Harrah's Entertainment Reports Strong Third-Quarter Results; Acquisition and Same-Store Gains Lead to Record Revenue and EBITDA.LAS VEGAS Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. -- Hurricanes Hurt Earnings Per ShareHarrah's Entertainment Harrah's Entertainment, Inc. (NYSE: HET) is a gaming corporation that owns and operates casinos, hotels, and six golf courses under several brands. The company, based in Las Vegas, Nevada, is the largest gaming company in the world, with yearly revenues around $7.11 billion. , Inc. (NYSE NYSE See: New York Stock Exchange :HET) today reported record third-quarter revenues of $2.3 billion, up 78.2 percent from revenues of $1.3 billion in the 2004 third quarter. Property Earnings Before Interest, Taxes, Depreciation and Amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were $1.01 in the period compared to $1.02 in the same period last year. Results for this reporting period include a full third-quarter contribution from Caesars Entertainment Caesars Entertainment, Inc. is a Las Vegas, Nevada based business that was the largest owner, operator and developer of hotels and casinos throughout the world. Now a wholly owned subsidiary of Harrah's Entertainment it was part of the Hilton Hotels chain and was spun off from , Inc., acquired by Harrah's Entertainment on June June: see month. 13, 2005. Property EBITDA and Adjusted EPS are not Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See 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. Third-quarter income from operations rose 60.9 percent to a record $414.9 million from $257.8 million in the year-earlier quarter. Third-quarter net income was a record $169.0 million, up 42.3 percent from $118.8 million in the 2004 third quarter. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the 2005 third quarter was 91 cents, down 14.2 percent from the $1.06 achieved in the 2004 third quarter. In two important gauges of customer loyalty -- same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. growth and cross-market play -- Harrah's also posted gains. In the quarter, the company recorded 3.8 percent growth in same-store sales, and 13.5 percent growth in cross-market play on a year-over-year basis, including the hurricane-affected properties. Excluding the hurricane-affected properties, same-store sales growth was a robust 7.3 percent. In the third quarter, Harrah's experienced solid growth in year-over-year gaming revenue in nearly every operating market, and reached records in several markets. For the first nine months of 2005, revenues rose 50.6 percent to $5.1 billion from $3.4 billion in the year-ago period. Property EBITDA increased to $1.4 billion, up 52.7 percent from $928.1 million in the first nine months of 2004. Adjusted EPS was $2.99, 13.3 percent higher than the $2.64 achieved in the first nine months of 2004. Adjusted EPS from continuing operations was $2.85, 16.3 percent higher than the $2.45 achieved in the first nine months of 2004. Nine-month income from operations was $874.6 million, up 39.7 percent from $626.1 million in the first nine months of 2004. Net income rose 30.2 percent to $378.6 million from $290.8 million in the first nine months of 2004. Nine-month diluted earnings per share was $2.71, up 5.0 percent from $2.58 in the first nine months of 2004. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. performance includes results of the Caesars business since the acquisition date of June 13, 2005. Year-to-date 2004 includes results of the Horseshoe horseshoe, narrow plate, commonly of iron or steel, shaped to fit a horse's hoof and attached to the hoof by nailing it to the inner edge of the horny wall of the hoof. properties subsequent to their July July: see month. 1, 2004, acquisition. Third-quarter highlights for Harrah's Entertainment include: --Harrah's signed an agreement with Imperial Palace, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , to acquire the Imperial Palace Hotel & Casino casino or cassino (both: kəsē`nō). 1 Card game played with a full deck by two to four players. Its origins are obscure though it probably traces back to the Italian game of Scopa. in Las Vegas. The Imperial Palace occupies an 18.5-acre site on the Las Vegas Strip The Las Vegas Strip (also known as The Strip) is a 4 mi (6.7 km) section of Las Vegas Boulevard South, most of which has been designated an All-American Road. , situated between Harrah's Las Vegas Harrah's Las Vegas is a hotel and casino located on the famed Las Vegas Strip in Las Vegas, Nevada. The property is owned and operated by Harrah's Entertainment. The hotel offers 2,677 rooms with an attached casino providing 87,000 square feet (8,051 m²) of space. and the Flamingo flamingo, common name for a large pink or red wading bird, similar to the related heron, stork, and spoonbill but with a longer neck, webbed feet, and a unique down-bent bill. Flamingos are tropical birds, although large colonies have been observed high in the Andes. , across the Strip from Caesars Palace Caesars Palace is a luxury hotel and casino located on the Las Vegas Strip in Las Vegas, Nevada. Caesars Palace is owned and operated by Harrah's Entertainment. Caesars is located on the west side of the Strip, between the Bellagio and the Mirage. . This agreement only pertains to the Imperial Palace operations in Las Vegas. --Harrah's Entertainment launched the second season of its popular World Series of Poker The World Series of Poker is the largest set of poker tournaments in the world. It is held annually in Las Vegas, lasting just over a month. A bracelet is awarded to the winner of each of the fifty-plus events which include all the major varieties of poker. (R) Circuit with an expanded schedule that brings high-stakes poker poker, card game, believed to have originated in Asia and first played in the United States in the 19th cent. A traditional cutthroat gambling game at first, it is now also an internationally popular social pastime. action and excitement to players in Harrah's casinos A list of casinos. Antigua and Barbuda
