Park Place Reports 87 Percent Increase in EBITDA and 24 Percent Increase in Net Income
LAS VEGAS--(BUSINESS WIRE)--July 25, 2000--Park Place
Entertainment Corporation (NYSE: PPE) today reported a 24 percent
increase in net income before asset dispositions and pre-opening
charges to $56 million for the second quarter ended June 30, 2000
compared to $45 million for the second quarter of 1999.
Diluted earnings per share for the quarter increased 20 percent to
$0.18 compared to last year's $0.15, excluding the impact of asset
dispositions and pre-opening charges. Including these items, net
income for the second quarter 2000 was $31 million and diluted
earnings per share was $0.10.
Diluted cash earnings (net income before asset dispositions plus
goodwill amortization) increased 22 percent to $0.22 in the second
quarter 2000 from $0.18 last year.
Earnings before interest, taxes, depreciation and amortization,
pre-opening expense and asset dispositions (EBITDA) were $335 million
in the second quarter of 2000, up 87 percent compared to last year's
$179 million. The Company's EBITDA margin increased to 26.8 percent
from 24.2 percent in 1999 as more high margin revenues were earned and
operating costs were spread over additional units.
Positive results in the second quarter of 2000 were driven by 18
percent company-wide same store EBITDA growth and the introduction of
Paris Las Vegas on September 1, 1999. The same store improvement was
driven principally by successful local marketing efforts and Park
Place's domestic marketing network. The Company also reported
impressive top-line growth with total revenues up 69 percent for the
quarter.
Park Place generated approximately $176 million in net cash flow
in the second quarter 2000. The Company deployed the excess cash flow
as follows:
-- $100 million reduction in bank debt outstanding;
-- $49 million share repurchase - 4 million shares at an
average price of $12.34; and
-- $27 million in new unit capital spending.
"I am pleased to report that our Company continues to generate
significant same store EBITDA growth and substantial free cash flow
from operations," said Arthur Goldberg, President and CEO. "We plan to
use our free cash flow and proceeds from the disposition of
non-strategic assets to reduce debt, buy back stock and invest in high
ROI driven projects. At the same time, we are seamlessly assimilating
our Caesars assets and are on track to meet or exceed our synergy
projections."
The Caesars asset integration continued successfully into the
second quarter as EBITDA from the Caesars portfolio increased 38
percent to $110 million, as compared to $80 million in the second
quarter of 1999. This improvement was driven by both top line revenue
increases and cost reduction programs.
Eastern Region
Park Place's three properties in Atlantic City -- Bally's Park
Place, Caesars Atlantic City and the Atlantic City Hilton -- continued
to outperform the competition and capture additional market share. On
a combined basis in the second quarter 2000, gaming revenue for the
three properties was up approximately 8 percent while gaming revenue
for the market excluding Park Place properties was up approximately 1
percent.
The Atlantic City Hilton generated $23 million in EBITDA for the
second quarter of 2000, up 64 percent from last year's $14 million.
The improvement was driven primarily by a 28 percent increase in slot
handle.
EBITDA at Caesars Atlantic City was $43 million in the second
quarter of 2000 compared to $40 million last year, illustrating the
benefits accruing to assets located at the center of the Boardwalk.
Twelve percent EBITDA growth at Bally's Park Place to $48 million
in the second quarter 2000 resulted primarily from leveraging single
digit top line growth through margin improvements and effective cost
controls.
In the first quarter of 2000, construction commenced on the Wild
Wild West casino expansion connecting Bally's Park Place and the Wild
Wild West Casino to Caesars Atlantic City. The project is proceeding
on schedule and is expected to open this fall. The expansion will add
roughly 300 slot machines to Bally's Park Place, as well as additional
meeting space to Caesars Atlantic City. The expansion budget is
approximately $30 million with approximately $7 million spent through
the end of June.
Western Region
EBITDA at Caesars Palace increased 83 percent to $33 million from
last year's $18 million. The improvement was driven primarily through
a 15 percent increase in table drop.
Paris/Bally's Las Vegas recorded $50 million of EBITDA for the
second quarter of 2000 versus $21 million from Bally's alone last
year. Paris has driven incremental EBITDA of $115 million in its first
ten months of operations and continues to generate strong customer
counts and casino volumes.
The Las Vegas Hilton reported $12 million of EBITDA in the second
quarter of 2000 compared to last year's $7 million. Improved
performance came from a 9 percent increase in room revenues and a 6
percent jump in slot handle.
