agreed Raymond E.
Schultz, president and chief executive officer of Promus Hotel Corporation and
Philip G. Satre, president and chief executive officer of Harrah's
Entertainment, Inc.
"Our hotel business is a well-respected leader within the hospitality
industry, and it has achieved the size, scope and financial performance where it
is capable of sustaining high growth through the addition of both franchised and
company-developed hotels," added Schultz. "Each of our established hotel brands
is a leader it its industry segment in revenue per available room and guest
satisfaction, two key measures of success in the hotel business." The company
has established a goal to reach 1,000 hotels by the year 2000.
"Harrah's is the premier name in casino entertainment. No casino
entertainment company has a richer history, a better focus on customer service,
greater distribution or a more promising future," Satre stated. "Including open
and under development casinos, one-half of the U.S. population lives within a
two-hour drive of a Harrah's casino, and there is still a great opportunity to
grow our business further as additional states and jurisdictions take action to
obtain the success, entertainment and economic vitality that a well-organized
and regulated casino entertainment industry can bring." Harrah's has targeted
having 30 Harrah's branded casinos worldwide by the turn of the century.
Michael D. Rose, chairman of the board of both companies cites several
strategic advantages to today's spin-off, including the ability of each
management team to focus on its own growth needs and objectives, the opportunity
to create management incentive programs that reward specific financial
performance and the elimination of internal competition for capital and other
resources. "A key benefit is that each business now has a highly qualified and
experienced management team that will be directly accountable to its
shareholders," Rose commented. "In addition to a strong correlation between
management performance and shareholder value, this spin-off also creates a
very clear investment opportunity in which each company is valued
independently for its own strengths and opportunities."
Both Harrah's Entertainment, Inc. and Promus Hotel Corporation will
maintain corporate headquarters in Memphis, Tenn.
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