A lake on the California-Nevada border west of Carson City, Nevada. It is a popular resort area. . --Harrah's Operating Company operating company A business that engages in transactions with outsiders. , Inc., a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Harrah's Entertainment, Inc., completed the private placement of $750 million of its 5.75% Senior Notes due 2017 and the private placement of $250 million of its 5.625% Senior Notes due 2015. --For the sixth consecutive year, Harrah's Entertainment led the gaming industry in Casino Player's Best of Gaming Awards, the magazine's annual poll of gaming customers from across the country. Harrah's properties received first-place awards in a record 375 categories, up 47 percent from last year's performance. The company's 869 total awards were a 45 percent improvement over last year; the previous record was 598, set by Harrah's in 2003. The company's performance was boosted by the addition of Caesars' casinos, which received a total of 141 awards, including 62 first-place finishes Noun 1. first-place finish - a finish in first place (as in a race) win - a victory (as in a race or other competition); "he was happy to get the win" . --For the fifth consecutive year, Harrah's Entertainment was named to the Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance Sustainability World Index, a listing of the world's leading socially responsible companies. Harrah's remains the only U.S. gaming or lodging Lodging or holiday accommodation is a type of accommodation. People who travel and stay away from home for more than a day need lodging mainly for sleeping. Other purposes are safety, shelter from cold and rain, having a place to store luggage and being able to take a company on the index, a distinction it has held since 2001. The index is a compilation Compiling a program. See compiler. of more than 300 companies from 24 countries, including 66 from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , selected for their economic, environmental and social performance. Just three U.S. companies -- Harrah's, McDonald's McDonald’s fast-food restaurant chain throughout the world; recognized by golden arches. [Am. Culture: Misc.] See : Ubiquity Corp. and Starbucks Corp. -- were included in the index's Travel & Leisure sector. --Harrah's continued marked progress toward full integration of the Caesars properties during this period. The rollout of Total Rewards and Harrah's revenue- and yield-management systems to all Caesars properties is slated to begin in the fourth quarter and run through April 2006. "In the third quarter of this year, Harrah's continued to make strong and solid progress toward our strategic goals," said Gary Loveman Gary Loveman is an American business executive and former academic. He is the current Chief Executive Officer of Harrah's Entertainment, Inc. and has held the position since 2003. , Harrah's chairman, chief executive officer and president. "Our same-store sales growth and cross-market play numbers clearly indicate our customer base is loyal, that our operations are resilient See resiliency. , and that we are realizing our planned acquisition synergies." "The value of our industry's most diversified diversified (di·verˑ·s property portfolio and the effectiveness of Harrah's Total Rewards loyalty program were never more in evidence than during the third quarter of 2005," Loveman said. "Customers continued visiting our casino properties nationwide throughout the quarter." In the following tables, Harrah's Entertainment, Inc. has retained its reporting format from previous periods while incorporating the Caesars properties as a separate line item in each region. Las Vegas / Northern Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). Set the Pace in West Region
West Results
(in millions)
2005 2004 Percent 2005 2004 Percent
First First
Third Third Increase Nine Nine Increase
Quarter Quarter (Decrease) Months Months (Decrease)
------- ------- ---------- --------- --------- ----------
Harrah's
Northern
Nevada
Total
revenues $145.0 $135.3 7.2% $ 349.8 $ 352.6 -0.8%
Income from
operations 41.5 33.0 25.8% 58.2 56.6 2.8%
Property
EBITDA 49.1 43.7 12.4% 86.6 87.9 -1.5%
Harrah's
Southern
Nevada
Total
revenues 276.6 265.8 4.1% 844.3 797.1 5.9%
Income from
operations 65.8 56.2 17.1% 219.8 187.6 17.2%
Property
EBITDA 84.8 75.6 12.2% 275.3 240.6 14.4%
Caesars West
Total
revenues 434.7 - N/A 512.5 - N/A
Income from
operations 89.4 - N/A 104.9 - N/A
Property
EBITDA 120.5 - N/A 142.3 - N/A
Total West
Region
Total
revenues 856.3 401.1 113.5% 1,706.6 1,149.7 48.4%
Income from
operations 196.7 89.2 120.5% 382.9 244.2 56.8%
