LAS VEGAS, July 21 /PRNewswire-FirstCall/ -- Harrah's Entertainment, Inc.
(NYSE: HET) today reported record second-quarter revenues of $1.13 billion, up
4.5 percent from revenues of $1.08 billion in the 2003 second quarter.
(Logo: http://www.newscom.com/cgi-bin/prnh/20021220/LAF055LOGO )
Property Earnings Before Interest, Taxes, Depreciation and Amortization
(Property EBITDA) rose 6.2 percent to a second-quarter record of $301.1
million from Property EBITDA of $283.6 million in the year-earlier period.
Second-quarter Adjusted Earnings Per Share increased to a record 79 cents, up
6.8 percent from the 74 cents achieved in 2003's second-quarter.
Property EBITDA and Adjusted EPS are not Generally Accepted Accounting
Principles (GAAP) measurements but are commonly used in the gaming industry as
measures of performance and as a basis for valuation of gaming companies. In
addition, analysts' per-share earnings estimates for gaming companies are
comparable to Adjusted EPS. Reconciliations of Adjusted EPS to GAAP EPS and
Property EBITDA to income from operations are attached to this release.
Second-quarter income from operations rose 10.4 percent to a record
$202.4 million from $183.3 million in the year-earlier quarter. Second-
quarter net income was a record $90.2 million, up 17.6 percent from
$76.7 million in the 2003 second quarter. Diluted earnings per share from
continuing operations for the 2004 second quarter was 79 cents, 14.5 percent
higher than the 69 cents achieved in the 2003 second quarter.
Strong Demand, Diversification Drive Growth
"The second quarter proved the effectiveness of our unique loyalty
strategy, which is focused on the delivery of superior service and recognition
to more customers in more markets than any other casino operator," said Gary
Loveman, Harrah's Entertainment's president and chief executive officer. "The
marketing and technological capabilities we use to promote customer loyalty
helped boost cross-market play that benefited our Southern Nevada operations
in particular, leading to another quarter of same-store sales growth. We plan
to apply these same capabilities to the properties we will add to our
portfolio when we close on the Caesars transaction."
On July 15, Harrah's signed a definitive agreement to acquire Caesars
Entertainment, Inc., which operates 28 casinos, including 17 in the United
States. Caesars has a significant presence in Las Vegas, Atlantic City and
Mississippi. The transaction is expected to take about a year to complete.
Second-quarter 2004 same-store revenues increased 4.6 percent over the
year-ago period. Cross-market play -- gaming by customers at Harrah's
properties other than their "home" casino -- rose 11.9 percent from the second
quarter of 2003. Tracked play -- gaming by customers using the company's Total
Rewards player cards -- increased 8.5 percent from the year-ago second
quarter.
For the 2004 first half, revenues rose 4.6 percent to $2.24 billion from
$2.14 billion in the year-ago period. Property EBITDA increased to
$588.6 million, up 3.8 percent from $567.3 million in the 2003 first half.
Adjusted EPS was $1.55, 4.0 percent higher than the $1.49 achieved in the
first six months of 2003.
First-half income from operations was $390.4 million, up 4.5 percent from
$373.7 million in the 2003 first half. Net income rose 9.0 percent to
$172.0 million from $157.8 million in the first six months of 2003. First-
half diluted earnings per share was $1.52, up 6.3 percent from $1.43 in the
2003 first half.
Among second-quarter highlights:
-- The company sold $750 million of unsecured 5.50 percent Senior Notes,
due July 2010, in a private-placement transaction. Net proceeds were
used to reduce outstanding debt and for general corporate purposes.
As part of the transaction, Harrah's became the first major casino
company to include a minority investment-banking firm in a debt
offering.
-- Harrah's also reduced the interest rate, extended the maturity date
and increased the borrowing capacity of its bank credit facilities to
$2.5 billion from $1.9625 billion; the agreement also allows an
increase in the total borrowing capacity up to $3 billion if Harrah's
and its bank lenders agree.
