Park Place Entertainment Corp. (NYSE:PPE) today reported net income of $48 million, or $0.16 per diluted share, for the quarter ended June 30, 2001, compared to last year’s $31 million, or $0.10 per diluted share ($0.18 for the quarter ended June 30, 2000, excluding the write-down of the Las Vegas Hilton and the gain on sale of the Flamingo Kansas City Riverboat Casino).
Cash earnings per diluted share (net income before pre-opening expenses, asset dispositions, impairments and goodwill amortization) for the second quarter were $0.21 vs. $0.22 last year.
Earnings before interest, taxes, depreciation, amortization, pre-opening expense, and asset dispositions and impairments (“EBITDA”) were $310 million in the second quarter of 2001, compared to last year’s $335 million.
“The second-quarter results indicate that our properties in the major gaming markets continue to drive solid results,” said Thomas E. Gallagher, president and chief executive officer. “Our casinos at the “Four Corners” in Las Vegas, Atlantic City, Mississippi Gulf Coast and Indiana, experienced strong occupancy levels, table drop, slot handle and revenues vs. the second quarter of 2000.”
At the company’s flagship Caesars properties, Caesars Palace, Caesars Atlantic City and Caesars Indiana, EBITDA results declined $1 million from $87 million to $86 million this quarter, primarily due to Caesars Atlantic City’s lower hold percentage in the quarter. Assuming a normal hold percentage at Caesars Atlantic City, the three properties would have produced a quarter-over-quarter EBITDA increase.
Highlights from the quarter include:
Generated $101 million in excess cash flow (excluding option exercise proceeds)
Completed the $65 million Claridge acquisition ($32 million funded in the quarter)
Invested $61 million in new unit projects
Paid down an additional $8 million in debt
Repurchased 3 million shares at an average price of $11.89 by utilizing proceeds from 4 million stock options exercised
Las Vegas “Four Corners” RevPAR up 5%
Mississippi Gulf Coast properties EBITDA up 7% over last year
Paris/Bally’s Las Vegas posted second consecutive increase in EBITDA over last year
“Our results continue to provide evidence that the major markets in the gaming industry are extremely resilient,” said Scott LaPorta, executive vice president and chief financial officer. “Our analysis reveals that if we normalize table hold for the quarter, we would have surpassed last year’s results.” More about Semua Situs Slot Mpo
Eastern Region fundamentals were strong as gaming volumes increased approximately 3% this quarter over the second quarter of 2000. However, overall Eastern Region EBITDA for the second quarter of 2001 was 5% lower than the second quarter of 2000, primarily due to an overall lower table game hold percentage and increased energy costs.
Caesars Atlantic City EBITDA declined 7% to $38 million in the second quarter of 2001 from $41 million in 2000. Despite an increase in table game drop, table game win decreased approximately $9 million due to a 4 percentage point decline in the hold percentage.
EBITDA at Bally’s Atlantic City was $46 million for the second quarter of 2001 vs. $48 million reported for the second quarter of 2000. The decline in EBITDA at the property was primarily due to a 2 percentage point decline in hold percentage and a 22% increase in energy costs.
The Atlantic City Hilton earned EBITDA of $21 million for the second quarter of 2001 compared to $23 million in the year-ago quarter. The property’s lower results were primarily attributable to lower table game win and increased energy expenses, partially offset by a 2% increase in slot win.
The company began operating the Claridge on June 1, 2001. While the property contributed only modestly to Eastern Region operating results, its location adjacent to Bally’s provides strategic opportunities to Park Place.
The strength of the Western Region was centered at the “Four Corners,” where both slot handle and table game drop were up vs. the previous year. Room revenues were up 5% as a result of stable occupancy and an increase in room rates. A 69% ($5 million) increase in energy costs during 2001 vs. 2000 had a negative effect on operating results for the region.
Paris/Bally’s Las Vegas posted another $1 million EBITDA increase this quarter to $51 million vs. $50 million in the second quarter of 2000. The increase was primarily due to higher table win coupled with a 6% increase in RevPAR for the quarter.