Property
EBITDA 254.4 119.3 113.2% 504.2 328.5 53.5%
Harrah's West properties include: Harrah's Las Vegas, Rio,
Harrah's Laughlin, Harrah's Reno, Harrah's Lake Tahoe, Harveys Lake
Tahoe, Bill's Lake Tahoe
Caesars West properties include: Caesars Palace, Bally's/Paris,
Flamingo
Harrah's three properties in southern Nevada each reported record results. Same-store revenues were up 10.2 percent and same-store Property EBITDA was up 13.3 percent. Similar to previous quarters, strong cross-market visitation VISITATION. The act of examining into the affairs of a corporation. 2. The power of visitation is applicable only to ecclesiastical and eleemosynary corporations. 1 Bl. Com. 480; 2 Kid on Corp. 174. into the region drove significant gaming revenue. In addition, the World Series of Poker at the Rio See RapidIO and MP3. , which ran into July, contributed to the strong results. In Northern Nevada, revenues were up 7.2 percent and Property EBITDA was up 12.4 percent, with Harrah's Lake Tahoe Harrah's Lake Tahoe, is a resort casino in South Lake Tahoe at Stateline, Nevada. It is branded with the name of its former owner William Fisk Harrah and owned by Harrah's Entertainment. reporting record revenue and EBITDA. A celebrity golf tournament hosted by Harrah's Lake Tahoe, and the very effective summer concert series at the Lake Tahoe properties contributed to the strong results. West Region results were boosted by the addition of Caesars' four Nevada properties -- Caesars Palace, Bally's Las Vegas
Paris Las Vegas is a hotel and casino located on the famed Las Vegas Strip in Las Vegas, Nevada, USA , that is owned and operated by Harrah's Entertainment. , and the Flamingo Las Vegas The Flamingo Las Vegas is a hotel casino located on the famed Las Vegas Strip in Las Vegas, Nevada, and is owned and operated by Harrah's Entertainment. The property offers a 77,000 ft² (7,200 m²) casino along with 3,626 hotel rooms. . These properties combined posted a 8.1 percent improvement in total revenues and a 14.8 percent increase in EBITDA compared to what was reported in the third quarter of 2004 by Caesars as a separate company. East Region Continues Solid Performance
East Results
(in millions)
2005 2004 Percent 2005 2004 Percent
First First
Third Third Increase Nine Nine Increase
Quarter Quarter (Decrease) Months Months (Decrease)
-------- -------- ---------- --------- ------- ----------
Harrah's
Atlantic
City
Total
revenues $129.4 $122.4 5.7% $ 339.6 $327.3 3.8%
Income from
operations 40.8 37.2 9.7% 95.0 91.4 3.9%
Property
EBITDA 50.8 47.5 6.9% 125.9 119.9 5.0%
Showboat
Atlantic
City
Total
revenues 112.4 104.8 7.3% 290.8 275.6 5.5%
Income from
operations 31.0 32.3 -4.0% 72.9 74.9 -2.7%
Property
EBITDA 42.7 40.8 4.7% 107.9 99.4 8.6%
Caesars East
Total
revenues 320.3 - N/A 373.9 - N/A
Income from
operations 79.2 - N/A 90.1 - N/A
Property
EBITDA 106.2 - N/A 120.9 - N/A
Total East
Region
Total
revenues 562.1 227.2 147.4% 1,004.3 602.9 66.6%
Income from
operations 151.0 69.5 117.3% 258.0 166.3 55.1%
Property
EBITDA 199.7 88.3 126.2% 354.7 219.3 61.7%
Harrah's East Properties include: Harrah's Atlantic City and Showboat
Atlantic City
Caesars East properties include: Caesars Atlantic City, Bally's
Atlantic City
Revenues at the Harrah's and Showboat showboat. In the early 19th cent. entertainment was brought by boat to the pioneers that settled along the western rivers (especially the Mississippi and Ohio) of the United States. At first companies only traveled by boat, performing on land. properties in Atlantic City combined were up 6.4 percent from last year, and Property EBITDA was up 5.9 percent, as both properties posted strong year-over-year gains, exceeding the market growth rate and posting records for market revenue and EBITDA. "Aggressive and effective marketing programs, including solid execution at the property level and the recent House of Blues House of Blues (HOB) is a chain of music halls and restaurants founded in 1992 by Hard Rock Cafe founder Isaac Tigrett and his friend and investor Dan Aykroyd. It is a home for live music and southern-inspired cuisine, whose clubs celebrate African-American culture, specifically expansion at the Showboat, drove the strong results," said Tim Wilmott, Harrah's chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . Results in the East Region included contributions from Caesars Atlantic City Caesars Atlantic City is a hotel and casino, located in Atlantic City, New Jersey, USA. Like Caesars Palace in Las Vegas, it has an ancient Roman theme. Atlantic City's second casino, it opened in 1979 as the Caesars Boardwalk Regency Hotel Casino. The 124,720 sq. ft. and Bally's Atlantic City Bally's Atlantic City is a hotel and casino on the Boardwalk in Atlantic City, New Jersey that opened in 1979. History Bally's started life in 1976 when gambling became legalized in Atlantic City. , acquired on June 13, 2005. On a combined basis, the properties' revenues were flat and EBITDA was 2.5 percent lower than was reported by Caesars in the third quarter of 2004. Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. Tax Adjustment Impacts North Central Results
North Central Results
(in millions)
2005 2004 Percent 2005 2004 Percent
First First
Third Third Increase Nine Nine Increase
Quarter Quarter (Decrease) Months Months (Decrease)
