EXHIBIT 99.1
Caesars Entertainment Reports Financial Results for Third Quarter
of 2004
LAS VEGAS--(BUSINESS WIRE)--Oct. 21, 2004--Caesars Entertainment,
Inc. (NYSE: CZR) today reported financial results for the quarter and
nine months ended September 30, 2004.
Third quarter 2004 results
For the third quarter of 2004, Caesars Entertainment reported net
income of $58 million, or $0.18 per fully diluted share, up 21 percent
from net income of $48 million, or $0.16 per fully diluted share,
recorded in the third quarter of 2003.
Adjusted net income for the third quarter of 2004 was $68 million,
or $0.22 per diluted share. That represents an increase of 51 percent
from adjusted net income of $45 million, or $0.15 per diluted share,
reported in the third quarter of 2003.
Adjusted net income for the third quarter of 2004 excludes: $9
million in operating results from the Atlantic City Hilton and Bally's
Tunica (which the company has announced that it will sell); $9 million
in asset impairments related to the write-down of the book value of
Caesars Tahoe, as required by Statement of Financial Accounting
Standards No. 144; $6 million in expense related to the pending merger
of Caesars Entertainment with Harrah's Entertainment, Inc. (NYSE:
HET); $5 million in income tax expense related to the settlement of a
dispute involving Lakes Entertainment, Inc.; and $4 million in
pre-opening expense related to the production of the musical "We Will
Rock You" at Paris Las Vegas.
Adjusted net income for the third quarter of 2003 excludes $3
million of discontinued operations related to operating results for
the Las Vegas Hilton, the Atlantic City Hilton and Bally's Tunica.
Net revenue for the third quarter of 2004 was $1.119 billion,
compared to $1.073 billion for the third quarter of 2003. Third
quarter EBITDA - earnings before interest, taxes, depreciation and
amortization and non-recurring gains and charges - was $293 million,
compared to $262 million in EBITDA in the third quarter of 2003.
(On September 27, 2004, Caesars Entertainment signed a definitive
agreement to sell the Atlantic City Hilton and Bally's Tunica to an
affiliate of Colony Capital, LLC, of Los Angeles. On June 17, 2004,
Caesars Entertainment closed the sale of the Las Vegas Hilton to an
affiliate of Colony Capital. Throughout this press release, results
from the Las Vegas Hilton, the Atlantic City Hilton and Bally's Tunica
are treated as "discontinued operations." That means results for those
properties are excluded from such financial measures as net revenue,
EBITDA, operating income, interest expense and other items. Had the
company included financial results from the Atlantic City Hilton and
Bally's Tunica, adjusted earnings per diluted share in the third
quarter would have been $0.24 instead of $0.22.)
Results for the first nine months of 2004
For the first nine months of 2004, Caesars Entertainment reported
net income of $277 million - or $0.88 per diluted share. That compares
to net income of $130 million - or $0.43 per diluted share - for the
nine-month period that ended on September 30, 2003.
Adjusted net income for the first nine months of 2004 was $192
million, or $0.61 per diluted share, compared to adjusted net income
of $119 million, or $0.39 per diluted share, for the first nine months
of 2003.
Adjusted net income for the first nine months of 2004 excludes:
-- An $87 million gain (included in discontinued operations) from
the sale of the Las Vegas Hilton.
-- $26 million in operating results, classified as discontinued
operations, from the Las Vegas Hilton, the Atlantic City
Hilton and Bally's Tunica.
-- $9 million in asset impairments related to Caesars Tahoe.
-- $7 million in pre-opening expense primarily related the
production of the musical "We Will Rock You" at Paris Las
Vegas.
-- $7 million in income tax expense related to a 2004 Indiana Tax
Court decision involving the deductibility of gaming taxes.
-- $6 million in expense related to the pending merger of Caesars
and Harrah's.
-- $5 million in income tax expense related to the settlement of
the Lakes Entertainment dispute.
-- $3 million of investment gain associated with the sale of the
company's interest in a Las Vegas office building.
-- $2 million in expense related to executive contract
terminations.
Adjusted net income for the first nine months of 2003 excludes $12
million in operating results from the Las Vegas Hilton, the Atlantic
City Hilton and Bally's Tunica and $1 million in pre-opening expense
associated with the premiere of "A New Day...." starring Celine Dion
at Caesars Palace.
Net revenue for the first nine months of 2004 was $3.305 billion,
up from $3.115 billion for the first nine months of 2003. EBITDA for
the first nine months of 2004 was $863 million, up from $764 million
for the first nine months of 2003.
EBITDA improvements, margin growth drive strong third quarter
"We recorded an exceptionally strong third quarter, with
significant EBITDA improvement in the West and the Mid-South and
increased EBITDA margins in all three domestic regions," said Caesars
Entertainment President and Chief Executive Officer Wallace R. Barr.
"We particularly were pleased with the four percent EBITDA
improvement in Atlantic City, where we had forecast a modest decline.
That growth is a strong indicator that our Atlantic City properties
have successfully absorbed the additional supply created by the
Borgata," Barr added.
Third quarter financial highlights
-- The Western Region reported EBITDA of $115 million, a 25
percent increase from the $92 million in EBITDA reported in
the third quarter of 2003. The company's four Las Vegas Strip
resorts reported a 31 percent increase in EBITDA, primarily
driven by strong room rates.
-- In the Eastern Region, EBITDA was $110 million, up three
percent from the $107 million reported for the third quarter
of 2003. The results represent a significant improvement over
the EBITDA decline that the company had forecast.
-- The Mid-South Region recorded EBITDA of $62 million, an
increase of 11 percent from the $56 million in EBITDA reported
for the third quarter of 2003, despite weakened gaming volumes
at the company's two Mississippi Gulf Coast properties
affected by Hurricane Ivan.
-- Company-wide EBITDA margins rose to 26 percent from 24 percent
in the third quarter of 2003.
-- The company's Board of Directors accepted an offer from
Harrah's Entertainment to acquire Caesars for approximately
$1.8 billion in cash and 66.3 million shares of Harrah's
common stock. The acquisition is contingent on approval by
shareholders of both companies as well as federal and state
regulatory agencies.
