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 JUNE 30, 2000
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 NUMBER 1-14573
PARK PLACE ENTERTAINMENT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 88-0400631
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3930 HOWARD HUGHES PARKWAY
LAS VEGAS, NEVADA 89109
(Address of principal executive offices) (Zip code)
(702) 699-5000
(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 twelve 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 / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
TITLE OF EACH CLASS OUTSTANDING AT AUGUST 1, 2000
------------------- -----------------------------
Common Stock, par value $0.01 per share 300,226,861
1
PARK PLACE ENTERTAINMENT CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Page
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets 3
June 30, 2000 and December 31, 1999
Condensed Consolidated Statements of Income 4
Three and six months ended June 30, 2000 and 1999
Condensed Consolidated Statements of Cash Flows 5
Six months ended June 30, 2000 and 1999
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT PAR VALUE)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2000 1999
----------- -----------
Assets
Cash and equivalents $ 283 $ 346
Accounts receivable, net 283 287
Inventory, prepaids, and other 157 162
Deferred income taxes 102 98
----------- -----------
Total current assets 825 893
Investments 256 282
Property and equipment, net 7,725 7,873
Goodwill, net of amortization of $127 million and $102 million 1,888 1,913
Other assets, net 193 190
----------- -----------
Total assets $ 10,887 $ 11,151
=========== ===========
Liabilities and stockholders' equity
Accounts payable and accrued expenses $ 670 $ 711
Current maturities of long-term debt 1 8
Income taxes payable 9 14
----------- -----------
Total current liabilities 680 733
Long-term debt, net of current maturities 5,379 5,616
Deferred income taxes, net 977 980
Other liabilities 80 82
----------- -----------
Total liabilities 7,116 7,411
----------- -----------
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value, 400.0 million shares authorized, 311.5
million and 306.8 million shares issued at
June 30, 2000 and December 31, 1999, respectively 3 3
Additional paid-in capital 3,675 3,635
Other (6) (5)
Retained earnings 219 136
Common stock in treasury at cost, 11.1 million and 3.1 million shares
at June 30, 2000 and December 31, 1999, respectively (120) (29)
----------- -----------
Total stockholders' equity 3,771 3,740
----------- -----------
Total liabilities and stockholders' equity $ 10,887 $ 11,151
=========== ===========
See notes to condensed consolidated financial statements
3
PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
Revenues
Casino $ 879 $ 530 $ 1,743 $ 1,070
Rooms 151 91 296 181
Food and beverage 123 65 242 132
Other revenue 95 53 198 104
----------- ----------- ----------- -----------
1,248 739 2,479 1,487
----------- ----------- ----------- -----------
Expenses
Casino 457 281 918 558
Rooms 46 34 93 65
Food and beverage 110 60 212 122
Other expense 287 176 570 353
Depreciation and amortization 130 71 260 142
Pre-opening expense 1 7 1 10
Impairment losses and other, net 37 -- 37 --
Corporate expense 13 9 24 17
----------- ----------- ----------- -----------
1,081 638 2,115 1,267
----------- ----------- ----------- -----------
Operating income 167 101 364 220
Interest and dividend income 5 3 10 6
Interest expense, net of interest capitalized (112) (29) (219) (58)
Interest expense, net from unconsolidated affiliates (2) (3) (5) (6)
----------- ----------- ----------- -----------
Income before income taxes, minority interest, and
cumulative effect of accounting change 58 72 150 162
Provision for income taxes 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
income taxes of $1 million) -- -- -- (2)
----------- ----------- ----------- -----------
Net income $ 31 $ 40 $ 83 $ 85
=========== =========== =========== ===========
Basic earnings per share
Income before cumulative effect of accounting change $ 0.10 $ 0.13 $ 0.27 $ 0.29
Cumulative effect of accounting change $ -- $ -- $ -- $ (0.01)
Net income per share $ 0.10 $ 0.13 $ 0.27 $ 0.28
Diluted earnings per share
Income before cumulative effect of accounting change $ 0.10 $ 0.13 $ 0.27 $ 0.28
Cumulative effect of accounting change $ -- $ -- $ -- $ (0.01)
Net income per share $ 0.10 $ 0.13 $ 0.27 $ 0.28
See notes to condensed consolidated financial statements
4
PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------------
2000 1999
----------- -----------
Operating activities
Net income $ 83 $ 85
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 260 142
Pre-opening expense 1 10
Impairment losses and other, net 37 --
Change in working capital components (46) (34)
Change in deferred income taxes (7) 29
Other 9 17
----------- -----------
Net cash provided by operating activities 337 249
----------- -----------
Investing activities
Capital expenditures (117) (385)
Pre-opening expense (1) (10)
Change in investments 3 (14)
Other 18 (4)
----------- -----------
Net cash used in investing activities (97) (413)
----------- -----------
Financing activities
Change in credit facilities (738) 620
Net borrowings on commercial paper program -- 24
Payments on debt (5) (623)
Proceeds from issuance of notes 500 --
Payments to Hilton -- (73)
Purchases of treasury stock (91) (12)
Proceeds from exercise of stock options 33 4
Other (2) --
----------- -----------
Net cash used in financing activities (303) (60)
----------- -----------
Decrease in cash and equivalents (63) (224)
Cash and equivalents at beginning of period 346 382
----------- -----------
Cash and equivalents at end of period $ 283 $ 158
=========== ===========
Supplemental Disclosures of Cash Flow Information
Cash paid for:
Interest, net of amounts capitalized $ 185 $ 52
=========== ===========
Income taxes $ 65 $ 36
=========== ===========
See notes to condensed consolidated financial statements
5
PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. THE COMPANY
Park Place Entertainment Corporation ("Park Place" or "the Company"), a
Delaware corporation, was formed in June 1998. On December 31, 1998, Hilton
Hotels Corporation ("Hilton") completed the transfer of the operations, assets,
and liabilities of its gaming business to the Company. The stock of the Company
was distributed to Hilton's shareholders tax-free on a one-for-one basis. Also
on December 31, 1998, immediately following the Hilton distribution, the Company
acquired, by means of a merger, the Mississippi gaming business of Grand
Casinos, Inc. ("Grand") in exchange for the assumption of debt and the issuance
of Company common stock on a one-for-one basis. On December 29, 1999, the
Company acquired all of the outstanding stock of Caesars World, Inc. and
interests in several other gaming entities ("Caesars") from Starwood Hotels &
Resorts Worldwide, Inc. for cash.