-- Harrah's hosted the largest World Series of Poker ever, attracting
more than 13,000 players who generated a total prize pool of nearly
$50 million, more than double the 2003 total. On July 6, ESPN began
airing an unprecedented 22 hours of original 2004 World Series
programming that is expected to be repeated throughout the year.
-- The new permanent casino at Louisiana Downs opened, raising the total
number of slot machines at the facility to more than 1,400 and adding
significantly enhanced non-gaming amenities for customers.
-- Construction began on a $142 million, 450-room luxury hotel tower at
Harrah's New Orleans. The 26-story tower is expected to open in early
2006.
-- Harrah's received Pennsylvania regulatory approval to buy a 50 percent
ownership interest in Chester Downs & Marina, L.L.C., which is
licensed to develop a harness-racing facility near Philadelphia.
Early in the third quarter, the Pennsylvania Legislature passed and
the governor signed a bill allowing up to 3,000 slot machines at each
of eight race tracks and four stand-alone slot parlors, with the
potential for adding 2,000 more slots at each of those locations.
-- The Rhode Island Legislature approved a November referendum on
development of a Harrah's-owned casino venture with the Narragansett
Tribe in West Warwick. The governor subsequently vetoed the bill, and
Harrah's is awaiting further legislative developments.
-- The National Indian Gaming Commission approved a seven-year extension
of Harrah's management contract for Harrah's Cherokee, which is owned
by the Eastern Band of Cherokee Indians.
-- Market Metrix, LLC named Harrah's the top-ranked casino operator in
the measurement firm's latest quarterly customer-satisfaction survey
of 35,000 American consumers. The company's Web site,
http://www.harrahs.com, also received the No. 1 ranking in the Hotel
Reservations Web Site category.
On July 1, just after the end of the second quarter, Harrah's completed
its approximately $1.45 billion acquisition of Horseshoe Gaming Holding Corp.,
which operates casino-entertainment facilities in Hammond, Indiana; Tunica,
Mississippi; and Bossier City, Louisiana. The transaction raised Harrah's
U.S. portfolio of owned or managed properties to 28.
"Our second-quarter operating results were highlighted by stellar
performances at several properties and a continuation of the positive same-
store momentum that has gained steam since late last year," Loveman said.
"Those gains were driven by the successful execution of the customer-loyalty
strategy that distinguishes Harrah's from other operators.
"In particular, continued refinements to our Total Rewards player-card
program contributed to the increases in cross-market and tracked play,"
Loveman said. "And by the end of the second quarter, we'd completed
conversions on almost 90 percent of the slot machines we plan to change to
Fast Cash, the coinless slot system that has proven so popular with our
players.
"There were also several recent developments that position us better than
ever to deliver sustainable long-term earnings growth through a variety of
means," Loveman said. "The Horseshoe Gaming acquisition enhances our position
as the leading distributor of casino entertainment in the United States -- a
position that will benefit the customers of both enterprises.
"We were delighted to welcome the more than 7,300 Horseshoe employees to
the Harrah's family," Loveman said. "They've done a terrific job of
delivering on the promises the Horseshoe brand makes to its customers, and we
look forward to working with and learning from them.
"During the second quarter, our industry-leading financial strength and
investment-grade credit rating enabled us to sell $750 million of senior notes
and increase our bank borrowing capacity," Loveman said.
"We are continuing to grow our existing properties," he said. "During the
second quarter, for example, we opened our permanent casino at Louisiana Downs
and began construction on a 450-room luxury hotel at Harrah's New Orleans.
And we are scheduled to open a 200-room hotel at Harrah's St. Louis later this
quarter, adding to the substantially expanded food and beverage facilities
that opened in the second quarter. Finally, Harrah's North Kansas City is
developing a 206-room hotel tower and casino expansion that will include four
new restaurants and a second parking garage.
"We're extremely excited about the Caesars transaction, which will
solidify our position as the preeminent distributor of casino entertainment,"
Loveman said. "We will gain first-class assets in three major markets -- Las
Vegas, Atlantic City and Mississippi -- that have stable tax environments and
casino-entertainment clusters that draw customers from other areas.