-- The company finalized plans for its first venture into Europe
with a $600-million casino resort in London, to be built near
the reconstructed Wembley National Stadium and adjacent to the
soon-to-be renovated Wembley Arena. Caesars and its British
partner, Quintain Estates and Development LLC, announced the
joint venture on October 12.
-- The company announced a definitive agreement to sell the
Atlantic City Hilton and Bally's Tunica - for approximately
8.5 times trailing twelve-month EBITDA - to an affiliate of
Colony Capital, LLC of Los Angeles. The sale is expected to
result in after-tax proceeds of approximately $480 million.
-- The Big Sandy Band of Western Mono Indians signed formal
agreements with the company that will govern the development,
construction and management of the Tribe's planned new casino,
to be built on Tribal land near Fresno, California.
-- Caesars Palace debuted Mesa Grill, the first restaurant
outside of New York City to be opened by celebrity chef and
television personality Bobby Flay.
-- The Roman Plaza, the new gateway to Caesars Palace, opened at
the corner of Las Vegas Boulevard and Flamingo Road. The
expansive piazza features a new restaurant, retail space and
an amphitheater for concerts and sporting events.
-- Cascata, the company's signature desert golf course, was named
to Golf Magazine's roster of the "Top 100 Courses You Can
Play." The award-winning course is open to guests at any of
Caesars' Las Vegas casino resorts.
-- The company initiated several new technology initiatives,
including its adoption of Avero's "Slingshot"
business-intelligence software to manage food and beverage
operations across multiple resorts and Manugistics and The
Rainmaker Group's NetWORKS(TM) Hospitality Revenue Optimizer
to increase yield on hotel rooms. Both products convert
information about customer choices into usable business
intelligence intended to drive margin improvements.
-- Construction proceeded on schedule and on budget for the new
949-room hotel tower at Caesars Palace, scheduled for
completion in the summer of 2005. The project, which will
bring total room capacity to nearly 3,400, is the final
component of the current master plan to renovate Caesars
Palace.
Western Region
EBITDA for the Western Region's seven casino resorts was $115
million in the third quarter of 2004, up 25 percent from $92 million
in the year-ago quarter. The company's resorts on the Las Vegas Strip
posted a 31 percent increase in EBITDA. The increase primarily was
driven by strong room rates. Revenue Per Available Room (RevPAR) for
Strip resorts rose eight percent. Cash room rates rose nine percent.
At Caesars Palace, net revenue in the quarter rose to $140 million
from $125 million in the third quarter of 2003. EBITDA was $28
million, an increase of 27 percent from the $22 million reported for
the third quarter of 2003. The EBITDA increase principally was due to
a seven percent increase in RevPAR. Gaming win declined two percent
because of lower baccarat volume and non-baccarat table game hold.
In early July, Caesars Palace opened its new Roman Plaza, which
provides a direct entrance to the property from the pedestrian bridges
that span Flamingo Road and Las Vegas Boulevard. The 175,000
square-foot expansion of The Forum Shops at Caesars is scheduled to
open tomorrow. The resort's new 949-room, luxury hotel tower is on
schedule for completion next summer.
At Paris Las Vegas, third quarter net revenue was $98 million,
even with the year-ago quarter. Third quarter EBITDA was $27 million,
up four percent from $26 million reported in the third quarter of
2003. The increase was due largely to room revenues. RevPAR increased
seven percent, driven by higher cash room rates. Gaming win declined
15 percent.
At Bally's, net revenue in the third quarter rose six percent, to
$71 million, from the third quarter of 2003. EBITDA was $21 million,
up 50 percent from the third quarter of 2003. Gaming win rose eight
percent due to a 25 percent increase in slot win. RevPAR rose five
percent, driven by higher room rates and occupancy.
At the Flamingo Las Vegas, net revenue for the third quarter was
$93 million, up 24 percent from the year-ago quarter. EBITDA rose 61
percent, to $29 million, from the third quarter of 2003. The results
were driven by an 11 percent increase in gaming win, a 10 percent
increase in RevPAR and the inclusion of results from the new
Margaritaville cafe, which held its grand opening in January of this
year.
Other Nevada properties - the Reno Hilton, Caesars Tahoe and
Flamingo Laughlin - recorded combined EBITDA of $10 million in the
third quarter, compared to $12 million in the third quarter of 2003.
(Financial results of the Las Vegas Hilton are not included in either
year's figures.)
Eastern Region
Third quarter EBITDA from Caesars Entertainment's Atlantic City
casino resorts (excluding results from the Atlantic City Hilton) and
management fees from its Dover Downs slot operation was $110 million,
up three percent from the $107 million reported for the third quarter
of 2003. The results reflect a significant improvement over the modest
EBITDA decline that the company had forecast.
At Caesars Atlantic City, third quarter net revenue was $138
million, even with the year-ago quarter. EBITDA was $47 million,
compared to $49 million in the third quarter of 2003. Gaming win
declined less than one percent, while RevPAR rose seven percent.
Work continues on schedule for Caesars' new 3,200-space,
$75-million parking garage and The Pier at Caesars. The Pier, which
will create 325,000 square feet of new retail, restaurant and
nightclub space, is scheduled to open next year. The project is being
financed and developed by an affiliate of The Gordon Group of
Greenwich, Connecticut.
At Bally's Atlantic City, net revenue for the third quarter was
$182 million, compared to $183 million for the third quarter of 2003.
EBITDA for the third quarter rose 11 percent, to $62 million, from the
$56 million reported in the third quarter of 2003. While gaming win
declined two percent as a result of lower gaming volumes, RevPAR rose
four percent, driven by a ten percent increase in cash room rates.
Mid-South Region
Caesars Entertainment's casino resorts in Indiana, Mississippi and
Louisiana (excluding Bally's Tunica) reported third quarter EBITDA of
$62 million, an 11 percent increase over the $56 million reported for
the third quarter of 2003. The improvement came despite the effects of
Hurricane Ivan, which impacted the Gulf Coast of Mississippi in
mid-September and forced the company to close its Gulf Coast casinos
for three days.