The Company is primarily engaged in the ownership, operation, and
development of gaming facilities. The operations of the Company currently are
conducted under the Caesars, Bally's, Paris, Flamingo, Grand, Hilton, and Conrad
brands. The Company operates a total of twenty-eight casino hotels, including
seventeen located in the United States, of which nine are located in Nevada,
three are located in Atlantic City, New Jersey, and five are located in
Mississippi. The Company has a 49.9 percent owned and managed riverboat casino
in New Orleans and an 82 percent owned and managed riverboat casino in Harrison
County, Indiana. The Company partially owns and manages two casino hotels in
Australia, one casino hotel in Punta del Este, Uruguay, two casinos in Nova
Scotia, Canada, one casino in South Africa, and has an interest in two casinos
on cruise ships. The Company provides management services to a casino in
Windsor, Canada and the slot operations at the Dover Downs racetrack in
Delaware.
NOTE 2. BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of the
Company, its subsidiaries, and investments in unconsolidated affiliates, which
are 50 percent or less owned, accounted for under the equity method. All
material intercompany accounts and transactions are eliminated and net earnings
are reduced by the portion of the earnings of affiliates applicable to other
ownership interests. There are no significant restrictions on the transfer of
funds from the Company's wholly owned subsidiaries to Park Place.
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of management, all adjustments (which
include normal recurring adjustments) necessary for a fair presentation of
results for the interim periods have been made. The results for the six-month
period are not necessarily indicative of results to be expected for the full
fiscal year. These condensed 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
31, 1999.
6
The condensed consolidated financial statements for the prior periods
reflect certain reclassifications to conform to classifications adopted in 2000.
These classifications have no effect on previously reported net income.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 clarifies existing accounting principles related to
revenue recognition in financial statements. The Company is required to comply
with the provisions of SAB No. 101 by the fourth quarter of 2000. Due to the
nature of the Company's operations, management does not believe that SAB No. 101
will have a significant impact on the Company's financial statements.
NOTE 3. STOCK REPURCHASE
In March 1999, the Company's Board of Directors approved a stock repurchase
program allowing for the purchase of up to eight million shares of the Company's
outstanding common stock, all of which have been repurchased. In May 2000, the
Board of Directors approved an additional 12 million shares under the stock
repurchase program. The Company repurchased approximately four million shares of
its common stock this quarter. In total, 11.1 million shares have been
repurchased through June 30, 2000.
NOTE 4. CAESARS ACQUISITION
Effective December 29, 1999, the Company completed the acquisition of
Caesars pursuant to an agreement dated April 27, 1999. Aggregate consideration
consisted of approximately $3 billion in cash.
The acquisition has been accounted for using the purchase method of
accounting. The purchase price has been preliminarily allocated based on
estimated fair values at the date of acquisition, pending final determination of
certain acquired balances. The final allocation of the purchase price will be
completed within one year from the date of acquisition. A total of approximately
$640 million, representing the estimated excess of acquisition cost over the
fair value of Caesars tangible net assets, was allocated to goodwill and is
being amortized over 40 years.
The following unaudited pro forma information for the three and six months
ended June 30, 1999 has been prepared assuming that the Caesars merger had taken
place as of January 1, 1999. This pro forma information does not purport to be
indicative of future results or what would have occurred had the Caesars merger
been completed as of January 1, 1999.
Three months ended Six months ended
June 30, 1999 June 30, 1999
------------- -------------
(in millions, except (in millions, except
per share amounts) per share amounts)
Revenue .................................................. $ 1,092 $ 2,186
Operating income ......................................... 131 290
Income before cumulative effect of accounting change ..... 17 46
Basic and diluted earnings per share before cumulative
effect of accounting change .............................. 0.06 0.15
Net income ............................................... 17 44
Basic earnings per share ................................. 0.06 0.15
Diluted earnings per share ............................... 0.06 0.14
7
NOTE 5. EARNINGS PER SHARE
Basic earnings per share ("EPS") is calculated by dividing net income by
the weighted-average number of common shares outstanding for the period. The
weighted-average number of common shares outstanding for the three months ended
June 30, 2000 and 1999 was 303 million and 302 million, respectively, and 304
million and 303 million for the six months ended June 30, 2000 and 1999,
respectively. Diluted EPS reflects the effect of assumed stock option exercises.
The dilutive effect of the assumed exercise of stock options increased the
weighted-average number of common shares by 7 million and 6 million for the
three months ended June 30, 2000 and 1999, respectively and 6 million and 3
million for the six months ended June 30, 2000 and 1999, respectively.
