Park Place Reports 59% Increase in EBITDA, 18% Increase in Cash Earnings to $0.26 and 17% Increase in Net Income
LAS VEGAS--(BUSINESS WIRE)--Oct. 25, 2000--Park Place Entertainment Corporation (NYSE: PPE) today reported a 17 percent increase in net income before pre-opening charges to $68 million for the third quarter ended September 30, 2000 compared to $58 million for the third quarter of 1999.
Diluted earnings per share for the quarter increased 16 percent to $0.22 compared to last year's $0.19, excluding pre-opening charges. Including pre-opening charges, net income for the third quarter 2000 and third quarter 1999 was $67 million and $34 million, respectively, and diluted earnings per share was $0.22 and $0.11, respectively.
Diluted cash earnings per share (net income before pre-opening expense plus goodwill amortization) increased 18 percent to $0.26 in the third quarter 2000 from $0.22 last year.
Earnings before interest, taxes, depreciation and amortization, pre-opening expense and asset dispositions (EBITDA) were $338 million in the third quarter of 2000, up 59 percent compared to last year's $213 million. The Company's EBITDA margin in the third quarter increased 100 bps to 26.4 percent from 25.4 percent in 1999.
Park Place generated approximately $170 million in net cash flow in the third quarter 2000 and deployed it as follows:
- $72 million in new unit capital spending;
-- $61 million paydown of bank debt outstanding; and
-- $37 million of share repurchases - 2.6 million shares at an
average price of $14.20.
The Caesars asset integration continued successfully into the third quarter as EBITDA from that portfolio increased 24 percent to $126 million, as compared to $102 million in the third quarter of 1999. This improvement was driven by both top line revenue growth and cost reduction programs. For the first nine months of 2000, the Caesars assets produced $333 million of EBITDA versus $265 million, a 26 percent increase.
Eastern Region
The Atlantic City Hilton generated $24 million in EBITDA for the third quarter of 2000, up 33 percent from last year's $18 million. The increase resulted primarily from higher slot handle and improved hotel occupancy.
EBITDA at Caesars Atlantic City was $56 million in the third quarter of 2000 compared to $50 million last year as the property benefited from its inclusion in the Company's marketing networks and improved cost controls.
EBITDA at Bally's Park Place increased to $58 million in the third quarter 2000 from $55 million last year. The increase is attributable largely to improved slot handle driven by successful regional marketing programs.
On September 1, the Company opened its Wild Wild West casino expansion connecting Bally's Park Place and the Wild Wild West Casino to Caesars Atlantic City adding over 300 slot machines at its center Boardwalk location and 4,400 additional square feet of meeting space to Caesars. The expavsion cost approximately $30 million and is successfully riving incremental customer traffic to both properties.
For the first nine months of 2000, Park Place's Atlantic City properties outperformed the competition as combined gaming revenue for the Atlantic City Hilton, Bally's Park Place, and Caesars Atlantic City was up approximately 8 percent compared to an increase of approximately 3 percent for the market excluding Park Place's properties. Most importantly, EBITDA for the Eastern Region grew 12 percent for the third quarter 2000 and 19 percent year to date.
Western Region
EBITDA at Caesars Palace increased 37 percent to $26 million from last year's $19 million. The improvement was driven primarily through a 16 percent increase in table game drop.
Capital improvement projects at Caesars Palace continue on pace with the opening of Cafe Lago on September 29. Cafe Lago, which replaced Cafe Roma, is a 24-hour, casual-dining restaurant overlooking the property's pool area. Meanwhile, the refacing of the resort's exterior facade is well underway and is expected to be largely complete by year end.
Paris/Bally's Las Vegas recorded $46 million in EBITDA for the third quarter of 2000 versus $31 million last year. Paris opened on September 1, 1999 and operated at maximum capacity throughout its first month. In its first twelve months of operation, Paris generated $137 million of incremental EBITDA and continues to generate strong customer counts and casino volumes.
Flamingo Las Vegas EBITDA increased $2 million in the third quarter of 2000 to $25 million. New marketing programs targeted at table game customers paid off with an 18 percent increase in table game volume.
Mid-South Region
Caesars Indiana EBITDA increased to $14 million in the third quarter 2000 from $11 million last year. Additional amenities in its retail pavilion combined with enhanced marketing efforts drove a 23 percent increase in slot handle and an 11 percent increase in table game drop. On July 26, the upscale Portico restaurant opened, and on October 2, Legends, an exciting casual-dining restaurant with live entertainment, opened to complete the facility's full complement of amenities. Construction of the 500 room hotel tower is proceeding according to plan and is scheduled for completion late in the third quarter of 2001.
Third quarter 2000 EBITDA at Grand Tunica was $12 million compared to $18 million in the third quarter 1999. The reduction in EBITDA is attributable to competitive market conditions and increased promotional spending.
Conditions on the Gulf Coast of Mississippi continue to be competitive due to supply added in New Orleans and Biloxi. Grand Gulfport reported $11 million in EBITDA for the third quarter 2000 versus last year's $13 million and EBITDA at Grand Biloxi came in at $19 million compared to $21 million.
International
The Company's share of EBITDA from its International properties increased by $19 million to $28 million. The inclusion of the Caesars assets, plus strong same store profit increases at both Australian properties and at Conrad Punta del Este in Uruguay, drove the improvement.
Nine Month Results
For the nine months ended September 30, 2000, EBITDA for the Company reached $1 billion, a 71 percent increase over last year's $585 million.
Excluding asset dispositions and pre-opening charges, net income for the nine month period was $175 million or $0.57 per diluted share, up 16 percent from the $0.49 per diluted share reported for the nine months ended September 30, 1999. Including these items, net income for the nine month periods ended September 30, 2000 and September 30, 1999 was $150 million and $119 million, respectively, or $0.49 and $0.39, respectively, per diluted share.
Diluted cash earnings per share for the nine months ended September 30, 2000 increased 21 percent to $0.70 compared to $0.58 last year.
Corporate Items
As a result of the Company's stock repurchase program, actual shares outstanding at the end of the quarter declined to 299 million from 303 million last year. For the first nine months of the year, Park Place purchased approximately 11 million shares at an average price of $12.00 and as of September 30, 2000 had 6 million shares remaining under its stock repurchase authorization.
In September, Park Place issued $400 million in aggregate principal amount of Senior Subordinated Notes under its shelf registration statement. Proceeds from the offering were primarily used to repay current bank indebtedness. The Notes carry an 8.875 percent coupon and mature in 2008.
On September 27, the Company announced that it had entered into an agreemenr to purchase the world-class Boulder City golf course from MGM MIRAGE, subject to Boulder City approval. The Rees Jones-designed championship golf course complements the Company's impressive array of high-end amenities. The transaction is expected to close by year-end.
In a separate transaction with MGM MIRAGE, Park Place Entertainment agreed to purchase 5.5 acres of boardwalk fronting property located next to the Atlantic City Hilton to be used for surface parking. The combined price for both transactions is approximately $60 million.
The sale of the Las Vegas Hilton to Ed Roski, Jr. received approval from the Nevada Gaming Control Board earlier this month and is on the October agenda for the Nevada Gaming Commission approval. He is also on the October agenda for licensing approvals from Clark County. Park Place intends to use the net cash proceeds of the sale to pay down debt and repurchase stock.
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. |