The Flamingo Las Vegas EBITDA increased $1 million in the second
quarter of 2000 to $30 million, demonstrating the power of the
Flamingo's longstanding and loyal customer base.
Mid-South Region
Caesars Indiana EBITDA nearly tripled quarter-over-quarter to $13
million. New marketing programs combined with added amenities in the
retail pavilion drove a 40 percent increase in gaming volume through
improved penetration of the Louisville, Kentucky market. Additionally,
last year's second quarter performance was negatively impacted by the
14 day closure of the facility due to low river water levels. On May
17, Caesars Indiana broke ground on a 500 room hotel scheduled for
completion in late 2001.
EBITDA at Grand Biloxi came in at $16 million for the second
quarter of 2000, down from last year's $18 million due to competitive
pressure from significant new supply in Biloxi.
Grand Gulfport reported $11 million in EBITDA for the second
quarter 2000, a 22 percent increase over last year's results. The
improvement resulted from an 8 percent increase in gaming volume and
the June 30, 1999 opening of the Oasis Resort and Spa.
Second quarter EBITDA at Grand Tunica was $16 million compared to
$18 million in the second quarter 1999. Higher table game drop was
offset by increased marketing costs.
International
On a combined basis in the second quarter 2000, the Company's
share of EBITDA from its non-U.S. properties increased to $21 million
from $7 million last year. The inclusion of the Caesars assets, plus
stronger results at Conrad Jupiters in Australia, drove the
improvement.
Six Month Results
EBITDA for the six month period ended June 30, 2000 totaled $662
million, a 78 percent increase over last year's $372 million.
Excluding asset dispositions and pre-opening charges, net income
for the six month period was $108 million or $0.35 per diluted share,
up 13 percent from the $0.31 per diluted share reported for the six
months ended June 30, 1999. Including these items, net income for the
six month period ended June 30, 2000 was $83 million or $0.27 per
diluted share and net income for the six month period ended June 30,
1999 was $85 million or $0.28 per diluted share.
Diluted cash earnings for the six months ended June 30, 2000
increased 22 percent to $0.44 compared to $0.36 last year.
EBITDA from the Caesars portfolio for the six months ended June
30, 2000 was $207 million, a 27 percent increase from the prior year
period. For the full year 1999, the Caesars portfolio generated $336
million in EBITDA.
Asset Dispositions
On July 11, the Company announced that it had entered into an
agreement to sell the Las Vegas Hilton to Ed Roski, Jr. The
transaction is expected to be completed by year end and is subject to
regulatory approval. Total consideration for the property is
approximately $365 million consisting of: $300 million for the
property, plant and equipment; $31 million for assuming all
liabilities under the Hilton licensing agreement; estimated $6 million
for net working capital; and the retention of all "high-end gaming"
customer receivables, which were approximately $28 million at June 30,
2000. As a result of this agreement, the Company recognized an asset
impairment of $55 million before tax during the quarter ended June 30,
2000.
On June 5, Hilton Hotels Corporation completed the sale of the
Kansas City Flamingo to Isle of Capri for $33.5 million. In
conjunction with the spin-off from Hilton Hotels in December 1998, the
Company entered into a disposition agreement with Hilton Hotels with
respect to the Flamingo Hilton Riverboat Casino located in Kansas
City, Missouri. This asset was not a part of the tax-free spin-off
transaction at December 31, 1998; however, the agreement provided for
the Company to receive the equivalent economic value of this asset
upon sale or other disposition. As a result of this sale and in
accordance with the disposition agreement, the Company recognized a
net gain of $18 million during the quarter ended June 30, 2000.
The net result of the sale of the Kansas City Flamingo and the Las
Vegas Hilton was a loss of $37 million or $24 million net of tax in
the second quarter 2000.
Park Place Entertainment is the world's largest gaming company and
owns, manages or has an interest in 28 gaming properties operating
under the Bally's, Caesars, Paris, Flamingo, Grand and Hilton brand
names with a total of approximately 2 million square feet of gaming
space, over 28,000 hotel rooms and approximately 57,000 employees
worldwide.
Additional information on Park Place Entertainment can be accessed
through the Company's 24-hour investor relations service. Individuals
may call toll-free 877-PPE-NYSE (877-773-6973) or visit
www.parkplace.com to obtain the latest Company news and stock price
information, or to request information by email, fax or postal mail
delivery.