"We will combine into one company three of the most storied brands in
gaming -- Caesars, Horseshoe and Harrah's, all with a great tradition of
success," Loveman said. "And we'll strengthen our reputation for customer-
service excellence by uniting the best management and employee teams in the
gaming industry.
"We believe there is a big opportunity for us to apply our capabilities to
enhance the value of the Caesars assets, deliver long-term gains to
shareholders and provide rewarding careers to employees," Loveman said. "Our
employees have enjoyed great successes using those tools, and we believe the
Caesars team will be equally successful.
"We admire what Caesars' management and employees have accomplished
without having access to the industry-leading marketing and technological
capabilities that have driven strong same-store sales gains at Harrah's over
the past three years," Loveman said. "We're confident they'll find our
capabilities will help them achieve similar results.
"In the past three months, we have recorded continued same-store revenue
growth, increased earnings, seen a number of potential development projects
enter the pipeline, added three premier casinos to our portfolio and announced
an acquisition that would double our size and provide superior growth
opportunities," Loveman said. "I believe our future has never looked
brighter."
West Region Again Posts Record Results
West Results
(in millions)
2004 2003
2004 2003 Percent First First Percent
Second Second Increase Six Six Increase
Quarter Quarter (Decrease) Months Months (Decrease)
Northern Nevada
Total revenues $111.8 $106.3 5.2% $217.3 $210.6 3.2%
Income from
operations 14.9 12.6 18.3% 23.6 24.5 -3.7%
Property
EBITDA 25.7 22.4 14.7% 44.2 43.7 1.1%
Southern Nevada
Total revenues 272.7 221.4 23.2% 531.3 449.5 18.2%
Income from
operations 66.0 42.7 54.6% 131.4 87.6 50.0%
Property
EBITDA 82.7 61.0 35.6% 164.9 124.7 32.2%
Total West
Total revenues 384.5 327.7 17.3% 748.6 660.1 13.4%
Income from
operations 80.9 55.3 46.3% 155.0 112.1 38.3%
Property
EBITDA 108.4 83.4 30.0% 209.1 168.4 24.2%
Continued strong cross-market play at Harrah's Las Vegas and the Rio and
new entertainment attractions in Lake Tahoe propelled Harrah's West Region to
record results.
Southern Nevada revenues rose 23.2 percent, income from operations gained
54.6 percent and Property EBITDA increased 35.6 percent from the 2003 second
quarter.
Northern Nevada revenues rose 5.2 percent to a record level from the
second quarter last year, while income from operations gained 18.3 percent and
Property EBITDA was 14.7 percent higher.
"With each Southern Nevada property posting record results and Lake Tahoe
performing well, we continue to be enthusiastic about the West Region
outlook," said Tim Wilmott, Harrah's chief operating officer.
For the 2004 first half, West Region revenues were up 13.4 percent, income
from operations rose 38.3 percent and Property EBITDA gained 24.2 percent from
the first half of 2003.
East Region Results Decline
East Results
(in millions)
2004 2003
2004 2003 Percent First First Percent
Second Second Increase Six Six Increase
Quarter Quarter (Decrease) Months Months (Decrease)
Harrah's
Atlantic City
Total revenues $104.5 $112.9 -7.4% $204.9 $215.1 -4.7%
Income from
operations 28.0 37.7 -25.7% 54.1 67.6 -20.0%
Property
EBITDA 37.4 46.3 -19.2% 72.4 84.7 -14.5%
Showboat
Atlantic City
Total revenues 89.4 93.1 -4.0% 170.8 169.3 0.9%
Income from
operations 24.1 25.3 -4.7% 42.6 39.0 9.2%
Property
EBITDA 32.3 32.4 -0.3% 58.5 52.4 11.6%
Total East
Total revenues 193.9 206.0 -5.9% 375.7 384.4 -2.3%
Income from
operations 52.1 63.0 -17.3% 96.7 106.6 -9.3%
Property
EBITDA 69.7 78.7 -11.4% 130.9 137.1 -4.5%
Results for Harrah's two Atlantic City properties fell due to competition
from the city's first new hotel-casino in more than a decade. Second-quarter
revenues declined 5.9 percent, income from operations fell 17.3 percent and
Property EBITDA decreased 11.4 percent from the year-earlier period.