Caesars Indiana reported third quarter net revenue of $81 million,
up seven percent from $76 million in the third quarter of 2003. EBITDA
rose 24 percent, to $21 million, from $17 million in the third quarter
of 2003. Results were driven by a nine percent increase in slot win
and a 20 percent rise in RevPAR. The increased slot win resulted from
improvements in both volume and hold, while the rise in RevPAR was due
to increases in occupancy and room rate. The average cash room rate
rose 10 percent.
On the Gulf Coast, third quarter net revenue at Grand Casino
Biloxi was $60 million, even with the year-ago quarter. EBITDA was $15
million, up 15 percent from the $13 million recorded in the third
quarter of 2003. Declines in gaming volumes resulted in gaming win
increasing only one percent.
Third quarter net revenue at Grand Casino Gulfport was $48
million, even with the third quarter of 2003. EBITDA was $9 million,
down from $10 million in the third quarter of 2003, largely because of
increases in health care costs. Gaming win declined two percent on
lower volumes, as higher room rates drove a 14 percent increase in
RevPAR. The average cash room rate rose 37 percent from the year-ago
quarter.
In Northern Mississippi, Grand Casino Tunica reported net revenue
of $52 million, compared to $53 million in the third quarter of last
year. EBITDA was $10 million, down from $11 million in the third
quarter of 2003. Gaming win declined three percent as a result of
lower volumes and hold.
Net revenue at Sheraton Tunica was $19 million, even with the
third quarter of 2003. EBITDA was $7 million, up from $5 million in
the year-ago quarter.
International
The company's ten international properties reported combined net
revenue of $35 million, up from $27 million in the third quarter of
2003. EBITDA was $18 million, up 20 percent from the $15 million
recorded in the third quarter of last year.
Capital expenditures
The company invested $183 million of capital during the third
quarter of 2004. Maintenance capital expenditures were $47 million and
investments in growth projects were $136 million. In the first nine
months of 2004, the company invested $402 million of capital - $147
million for maintenance and $255 million for growth projects. The
company currently expects to spend $642 million on capital investments
in 2004. This includes maintenance capital investments of $274 million
and growth capital of $368 million.
The 2004 budget for growth capital includes $202 million for the
luxury room tower and meeting space addition at Caesars Palace; $42
million for the garage at Caesars Atlantic City; $36 million for the
purchase of land behind Bally's Las Vegas; $25 million for the Roman
Plaza project at Caesars Palace; and $12 million related to
development of Native American projects in New York and California.
The remaining budget for growth projects includes $17 million for
selected projects at Caesars Palace; $9 million related to "We Will
Rock You" at Paris Las Vegas; $8 million at Caesars Atlantic City,
principally for new dining and entertainment venues, renovation of the
facade and construction of the bridge connecting the second floor of
the casino to The Pier at Caesars; and $2 million related to a new
hotel revenue management system.
Other items
Depreciation and amortization in the third quarter was $106
million, compared to $103 million in the third quarter of 2003.
Pre-opening expense in the quarter was $4 million, related to the
production of "We Will Rock You" at Paris Las Vegas.
The line item "Impairment loss, merger costs and other expenses"
in the quarter included expenses related to the $9 million write down
of the company's Caesars Tahoe assets and $6 million in merger related
costs.
Corporate expense in the third quarter was $12 million, compared
to $8 million in the third quarter of 2003. The increase is primarily
related to legal and development activity.
Equity in earnings of unconsolidated affiliates primarily consists
of earnings from the company's ownership interests in Conrad Punta del
Este in Uruguay (through August 31, 2004), Caesars Gauteng near
Johannesburg, South Africa and Windsor Casino Limited, the company
that manages Casino Windsor in Windsor, Canada. For the third quarter,
this item was unchanged from prior year at $3 million.
Net interest expense in the quarter was $69 million, down from $78
million in the third quarter of 2003, due to lower borrowing rates and
lower debt balances. Capitalized interest was $3 million in the third
quarter, compared to $1 million in the year-ago quarter.
The effective tax rate in the third quarter was 48.0 percent,
compared to 41.8 percent in the third quarter of 2003. The effective
tax rate in the third quarter was impacted by a $5 million charge
arising from Caesars' settlement of a dispute involving a 1998 tax
allocation and indemnity agreement entered into by a Caesars
subsidiary and Lakes Entertainment, Inc.
Balance sheet
As of September 30, 2004, the company had a cash balance of $318
million and a debt balance of $4.2 billion.
The company had $1.3 billion available on its credit facility,
subject to covenant restrictions. Its leverage ratio, as defined by
its credit facility, was 3.7 times EBITDA.
The number of diluted shares outstanding was 316 million at the
end of the third quarter.
Other events
In the quarter, the company utilized a portion of its cash on hand
to retire a $325 million, seven percent senior note issue due July 15.
On July 14, 2004, the company, Harrah's Entertainment, Inc. and
Harrah's Operating Company, Inc., a wholly-owned subsidiary of
Harrah's, entered into an Agreement and Plan of Merger, providing for
the merger of Caesars with and into Harrah's Operating Company, Inc.,
which would be the surviving corporation. Following the approval and
adoption of the Agreement and Plan of Merger by the stockholders of
Caesars and Harrah's and upon the receipt of all necessary gaming and
other approvals, and the satisfaction or waiver of all other
conditions precedent, each outstanding share of common stock of
Caesars will be exchanged for either $17.75 in cash or 0.3247 shares
of Harrah's common stock, at the election of each Caesars stockholder,
subject to pro-ration as provided for in the Agreement and Plan of
Merger.
During the quarter, Caesars successfully reorganized the ownership
structure of its Conrad resort in Punta del Este, Uruguay. The
reorganization increased Caesars' ownership interest in the property
from 46 percent to approximately 86 percent. Since September 1,
operating results of this property have been consolidated into the
company's financial statements.
In California, the Pauma Yuima Band of Luiseno Mission Indians has
withdrawn from negotiations with Caesars Entertainment to develop and
manage a Caesars-branded casino in northern San Diego County.