NOTE 6. LONG-TERM DEBT
Long-term debt is as follows (in millions):
June 30, December 31,
2000 1999
----------- -----------
Senior and senior subordinated notes, net of unamortized discount
of $6 million and $7 million, respectively ......................... $ 2,219 $ 1,718
Credit facilities ..................................................... 3,150 3,888
Other ................................................................. 11 18
----------- -----------
5,380 5,624
Less current maturities ............................................ (1) (8)
=========== ===========
Net long-term debt .................................................... $ 5,379 $ 5,616
=========== ===========
In February 2000, the Company issued $500 million of senior subordinated
notes due 2007 through a private placement offering to institutional investors.
The notes were issued with a coupon rate of 9.375%. In June 2000, the Company
exchanged these notes for notes registered under the Securities Act of 1933, as
amended. The notes are redeemable at any time prior to their maturity at the
redemption prices described in the indenture governing such notes. The notes are
unsecured obligations, rank equal with the Company's other senior subordinated
indebtedness and are junior to all of the Company's senior indebtedness.
Proceeds from this offering were used to reduce borrowings under the credit
facilities.
The Company is in the process of amending its credit facilities with an
anticipated effective date of August 28, 2000. When these amendments become
effective, the Company anticipates having the following two credit facilities in
place: (1) a $1.9 billion 364-day short-term facility and (2) a $2.0 billion
multi-year facility expiring December 2003.
NOTE 7. PROPOSED PROJECT
Park Place entered into an agreement in April 2000 with the Saint Regis
Mohawk Nation in upstate New York. Park Place paid $3 million for exclusive
rights to develop a Class II or Class III casino project in the State of New
York for a period of three years, or extended thereafter by mutual agreement. In
the event such a casino project is developed, the parties also agreed to enter
into a seven-year management agreement whereby Park Place will manage the casino
and pay the Tribe 70 percent of the net profits. The agreement is subject to the
approval of the National Indian Gaming Commission.
8
On May 1, 2000, Park Place announced that it had entered into a definitive
agreement to acquire 50 acres of the Kutsher's Resort Hotel and Country Club in
Sullivan County, New York, for approximately $250,000, with an option to
purchase the remaining 1,400 acres for $65 million. The 50-acre site will be
transferred in trust to the Saint Regis Mohawk Nation subject to approval of the
Bureau of Indian Affairs ("BIA").
All of the agreements and plans relating to the development and management
of this Indian gaming project are contingent upon various regulatory approvals,
including a compact between the Saint Regis Mohawk Nation and the State of New
York, and receipt of approvals from the BIA, National Indian Gaming Commission
and local planning and zoning boards.
On April 26, 2000, certain individual members of the Saint Regis Tribe
purported to commence a class action proceeding in the Saint Regis Mohawk
Tribal Court in Hogansburg, New York against Park Place and certain of its
executives. The proceeding seeks to nullify Park Place's casino development
and management agreement with the Saint Regis Mohawk Tribe and further seeks
an award of $12 billion in damages. The Company believes that the purported
tribal court in which the proceeding has been invoked is an invalid forum and
is not recognized by the lawful government of the Saint Regis Mohawk Tribe.
On June 2, 2000, Park Place and certain of its executives filed an action in
the United States District Court for the Northern District of New York
seeking to enjoin the dissident Tribe members from proceeding in the tribal
court with an action that the Company believes has been unlawfully convened
and is without merit.
On June 6, 2000, President R.C.-St. Regis Management Company and its
principal, Ivan Kaufman, filed an action in the Supreme Court of the State of
New York, County of Nassau, against Park Place and certain of its executives
seeking compensatory and punitive damages in the amount of approximately $550
million. The action alleges claims based on breach of a proposed letter
agreement between plaintiffs, Park Place, and the Saint Regis Mohawk Tribe
concerning the Tribe's existing casino in Hogansburg, New York, fraudulent
inducement, tortious interference with contract, and defamation.
Alternatively, plaintiffs seek specific performance and/or injunctive relief
in connection with the proposed letter agreement. The Company believes this
lawsuit is without merit and intends to vigorously pursue its defense.
NOTE 8. ASSET DISPOSITIONS AND IMPAIRMENT LOSSES
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
due to lack of regulatory approvals. However, the agreement provided for the
Company to receive the equivalent economic value of this asset upon sale or
other disposition. In June 2000, Hilton Hotels sold this asset to a third party.
As a result of this sale and in accordance with the disposition agreement, the
Company recognized a pretax gain of $18 million during the quarter ended June
30, 2000.
In July 2000, the Company entered into an agreement to sell the Las Vegas
Hilton. The transaction is expected to be completed by the end of the year and
is subject to regulatory approvals. The Company is to receive $300 million in
cash for the property, building, and equipment and approximately $6 million for
estimated net working capital (excluding certain gaming customer receivables to
be retained by Park Place which were approximately $28 million at June 30,
2000). The purchaser will also assume approximately $31 million in future
liabilities pursuant to an agreement with Hilton Hotels for use of the Hilton
name. In connection with this planned disposition, the Company recognized a
non-cash impairment loss of $55 million during the quarter ended June 30, 2000.
The net result of the sale of the Flamingo Hilton Riverboat Casino and the
Las Vegas Hilton impairment was a loss of $37 million, or $24 million net of
tax, during the quarter ended June 30, 2000.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Results of operations include our wholly owned subsidiaries and investments
accounted for under the equity method of accounting. After our merger with Grand
Casinos, Inc. on December 31, 1998, the opening of Paris Las Vegas on September
1, 1999 and our acquisition of Caesars World, Inc. and other gaming assets from
Starwood Hotels & Resorts Worldwide, Inc. on December 29, 1999, we operate the
following portfolio of properties under the Caesars, Bally's, Paris, Flamingo,
Grand, Hilton, and Conrad brand names:
- nine casino hotels in Nevada;
- three casino hotels in Atlantic City, New Jersey;
- five dockside casinos in Mississippi;
- a 49.9 percent owned and managed riverboat casino in
New Orleans;
- an 82 percent owned and managed riverboat casino in Indiana;
- three partially owned and/or managed casino hotels in Canada;
- two partially owned and managed casino hotels in Australia;
- a partially owned and managed casino hotel in Punta del Este,
Uruguay;
- a partially owned and managed casino hotel in Johannesburg,
South Africa;
- two casinos on cruise ships; and
- managed slot operations at a racetrack in Delaware.