"As the economy continues to improve and we reach the anniversary of the
opening of the new competitor facility, we look forward to a return to growth
in Atlantic City," Wilmott said.
For the first half, East Region revenues declined 2.3 percent, income from
operations fell 9.3 percent and Property EBITDA was 4.5 percent lower than in
the year-earlier period.
North Central Region Results Improve
North Central Results
(in millions)
2004 2003
2004 2003 Percent First First Percent
Second Second Increase Six Six Increase
Quarter Quarter (Decrease) Months Months (Decrease)
Illinois/Indiana
Total revenues $171.1 $174.8 -2.1% $345.7 $353.3 -2.2%
Income from
operations 22.4 20.5 9.3% 46.5 55.6 -16.4%
Property
EBITDA 31.5 29.0 8.6% 64.3 73.3 -12.3%
Iowa
Total revenues 64.0 59.9 6.8% 124.7 118.6 5.1%
Income from
operations 33.1 9.1 N/M 41.0 17.5 N/M
Property
EBITDA 22.8 13.7 66.4% 36.4 26.6 36.8%
Missouri
Total revenues 109.7 108.7 0.9% 218.1 218.2 0.0%
Income from
operations 18.0 22.8 -21.1% 36.6 44.5 -17.8%
Property
EBITDA 28.6 31.8 -10.1% 56.4 62.0 -9.0%
Total North
Central
Total revenues 344.8 343.4 0.4% 688.5 690.1 -0.2%
Income from
operations 73.5 52.4 40.3% 124.1 117.6 5.5%
Property EBITDA 82.9 74.5 11.3% 157.1 161.9 -3.0%
N/M = Not Meaningful
The North Central Region's second-quarter results benefited from
legislation lowering the gaming-tax rate affecting the Bluffs Run racetrack
casino in Iowa. The company had been accruing gaming taxes at a higher rate
as it awaited the resolution of the rate issue, and recorded a $3.7 million
adjustment of the first-quarter accrual due to the reduction in the tax rate.
The company also adjusted its tax accrual for prior periods by $16.6 million,
and recorded this component of the adjustment to the write-downs, reserves and
recoveries account. The prior-periods component is excluded from Adjusted
EPS.
Second-quarter North Central Region revenues were flat, while income from
operations rose 40.3 percent and Property EBITDA increased 11.3 percent.
Strong gains at Harrah's East Chicago and Metropolis facilities offset
lower results stemming from the revised operations model implemented at
Harrah's Joliet following last year's Illinois tax increase. As a result,
combined Illinois and Indiana second-quarter revenues fell 2.1 percent, but
income from operations rose 9.3 percent, and Property EBITDA was 8.6 percent
higher.
The company's two Iowa properties posted record second-quarter results,
with revenues 6.8 percent higher than in the year-ago period. Income from
operations more than tripled and Property EBITDA increased 66.4 percent due in
part to the tax-accrual adjustment.
Combined second-quarter revenues at Harrah's two Missouri properties were
about level with the 2003 second quarter's, but income from operations
declined 21.1 percent and Property EBITDA decreased 10.1 percent. Improved
results at St. Louis were more than offset by declines in Kansas City, which
faced increased competition due to significant expansions by two of the three
competitors in that market.
For the 2004 first half, North Central Region revenues were flat, income
from operations was 5.5 percent higher and Property EBITDA was down 3.0
percent from the 2003 first half.
South Central Region Reports Higher Second-Quarter Results
South Central Results
(in millions)
2004 2003
2004 2003 Percent First First Percent
Second Second Increase Six Six Increase
Quarter Quarter (Decrease) Months Months (Decrease)
Louisiana
Total revenues $167.0 $159.3 4.8% $347.8 $319.2 9.0%
Income from
operations 19.9 19.5 2.1% 47.2 46.7 1.1%
Property
EBITDA 32.6 32.6 0.0% 69.8 70.6 -1.1%
Mississippi
Total revenues 20.0 20.9 -4.3% 41.1 41.1 -0.0%
Income from
operations 3.5 3.4 2.9% 6.9 6.2 11.3%
Property
EBITDA 5.1 4.9 4.1% 10.1 9.4 7.4%
Total South
Central
Total revenues 187.0 180.2 3.8% 388.9 360.3 7.9%
Income from
operations 23.4 22.9 2.2% 54.1 52.9 2.3%
Property
EBITDA 37.7 37.5 0.5% 79.9 80.0 -0.1%
At Harrah's Louisiana and Mississippi properties, revenues rose 3.8
percent, income from operations increased 2.2 percent and Property EBITDA was
0.5 percent higher than in the year-ago second quarter.