-------- -------- ---------- --------- ------- ----------
Harrah's
Illinois/
Indiana
Total
revenues $211.6 $202.3 4.6% $ 628.0 $400.6 56.8%
Income from
operations 35.7 38.7 -7.8% 119.4 70.0 70.6%
Property
EBITDA 43.9 46.6 -5.8% 143.8 86.3 66.6%
Harrah's Iowa
Total
revenues 61.6 64.7 -4.8% 188.6 189.4 -0.4%
Income from
operations 10.9 13.3 -18.0% 35.6 54.3 -34.4%
Property
EBITDA 17.2 19.5 -11.8% 54.7 55.8 -2.0%
Harrah's
Missouri
Total
revenues 122.6 120.3 1.9% 360.2 338.3 6.5%
Income from
operations 19.3 20.9 -7.7% 57.0 57.5 -0.9%
Property
EBITDA 31.8 32.7 -2.8% 94.4 89.1 5.9%
Caesars North
Central
Total
revenues 81.2 - N/A 94.8 - N/A
Income from
operations 16.6 - N/A 18.9 - N/A
Property
EBITDA 21.5 - N/A 25.1 - N/A
Total North
Central
Total
revenues 477.0 387.3 23.2% 1,271.6 928.3 37.0%
Income from
operations 82.5 72.9 13.2% 230.9 181.8 27.0%
Property
EBITDA 114.4 98.8 15.8% 318.0 231.2 37.5%
Harrah's North Central properties include: Harrah's Joliet,
Horseshoe Hammond, Harrah's Metropolis, Harrah's Council Bluffs,
Bluffs Run Casino, Harrah's St. Louis, and Harrah's North Kansas City
Caesars North Central properties include: Caesars Indiana
Harrah's properties in Illinois, Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. and Iowa,
combined posted third-quarter revenue increases of 2.2 percent while
Property EBITDA was down 6.0 percent.
"The third-quarter decrease in Property EBITDA year-over-year was primarily related to the additional taxes we accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. as a result of the mid-year gaming tax legislation in Illinois," said Wilmott. The legislation requires a minimum tax be paid for the Illinois fiscal year ending June 30, 2006. The net impact of this accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. reduced the combined Property EBITDA at the Joliet Joliet (jō`lēĕt'), city (1990 pop. 76,836), seat of Will co., NE Ill., on the Des Plaines River; inc. 1857. It is a river port and an industrial shipping center, with limestone quarries and coal mines in the area, but riverboat casino and Metropolis properties by approximately $5 million in the quarter, including a year-to-date accrual adjustment. North Central Region results in the quarter included contributions from Caesars Indiana Caesars Indiana is a riverboat casino operated by Harrah's Entertainment[1]. Opened in 1999, it is located outside the community of Elizabeth, Indiana, across the Ohio River from Louisville, Kentucky. The complex is located at the Harrison County line. , where revenue and EBITDA were flat compared to the third quarter of 2004 when it was part of Caesars Entertainment. Work is substantially finished on Harrah's expansion project and new hotel tower in North Kansas City Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). . The centerpiece of that project, a 206-room hotel tower, opened in August along with the new food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. amenities that opened in late September September: see month. . This project is similar in nature to Harrah's recent expansion at St. Louis Louis, titular duke of Burgundy Louis, 1682–1712, titular duke of Burgundy; grandson of King Louis XIV of France. He became heir to the throne on the death (1711) of his father, Louis the Great Dauphin. . Work continues on schedule for the $85 million re-branding and expansion project at Bluffs Run. This includes the addition of table games, video poker Video poker is a casino game based on five-card draw poker. It is played on a computerized console which is a similar size to a slot machine. History Video poker first became commercially viable when it became economical to combine a television-like monitor with a , greater slot capacity, and the re-branding of the property to a Horseshoe theme. This project is scheduled to be completed at the end of the first quarter of 2006. Hurricanes Impact South Central Results
South Central Results
(in millions)
2005 2004 Percent 2005 2004 Percent
First First
Third Third Increase Nine Nine Increase
Quarter Quarter (Decrease) Months Months (Decrease)
-------- -------- ---------- ------- ------- ----------
Harrah's
Louisiana
Total
revenues $174.7 $215.8 -19.0% $609.5 $563.6 8.1%
Income from
operations (5.0) 28.8 -117.4% 53.3 76.0 -29.9%
Property
EBITDA 28.6 43.9 -34.9% 114.4 113.6 0.7%
Harrah's
Mississippi
Total
revenues 62.8 58.1 8.1% 181.2 58.1 N/M
Income from
operations 16.1 14.6 10.3% 44.2 14.6 N/M
Property
EBITDA 20.2 17.6 14.8% 56.8 17.7 N/M
Caesars South
Central
Total
revenues 150.3 - N/A 183.5 - N/A
Income from
operations 27.6 - N/A 32.4 - N/A
Property
EBITDA 36.2 - N/A 44.6 - N/A
Total South
Central
Total
revenues 387.8 273.9 41.6% 974.2 621.7 56.7%
Income from
operations 38.7 43.4 -10.8% 129.9 90.6 43.4%
Property
EBITDA 85.0 61.5 38.2% 215.8 131.3 64.4%
Harrah's South Central properties include: Horseshoe Tunica,
Harrah's New Orleans, Harrah's Lake Charles, Horseshoe Bossier City,
Harrah's Louisiana Downs
Caesars South Central properties include: Grand Casino Tunica,
Sheraton Tunica, Grand Casino Biloxi, Grand Casino Gulfport