Note: This press release contains "forward-looking statements"
within the meaning of federal securities law, including statements
concerning anticipated future events, plans and expectations, company
growth and new construction, business strategies and anticipated cost
savings and allocation of capital. The forward-looking statements in
this press release are subject to numerous risks and uncertainties
which could cause actual results to differ materially from those
expressed in or implied by the statements herein. Additional
information concerning potential factors that could affect the
Company's future financial results is included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999 and on Form
10-Q for the quarter ended March 31, 2000.
PARK PLACE ENTERTAINMENT
Summary Income Statement
(Amounts in millions, except per share amounts)
Three Months Ended Year to Date Ended
June 30, June 30,
Actual Actual Actual Actual
2000 1999 2000 1999
Net revenue $1,248 $ 739 $2,479 $1,487
Operating costs and expenses 900 551 1,793 1,098
Depreciation and amortization 130 71 260 142
Pre-opening expense 1 7 1 10
Other non-recurring items 37 -- 37 --
Operating profit before
corporate expense 180 110 388 237
Corporate expense 13 9 24 17
Operating income 167 101 364 220
Net interest expense 109 29 214 58
Income before taxes, minority
interest and cumulative effect
of accounting change 58 72 150 162
Income tax provision 27 31 67 73
Minority interest, net -- 1 -- 2
Income before cumulative
effect of accounting change 31 40 83 87
Cumulative effect of accounting
change, net of tax -- -- -- 2
Net income $ 31 $ 40 $ 83 $ 85
Net income per share, before
pre-opening, non-recurring
and cumulative effect of
accounting change
Basic $ 0.18 $ 0.15 $ 0.36 $ 0.31
Diluted $ 0.18 $ 0.15 $ 0.35 $ 0.31
Net income per share
Basic $ 0.10 $ 0.13 $ 0.27 $ 0.28
Diluted $ 0.10 $ 0.13 $ 0.27 $ 0.28
Cash earnings per share,
before pre-opening,
non-recurring and
cumulative effect of
accounting change
Basic $ 0.23 $ 0.18 $ 0.44 $ 0.37
Diluted $ 0.22 $ 0.18 $ 0.44 $ 0.36
Weighted average
shares outstanding
Basic 303 302 304 303
Diluted 310 308 310 306
PARK PLACE ENTERTAINMENT
EBITDA(1)
(Amounts in millions)
Three Months Ended Year to Date Ended
June 30, June 30,
Actual Actual Pro Actual Actual Pro
Forma(2) Forma(2)
2000 1999 1999 2000 1999 1999
WESTERN REGION
Paris/Bally's $ 50 $ 21 $ 21 $ 108 $ 45 $ 45
Caesars Palace 33 -- 18 68 -- 51
Flamingo Las Vegas 30 29 29 63 61 61
Las Vegas Hilton 12 7 7 30 34 34
Other 22 15 18 37 27 35
147 72 93 306 167 226
EASTERN REGION
Bally's Park Place 48 43 43 86 76 76
Caesars Atlantic
City 43 -- 40 75 -- 63
Atlantic City
Hilton 23 14 14 37 20 20
114 57 97 198 96 159
MID-SOUTH REGION
Grand Biloxi 16 18 18 32 38 38
Grand Tunica 16 18 18 30 31 31
Caesars Indiana 13 -- 4 24 -- 13
Grand Gulfport 11 9 9 23 19 19
Other 13 10 15 26 21 30
Regional Overhead (3) (3) (3) (5) (5) (5)
66 52 61 130 104 126
INTERNATIONAL 21 7 20 52 22 48
CORPORATE (13) (9) (12) (24) (17) (24)
TOTAL $ 335 $ 179 $ 259 $ 662 $ 372 $ 535
(1) EBITDA is earnings before interest, taxes, depreciation and
amortization, pre-opening expense and other non-recurring items.
(2) The amounts in the pro forma column include the results of the
Caesars World, Inc. properties acquired on December 29, 1999.
PARK PLACE ENTERTAINMENT
Statistical Highlights
Three Months Year to Date
Ended Ended
June 30, June 30,
Actual Actual Actual Actual
2000 1999 2000 1999
WESTERN REGION
Average Daily Rate $ 90 $ 77 $ 91 $ 79
Occupancy Percentage 94% 88% 92% 88%
EASTERN REGION
Average Daily Rate $ 93 $ 87 $ 89 $ 81
Occupancy Percentage 96% 99% 95% 96%
MID-SOUTH REGION
Average Daily Rate $ 56 $ 57 $ 53 $ 58
Occupancy Percentage 96% 94% 92% 94%
INTERNATIONAL
Average Daily Rate $ 86 $ 89 $ 93 $101
Occupancy Percentage 65% 60% 68% 64%
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