The 2004 second quarter included results from Harrah's Shreveport through
May 19, when that property was sold to another operator, and from Louisiana
Downs, where 900 slot machines were introduced in late May 2003; the total was
increased to just over 1,400 in May 2004.
"Combined, our New Orleans and Lake Charles, Louisiana, properties posted
double-digit gains in revenues and income from operations," Wilmott said.
First-half revenues for the South Central properties rose 7.9 percent,
income from operations increased 2.3 percent and Property EBITDA was flat
compared with the first half of 2003.
Managed Properties And Other Items
Second-quarter management-fee revenues were down 20.6 percent from the
year-ago period due to lower fee schedules associated with contract
extensions.
Second-quarter development costs rose to $6.1 million from $3.6 million in
the 2003 second quarter.
Corporate expense was level with the 2003 second quarter. Interest
expense was 1.2 percent higher than in the 2003 second quarter.
During the second quarter, Harrah's Entertainment made a $10 million
endowment to The Harrah's Foundation, a non-profit corporation that provides
charitable contributions to qualifying organizations in communities served by
Harrah's. The $10 million expense resulting from this action is recorded in
write-downs, reserves and recoveries. Also included in write-downs, reserves
and recoveries is the $16.6 million adjustment of the prior period gaming tax
accruals for the Bluffs Run property resulting from the passage of legislation
lowering the gaming-tax rate.
The effective income tax rate after minority interest for the 2004 second
quarter was 37.1 percent, similar to the full year 2003 and the first quarter
of 2004.
On July 1, the company's Horseshoe Gaming subsidiary called for redemption
of all $535 million of its outstanding 8 5/8 percent Senior Subordinated
Notes, due July 2009. Noteholders will receive a redemption price equal to
104.313 percent of the principal amount of the notes, plus accrued and unpaid
interest through the redemption date of August 2, 2004.
Harrah's Entertainment will host a conference call Wednesday, July 21,
2004, at 9:00 a.m. Eastern Daylight Time to review its 2004 second-quarter
results. Those interested in participating in the call should dial
1-888-399-2695, or 1-706-679-7646 for international callers, approximately
10 minutes before the call start time.
A taped replay of the conference call can be accessed at 1-800-642-1687,
or 1-706-645-9291 for international callers, beginning at 12:00 p.m. EDT
Wednesday, July 21. The replay will be available through 11:59 p.m. EDT on
Tuesday, July 27. The passcode number for the replay is 8388518.
Interested parties wanting to listen to the live conference call on the
Internet may do so on the company's web site -- http://www.harrahs.com -- in the
Investor Relations section behind the "About Us" tab.
Founded 66 years ago, Harrah's Entertainment, Inc. owns or manages through
various subsidiaries 28 casinos in the United States, primarily under the
Harrah's brand name. Harrah's Entertainment is focused on building loyalty
and value with its valued customers through a unique combination of great
service, excellent products, unsurpassed distribution, operational excellence
and technology leadership.
More information about Harrah's is available at http://www.harrahs.com.
This release 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, new projects, strategies, future performance, the
outcome of contingencies such as legal proceedings and future financial
results. We have based these forward-looking statements on our current
expectations and projections about future events.
