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 SEPTEMBER 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 NOVEMBER 1, 2000
------------------- -------------------------------
Common Stock, par value $0.01 per share 297,404,448
PARK PLACE ENTERTAINMENT CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
September 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Income
Three and nine months ended September 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
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)
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
Assets
Cash and equivalents $ 300 $ 346
Accounts receivable, net 258 287
Inventory, prepaids, and other 157 162
Deferred income taxes 97 98
------------- ------------
Total current assets 812 893
Investments 258 282
Property and equipment, net 7,771 7,873
Goodwill, net of amortization of $139 million
and $102 million 1,855 1,913
Other assets, net 226 190
------------- ------------
Total assets $ 10,922 $ 11,151
============= ============
Liabilities and stockholders' equity
Accounts payable and accrued expenses $ 661 $ 711
Current maturities of long-term debt 1 8
Income taxes payable 13 14
------------- ------------
Total current liabilities 675 733
Long-term debt, net of current maturities 5,318 5,616
Deferred income taxes, net 989 980
Other liabilities 132 82
------------- ------------
Total liabilities 7,114 7,411
------------- ------------
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value, 400.0 million shares
authorized, 312.3 million and 306.8 million shares
issued at September 30, 2000 and December 31, 1999,
respectively 3 3
Additional paid-in capital 3,682 3,635
Other (6) (5)
Retained earnings 286 136
Common stock in treasury at cost, 13.7 million and
3.1 million shares at September 30, 2000 and
December 31, 1999, respectively (157) (29)
------------- ------------
Total stockholders' equity 3,808 3,740
------------- ------------
Total liabilities and stockholders' equity $ 10,922 $ 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Revenues
Casino $ 930 $ 613 $ 2,673 $ 1,683
Rooms 137 98 433 279
Food and beverage 112 71 354 203
Other revenue 100 57 298 161
--------- --------- --------- ---------
1,279 839 3,758 2,326
--------- --------- --------- ---------
Expenses
Casino 483 316 1,401 874
Rooms 47 37 140 102
Food and beverage 102 68 314 190
Other expense 296 196 866 549
Depreciation and amortization 115 76 375 218
Pre-opening expense 1 37 2 47
Impairment losses and other, net -- -- 37 --
Corporate expense 13 9 37 26
--------- --------- --------- ---------
1,057 739 3,172 2,006
--------- --------- --------- ---------
Operating income 222 100 586 320
Interest and dividend income 6 3 16 9
Interest expense, net of interest capitalized (110) (37) (329) (95)
Interest expense, net from unconsolidated affiliates (3) (3) (8) (9)
--------- --------- --------- ---------
Income before income taxes, minority interest, and
cumulative effect of accounting change 115 63 265 225
Provision for income taxes 47 28 114 101
Minority interest, net 1 1 1 3
--------- --------- --------- ---------
Income before cumulative effect of accounting change 67 34 150 121
Cumulative effect of accounting change (net of
income taxes of $1 million) -- -- -- (2)
--------- --------- --------- ---------
Net income $ 67 $ 34 $ 150 $ 119
========= ========= ========= =========
Basic earnings per share
Income before cumulative effect of accounting change $ 0.22 $ 0.11 $ 0.50 $ 0.40
Cumulative effect of accounting change $ -- $ -- $ -- $ (0.01)
Net income per share $ 0.22 $ 0.11 $ 0.50 $ 0.39
Diluted earnings per share
Income before cumulative effect of accounting change $ 0.22 $ 0.11 $ 0.49 $ 0.39
Cumulative effect of accounting change $ -- $ -- $ -- $ (0.01)
Net income per share $ 0.22 $ 0.11 $ 0.49 $ 0.39
See notes to condensed consolidated financial statements
4
PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
2000 1999
------- -------
Operating activities
Net income $ 150 $ 119
Adjustments to reconcile net income to net cash
provided by operating
activities:
Depreciation and amortization 375 218
Pre-opening expense 2 47
Impairment losses and other, net 37 --
Change in working capital components (26) 6
Change in deferred income taxes 10 20
Other 30 3
------- -------
Net cash provided by operating activities 578 413
------- -------
Investing activities
Capital expenditures (269) (532)
Pre-opening expense (2) (47)
Change in investments 1 30
Other 50 9
------- -------
Net cash used in investing activities (220) (540)
------- -------
Financing activities
Change in credit facilities (1,198) 380
Payments on debt (6) (624)
Proceeds from issuance of notes 900 298
Payments to Hilton -- (73)
Purchases of treasury stock (128) (12)
Proceeds from exercise of stock options 39 7
Other (11) (10)
------- -------
Net cash used in financing activities (404) (34)
------- -------
Decrease in cash and equivalents (46) (161)
Cash and equivalents at beginning of period 346 382
------- -------
Cash and equivalents at end of period $ 300 $ 221
======= =======
Supplemental Disclosures of Cash Flow Information
Cash paid for:
Interest, net of amounts capitalized $ 296 $ 115
======= =======
Income taxes $ 85 $ 64
======= =======
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 three- and
nine-month periods 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.