We have experienced a number of changes, resulting in increases in the
number of subsidiaries and investments (as listed above), between the periods
covered in this discussion. On September 1, 1999, we opened the 2,916 room Paris
Las Vegas on the Las Vegas Strip. On December 29, 1999, we completed our
acquisition of Caesars World, Inc. As a result of the Caesars acquisition, we
now own Caesars Palace, Caesars Atlantic City, Caesars Tahoe, Sheraton Casino
and Hotel Tunica, an 82 percent interest in Caesars Indiana, a 95 percent
interest in Sheraton Casino Sydney and Sheraton Halifax Casino, an interest in
Caesars Guateng, a 50 percent interest in the management company of Windsor
Casino in Ontario, Canada, an interest in Caesars at Sea, and the slot
operations at the Dover Downs racetrack in Delaware. The results of operations
for the Caesars properties and Paris are not included in our condensed
consolidated statements of income for the three and six months ended June 30,
1999, as the acquisition of Caesars was completed on December 29, 1999 and Paris
opened on September 1, 1999.
The following discussion presents an analysis of the results of
operations for the three and six months ended June 30, 2000 and 1999. EBITDA
(earnings before interest, taxes, depreciation, amortization, pre-opening,
and impairment losses and other, net) is presented supplementally in the
tables below and in the discussion of operating results because we believe it
allows for a more complete analysis of results
10
of operations. This information should not be considered as an alternative to
any measure of performance as promulgated under accounting principles
generally accepted in the United States of America (such as operating income
or net income), nor should it be considered as an indicator of our overall
financial performance. Our calculation of EBITDA may be different from the
calculation used by other companies and therefore comparability may be
limited. Our depreciation, amortization and pre-opening costs for the three
months ended June 30, 2000 and 1999 and the six months ended June 30, 2000
and 1999 totaled $131 million, $78 million, $261 million, and $152 million,
respectively. Pretax impairment losses and other, net for the three and six
months ended June 30, 2000 were a net $37 million consisting of a $55 million
impairment write-down of the Las Vegas Hilton offset by an $18 million gain
on the sale of the Flamingo Kansas City Riverboat Casino. We had no
impairment losses and other, net amounts for the three or six months ended
June 30, 1999.
COMPARISON OF THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
A summary of our consolidated revenue and earnings for the three and six
months ended June 30, 2000 and 1999 is as follows (in millions, except per share
amounts):
Three months ended Six months ended
June 30, June 30,
--------------------- -----------------------
2000 1999 2000 1999
-------- -------- -------- --------
Revenue $1,248 $739 $2,479 $1,487
Operating income 167 101 364 220
Net income 31 40 83 85
Basic and diluted earnings per share 0.10 0.13 0.27 0.28
Other operating data:
EBITDA $335 $179 $662 $372
We recorded net income of $31 million or diluted earnings per share of
$0.10 for the three months ended June 30, 2000, compared with net income of
$40 million or diluted earnings per share of $0.13 for the three months ended
June 30, 1999. Current-period results were negatively impacted by a $37
million net loss ($24 million net of tax or $0.08 per diluted share) related
to the announced sale of the Las Vegas Hilton and the net impact of the sale
of the Flamingo Kansas City Riverboat Casino. Revenues increased 69 percent
primarily resulting from the Caesars acquisition and the opening of Paris Las
Vegas on September 1, 1999. Positive operating results in the current quarter
were driven by company-wide same store EBITDA growth and the opening of Paris
Las Vegas. The same store improvement was driven primarily by successful
local marketing efforts and our domestic marketing network. EBITDA increased
87 percent to $335 million for the three months ended June 30, 2000, from
$179 million in 1999. The Caesars properties contributed $110 million of
EBITDA during the second quarter 2000. Excluding the Caesars properties, the
Western Region was up $37 million, the Eastern Region was up $14 million, the
Mid-South Region was down $5 million, and the International properties were
up $3 million.
For the six months ended June 30, 2000, we recorded net income of $83
million or diluted earnings per share of $0.27 compared with net income of $85
million or diluted earnings per share of $0.28 in the prior-year period. Results
for the current six-month period included a net loss of $24 million, or $0.08
per diluted share, related to the Las Vegas Hilton and Flamingo Kansas City
sales noted above. Revenues increased 67 percent to $2.5 billion for the six
months ended June 30, 2000, from $1.5 billion in 1999. This increase was
primarily a result of the Caesars acquisition, the opening of Paris, and strong
operating performance in the Eastern Region. For the six months ended June 30,
2000, EBITDA increased $290 million when compared to the prior-year period. The
Caesars properties contributed $207 million. Excluding the Caesars
properties, the Western Region was up $63 million, the Eastern Region was up
$27 million, the Mid-South Region was down $8 million, and the International
properties were up $8 million.
11
WESTERN REGION
EBITDA for the Western Region was $147 million for the three months ended
June 30, 2000 compared to $72 million for the three months ended June 30, 1999.
The increase in EBITDA was primarily attributable to the acquisition of Caesars
and the opening of Paris. Caesars Palace recorded EBITDA of $33 million and $68
million for the three and six months ended June 30, 2000, respectively.