We caution the reader that forward-looking statements involve risks and
uncertainties that cannot be predicted or quantified and, consequently, actual
results 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 Securities and Exchange Commission:
-- the effect 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 the company's properties;
-- our ability to complete the Caesars Entertainment acquisition and to
timely and cost effectively integrate into our operations the
companies that we acquire, including Caesars and Horseshoe Gaming
Holding Corp.;
-- access to available and feasible financing;
-- 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;
-- ability of our customer-tracking, customer-loyalty and yield-
management programs to continue to increase customer loyalty and same-
store sales;
-- 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. We
undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED SUMMARY OF OPERATIONS
(UNAUDITED)
(In thousands, Second Quarter Ended Six Months Ended
except per June 30, June 30, June 30, June 30,
share amounts) 2004 2003 2004 2003
Revenues $1,129,006 $1,080,220 $2,238,172 $2,139,149
Property operating
expenses (827,883) (796,605) (1,649,579) (1,571,897)
Depreciation and
amortization (81,976) (79,010) (160,048) (157,538)
Operating profit 219,147 204,605 428,545 409,714
Corporate expense (15,802) (15,742) (30,532) (27,846)
(Losses)/income on
interests in
nonconsolidated
affiliates (150) (24) 284 (86)
Amortization of
intangible assets (1,207) (1,200) (2,443) (2,399)
Project opening costs
and other items 406 (4,327) (5,428) (5,645)
Income from
operations 202,394 183,312 390,426 373,738
Interest expense,
net of interest
capitalized (58,854) (58,208) (117,100) (117,082)
Loss on early
extinguishment
of debt -- (2,141) -- (2,141)
Other income,
including
interest income 1,857 4,810 4,098 5,495
Income before income
taxes and minority
interests 145,397 127,773 277,424 260,010
Provision for
income taxes (53,225) (46,104) (101,431) (94,918)
Minority interests (1,935) (3,735) (4,025) (6,895)
Income from
continuing
operations 90,237 77,934 171,968 158,197
Discontinued
operations,
net of tax -- (1,250) -- (433)
Net income $90,237 $76,684 $171,968 $157,764
Earnings per share
- basic
Income from
continuing
operations $0.81 $0.72 $1.55 $1.45
Discontinued
operations,
net of tax -- (0.01) -- --
Net income $0.81 $0.71 $1.55 $1.45
Earnings per share
- diluted
Income from
continuing
operations $0.79 $0.70 $1.52 $1.43
Discontinued
operations,
net of tax -- (0.01) -- --
Net income $0.79 $0.69 $1.52 $1.43
Weighted average
common shares
outstanding 111,683 108,786 111,156 108,641
Weighted average
common and common
equivalent shares
outstanding 113,573 110,373 112,967 110,168
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL OPERATING INFORMATION
(UNAUDITED)
Second Quarter Ended Six Months Ended
(In thousands) June 30, June 30, June 30, June 30,
2004 2003 2004 2003
Revenues
West Region $384,468 $327,693 $748,599 $660,082
East Region 193,893 205,973 375,670 384,422
North Central
Region 344,801 343,421 688,488 690,092
South Central
Region 186,992 180,243 388,872 360,317
Managed 14,998 18,896 29,554 36,008
Other 3,854 3,994 6,989 8,228
Total revenues $1,129,006 $1,080,220 $2,238,172 $2,139,149
Income from operations
West Region $80,901 $55,276 $154,990 $112,131
East Region 52,149 62,990 96,722 106,622
North Central
Region 73,512 52,357 124,075 117,596
South Central
Region 23,362 22,895 54,058 52,867
Managed 12,843 16,877 25,037 31,644
Other (24,571) (11,341) (33,924) (19,276)
Corporate expense (15,802) (15,742) (30,532) (27,846)
Total income
from operations $202,394 $183,312 $390,426 $373,738
Property EBITDA *
West Region $108,411 $83,432 $209,123 $168,405
East Region 69,763 78,739 130,923 137,130
North Central
Region 82,855 74,485 157,054 161,851
South Central
Region 37,637 37,522 79,873 80,027
Managed 12,923 16,896 25,173 31,683
Other (10,466) (7,459) (13,553) (11,844)
Total Property
EBITDA $301,123 $283,615 $588,593 $567,252
Project opening costs
and other items
Project opening
costs $(4,133) $(4,122) $(6,568) $(4,589)
Writedowns, reserves
and recoveries 4,539 (205) 1,140 (1,056)
Total project
opening costs
and other items $406 $(4,327) $(5,428) $(5,645)
* Property EBITDA (earnings before interest, taxes, depreciation and
amortization) consists of Income from operations before depreciation
and amortization, write-downs, reserves and recoveries, project opening
costs, corporate expense, income/(losses) on interests in
nonconsolidated affiliates, venture restructuring costs and
amortization of intangible assets. Property EBITDA is a supplemental
financial measure used by management, as well as industry analysts, to
evaluate our operations. However, Property EBITDA should not be
construed as an alternative to Income from operations (as an indicator
of our operating performance) or to Cash flows from operating
activities (as a measure of liquidity) as determined in accordance with
generally accepted accounting principles. All companies do not
calculate EBITDA in the same manner. As a result, Property EBITDA as
presented by our Company may not be comparable to similarly titled
measures presented by other companies.