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. In May 2000, the Board of Directors
approved an additional 12 million shares under the stock repurchase program.
As of October 31, 2000, a total of 15 million shares had been repurchased. In
November 2000, the Board of Directors approved an additional 20 million
shares, resulting in 25 million shares available under the stock repurchase
program.
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 nine months
ended September 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 Nine months ended
September 30, 1999 September 30, 1999
------------------ ------------------
(in millions, except per share amounts)
Revenue...................................................... $1,255 $3,411
Operating income............................................. 175 465
Income before cumulative effect of accounting change......... 40 86
Basic and diluted earnings per share before cumulative
effect of accounting change.................................. 0.13 0.28
Net income................................................... 40 84
Basic earnings per share..................................... 0.13 0.28
Diluted earnings per share................................... 0.13 0.27
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
basic weighted-average number of common shares outstanding for the three months
ended September 30,
7
2000 and 1999 was 300 million and 302 million, respectively, and 302 million
and 303 million for the nine months ended September 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 8 million and 7
million for the three months ended September 30, 2000 and 1999, respectively
and 7 million and 4 million for the nine months ended September 30, 2000 and
1999, respectively.
NOTE 6. LONG-TERM DEBT
Long-term debt is as follows (in millions):
September 30, December 31,
2000 1999
------------- ------------
Senior and senior subordinated notes, net of
unamortized discount of $6 million and
$7 million, respectively ................ $ 2,619 $ 1,718
Credit facilities .......................... 2,690 3,888
Other ...................................... 10 18
------------- ------------
5,319 5,624
Less current maturities ................. (1) (8)
------------- ------------
Net long-term debt ......................... $ 5,318 $ 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 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.
In August 2000, the Company entered into agreements which modified its
existing bank credit facilities. The existing $1.0 billion 364-day facility,
which expired at the end of August, was eliminated. The existing $2.0 billion
364-day facility, which also expired at the end of August, was renewed for $1.9
billion for an additional 364-day period. The existing $1.5 billion multi-year
facility, which expires December 31, 2003, was increased to $2.0 billion for the
remaining term.
In September 2000, the Company issued $400 million of senior subordinated
notes due 2008 in a registered note offering. The notes were issued with a
coupon rate of 8.875%. 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.
8
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.
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. In September 2000, the District Court dismissed the
action on the grounds that the Court lacked subject matter jurisdiction.
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. In September 2000,
plantiffs voluntarily dismissed three of the contract-related claims that had
been brought against the individually named defendants. 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 second quarter 2000.
9
In July 2000, the Company entered into an agreement to sell the Las
Vegas Hilton, subject to regulatory approvals. In October 2000, the Nevada
Gaming Control Board, Nevada Gaming Commission, and Clark County Liquor and
Gaming Licensing Board approved the transaction. Under the terms of the
agreement, the transaction must be completed by February 7, 2001.
The Company is to receive $300 million 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).
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 second quarter 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 second quarter 2000.
10
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 are not included in our condensed consolidated
statements of income for the three and nine months ended September 30, 1999, as
the acquisition of Caesars was completed on December 29, 1999. Only one month of
operations for Paris is included during those periods because of its opening on
September 1, 1999.
11
The following discussion presents an analysis of the results of operations
for the three and nine months ended September 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 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 September 30, 2000 and 1999 and the nine months
ended September 30, 2000 and 1999 totaled $116 million, $113 million, $377
million, and $265 million, respectively. Pretax impairment losses and other, net
for the nine months ended September 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. There
were no such items for the three months ended September 30, 2000 and 1999 or the
nine months ended September 30, 1999.
COMPARISON OF THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
A summary of our consolidated revenue and earnings for the three and nine
months ended September 30, 2000 and 1999 is as follows (in millions, except per
share amounts):
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
Revenue $ 1,279 $ 839 $ 3,758 $ 2,326
Operating income 222 100 586 320
Net income 67 34 150 119
Basic earnings per share 0.22 0.11 0.50 0.39
Diluted earnings per share 0.22 0.11 0.49 0.39
Other operating data:
EBITDA $ 338 $ 213 $ 1,000 $ 585
We recorded net income of $67 million or diluted earnings per share of
$0.22 for the three months ended September 30, 2000, compared with net income of
$34 million or diluted earnings per share of $0.11 for the three months ended
September 30, 1999. Revenues increased 52 percent primarily resulting from the
Caesars acquisition and the opening of Paris Las Vegas on September 1, 1999.