Occupancy for the Western Region was 94 percent for the three months ended June
30, 2000, compared to 88 percent in the prior year. The average room rate was
$90 compared to $77 in the prior year. The increase in the average room rate was
a result of the addition of Paris, Caesars Palace, and Caesars Tahoe. For the
six months ended June 30, 2000, Western Region EBITDA increased $139 million to
$306 million when compared to the six months ended June 30, 1999. Occupancy was
92 percent and the average room rate was $91 for the six months ended June 30,
2000 compared with 88 percent occupancy and a $79 average room rate for the
corresponding prior-year period.
EBITDA at the Las Vegas Hilton was $12 million for the three months
ended June 30, 2000, compared to $7 million in the prior year. The improved
performance resulted from a six percent increase in slot handle and a nine
percent increase in room revenues. For the six months ended June 30, 2000,
EBITDA decreased $4 million to $30 million. Results at the Las Vegas Hilton
are more volatile than most of our other casinos because this property caters
to the premium play segment of the market.
The combined Paris/Bally's properties generated EBITDA of $50 million in
the second quarter of 2000, an increase of $29 million from the second quarter
of 1999. The increase in EBITDA was primarily attributable to the addition of
Paris. For the six months ended June 30, 2000, EBITDA increased $63 million to
$108 million. Paris continues to generate strong customer counts and casino
volumes.
EBITDA at the Flamingo Las Vegas increased $1 million to $30 million for
the three months ended June 30, 2000. For the six months ended June 30, 2000,
EBITDA was $63 million compared with $61 million during the six months ended
June 30, 1999. The Flamingo Hilton Las Vegas continues to demonstrate the power
of its longstanding and loyal customer base.
Combined EBITDA from the Reno Hilton, the Flamingo Hilton Reno, and the
Flamingo Hilton Laughlin was $17 million for the three months ended June 30,
2000 compared with $15 million for the second quarter of 1999. For the six
months ended June 30, 2000, combined EBITDA was $29 million compared with $27
million for the corresponding prior-year period. Caesars Tahoe generated EBITDA
during the three and six months ended June 30, 2000 of $5 million and $8
million, respectively.
Since October 1998, four new mega-resorts (including Paris) have opened
in Las Vegas, which drove increased visitation in 1999. In August 2000, one
new mega-resort is expected to open adjacent to Paris. We cannot predict what
impact the recent development projects or new expansion will have on our
future results of operations.
12
EASTERN REGION
EBITDA for the Eastern Region was $114 million for the three months ended
June 30, 2000 compared to $57 million for the three months ended June 30, 1999.
The increase is due to the addition of Caesars Atlantic City, coupled with the
continued success of our marketing efforts, which are driving incremental
visitation to our properties in Atlantic City. Caesars Atlantic City recorded
EBITDA of $43 million and $75 million for the three and six months ended June
30, 2000, respectively. The average room rate in the Eastern Region increased to
$93 for the three months ended June 30, 2000 from $87 in the second quarter of
1999. The occupancy percentage declined from 99 percent during the second
quarter of 1999 to 96 percent for the three months ended June 30, 2000. For the
six months ended June 30, 2000, the Eastern Region recorded EBITDA of $198
million compared to $96 million for the corresponding prior-year period.
Occupancy was 95 percent and the average room rate was $89 for the six months
ended June 30, 2000 compared with 96 percent occupancy and an average room rate
of $81 for the corresponding prior-year period.
Bally's Park Place generated EBITDA of $48 million for the three months
ended June 30, 2000, an increase of 12 percent from the $43 million recorded
during last year's second quarter. The improvement resulted from an eight
percent increase in revenues coupled with margin improvements and effective cost
controls. For the six months ended June 30, 2000, EBITDA increased $10 million
to $86 million.
For the three months ended June 30, 2000, the Atlantic City Hilton reported
EBITDA of $23 million, a 64 percent increase from last year's $14 million. The
improvement was driven primarily by a 28 percent increase in slot handle. EBITDA
for the six months ended June 30, 2000 was $37 million compared to $20 million
for the corresponding prior-year period.
Certain competitors have announced plans to enter the Atlantic City
market or expand existing facilities, which may bring new capacity to the
market. Such potential new capacity could intensify competition in the
Atlantic City marketplace, or alternatively broaden Atlantic City's appeal to
an expanded customer base. We cannot predict if these projects will be
completed or how any additional capacity would affect our operating results.
MID-SOUTH REGION
EBITDA for the Mid-South Region increased $14 million to $66 million for
the three months ended June 30, 2000. The increase in EBITDA is primarily
attributable to the $13 million in EBITDA generated by Caesars Indiana and the
$6 million generated by Sheraton Tunica, partially offset by a $4 million
decrease at Bally's New Orleans. The average room rate for the region was $56
and occupancy was 96 percent for the quarter ended June 30, 2000 compared to an
average room rate of $57 and occupancy of 94 percent for the second quarter of
1999. For the six months ended June 30, 2000, EBITDA was $130 million compared
to $104 million for the six months ended June 30, 1999. Caesars Indiana
generated EBITDA of $24 million and Sheraton Tunica had EBITDA of $10 million
for the six months ended June 30, 2000. For the six months ended June 30, 2000,
the regional average room rate was $53 and the regional occupancy rate was 92
percent compared to an average room rate of $58 and occupancy of 94 percent for
the prior-year period.
Grand Gulfport generated $11 million in EBITDA for the three months ended
June 30, 2000, a 22 percent increase above the $9 million reported in the second
quarter of 1999. Increases in both slot handle and table game drop, the June
1999 opening of the Oasis Resort and Spa, and improved operating margins
contributed to this increase. For the six months ended June 30, 2000, EBITDA was
$23 million compared to $19 million for the corresponding prior-year period.