On October 1, members of Local 54 of the Hotel Employees and
Restaurant Employees International Union began a strike against seven
Atlantic City casino resorts, including the three operated by Caesars
Entertainment.
Guidance
The company is providing the following guidance based on the
current competitive, economic, regulatory, tax and political
environment and current expectations for Caesars Entertainment
property performance. Changes in any of these factors as well as other
factors that may or may not be currently known to management will
affect this guidance.
Guidance will be revised when management becomes aware that
financial results have been affected and reasonably believes that the
company will no longer achieve the guidance range outlined below.
The guidance for adjusted earnings per share is a non-GAAP
financial measure. This measure excludes items considered
non-recurring from an operating perspective.
In the past, examples of items that have not been included in
adjusted earnings per share are pre-opening expenses, asset
impairments and write-downs, investment gains and losses, discontinued
operations, contract and litigation settlements and other items.
Guidance for the fourth quarter of 2004 reflects the
classification of results from the Atlantic City Hilton and Bally's
Tunica as "Discontinued operations."
Adjusted Diluted Earnings Per Share
Fourth Quarter 2004 Full Year 2004
$0.04 - $0.06 $0.65- $0.67
Non-GAAP financial measures
Adjusted net income, adjusted earnings per share and EBITDA are
non-GAAP financial measurements. EBITDA is earnings before interest,
taxes, depreciation and amortization (including depreciation from
unconsolidated subsidiaries), pre-opening expense, asset impairments,
write-downs, contract and litigation settlements, investment gains and
losses, discontinued operations and other non-recurring items.
Adjusted net income, adjusted earnings per share and EBITDA are
presented as supplemental disclosures because this is how the company
reviews and analyzes its performance and the performance of its
properties. These measures are used widely within the gaming industry
as indicators of performance and of the value of gaming companies.
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, such as operating income, net
income or net cash provided by operating activities.
Caesars Entertainment's calculation of adjusted net income,
adjusted earnings per share and EBITDA may be different from the
calculation used by other companies and therefore comparability may be
limited. The company has included schedules in the tables that
accompany this release that: 1) Reconcile EBITDA to operating income
and net income and 2) Reconcile net income to adjusted net income.
Investor conference call
Caesars Entertainment has scheduled an investor conference call
for today at 8:00 a.m. PDT (10:00 a.m. CDT and 11:00 a.m. EDT). The
call can be accessed by calling 1-877-226-4294 or by visiting the
Caesars Entertainment web site at www.caesars.com and selecting the
Investor tab. International callers should dial 1-706-643-0366.
A replay of the conference call is available through October 28 by
calling 1-800-642-1687 or by visiting the Caesars Entertainment web
site. The international replay number is 1-706-645-9291. The replay
reservation number for both domestic and international callers is
1069433.
About Caesars Entertainment
Caesars Entertainment, Inc. (NYSE: CZR) is one of the world's
leading gaming companies. With $4.5 billion in annual net revenue, 28
properties on four continents, 26,000 hotel rooms, two million square
feet of casino space and 52,000 employees, the Caesars portfolio is
among the strongest in the industry. Caesars casino resorts operate
under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris
brand names. The company has its corporate headquarters in Las Vegas.
In July 2004, the Board of Directors of Caesars Entertainment
approved an offer from Harrah's Entertainment to acquire the company
for approximately $1.8 billion and 66.3 million shares of Harrah's
common stock. The offer must be approved by shareholders of both
companies and federal and state regulators before the transaction can
close.
Additional information on Caesars Entertainment can be accessed
through the company's web site at www.caesars.com .
Additional Information about the Acquisition and Where to Find It
In connection with Harrah's proposed acquisition of Caesars (the
"Acquisition"), Caesars and Harrah's have filed and will continue to
file relevant materials with the Securities and Exchange Commission
("SEC"), including a registration statement on Form S-4 that will
contain a prospectus and a joint proxy statement. INVESTORS AND
SECURITY HOLDERS OF CAESARS ARE URGED TO READ THESE MATERIALS WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT HARRAH'S, CAESARS AND THE ACQUISITION.
The proxy statement, prospectus and other relevant materials (when
they become available), and any other documents filed by Harrah's or
Caesars with the SEC, may be obtained free of charge at the SEC's web
site at www.sec.gov. In addition, investors and security holders may
obtain free copies of the documents filed with the SEC by directing a
written request to: Caesars Entertainment, Inc., 3930 Howard Hughes
Parkway, Las Vegas, Nevada 89109, Attention: Investor Relations
Investors and security holders are urged to read the proxy statement,
prospectus and the other relevant materials when they become available
before making any voting or investment decision with respect to the
Acquisition. Caesars and its executive officers and directors may be
deemed to be participants in the solicitation of proxies from the
stockholders of Caesars in connection with the Acquisition.
Information about the executive officers and directors of Caesars and
their ownership of Caesars common stock is set forth in the proxy
statement for Caesars' 2004 Annual Meeting of Stockholders, which was
filed with the SEC on April 16, 2004. Investors and security holders
may obtain additional information regarding the direct and indirect
interests of Caesars and its executive officers and directors in the
Acquisition by reading the proxy statement and prospectus regarding
the Acquisition when it becomes available. This communication shall
not constitute an offer to sell or the solicitation of an offer to
sell or the solicitation of an offer to buy any securities, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No
offering of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Safe Harbor
This document includes "forward-looking statements" intended to
qualify for the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. You can identify these
statements by the fact that they do not relate strictly to historical
or current facts. These statements contain words such as "may,"
"will," "project," "might," "expect," "believe," "anticipate,"
"intend," "could," "would," "estimate," "continue" or "pursue," or the
negative or other variations thereof or comparable terminology. In
particular, they include statements relating to, among other things,
future actions, strategies, future performance, future financial
results of Caesars and Harrah's anticipated acquisition of Caesars.
These forward-looking statements are based on current expectations and
projections about future events.