Prior-period results were negatively impacted by pre-opening costs of $37
million ($24 million net of tax or $0.08 per diluted share) primarily related to
the opening of Paris on September 1, 1999. EBITDA increased 59 percent to $338
million for the three months ended September 30, 2000, from $213 million in
1999. The Caesars properties contributed $126 million of EBITDA during the third
quarter 2000. Excluding the Caesars properties, the Western Region was up $4
million, the Eastern Region was up $9 million, the Mid-South Region was down $13
million, and the International properties were up $3 million.
For the nine months ended September 30, 2000, we recorded net income of
$150 million or diluted earnings per share of $0.49 compared with net income of
$119 million or diluted earnings per share of $0.39 in the prior-year period.
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. Prior-period results were negatively impacted by pre-opening
costs of $47 million ($30 million net of tax or $0.10 per diluted
12
share) primarily related to the opening of Paris on September 1, 1999. Revenues
increased 62 percent primarily resulting from the Caesars acquisition and the
opening of Paris. For the nine months ended September 30, 2000, EBITDA increased
$415 million when compared to the prior-year period. The Caesars properties
contributed $333 million. Excluding the Caesars properties, the Western Region
was up $67 million, the Eastern Region was up $36 million, the Mid-South Region
was down $21 million, and the International properties were up $11 million.
WESTERN REGION
EBITDA for the Western Region was $121 million for the three months ended
September 30, 2000 compared to $82 million for the three months ended September
30, 1999. The increase in EBITDA was primarily attributable to the acquisition
of Caesars and the opening of Paris on September 1, 1999. Caesars Palace
generated EBITDA of $26 million for the three months ended September 30, 2000.
Occupancy for the Western Region was 94 percent for the three months ended
September 30, 2000, compared to 92 percent in the prior year. The average room
rate was $83 compared to $72 in the prior year. The increase in the average room
rate was primarily a result of the addition of Caesars Palace and Caesars Tahoe.
For the nine months ended September 30, 2000, Western Region EBITDA
increased $178 million to $427 million when compared to the nine months ended
September 30, 1999. Caesars Palace recorded EBITDA of $94 million for the nine
months ended September 30, 2000. Western Region occupancy was 93 percent and the
average room rate was $88 for the nine months ended September 30, 2000 compared
with 89 percent occupancy and a $76 average room rate for the corresponding
prior-year period.
The combined Paris/Bally's properties generated EBITDA of $46 million in
the third quarter of 2000, an increase of $15 million from the third quarter of
1999. The increase in EBITDA was attributable to Paris operations. For the nine
months ended September 30, 2000, EBITDA increased $78 million to $154 million.
In its first twelve months of operation, Paris generated $137 million of
incremental EBITDA and continues to generate strong customer counts and casino
volumes.
EBITDA at the Flamingo Las Vegas increased $2 million to $25 million for
the three months ended September 30, 2000. New marketing programs targeted at
table game customers resulted in an 18 percent increase in table game volume.
For the nine months ended September 30, 2000, EBITDA was $88 million compared
with $84 million during the nine months ended September 30, 1999.
For the three months ended September 30, 2000, EBITDA at the Las Vegas
Hilton declined $13 million from the $12 million of EBITDA reported in the
prior year due primarily to a significant reduction in table game hold
percentage. For the nine months ended September 30, 2000, EBITDA decreased
$17 million to $29 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.
Combined EBITDA from the Reno Hilton, the Flamingo Reno, and the Flamingo
Laughlin was $16 million for the third quarter 2000 and the third quarter 1999.
For the nine months ended September 30, 2000, combined EBITDA was $45 million
compared with $43 million for the corresponding prior-year period.
13
From October 1998 to September 1999, four new mega-resorts (including
Paris) have opened in Las Vegas, which drove increased visitation in 1999. In
August 2000, a new mega-resort opened adjacent to Paris. We cannot predict what
impact this new resort will have on our future results of operations.