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For the three months ended June 30, 2000, Grand Tunica reported EBITDA
of $16 million, down from $18 million reported for the three months ended
June 30, 1999 due to competitive pressures. EBITDA for the six months ended
June 30, 2000 was $30 million compared to $31 million for the six months
ended June 30, 1999.
Grand Biloxi reported EBITDA of $16 million for the second quarter of 2000,
down from last year's $18 million due to competitive pressure from significant
new supply in the Biloxi market. EBITDA for the six months ended June 30, 2000
was $32 million compared to $38 million for the prior-year period.
INTERNATIONAL
On a combined basis, second quarter 2000 EBITDA from the Conrad properties
in Uruguay and Australia increased $3 million to $10 million. The Caesars
properties in Canada and South Africa recorded EBITDA of $11 million. On a
combined basis, for the second quarter 2000, the International properties
reported an average daily rate of $86, a decrease of $3, and occupancy
of 65 percent, an increase of 5 percentage points over the second quarter of
1999. For the six months ended June 30, 2000, the International properties had
combined EBITDA of $52 million, including $22 million from the Caesars
properties.
DEPRECIATION AND AMORTIZATION
Consolidated depreciation and amortization increased $59 million to $130
million for the three months ended June 30, 2000. For the six months ended June
30, 2000, depreciation and amortization increased $118 million to $260 million.
The increase in depreciation and amortization for the three and six months was
primarily attributable to the addition of the Caesars properties and Paris.
CORPORATE EXPENSE
Corporate expense increased $4 million to $13 million for the three months
ended June 30, 2000. For the six months ended June 30, 2000, corporate expense
increased $7 million to $24 million. The increase was primarily attributable to
the acquisition of Caesars.
NET INTEREST EXPENSE
Consolidated net interest expense increased $80 million to $109 million for
the three months ended June 30, 2000. For the six months ended June 30, 2000,
net interest expense increased $156 million to $214 million. The increase in net
interest expense was due primarily to an increase in long-term debt of
approximately $3 billion associated with the Caesars acquisition and a decrease
in capitalized interest primarily due to the completion of Paris. We used a
combination of fixed-rate debt and bank credit facilities to fund the
acquisition of Caesars. Capitalized interest for the three months ended June 30,
2000 was less than $1 million compared to $14 million for the second quarter of
1999. For the six months ended June 30, 2000 and 1999, capitalized interest was
$1 million and $27 million, respectively.
INCOME TAXES
The effective income tax rate for the three and six months ended June 30,
2000 was 47 percent and 45 percent, respectively. For the three and six months
ended June 30, 1999, the effective income tax rate was 43 percent and 45
percent, respectively. Our effective income tax rate is determined by the level
and composition of pretax income subject to varying foreign, state, and local
taxes and exceeds the federal statutory rate due primarily to non-deductible
amortization of goodwill.
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LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
As of June 30, 2000, we had cash and cash equivalents of $283 million. Net
cash provided by operating activities for the six months ended June 30, 2000 was
$337 million. In addition, we had availability under our credit facilities of
approximately $465 million at June 30, 2000. We expect to finance our current
operations and capital expenditures through cash flow from operations, existing
cash balances, borrowings under our credit facilities, new issuances in the
public bond markets, and commercial paper borrowings.
INVESTING ACTIVITIES
For the six months ended June 30, 2000, net cash used in investing
activities was $97 million, including $117 million related to capital
expenditures for normal maintenance as well as major construction projects.
Major construction projects primarily consist of the Wild Wild West Casino
expansion in Atlantic City, the master plan at Caesars Indiana, and casino,
suite, and restaurant expansions at Caesars Palace.
During 2000 we intend to spend up to $225 million on normal maintenance
capital spending at our casino properties, and make selective expansion or
improvement investments at certain of our existing properties. We intend to
continue to maintain our facilities in first-class condition in order to
preserve our competitive position.
FINANCING ACTIVITIES
During the six months ended June 30, 2000, we were able to reduce our debt
by approximately $240 million and repurchase eight million shares of common
stock at a total cost of $91 million with the free cash flow we generated.
In February 2000, we issued $500 million of senior subordinated notes due
2007 through a private placement offering to institutional investors. The notes
were issued with a coupon rate of 9.375%. In June 2000 we exchanged these notes
for notes registered under the Securities Act of 1933, as amended. The notes are
redeemable at any time prior to their maturity at the redemption prices
described in the indenture governing such notes. The notes are unsecured
obligations, rank equal with our other senior subordinated indebtedness and are
junior to all of our senior indebtedness. Proceeds from this offering were used
to reduce borrowings under the credit facilities.
We are in the process of amending our credit facilities with an anticipated
effective date of August 28, 2000. When these amendments become effective, we
anticipate having the following two credit facilities in place: (1) a $1.9
billion 364-day short-term facility and (2) a $2.0 billion multi-year facility
expiring December 2003.
We have established a $1.0 billion commercial paper program. To the extent
that we incur debt under this program, we must maintain an equivalent amount of
credit available under our credit facilities. At June 30, 2000, we had no
amounts outstanding under the commercial paper program.
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In January 1999, we filed a shelf registration statement (the "Shelf") with
the Securities and Exchange Commission registering up to $1.0 billion in debt or
equity securities. The terms of any securities offered pursuant to the Shelf
will be determined by market conditions at the time of issuance. Availability
under the Shelf at June 30, 2000 was approximately $600 million.