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)
Calculation of Adjusted Earnings Per Share
(In thousands, except Second Quarter Ended Six Months Ended
per share amounts) June 30, June 30, June 30, June 30,
2004 2003 2004 2003
Income before income
taxes and minority
interests $145,397 $127,773 $277,424 $260,010
Add/(deduct):
Project opening
costs and other
items
True-up of
Bluffs Run
prior year's
gaming tax
accrual (16,558) -- (16,558) --
Contribution to
the Harrah's
Foundation 10,000 -- 10,000 --
Other 6,152 4,327 11,986 5,645
Loss on early
extinguishments
of debt -- 2,141 -- 2,141
Adjusted income
before income taxes
and minority
interests 144,991 134,241 282,852 267,796
Provision for
income taxes (53,074) (48,564) (103,445) (97,838)
Minority interests (1,935) (3,735) (4,025) (6,895)
Adjusted income from
continuing operations 89,982 81,942 175,382 163,063
Discontinued
operations,
net of tax -- (1,250) -- (433)
Add/(deduct):
Write-down of
assets at Vicksburg,
net of tax -- 460 -- 460
Loss on sale of
Harveys Colorado
assets, net of tax -- 674 -- 674
Adjusted net income $89,982 $81,826 $175,382 $163,764
Diluted adjusted
earnings per share $0.79 $0.74 $1.55 $1.49
Weighted average
common and common
equivalent shares
outstanding 113,573 110,373 112,967 110,168
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)
Reconciliation of Property EBITDA to Income from operations
(In thousands)
Second Quarter Ended June 30, 2004
North
West East Central
Region Region Region
Revenues $384,468 $193,893 $344,801
Property operating expenses (276,057) (124,130) (261,946)
Property EBITDA 108,411 69,763 82,855
Depreciation and amortization (26,179) (17,434) (22,754)
Operating profit 82,232 52,329 60,101
Amortization of intangible assets (181) -- (1,018)
Income/(losses) on interests
in nonconsolidated affiliates -- -- --
Project opening costs and
other items (1,150) (180) 14,429
Corporate expense -- -- --
Income from operations $80,901 $52,149 $73,512
Second Quarter Ended June 30, 2004
South Managed
Central and
Region Other Total
Revenues $186,992 $18,852 $1,129,006
Property operating expenses (149,355) (16,395) (827,883)
Property EBITDA 37,637 2,457 301,123
Depreciation and amortization (11,508) (4,101) (81,976)
Operating profit 26,129 (1,644) 219,147
Amortization of intangible assets (8) -- (1,207)
Income/(losses) on interests in
nonconsolidated affiliates 22 (172) (150)
Project opening costs and
other items (2,781) (9,912) 406
Corporate expense -- (15,802) (15,802)
Income from operations $23,362 $(27,530) $202,394*
Second Quarter Ended June 30, 2003
North
West East Central
Region Region Region
Revenues $327,693 $205,973 $343,421
property operating expenses (244,261) (127,234) (268,936)
Property EBITDA 83,432 78,739 74,485
Depreciation and amortization (27,600) (14,580) (20,667)
Operating profit 55,832 64,159 53,818
Amortization of intangible assets (181) -- (1,019)
Income/(losses) on interests in
nonconsolidated affiliates -- -- --
Project opening costs and
other items (375) (1,169) (442)
Corporate expense -- -- --
Income from operations $55,276 $62,990 $52,357
Second Quarter Ended June 30, 2003
South Managed
Central and
Region Other Total
Revenues $180,243 $22,890 $1,080,220
property operating expenses (142,721) (13,453) (796,605)
Property EBITDA 37,522 9,437 283,615
Depreciation and amortization (12,330) (3,833) (79,010)
Operating profit 25,192 5,604 204,605
Amortization of intangible assets -- -- (1,200)
Income/(losses) on interests in
nonconsolidated affiliates 18 (42) (24)
Project opening costs and
other items (2,315) (26) (4,327)
Corporate expense -- (15,742) (15,742)
Income from operations $22,895 $(10,206) $183,312*
* Total Income from operations as reported on this schedule corresponds
with the amounts reported for the respective periods on our CONSOLIDATED
SUMMARY OF OPERATIONS. See our CONSOLIDATED SUMMARY OF OPERATIONS for
the additional income and expenses recorded in the determination of Net
income and Earnings per share for the periods presented.