Caesars Palace generated EBITDA of $34 million, up from last year’s $33 million, primarily due to an increase in slot play. The property also set a new hotel occupancy record at 99% for the quarter vs. second-quarter results from 1997 to present. The increase was partially offset by higher energy costs when compared to last year.
EBITDA at the Las Vegas Hilton was $6 million in the second quarter of 2001 vs. $12 million last year. The second-quarter results were in line with management’s expectations as the company continues to reposition the property as a convention hotel. As part of this repositioning, management has reduced full-time employees by 220 when compared to last year’s quarter.
The Flamingo Las Vegas reported EBITDA of $28 million in the first quarter of 2001 compared to $30 million last year. The decline was primarily attributable to higher operating costs while casino revenues remained relatively flat.
The Mid-South Region saw quarter-over-quarter improvement at Grand Gulfport and Caesars Indiana and continued stable results at Grand Biloxi. However, the continued competitive pressure at the Tunica properties resulted in a 9% decline in EBITDA on a regional basis.
Caesars Indiana recorded a 4% improvement in revenues to $51 million and an 8% improvement in EBITDA to $14 million during the second quarter of 2001. The improvement resulted primarily from a 5% increase in slot handle and a 3% increase in table game drop. The Pavilion amenities completed at Caesars Indiana during 2000 continue to drive increased visitation from the Louisville, Ky., market and surrounding areas. Construction on the 500-room hotel tower is on budget and scheduled for completion in the third quarter of this year.
On the Gulf Coast, Grand Gulfport generated an 18% increase in EBITDA from $11 million in the second quarter of 2000 to $13 million in 2001, while EBITDA at Grand Biloxi was $16 million in 2001 and 2000. In early July, the company completed a 1,100-space parking garage adjacent to Grand Biloxi that provides customers direct access to the casino.
Grand Tunica reported EBITDA of $9 million for the three months ended June 30, 2001, compared to $16 million for the three months ended June 30, 2000. A 9% decrease in slot handle and a 4% decrease in table game volume as well as continued competitive marketing pressures caused the $7 million decline in EBITDA.
On a combined basis, second-quarter 2001 EBITDA from the company’s non-U.S. properties increased 5% from $21 million to $22 million this year.
In the second quarter, Park Place Entertainment funded the Claridge acquisition, paid down $8 million in bank debt, and invested $61 million in ROI-driven projects. In addition, the company repurchased $36 million in stock (3 million shares at an average price of $11.89) with proceeds from the exercise of 4 million stock options.
Additionally, the company, along with Las Vegas Gaming Inc., successfully launched “Nevada Numbers” in most of its Nevada properties. Nevada Numbers is a nightly statewide lucky numbers drawing offering a progressive jackpot starting at $5 million and is the only statewide progressive mega-jackpot lucky numbers game. The nightly drawings are held at Bally’s Las Vegas and results are electronically posted at all participating casinos.
The company also entered into five-year agreements for the purchase of electricity and natural gas at fixed costs starting in mid 2002. The company hopes to reduce cash flow volatility relating to fluctuating energy costs through these contracts.
In June, the company acquired the Claridge Hotel and Casino. The property is adjacent to Bally’s and adds additional capacity to the company’s existing Boardwalk “complex.” Park Place is currently evaluating strategic revenue enhancing and cost savings plans for the Claridge.
Park Place Entertainment is the world’s largest gaming company and owns, manages or has an interest in 29 gaming properties operating under the Caesars, Bally’s, Paris, Flamingo, Grand Casinos and Hilton brand names with a total of 2 million square feet of gaming space, more than 28,000 hotel rooms and approximately 60,000 employees worldwide.
Additional information on Park Place Entertainment can be accessed through the company’s 24-hour investor relations service. Individuals may call toll-free 877/PPE-NYSE (877/773-6973) or visit www.parkplace.com to obtain the latest company news and stock price information, or to request information by e-mail, fax or postal mail delivery.