In March 1999, our Board of Directors approved a stock repurchase
program allowing for the purchase of up to eight million shares of our common
stock, all of which have been repurchased. In May 2000, the Board of
Directors approved an additional 12 million shares under the stock repurchase
program. We repurchased approximately four million shares of our common stock
this quarter. In total, 11.1 million shares have been repurchased through
June 30, 2000.
OTHER DEVELOPMENTS
SAINT REGIS MOHAWK NATION
We entered into an agreement in April 2000 with the Saint Regis Mohawk
Nation in upstate New York. We paid $3 million for exclusive rights to
develop a Class II or Class III casino project in the State of New York for a
period of three years, or extended thereafter by mutual agreement. In the
event such a casino project is developed, the parties also agreed to enter
into a seven-year management agreement whereby we will manage the casino and
pay the Tribe 70 percent of the net profits. The agreement is subject to the
approval of the National Indian Gaming Commission.
On May 1, 2000, we announced that we had entered into a definitive
agreement to acquire 50 acres of the Kutsher's Resort Hotel and Country Club
in Sullivan County, New York, for approximately $250,000, with an option to
purchase the remaining 1,400 acres for $65 million. The 50-acre site will be
transferred in trust to the Saint Regis Mohawk Nation subject to approval of
the Bureau of Indian Affairs ("BIA").
All of the agreements and plans relating to the development and management
of this Indian gaming project are contingent upon various regulatory approvals,
including a compact between the Saint Regis Mohawk Nation and the State of New
York, and receipt of approvals from the BIA, National Indian Gaming Commission
and local planning and zoning boards.
LAS VEGAS HILTON
In July 2000, we entered into an agreement to sell the Las Vegas Hilton.
The transaction is expected to be completed by the end of the year and is
subject to regulatory approvals. We are to receive $300 million in cash for the
property, building, and equipment and approximately $6 million for estimated net
working capital (excluding certain gaming customer receivables to be retained by
us which were approximately $28 million at June 30, 2000). The purchaser will
also assume approximately $31 million in future liabilities pursuant to an
agreement with Hilton Hotels for use of the Hilton name. In connection with this
planned disposition, we recognized a non-cash impairment loss of $55 million
($36 million net of tax) during the quarter ended June 30, 2000.
FLAMINGO HILTON RENO
In December 1999, we entered into an agreement to sell the Flamingo Hilton
Reno to Sapphire Gaming LLC, with an anticipated closing date of June 30, 2000.
On July 3, 2000 we announced that Sapphire had withdrawn from the agreement and
that the sale had been cancelled.
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SANDS HOTEL & CASINO
In late 1999, we submitted to the U.S. Bankruptcy Court, a plan of
reorganization for the Sands Hotel & Casino in Atlantic City, New Jersey. Our
plan was one of two plans being considered by the court. In July 2000, the
bankruptcy court judge issued an opinion favoring the reorganization plan of the
other party. We do not intend to appeal the decision.
STRATEGY
As exemplified by the acquisition of Bally Entertainment Corporation in
1996, Grand Casinos, Inc. in 1998, the opening of Paris on September 1, 1999,
and the purchase of Caesars in 1999, we are interested in expanding our business
through the acquisition of quality gaming assets and selective new development.
We believe we are well positioned to, and may from time to time, pursue
additional strategic acquisitions, dispositions of non-strategic assets, or
alliances, which we believe to be financially beneficial to our long-term
interests. We also believe that in addition to our cash flow from operations, we
will have access to financial resources sufficient to finance our future growth.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 clarifies existing accounting principles related to
revenue recognition in financial statements. We are required to comply with the
provisions of SAB No. 101 by the fourth quarter of 2000. Due to the nature of
the our operations, we do not believe that SAB No. 101 will have a significant
impact on our financial statements.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this report, including without limitation,
those set forth under the captions "Results of Operations," "Liquidity and
Capital Resources," "Other Developments," and "Strategy" and statements relating
to our plans, strategies, objectives, expectations, intentions, and adequacy of
resources, are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The words "believes," "anticipates,"
"expects," "intends," "interested in," "plans," "continues," "projects," and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements reflect our current views with respect to future
events and financial performance, and are subject to certain risks and
uncertainties, including those identified above under "Management's Discussion
and Analysis of Financial Condition and Results of Operations," other factors
described previously in our reports filed with the SEC, and:
- the effect of economic conditions,
- the impact of competition,
- customer demand, which could cause actual results to differ
materially from historical results or those anticipated,
- regulatory, licensing, and other governmental approvals,
- access to available and reasonable financing,
- political uncertainties, including legislative action, referendum,
and taxation,
- litigation and judicial actions,
- third party consents and approvals, and
- construction issues, including environmental restrictions,
weather, soil conditions, building permits, and zoning approvals.
17
Although we believe the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, we can give no assurance that
any of our expectations will be attained in light of these risks and
uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss arising from changes in market rates and
prices, such as interest rates, foreign currency exchange rates, and commodity
process. We are exposed to market risk in the form of changes in interest rates
and the potential impact such change may have on our variable rate debt. We
attempt to limit the impact of changes in interest rates by balancing the mix of
our borrowings pursuant to our bank credit facilities and commercial paper
program and our long-term fixed-rate debt. We have not invested in
derivative-based financial instruments.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are party to legal proceedings relating to the Bally, Hilton, Grand, and
Caesars gaming businesses that we assumed in 1998 and 1999. We are also involved
in various other legal proceedings relating to routine matters incidental to our
business. While any proceeding or litigation has an element of uncertainty, we
believe that the final outcome of these matters is not likely to have a material
adverse effect upon our company. For a discussion of certain material litigation
to which the Company and its subsidiaries are a party, see the Company's Annual
Report on Form 10-K for the year ended December 31, 1999 and Form 10-Q for the
period ended March 31, 2000.