Readers are cautioned that forward-looking statements are not
guarantees of future performance or results and involve risks and
uncertainties that cannot be predicted or quantified and,
consequently, the actual performance or results of Caesars may differ
materially from those expressed or implied by such forward-looking
statements. Such risks and uncertainties include, but are not limited
to, the following factors as well as other factors described from time
to time in our reports filed with the SEC (including the sections
entitled "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained therein):
financial community and rating agency perceptions of Caesars, the
effects of economic, credit and capital market conditions on the
economy in general, and on gaming and hotel companies in particular;
construction factors, including delays, zoning issues, environmental
restrictions, soil and water conditions, weather and other hazards,
site access matters and building permit issues; the effects of
environmental and structural building conditions relating to our
properties; the ability to timely and cost-effectively integrate into
Harrah's operations; access to available and feasible financing,
including financing for Harrah's acquisition of Caesars, on a timely
basis; changes in laws (including increased tax rates), regulations or
accounting standards, third-party relations and approvals, and
decisions of courts, regulators and governmental bodies; litigation
outcomes and judicial actions, including gaming legislative action,
referenda and taxation; the ability of our customer-tracking, customer
loyalty and yield-management programs to continue to increase customer
loyalty and revenue; our ability to recoup costs of capital
investments through higher revenues; acts of war or terrorist
incidents; abnormal gaming holds; and the effects of competition,
including locations of competitors and operating and market
competition. Any forward-looking statements are made pursuant to the
Private Securities Litigation Reform Act of 1995 and, as such, speak
only as of the date made. Caesars disclaims any obligation to update
the forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements which speak only as of
the date stated, or if no date is stated, as of the date of this press
release.
(Financial tables follow)
CAESARS ENTERTAINMENT, INC.
Summary Statements of Operations
(Amounts in millions, except per share amounts)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------- ----------------
2004 2003 2004 2003
-------- ------- -------- -------
Net revenue $1,119 $1,073 $3,305 $3,115
-------- ------- -------- -------
Operating costs and expenses 818 808 2,426 2,345
Depreciation and amortization 106 103 314 316
Pre-opening expense 4 - 7 1
Impairment loss, merger costs and
other expenses 15 - 17 -
Corporate expense 12 8 34 25
-------- ------- -------- -------
Total costs and expenses 955 919 2,798 2,687
-------- ------- -------- -------
Equity in earnings of unconsolidated
affiliates 3 3 14 14
-------- ------- -------- -------
Operating income 167 157 521 442
Net interest expense 69 78 212 235
Investment gain - - (3) -
-------- ------- -------- -------
Income from continuing operations
before taxes and
minority interest 98 79 312 207
Income tax provision 47 33 142 87
Minority interest, net 2 1 6 2
-------- ------- -------- -------
Income from continuing operations 49 45 164 118
Discontinued operations
Income from discontinued operations
(including $87 million gain on sale
of the Las Vegas Hilton in the nine
month 2004 period), net of taxes 9 3 113 12
-------- ------- -------- -------
Net income $58 $48 $277 $130
======== ======= ======== =======
Basic earnings per share
Income from continuing operations $0.16 $0.15 $0.53 $0.39
Discontinued operations, net of
taxes (1) 0.03 0.01 0.37 0.04
-------- ------- -------- -------
Net income $0.19 $0.16 $0.90 $0.43
======== ======= ======== =======
Diluted earnings per share
Income from continuing operations $0.15 $0.15 $0.52 $0.39
Discontinued operations, net of
taxes (1) 0.03 0.01 0.36 0.04
-------- ------- -------- -------
Net income $0.18 $0.16 $0.88 $0.43
======== ======= ======== =======
Weighted average shares outstanding
Basic 310 302 308 301
Diluted 316 304 314 303
- -------------------------------------
(1) Discontinued operations include the results of the Las Vegas
Hilton year to date through June 17, 2004 and prior periods, and the
results of Atlantic City Hilton and Bally's Tunica for all periods
presented.
CAESARS ENTERTAINMENT, INC.
Property Operating Information
(Amounts in millions)
(unaudited)
Three Months Ended
September 30, 2004
----------------------------------------
Net Operating Deprecia- Pre-
Revenue Income tion and opening
(Loss) Amor- Expense
tization
------------------- ---------- ---------
WESTERN REGION
Caesars Las Vegas $140 $15 $13 $-
Paris Las Vegas 98 15 8 4
Bally's Las Vegas 71 11 10 -
Flamingo Las Vegas 93 22 7 -
Reno Hilton 39 3 2 -
Caesars Tahoe 22 (10) 2 -
Flamingo Laughlin 27 4 - -
-------- ---------- ---------- ---------
490 60 42 4
-------- ---------- ---------- ---------
EASTERN REGION
Bally's Atlantic City 182 47 15 -
Caesars Atlantic City 138 36 11 -