Operations in the South Central region, which include the Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. and Mississippi Mississippi, state, United StatesMississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by properties, were severely affected by Hurricanes Katrina and Rita. Four company properties -- Grand Casino Biloxi Grand Biloxi Casino Hotel and Spa is the name of a gambling establishment in Biloxi, Mississippi. It was owned and operated by Harrah's Entertainment. This facility replaces the former Grand Casino Biloxi, which was destroyed by Hurricane Katrina. , Grand Casino Gulfport, Harrah's New Orleans Harrah's New Orleans is a casino located in New Orleans, Louisiana near the foot of Canal Street a block away from the Mississippi River. It is a 115,000 ft² casino with approximately 2,100 slot machines, over 90 table games and a poker room. , Harrah's Lake Charles Lake Charles, city (1990 pop. 70,580), seat of Calcasieu parish, SW La.; inc. 1867. It is located on Lake Charles at the mouth of the Calcasieu River in a rice, timber, oil, and natural gas region. -- in the region were closed for a portion of the reporting period. As a result, revenues for legacy Harrah's properties were down 13.3 percent over last year and Property EBITDA was down 20.7 percent. "The state of Mississippi's recent legislative decision to permit shore-side gaming clearly provides us with a powerful incentive to move forward as quickly as possible with plans to rebuild on the Gulf Coast. The advent of shore-side gaming will allow us to build superior facilities and ensure maximum safety and protection of patrons, employees and future jobs," said Wilmott. Managed Properties and Other Items Third-quarter gross management fees were up 16.0 percent as Harrah's benefited from expansions at two of the properties managed for Indian tribes INDIAN TRIBE. A separate and distinct community or body of the aboriginal Indian race of men found in the United States. 2. Such a tribe, situated within the boundaries of a state, and exercising the powers of government and, sovereignty, under the national . Project opening costs and other items for the third quarter of 2005 included a charge of $20.8 million related to Hurricanes Katrina and Rita, representing the current estimate of the excess of incurred losses and related costs, including deductibles, over expected insurance proceeds. The company does not yet have the necessary information to fully assess the impact of Hurricane Rita Hurricane Rita was the fourth-most intense Atlantic hurricane ever recorded and the most intense tropical cyclone ever observed in the Gulf of Mexico. Rita caused $11.3 billion in damage on the U.S. Gulf Coast in September 2005. on the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain assets, primarily goodwill, at its Lake Charles property. As of third-quarter end, the Lake Charles property reported $56 million in goodwill on its balance sheet. The company expects to receive the necessary information to complete the assessment of the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , if any, of these assets during the fourth quarter. Corporate expense increased 86.2 percent over the year-ago quarter due to the addition of Caesars' corporate expenses, as well as the cost of transforming Harrah's corporate centers to manage the combined company. Corporate expense for third quarter 2005 equaled 1.4 percent of revenues, compared to 1.3 percent in the prior year third quarter. Interest expense was 93.4 percent higher than in the 2004 third quarter due to additional debt related to the Caesars acquisitions. The company recorded $15.2 million in costs during the quarter related to the integration of the Caesars. The effective income tax rate after minority interest for the 2005 third quarter was 38.0 percent, the same as in the prior year. The effective tax rate for the first nine months of 2005 was 38.0 percent, up from 37.25 percent in the year-ago period. Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for third quarter 2005 includes the operating results of three properties Harrah's acquired in the Caesars transaction -- the Reno Hilton, Flamingo Laughlin and a hotel in Halifax, Nova Scotia For other uses, see Halifax. Halifax, Nova Scotia may refer to any of the following:
hotel have been classified as assets held for sale. Harrah's expects to close on the sale of the Nova Scotia hotel in the fourth quarter of 2005. Discontinued operations for third quarter 2004 also included the operating results of Harrah's East Chicago East Chicago, city (1990 pop. 33,892), Lake co., extreme NW Ind., on Lake Michigan, in the industrialized Calumet region, adjoining Gary, Hammond, and Whiting; inc. 1889. and Harrah's Tunica tunica /tu·ni·ca/ (too´ni-kah) pl. tu´nicae [L.] a tunic; in anatomy, a general term for a membrane or other structure covering or lining a body part or organ. , which were sold in April 2005. Weighted average shares outstanding for third quarter 2005 were 185.1 million shares, as compared to 112.5 million in the prior year third quarter. The increase is primarily due to the 67 million shares issued in June 2005 in connection with the Caesars acquisition. Conference Call Details Harrah's Entertainment will host a conference call Thursday, November 3, 2005, at 9:00 a.m. Eastern Standard Time to review its 2005 third-quarter results. Those interested in participating in the call should dial 888-399-2695, or 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 800-642-1687, or 706-645-9291 for international callers, beginning at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy Thursday, November 3. The replay will be available through 11:59 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on Thursday, November 10. The passcode number for the replay is 1485028. Interested parties wanting to listen to the live conference call on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the may do so on the company's web site -- www.harrahs.com -- in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section under the Investor News tab. Harrah's Entertainment, Inc. is the world's largest provider of branded casino entertainment. Since its beginning in Reno, Nevada 68 years ago, Harrah's has grown through development of new properties, expansions and acquisitions. Harrah's Entertainment is focused on building loyalty and value with its 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 its Web site -- www.harrahs.com. This release includes "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " intended to qualify for the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. from liability established by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc , among other things, future actions, strategies, future performance and future financial results of Harrah's. These forward-looking statements are based on current expectations and projections about future events. Investors 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 of Harrah's 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 (including the sections entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Risk Factors" and "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" contained therein); financial community and rating agency perceptions of Harrah's; 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 the companies that it acquires, including with respect to its acquisition of Caesars; access to available and feasible financing 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 An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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 same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of ; our ability to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. costs of capital investments through higher revenues; acts of war Tom Clancy's Op-Center: Acts of War is a technothriller by Jeff Rovin Plot introduction The mobile Regional Operations Center (ROC) in Turkey investigates a dam blown up by Kurdish terrorists. or terrorist incidents The following is a timeline of acts and failed attempts that can be considered non-state terrorism. Massacres more generally are listed chronologically at List of massacres; assassinations are listed by location at List of assassinated people. ; 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. Harrah's 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.
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED SUMMARY OF OPERATIONS
(UNAUDITED)
Third Quarter Ended Nine Months Ended
---------------------------------------
(In millions, except per Sept. 30, Sept. 30, Sept. 30, Sept. 30,
share amounts) 2005 2004 2005 2004
---------------------------------------
Revenues $ 2,333.6 $1,309.7 $ 5,058.2 $ 3,359.3
Property operating expenses (1,670.8) (935.5) (3,640.8) (2,431.2)
Depreciation and amortization (141.6) (89.3) (339.7) (238.1)
--------- -------- --------- ---------
Operating profit 521.2 284.9 1,077.7 690.0
Corporate expense (32.4) (17.4) (70.6) (48.0)
Caesars acquisition costs (15.2) - (35.9) -
Income/(losses) on interests in
nonconsolidated affiliates 0.8 (0.7) 0.6 (0.3)
Amortization of intangible
assets (33.4) (3.2) (40.4) (5.7)
Project opening costs and other
items (26.1) (5.8) (56.8) (9.9)
--------- -------- --------- ---------
Income from operations 414.9 257.8 874.6 626.1
Interest expense, net of
interest capitalized (151.6) (78.4) (320.3) (195.5)
Loss on early extinguishment of
debt - - (2.2) -
Other income, including
interest income 0.9 1.3 4.0 5.4
--------- -------- --------- ---------
Income before income taxes and
minority interests 264.2 180.7 556.1 436.0
Provision for income taxes (99.1) (67.7) (207.9) (160.0)
Minority interests (3.4) (2.3) (8.9) (6.3)
--------- -------- --------- ---------
Income from continuing
operations 161.7 110.7 339.3 269.7
Discontinued operations, net of
tax 7.3 8.1 39.3 21.1
--------- -------- --------- ---------
Net income $ 169.0 $ 118.8 $ 378.6 $ 290.8
========= ======== ========= =========
Earnings per share - basic
Income from continuing
operations $ 0.89 $ 1.00 $ 2.47 $ 2.43
Discontinued operations, net
of tax 0.04 0.07 0.28 0.19
--------- -------- --------- ---------
Net income $ 0.93 $ 1.07 $ 2.75 $ 2.62
========= ======== ========= =========
Earnings per share - diluted
Income from continuing
operations $ 0.87 $ 0.99 $ 2.43 $ 2.39
Discontinued operations, net
of tax 0.04 0.07 0.28 0.19
--------- -------- --------- ---------
Net income $ 0.91 $ 1.06 $ 2.71 $ 2.58
========= ======== ========= =========
Weighted average common shares
outstanding 182.6 111.0 137.6 111.1
========= ======== ========= =========
Weighted average common and
common equivalent shares
outstanding 185.1 112.5 139.9 112.8
========= ======== ========= =========
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL OPERATING INFORMATION
(UNAUDITED)
Third Quarter Nine Months Ended
Ended
------------------------------------
(In millions) Sept. Sept. Sept. Sept.