GRAND CASINOS
INDEMNIFICATION OF PARK PLACE
Grand Casinos, Inc. and its subsidiaries are parties to various
lawsuits arising out of actions prior to Grand's merger with Park Place. Any
liabilities with respect thereto are an obligation of Grand, and Grand is to
be indemnified by Lakes Gaming, Inc. (the company that retained the
non-Mississippi business of Grand prior to the merger) for certain
liabilities. If Lakes is unable to satisfy its indemnification obligations,
Grand will be responsible for any liabilities, which could have a material
adverse effect on Park Place.
As security to support Lakes' indemnification obligations to Grand,
Lakes agreed to irrevocably deposit, in trust for the benefit of Grand, a
total sum of $30 million. The trust is to be funded with four annual
installments of $7.5 million during the four-year period subsequent to
December 31, 1998. The first annual installment payment was made in December
1999.
SETTLEMENT OF GRAND CASINOS AND STRATOSPHERE SECURITIES LITIGATION
The parties in three previously reported cases have reached a
consolidated settlement, although the courts have not yet formally dismissed
the cases. The three cases being settled are IN RE GRAND CASINOS, INC.
SECURITIES LITIGATION, filed on September 9, 1996 in the United States
District Court of Minnesota, MICHAEL CEASAR V. STRATOSPHERE CORPORATION ET.
AL., filed on August 5, 1996 in the United States District Court of Nevada,
and OPITZ ET. AL. V. STRATOSPHERE CORPORATION ET. AL., filed on August 16,
1996 in the District Court for Clark County, Nevada. The cases arose out of
Grand's involvement as a dominant shareholder in the Stratosphere Casino and
Hotel project in Las Vegas, Nevada.
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The settlement will involve the dismissal with prejudice of the three
cases in consideration of payment by Lakes Gaming (on behalf of Grand Casinos
under the indemnification agreement) of $9 million to the Grand Casino
shareholders and $9 million to the Stratosphere shareholders. The settlement
agreement is subject to final approval by each of the respective courts.
SAINT REGIS MOHAWK TRIBE
On April 26, 2000, certain individual members of the Saint Regis
Tribe purported to commence a class action proceeding in the Saint Regis
Mohawk Tribal Court in Hogansburg, New York against Park Place and certain of
its executives. The proceeding seeks to nullify Park Place's casino
development and management agreement with the Saint Regis Mohawk Tribe and
further seeks an award of $12 billion in damages. We believe that the
purported tribal court in which the proceeding has been invoked is an invalid
forum and is not recognized by the lawful government of the Saint Regis
Mohawk Tribe. On June 2, 2000, Park Place and certain of its executives filed
an action in the United States District Court for the Northern District of
New York seeking to enjoin the dissident Tribe members from proceeding in the
tribal court with an action that we believe has been unlawfully convened and
is without merit.
On June 6, 2000, President R.C.-St. Regis Management Company and its
principal, Ivan Kaufman, filed an action in the Supreme Court of the State of
New York, County of Nassau, against Park Place and certain of its executives
seeking compensatory and punitive damages in the amount of approximately $550
million. The action alleges claims based on breach of a proposed letter
agreement between plaintiffs, Park Place, and the Saint Regis Mohawk Tribe
concerning the Tribe's existing casino in Hogansburg, New York, fraudulent
inducement, tortious interference with contract, and defamation.
Alternatively, plaintiffs seek specific performance and/or injunctive relief
in connection with the proposed letter agreement. We believe this lawsuit is
without merit and intend to vigorously pursue its defense.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on May 12, 2000.
Approximately 284 million of the eligible 305 million shares were represented at
the meeting. Matters voted upon and the results of the voting follow:
ELECTION OF DIRECTORS. The three directors nominated were elected to
three-year terms.
FOR WITHHELD
--- --------
Barbara Bell Coleman 279,579,364 4,580,735
Clive S. Cummis 279,585,134 4,574,965
Eric M. Hilton 279,422,348 4,737,751
Directors continuing to serve on the board of directors are Stephen F.
Bollenbach, A. Steven Crown, Arthur M. Goldberg, William Barron Hilton, Gen.
Paul X. Kelley (Ret.), J. Kenneth Looloian, Rocco J. Marano, and Gilbert L.
Shelton.
APPROVAL AND RATIFICATION OF AMENDMENTS TO THE 1998 INDEPENDENT DIRECTOR
STOCK OPTION PLAN. The proposal to increase the number of options granted to
each non-employee independent director and to increase the total number of
shares authorized for issuance under the Plan was approved. Stockholders voted
225,169,338 shares in favor and 58,356,712 shares opposed with 634,049
abstentions and no broker non-votes.
19
APPROVAL AND RATIFICATION OF THE EXECUTIVE INCENTIVE PLAN. The proposal to
provide a performance-based compensation plan intended to secure the
deductibility of certain incentive compensation to certain executive officers of
the Company was approved. Stockholders voted 266,959,565 shares in favor and
16,419,651 shares opposed with 780,883 abstentions and no broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10 Hotel Sales Agreement between LVH Corporation (a subsidiary
of the Registrant) and Las Vegas Convention Hotel, LLC, dated
as of July 11, 2000.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
On May 10, 2000, the Company filed a Form 8-K/A dated March 24, 2000. The
Company updated information under "Item 4" regarding a change in auditors.
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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.
PARK PLACE ENTERTAINMENT CORPORATION
(Registrant)
Date: August 11, 2000
/s/ Scott A. LaPorta
- --------------------------------------
Scott A. LaPorta
Executive Vice President,
Chief Financial Officer, and Treasurer
(Principal Accounting Officer)
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