Dover Downs 1 1 - -
-------- ---------- ---------- ---------
321 84 26 -
-------- ---------- ---------- ---------
MID-SOUTH REGION
Grand Biloxi 60 10 5 -
Grand Tunica 52 4 6 -
Caesars Indiana 81 13 8 -
Grand Gulfport 48 5 4 -
Sheraton Tunica 19 4 3 -
Bally's New Orleans 13 - - -
Regional Overhead - - - -
-------- ---------- ---------- ---------
273 36 26 -
-------- ---------- ---------- ---------
INTERNATIONAL and Other 35 6 11 -
CORPORATE - (19) 1 -
-------- ---------- ---------- ---------
TOTAL $1,119 $167 $106 $4
======== ========== ========== =========
Three Months Ended
September 30, 2004
----------------------------------------
Impairment Deprecia- EBITDA
Loss, tion
Merger from
Costs and Unconsol-
Other idated
Expenses Affiliates
----------- ---------- -------
WESTERN REGION
Caesars Las Vegas $- $- $28
Paris Las Vegas - - 27
Bally's Las Vegas - - 21
Flamingo Las Vegas - - 29
Reno Hilton - - 5
Caesars Tahoe 9 - 1
Flamingo Laughlin - - 4
----------- ---------- -------
9 - 115
----------- ---------- -------
EASTERN REGION
Bally's Atlantic City - - 62
Caesars Atlantic City - - 47
Dover Downs - - 1
----------- ---------- -------
- - 110
----------- ---------- -------
MID-SOUTH REGION
Grand Biloxi - - 15
Grand Tunica - - 10
Caesars Indiana - - 21
Grand Gulfport - - 9
Sheraton Tunica - - 7
Bally's New Orleans - - -
Regional Overhead - - -
----------- ---------- -------
- - 62
----------- ---------- -------
INTERNATIONAL and Other - 1 18
CORPORATE 6 - (12)
----------- ---------- -------
TOTAL $15 $1 $293
=========== ========== =======
Three Months Ended
September 30, 2003
------------------------------------------------
Net Operating Deprecia- Deprecia- EBITDA
Revenue Income tion and tion
(Loss) Amor- from
tization Unconsol-
idated
Affiliates
----------------------------- ---------- -------
WESTERN REGION
Caesars Las Vegas $125 $10 $12 $- $22
Paris Las Vegas 98 18 8 - 26
Bally's Las Vegas 67 4 10 - 14
Flamingo Las Vegas 75 13 5 - 18
Reno Hilton 34 1 3 - 4
Caesars Tahoe 28 2 3 - 5
Flamingo Laughlin 26 1 2 - 3
-------- -------------------- ---------- -------
453 49 43 - 92
-------- -------------------- ---------- -------
EASTERN REGION
Bally's Atlantic
City 183 40 16 - 56
Caesars Atlantic
City 138 37 12 - 49
Dover Downs 2 2 - - 2
-------- -------------------- ---------- -------
323 79 28 - 107
-------- -------------------- ---------- -------
MID-SOUTH REGION
Grand Biloxi 60 9 4 - 13
Grand Tunica 53 6 5 - 11
Caesars Indiana 76 9 8 - 17
Grand Gulfport 48 7 3 - 10
Sheraton Tunica 19 4 1 - 5
Bally's New Orleans 14 (1) 1 - -
Regional Overhead - - - - -
-------- -------------------- ---------- -------
270 34 22 - 56
-------- -------------------- ---------- -------
INTERNATIONAL and
Other 27 5 8 2 15
CORPORATE - (10) 2 - (8)
-------- -------------------- ---------- -------
TOTAL $1,073 $157 $103 $2 $262
======== ==================== ========== =======
NOTE: All Property Operating Information excludes the results of Las
Vegas Hilton, Atlantic City Hilton and Bally's Tunica which are
classified as discontinued operations for all periods presented.
CAESARS ENTERTAINMENT, INC.
Property Operating Information
(Amounts in millions)
(unaudited)
Nine Months Ended
September 30, 2004
-----------------------------------------
Net Operating Deprecia- Pre-
Revenue Income tion and opening
(Loss) Amor- Expense
tization
--------- ---------- ---------- ---------
WESTERN REGION
Caesars Las Vegas $451 $66 $38 $1
Paris Las Vegas 319 75 24 6
Bally's Las Vegas 220 32 29 -
Flamingo Las Vegas 281 73 19 -
Reno Hilton 103 3 7 -
Caesars Tahoe 61 (15) 7 -
Flamingo Laughlin 83 12 2 -
--------- ---------- ---------- ---------
1,518 246 126 7
--------- ---------- ---------- ---------
EASTERN REGION
Bally's Atlantic City 500 102 45 -
Caesars Atlantic City 379 89 33 -
Dover Downs 4 4 - -
--------- ---------- ---------- ---------
883 195 78 -
--------- ---------- ---------- ---------
MID-SOUTH REGION
Grand Biloxi 182 31 15 -
Grand Tunica 153 8 18 -
Caesars Indiana 238 37 22 -
Grand Gulfport 144 20 12 -
Sheraton Tunica 59 14 8 -
Bally's New Orleans 43 1 - -
Regional Overhead - (2) - -
--------- ---------- ---------- ---------
819 109 75 -
--------- ---------- ---------- ---------
INTERNATIONAL and Other 85 18 30 -
CORPORATE - (47) 5 -
--------- ---------- ---------- ---------
TOTAL $3,305 $521 $314 $7
========= ========== ========== =========
Nine Months Ended
September 30, 2004
-----------------------------------------
Impairment Deprecia- EBITDA
Loss, tion
Merger from
Costs and Unconsol-
Other idated
Expenses Affiliates
----------- ---------- -------
WESTERN REGION
Caesars Las Vegas $- $- $105
Paris Las Vegas - - 105
Bally's Las Vegas - - 61
Flamingo Las Vegas - - 92
Reno Hilton - - 10
Caesars Tahoe 9 - 1
Flamingo Laughlin - - 14
----------- ---------- -------
9 - 388
----------- ---------- -------
EASTERN REGION
Bally's Atlantic City - - 147
Caesars Atlantic City - - 122
Dover Downs - - 4
----------- ---------- -------
- - 273
----------- ---------- -------
MID-SOUTH REGION
Grand Biloxi - - 46
Grand Tunica - - 26
Caesars Indiana - - 59
Grand Gulfport - - 32
Sheraton Tunica - - 22
Bally's New Orleans - - 1
Regional Overhead - - (2)
----------- ---------- -------