30, 30, 30, 30,
2005 2004 2005 2004
-----------------------------------------
Revenues
West Region $ 856.3 $ 401.1 $1,706.6 $1,149.7
East Region 562.1 227.2 1,004.3 602.9
North Central Region 477.0 387.3 1,271.6 928.3
South Central Region 387.8 273.9 974.2 621.7
Managed 22.5 15.9 55.4 45.5
Other 27.9 4.3 46.1 11.2
-------- -------- -------- --------
Total revenues $2,333.6 $1,309.7 $5,058.2 $3,359.3
======== ======== ======== ========
Income from operations
West Region $ 196.7 $ 89.2 $ 382.9 $ 244.2
East Region 151.0 69.5 258.0 166.3
North Central Region 82.5 72.9 230.9 181.8
South Central Region 38.7 43.4 129.9 90.6
Managed 17.3 14.1 45.1 39.1
Other (23.8) (13.9) (65.7) (47.9)
Corporate expense (32.4) (17.4) (70.6) (48.0)
Caesars acquisition costs (15.1) - (35.9) -
-------- -------- -------- --------
Total income from operations $ 414.9 $ 257.8 $ 874.6 $ 626.1
======== ======== ======== ========
Property EBITDA(a)
West Region $ 254.4 $ 119.3 $ 504.2 $ 328.5
East Region 199.7 88.3 354.7 219.3
North Central Region 114.4 98.8 318.0 231.2
South Central Region 85.0 61.5 215.8 131.3
Managed 20.4 14.1 48.4 39.3
Other (11.1) (7.8) (23.7) (21.5)
-------- -------- -------- --------
Total Property EBITDA $ 662.8 $ 374.2 $1,417.4 $ 928.1
======== ======== ======== ========
Project opening costs and other
items
Project opening costs $ 6.8 $ 2.0 $ 12.3 $ 7.8
Hurricane expense, including
insurance deductibles 20.8 - 20.8 -
Other writedowns, reserves and
recoveries (1.5) 3.8 13.7 8.7
Contribution to The Harrah's
Foundation - - 10.0 10.0
True-up of Bluffs Run prior
period's gaming tax accrual - - - (16.6)
-------- -------- -------- --------
Total project opening
costs and other items $ 26.1 $ 5.8 $ 56.8 $ 9.9
======== ======== ======== ========
(a) 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, Caesars
acquisition costs, income/(losses) on interests in nonconsolidated
affiliates 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
CALCULATION OF ADJUSTED EARNINGS PER SHARE
(UNAUDITED)
Third Quarter Nine Months
Ended Ended
-------------------------------
(In millions, except per share amounts) Sept. Sept. Sept. Sept.
30, 30, 30, 30,
2005 2004 2005 2004
-------------------------------
Income before income taxes and minority
interests $ 264.2 $180.7 $ 556.1 $ 436.0
Add/(deduct):
Project opening costs and other items 26.1 5.8 56.8 9.9
Caesars acquisition costs 15.2 - 35.9 -
Loss on early extinguishment of debt - - 2.2 -
------- ------ ------- -------
Adjusted income before income taxes and
minority interests 305.5 186.5 651.0 445.9
Provision for income taxes (114.8) (69.9) (244.0) (163.7)
Minority interests (3.4) (2.3) (8.9) (6.3)
------- ------ ------- -------
Adjusted income from continuing
operations 187.3 114.3 398.1 275.9
Discontinued operations, net of tax 7.3 8.1 39.3 21.1
Add/(deduct):
Gain on sale of discontinued
operations, net of tax (0.3) - (19.8) -
Valuation allowance provided for
unrealizable net operating loss
carry-forwards related to Harrah's
Tunica - - 0.8 -
Project opening costs and other items
at Harrah's Tunica and East Chicago - 0.4 0.1 1.1
------- ------ ------- -------
Adjusted net income $ 194.3 $122.8 $ 418.5 $ 298.1
======= ====== ======= =======
Diluted adjusted earnings per share
From continuing operations $ 1.01 $ 1.02 $ 2.85 $ 2.45
======= ====== ======= =======
Net income $ 1.05 $ 1.09 $ 2.99 $ 2.64
======= ====== ======= =======
Weighted average common and common
equivalent shares outstanding 185.1 112.5 139.9 112.8
======= ====== ======= =======
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS
(UNAUDITED)
(In millions)
Third Quarter Ended Sept. 30, 2005
North South Managed
West East Central Central and
Region Region Region Region Other Total
Revenues(b) $ 856.3 $ 562.1 $ 477.0 $ 387.8 $ 50.4 $ 2,333.6
Property operating
expenses (601.9) (362.4) (362.6) (302.8) (41.1) (1,670.8)