EASTERN REGION
EBITDA for the Eastern Region was $138 million for the three months ended
September 30, 2000 compared to $73 million for the three months ended September
30, 1999. The increase is due to the addition of Caesars Atlantic City and local
and national marketing efforts, which are driving incremental visitation to our
properties in Atlantic City. Caesars Atlantic City recorded EBITDA of $56
million and $131 million for the three and nine months ended September 30, 2000,
respectively. The average room rate in the Eastern Region increased to $104 for
the three months ended September 30, 2000 from $102 in the third quarter of
1999. Occupancy improved to 99 percent during the third quarter of 2000 from 98
percent for the three months ended September 30, 1999. For the nine months ended
September 30, 2000, the Eastern Region recorded EBITDA of $336 million compared
to $169 million for the corresponding prior-year period. The average room rate
was $94 for the nine months ended September 30, 2000 compared with $88 for the
corresponding prior-year period. Occupancy was 97 percent during both periods.
Bally's Park Place generated EBITDA of $58 million for the three months
ended September 30, 2000 compared to $55 million recorded during last year's
third quarter. The increase resulted primarily from improved slot handle. For
the nine months ended September 30, 2000, EBITDA increased $13 million to $144
million.
For the three months ended September 30, 2000, the Atlantic City Hilton
reported EBITDA of $24 million, a 33 percent increase from last year's $18
million. The improvement was driven primarily by a 32 percent increase in slot
handle. EBITDA for the nine months ended September 30, 2000 was $61 million
compared to $38 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 $6 million to $64 million for
the three months ended September 30, 2000. The increase in EBITDA is
primarily attributable to the $14 million in EBITDA generated by Caesars
Indiana, partially offset by declines at the other Mid-South Properties. The
average room rate for the region was $54 and occupancy was 97 percent for the
quarter ended September 30, 2000 compared to an average room rate of $57 and
occupancy of 89 percent for the third quarter of 1999. For the nine months
ended September 30, 2000, EBITDA was $194 million compared to $162 million
for the nine months ended September 30, 1999. Caesars Indiana generated
EBITDA of $38 million for the nine months ended September 30, 2000. For the
nine months ended September 30, 2000, the regional average room rate was $53
and the regional occupancy was 94 percent compared to an average room rate of
$56 and occupancy of 92 percent for the prior-year period.
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Grand Biloxi reported EBITDA of $19 million for the third quarter of 2000,
down from last year's $21 million due to competitive conditions from supply
added in New Orleans and Biloxi. EBITDA for the nine months ended September 30,
2000 was $51 million compared to $59 million for the prior-year period.
Grand Gulfport generated $11 million in EBITDA for the three months ended
September 30, 2000 compared to $13 million reported in the third quarter of
1999. For the nine months ended September 30, 2000, EBITDA was $34 million
compared to $32 million for the corresponding prior-year period.
For the three months ended September 30, 2000, Grand Tunica reported EBITDA
of $12 million, down from $18 million reported for the three months ended
September 30, 1999 due to competitive market conditions and increased
promotional spending. EBITDA for the nine months ended September 30, 2000 was
$42 million compared to $49 million for the nine months ended September 30,
1999.
INTERNATIONAL
On a combined basis, third quarter 2000 EBITDA from the International
properties increased $19 million to $28 million. The Caesars properties recorded
EBITDA of $16 million. On a combined basis, for the third quarter 2000, the
International properties reported an average room rate of $89 and occupancy of
66 percent compared to an average room rate of $85 and occupancy of 58 percent
for the third quarter of 1999. For the nine months ended September 30, 2000, the
International properties had combined EBITDA of $80 million, including $38
million from the Caesars properties, compared to $31 million for the nine months
ended September 30, 1999. For the nine months ended September 30, 2000, the
average room rate was $92 and occupancy was 70 percent compared to an average
room rate of $96 and occupancy of 62 percent for the nine months ended
September 30, 1999.
DEPRECIATION AND AMORTIZATION
Consolidated depreciation and amortization increased $39 million to $115
million for the three months ended September 30, 2000. The increase was
primarily attributable to the addition of the Caesars properties, partially
offset by the elimination of depreciation expense at the Las Vegas Hilton, which
is being held for sale. For the nine months ended September 30, 2000,
depreciation and amortization increased $157 million to $375 million. The
increase 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 September 30, 2000. For the nine months ended September 30, 2000,
corporate expense increased $11 million to $37 million. The increase was
primarily attributable to the acquisition of Caesars.
NET INTEREST EXPENSE
Consolidated net interest expense increased $70 million to $107 million for
the three months ended September 30, 2000. For the nine months ended September
30, 2000, net interest expense increased $226 million to $321 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
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ended September 30, 2000 was $4 million compared to $10 million for the third
quarter of 1999. For the nine months ended September 30, 2000 and 1999,
capitalized interest was $5 million and $37 million, respectively.
INCOME TAXES
The effective income tax rate for the three and nine months ended September
30, 2000 was 41 percent and 43 percent, respectively. For the three and nine
months ended September 30, 1999, the effective income tax rate was 44 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.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
As of September 30, 2000, we had cash and cash equivalents of $300 million.