- - 184
----------- ---------- -------
INTERNATIONAL and Other - 4 52
CORPORATE 8 - (34)
----------- ---------- -------
TOTAL $17 $4 $863
=========== ========== =======
Nine Months Ended
September 30, 2003
-----------------------------------------
Net Operating Deprecia- Pre-
Revenue Income tion and opening
(Loss) Amor- Expense
tization
--------- ---------- ---------- ---------
WESTERN REGION
Caesars Las Vegas $379 $40 $38 $1
Paris Las Vegas 284 48 24 -
Bally's Las Vegas 204 14 29 -
Flamingo Las Vegas 228 48 17 -
Reno Hilton 95 - 8 -
Caesars Tahoe 70 - 8 -
Flamingo Laughlin 81 5 6 -
--------- ---------- ---------- ---------
1,341 155 130 1
--------- ---------- ---------- ---------
EASTERN REGION
Bally's Atlantic City 517 99 48 -
Caesars Atlantic City 390 98 36 -
Dover Downs 4 4 - -
--------- ---------- ---------- ---------
911 201 84 -
--------- ---------- ---------- ---------
MID-SOUTH REGION
Grand Biloxi 170 23 12 -
Grand Tunica 159 16 18 -
Caesars Indiana 222 29 24 -
Grand Gulfport 139 24 9 -
Sheraton Tunica 57 13 6 -
Bally's New Orleans 44 - 1 -
Regional Overhead - (2) - -
--------- ---------- ---------- ---------
791 103 70 -
--------- ---------- ---------- ---------
INTERNATIONAL and Other 72 14 26 -
CORPORATE - (31) 6 -
--------- ---------- ---------- ---------
TOTAL $3,115 $442 $316 $1
========= ========== ========== =========
Nine Months Ended
September 30, 2003
-----------------------------------------
Deprecia- EBITDA
tion
from
Unconsol-
idated
Affiliates
---------- -------
WESTERN REGION
Caesars Las Vegas $- $79
Paris Las Vegas - 72
Bally's Las Vegas - 43
Flamingo Las Vegas - 65
Reno Hilton - 8
Caesars Tahoe - 8
Flamingo Laughlin - 11
---------- -------
- 286
---------- -------
EASTERN REGION
Bally's Atlantic City - 147
Caesars Atlantic City - 134
Dover Downs - 4
---------- -------
- 285
---------- -------
MID-SOUTH REGION
Grand Biloxi - 35
Grand Tunica - 34
Caesars Indiana - 53
Grand Gulfport - 33
Sheraton Tunica - 19
Bally's New Orleans - 1
Regional Overhead - (2)
---------- -------
- 173
---------- -------
INTERNATIONAL and Other 5 45
CORPORATE - (25)
---------- -------
TOTAL $5 $764
========== =======
NOTE: All Property Operating Information excludes the results of Las
Vegas Hilton, Atlantic City Hilton and Bally's Tunica which are
classified as discontinued operations for all periods presented.
CAESARS ENTERTAINMENT, INC.
Property Operating Information
(unaudited)
Three Months Ended
September 30, 2004
----------------------------------
Table Occupancy APR ADR RevPAR
Hold % (1) (2) (3)
%
----- --------- ----- ----- ------
WESTERN REGION
Caesars Palace 15.5% 95.3% $151 $151 $143
Paris Las Vegas 10.3% 95.3% $128 $126 $120
Bally's Las Vegas 14.6% 96.0% $93 $92 $89
Flamingo Las Vegas 18.5% 97.2% $83 $82 $79
Reno Hilton 19.3% 89.3% $81 $81 $72
Caesars Tahoe 6.9% 93.7% $127 $136 $128
Flamingo Laughlin 19.2% 87.6% $35 $33 $29
----- --------- ----- ----- ------
14.2% 94.1% $98 $98 $92
----- --------- ----- ----- ------
EASTERN REGION
Bally's Atlantic City 16.0% 97.8% $138 $103 $101
Caesars Atlantic City 15.8% 99.0% $140 $97 $96
----- --------- ----- ----- ------
15.9% 98.3% $139 $101 $99
----- --------- ----- ----- ------
MID-SOUTH REGION
Grand Biloxi 18.4% 95.3% $79 $66 $63
Grand Tunica 15.2% 84.2% $55 $55 $46
Caesars Indiana 16.8% 96.5% $101 $101 $97
Grand Gulfport 17.4% 90.5% $108 $81 $74
Sheraton Tunica 17.9% 98.1% $69 $67 $65
Bally's New Orleans 17.5% n/a n/a n/a n/a
----- --------- ----- ----- ------
17.1% 90.5% $81 $71 $64
----- --------- ----- ----- ------
Three Months Ended
September 30, 2003
----------------------------------
Table Occupancy APR ADR RevPAR
Hold % (1) (2) (3)
%
----- --------- ----- ----- ------
WESTERN REGION
Caesars Palace 15.2% 97.0% $136 $138 $134
Paris Las Vegas 15.4% 95.1% $117 $118 $112
Bally's Las Vegas 16.8% 94.8% $89 $89 $85
Flamingo Las Vegas 16.3% 96.7% $75 $75 $72
Reno Hilton 16.0% 88.0% $76 $74 $65
Caesars Tahoe 16.6% 90.2% $134 $140 $126
Flamingo Laughlin 17.7% 86.4% $31 $30 $26
----- --------- ----- ----- ------
15.7% 93.6% $91 $91 $85
----- --------- ----- ----- ------
EASTERN REGION
Bally's Atlantic City 15.2% 98.4% $125 $99 $97
Caesars Atlantic City 17.2% 98.8% $133 $91 $90
----- --------- ----- ----- ------
16.1% 98.6% $127 $96 $94
----- --------- ----- ----- ------
MID-SOUTH REGION
Grand Biloxi 15.6% 95.9% $78 $67 $65
Grand Tunica 16.9% 88.5% $47 $51 $45
Caesars Indiana 16.0% 91.0% $92 $88 $81
Grand Gulfport 16.3% 91.6% $79 $70 $65
Sheraton Tunica 14.3% 98.7% $61 $61 $61
Bally's New Orleans 16.7% n/a n/a n/a n/a
----- --------- ----- ----- ------
16.1% 91.8% $70 $65 $60
----- --------- ----- ----- ------
NOTE: All Property Operating Information excludes the results of
Las Vegas Hilton, Atlantic City Hilton and Bally's Tunica
which are classified as discontinued operations for all
periods presented.
(1) APR is Average Paying Rate and is calculated by dividing cash
room revenue by cash rooms occupied.
(2) ADR is Average Daily Rate and is calculated by dividing total
room revenue by total rooms occupied.
(3) RevPAR is defined as Revenue Per Available Room and is
calculated by dividing total room revenue by rooms available.
CAESARS ENTERTAINMENT, INC.