------- ------- ------- ------- ------ ---------
Property EBITDA 254.4 199.7 114.4 85.0 9.3 662.8
Depreciation and
amortization (51.7) (33.3) (26.8) (19.9) (9.9) (141.6)
------- ------- ------- ------- ------ ---------
Operating profit 202.7 166.4 87.6 65.1 (0.6) 521.2
Amortization of
intangible assets (7.1) (11.6) (3.8) (5.3) (5.6) (33.4)
Income on interests
in nonconsolidated
affiliates - - - - 0.8 0.8
Project opening
costs and
other items 1.1 (3.8) (1.3) (21.1) (1.0) (26.1)
Corporate expense - - - - (32.4) (32.4)
Caesars acquisition
costs (15.2) (15.2)
-------------------------------- ------ ---------
Income from
operations $ 196.7 $ 151.0 $ 82.5 $ 38.7 $(54.0)$ 414.9
======= ======= ======= ======= ====== =========
Third Quarter Ended Sept. 30, 2004
North South Managed
West East Central Central and
Region Region Region Region Other Total
Revenues $ 401.1 $ 227.2 $ 387.3 $ 273.9 $ 20.2 $1,309.7
Property operating
expenses (281.8) (138.9) (288.5) (212.4) (13.9) (935.5)
------- ------- ------- ------- ------ --------
Property EBITDA 119.3 88.3 98.8 61.5 6.3 374.2
Depreciation and
amortization (27.1) (17.9) (23.2) (16.3) (4.8) (89.3)
------- ------- ------- ------- ------ --------
Operating profit 92.2 70.4 75.6 45.2 1.5 284.9
Amortization of
intangible assets (0.2) - (1.5) (1.0) (0.5) (3.2)
Losses on interests
in nonconsolidated
affiliates - - - - (0.7) (0.7)
Project opening costs
and other items (2.8) (0.9) (1.2) (0.8) (0.1) (5.8)
Corporate expense - - - - (17.4) (17.4)
------- ------- ------- ------- ------ --------
Income from
operations $ 89.2 $ 69.5 $ 72.9 $ 43.4 $(17.2)$ 257.8
======= ======= ======= ======= ====== ========
(b) 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
RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS
(UNAUDITED)
(In millions)
Nine Months Ended Sept. 30, 2005
North South Managed
West East Central Central and
Region Region Region Region Other Total
Revenues(c) $ 1,706.6 $1,004.3 $1,271.6 $ 974.2 $ 101.5 $ 5,058.2
Property
operating
expenses (1,202.4) (649.6) (953.6) (758.4) (76.8) (3,640.8)
--------- -------- -------- ------- ------- ---------
Property EBITDA 504.2 354.7 318.0 215.8 24.7 1,417.4
Depreciation and
amortization (113.8) (74.0) (75.3) (54.6) (22.0) (339.7)
--------- -------- -------- ------- ------- ---------
Operating profit 390.4 280.7 242.7 161.2 2.7 1,077.7
Amortization of
intangible
assets (7.5) (11.6) (6.5) (8.0) (6.8) (40.4)
Income on
interests in
nonconsolidated
affiliates - - - - 0.6 0.6
Project opening
costs and
other items - (11.1) (5.3) (23.3) (17.1) (56.8)
Corporate expense - - - - (70.6) (70.6)
Caesars
acquisition
costs - - - - (35.9) (35.9)
--------- -------- -------- ------- ------- ---------
Income from
operations $ 382.9 $ 258.0 $ 230.9 $ 129.9 $(127.1)$ 874.6
========= ======== ======== ======= ======= =========
Nine Months Ended Sept. 30, 2004
North South Managed
West East Central Central and
Region Region Region Region Other Total
Revenues $1,149.7 $ 602.9 $ 928.3 $ 621.7 $ 56.7 $ 3,359.3
Property operating
expenses (821.2) (383.6) (697.1) (490.4) (38.9) (2,431.2)
-------- ------- ------- ------- ------ ---------
Property EBITDA 328.5 219.3 231.2 131.3 17.8 928.1
Depreciation and
amortization (78.9) (51.9) (59.7) (35.0) (12.6) (238.1)
-------- ------- ------- ------- ------ ---------
Operating profit 249.6 167.4 171.5 96.3 5.2 690.0
Amortization of
intangible
assets (0.6) - (3.5) (1.0) (0.6) (5.7)
Losses on interests
in nonconsolidated
affiliates - - - - (0.3) (0.3)
Project opening
costs and
other items (4.8) (1.1) 13.8 (4.7) (13.1) (9.9)
Corporate expense - - - - (48.0) (48.0)
-------- ------- ------- ------- ------ ---------
Income from
operations $ 244.2 $ 166.3 $ 181.8 $ 90.6 $(56.8)$ 626.1
======== ======= ======= ======= ====== =========
(c) 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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