Net cash provided by operating activities for the nine months ended September
30, 2000 was $578 million. In addition, we had availability under our credit
facilities of approximately $1.2 billion at September 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 nine months ended September 30, 2000, net cash used in investing
activities included $269 million related to capital expenditures for normal
maintenance and 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 nine months ended September 30, 2000, we were able to reduce our
debt by approximately $300 million and repurchase 11 million shares of common
stock at a total cost of $128 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
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.
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In August 2000, we entered into agreements which modified our existing bank
credit facilities. The existing $1.0 billion 364-day facility, which expired at
the end of August, was eliminated. The existing $2.0 billion 364-day facility,
which also expired at the end of August, was renewed for $1.9 billion for an
additional 364-day period. The existing $1.5 billion multi-year facility, which
expires December 31, 2003, was increased to $2.0 billion for the remaining term.
In September 2000, we issued $400 million of senior subordinated notes due
2008 in a registered note offering. The notes were issued with a coupon rate of
8.875%. 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 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 September 30, 2000, we had no
amounts outstanding under the commercial paper program.
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 September 30, 2000 was approximately $200 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. In May 2000, the Board of Directors approved an additional 12 million
shares under the stock repurchase program. As of October 31, 2000, a total of
15 million shares had been repurchased. In November 2000, the Board of
Directors approved an additional 20 million shares, resulting in 25 million
shares available under the stock repurchase program.
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.
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LAS VEGAS HILTON
In July 2000, we entered into an agreement to sell the Las Vegas Hilton,
subject to regulatory approvals. In October 2000, the Nevada Gaming Control
Board, Nevada Gaming Commission, and Clark County Liquor and Gaming Licensing
Board approved the transaction. Under the terms of the agreement, the
transaction must be completed by February 7, 2001.
We are to receive $300 million 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). 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 second quarter 2000.
FLAMINGO RENO
In December 1999, we entered into an agreement to sell the Flamingo 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.
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 have not appealed the decision.
CLARIDGE HOTEL
In August 2000, we submitted a letter of intent to purchase the Claridge
Hotel in Atlantic City, which is currently in bankruptcy. Discussions are
continuing. The bankruptcy court has indicated that reorganization plans would
need to be submitted by late November 2000.
STRATEGY
As exemplified by the acquisition of Bally Entertainment Corporation in
1996 and 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, dispose of non-strategic assets, or enter
into 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.
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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.
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
periods ended March 31, 2000 and June 30, 2000.
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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.
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.
In September 2000, the District Court dismissed the action on the grounds
that the Court lacked subject matter jurisdiction.
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. In September 2000,
plantiffs voluntarily dismissed three of the contract-related claims that had
been brought against the individually named defendants. We believe this
lawsuit is without merit and intend to vigorously pursue its defense.
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ITEM 5. OTHER INFORMATION
On October 23, 2000, the Company's Board of Directors announced the
appointment of Thomas E. Gallagher as President, Chief Executive Officer, and a
director of the Company. Mr. Gallagher succeeded Arthur M. Goldberg, who died
unexpectedly on October 19, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
4.1 Amendment No. 2 to Five Year Credit Agreement dated as of August 28,
2000 among Park Place Entertainment Corporation, the Lenders,
Syndication Agent and Documentation Agents referred to in the Five
Year Agreement dated as of December 31, 1998, as amended, and Bank of
America, N.A. as Administrative Agent.
4.2 $1.9 billion Short Term Credit Agreement dated as of August 28, 2000
among Park Place Entertainment Corporation, the Lenders, Documentation
Agents, Co-Arrangers and Senior Managing Agents referred to therein,
and Bank of America, N.A. as Administrative Agent.
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
On July 24, 2000, the Company filed a Form 8-K dated July 11, 2000. The
Company reported under "Item 5" that it had entered into an agreement to sell
the Las Vegas Hilton.
On September 7, 2000, the Company filed a Form 8-K dated August 28, 2000.
The Company reported under "Item 5" that it modified its existing credit
facilities resulting in a $1.9 billion 364-day facility and a $2.0 billion
multi-year facility which expires December 31, 2003.
On September 19, 2000, the Company filed a Form 8-K dated September 12,
2000. The Company reported under "Item 5" the terms of the publicly registered
$400 million aggregate principal amount of 8.875% Senior Subordinated Notes due
2008.
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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: November 10, 2000
/s/ SCOTT A. LAPORTA
- --------------------------------------
Scott A. LaPorta
Executive Vice President,
Chief Financial Officer, and Treasurer
(Principal Accounting Officer)
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