Property Operating Information
(unaudited)
Nine Months Ended
September 30, 2004
----------------------------------
Table Occupancy APR ADR RevPAR
Hold % (1) (2) (3)
%
----- --------- ----- ----- ------
WESTERN REGION
Caesars Palace 15.7% 96.9% $158 $155 $151
Paris Las Vegas 15.1% 94.6% $140 $136 $129
Bally's Las Vegas 14.8% 95.3% $103 $101 $97
Flamingo Las Vegas 17.7% 96.1% $89 $88 $84
Reno Hilton 17.0% 84.4% $75 $74 $62
Caesars Tahoe 11.2% 87.3% $118 $124 $108
Flamingo Laughlin 18.9% 86.6% $34 $32 $28
----- --------- ----- ----- ------
15.5% 93.0% $104 $103 $96
----- --------- ----- ----- ------
EASTERN REGION
Bally's Atlantic City 15.7% 96.4% $118 $90 $87
Caesars Atlantic City 16.1% 97.7% $122 $91 $89
----- --------- ----- ----- ------
15.9% 96.9% $120 $91 $88
----- --------- ----- ----- ------
MID-SOUTH REGION
Grand Biloxi 16.3% 95.9% $78 $66 $63
Grand Tunica 14.4% 78.1% $56 $56 $44
Caesars Indiana 17.1% 95.1% $96 $97 $92
Grand Gulfport 18.4% 90.7% $83 $70 $64
Sheraton Tunica 18.7% 97.9% $69 $65 $63
Bally's New Orleans 16.9% n/a n/a n/a n/a
----- --------- ----- ----- ------
16.6% 88.4% $75 $68 $60
----- --------- ----- ----- ------
Nine Months Ended
September 30, 2003
----------------------------------
Table Occupancy APR ADR RevPAR
Hold % (1) (2) (3)
%
----- --------- ----- ----- ------
WESTERN REGION
Caesars Palace 15.4% 94.4% $148 $146 $138
Paris Las Vegas 12.8% 95.1% $124 $124 $118
Bally's Las Vegas 15.4% 93.5% $93 $94 $88
Flamingo Las Vegas 16.8% 95.3% $79 $78 $75
Reno Hilton 17.5% 82.2% $70 $69 $57
Caesars Tahoe 16.1% 87.1% $120 $126 $110
Flamingo Laughlin 17.5% 86.0% $32 $30 $26
----- --------- ----- ----- ------
15.1% 91.9% $95 $95 $87
----- --------- ----- ----- ------
EASTERN REGION
Bally's Atlantic City 15.6% 97.3% $99 $85 $83
Caesars Atlantic City 17.5% 98.5% $117 $90 $88
----- --------- ----- ----- ------
16.5% 97.7% $105 $87 $85
----- --------- ----- ----- ------
MID-SOUTH REGION
Grand Biloxi 14.5% 97.0% $72 $64 $62
Grand Tunica 17.9% 84.3% $49 $51 $43
Caesars Indiana 16.7% 89.5% $88 $82 $73
Grand Gulfport 15.1% 90.7% $65 $63 $57
Sheraton Tunica 14.8% 98.1% $58 $61 $60
Bally's New Orleans 17.2% n/a n/a n/a n/a
----- --------- ----- ----- ------
16.1% 90.2% $65 $62 $56
----- --------- ----- ----- ------
NOTE: All Property Operating Information excludes the results of
Las Vegas Hilton, Atlantic City Hilton and Bally's Tunica
which are classified as discontinued operations for all
periods presented.
(1) APR is Average Paying Rate and is calculated by dividing cash
room revenue by cash rooms occupied.
(2) ADR is Average Daily Rate and is calculated by dividing total
room revenue by total rooms occupied.
(3) RevPAR is defined as Revenue Per Available Room and is
calculated by dividing total room revenue by rooms available.
CAESARS ENTERTAINMENT, INC.
Reconciliation of EBITDA to Net Income
(Amounts in millions, except per share amounts)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------------------------
2004 2003 2004 2003
-------- ------- -------- ------
EBITDA(1) $293 $262 $863 $764
Depreciation and
amortization (106) (103) (314) (316)
Depreciation from
unconsolidated subs (1) (2) (4) (5)
Pre-opening expense (4) - (7) (1)
Impairment loss, merger
costs and other expenses (15) - (17) -
--------- ------ --------- ------
Operating income 167 157 521 442
Net interest expense (69) (78) (212) (235)
Investment gain - - 3 -
Income tax provision (47) (33) (142) (87)
Minority interest, net (2) (1) (6) (2)
Discontinued operations, net
of taxes (2) 9 3 113 12
--------- ------ --------- ------
Net income $58 $48 $277 $130
========= ====== ========= ======
Earnings per share
Basic $0.19 $0.16 $0.90 $0.43
Diluted $0.18 $0.16 $0.88 $0.43
Weighted average shares outstanding
Basic 310 302 308 301
Diluted 316 304 314 303
(1) EBITDA is earnings before interest, taxes, depreciation and
amortization, impairment loss, merger costs and other, pre-
opening, and discontinued operations.
(2) Discontinued operations include the results of the Las Vegas
Hilton, Atlantic City Hilton and Bally's Tunica.
CAESARS ENTERTAINMENT, INC.
Reconciliation of Net Income to Adjusted Net Income
(Amounts in millions, except per share amounts)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------------------------
2004 2003 2004 2003
--------- ------ --------- ------
Net income $58 $48 $277 $130
Adjustments:
Pre-opening expense 4 - 7 1
Impairment loss, merger
costs and other expenses 15 - 17 -
Investment gain - - (3) -
Income taxes on adjustments (5) - (5) -
Indiana taxes - - 7 -
Lakes Entertainment tax
settlement 5 - 5 -
Discontinued operations, net
of taxes (9) (3) (113) (12)
--------- ------ --------- ------
Adjusted net income $68 $45 $192 $119
========= ====== ========= ======
Adjusted earnings per share
Basic $0.22 $0.15 $0.62 $0.40
Diluted $0.22 $0.15 $0.61 $0.39
Weighted average shares outstanding
Basic 310 302 308 301
Diluted 316 304 314 303
CONTACT: Caesars Entertainment, Inc., Las Vegas
Josh Hirsberg, 702-699-5269 (Investors)
hirsbergj@caesars.com
Robert W. Stewart, 702-699-5043 (Media)
stewartr@caesars.com