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)
Reconciliation of Property EBITDA to Income from operations
(In thousands)
Six Months Ended June 30, 2004
North
West East Central
Region Region Region
Revenues $748,599 $375,670 $688,488
Property operating expenses (539,476) (244,747) (531,434)
Property EBITDA 209,123 130,923 157,054
Depreciation and amortization (51,765) (34,014) (44,681)
Operating profit 157,358 96,909 112,373
Amortization of intangible assets (362) -- (2,036)
(Losses)/income on interests
in nonconsolidated affiliates -- -- --
Project opening costs and
other items (2,006) (187) 13,738
Corporate expense -- -- --
Income from operations $154,990 $96,722 $124,075
Six Months Ended June 30, 2004
South Managed
Central and
Region Other Total
Revenues $388,872 $36,543 $2,238,172
Property operating expenses (308,999) (24,923) (1,649,579)
Property EBITDA 79,873 11,620 588,593
Depreciation and amortization (21,717) (7,871) (160,048)
Operating profit 58,156 3,749 428,545
Amortization of intangible assets (45) -- (2,443)
(Losses)/income on interests in
nonconsolidated affiliates (83) 367 284
Project opening costs and
other items (3,970) (13,003) (5,428)
Corporate expense -- (30,532) (30,532)
Income from operations $54,058 $(39,419) $390,426*
Six Months Ended June 30, 2003
North
West East Central
Region Region Region Region
Revenues $660,082 $384,422 $690,092
Property operating expenses (491,677) (247,292) (528,241)
Property EBITDA 168,405 137,130 161,851
Depreciation and amortization (55,604) (29,265) (41,246)
Operating profit 112,801 107,865 120,605
Amortization of intangible assets (363) -- (2,036)
(Losses)/income on interests
in nonconsolidated
affiliates -- -- --
Project opening costs and
other items (307) (1,243) (973)
Corporate expense -- -- --
Income from operations $112,131 $106,622 $117,596
Six Months Ended June 30, 2003
South Managed
Central and
Region Other Total
Revenues $360,317 $44,236 $2,139,149
Property operating expenses (280,290) (24,397) (1,571,897)
Property EBITDA 80,027 19,839 567,252
Depreciation and amortization (23,939) (7,484) (157,538)
Operating profit 56,088 12,355 409,714
Amortization of intangible assets -- -- (2,399)
(Losses)/income on interests
in nonconsolidated affiliates (125) 39 (86)
Project opening costs and
other items (3,096) (26) (5,645)
Corporate expense -- (27,846) (27,846)
Income from operations $52,867 $(15,478) $373,738*
* Total Income from operations as reported on this schedule corresponds
with the amounts reported for the respective periods on our CONSOLIDATED
SUMMARY OF OPERATIONS. See our CONSOLIDATED SUMMARY OF OPERATIONS for
the additional income and expenses recorded in the determination of Net
income and Earnings per share for the periods presented.
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