Filed by Caesars Entertainment, Inc. pursuant to Rule 425
under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Caesars Entertainment, Inc.
Commission File No.: 001-14573
This filing relates to a proposed acquisition (the "Acquisition") by Harrah's
Entertainment, Inc. ("Harrah's") of Caesars Entertainment, Inc. ("Caesars")
pursuant to the terms of an Agreement and Plan of Merger, dated as of July 14,
2004 (the "Merger Agreement"), by and among Harrah's, Harrah's Operating
Company, Inc. and Caesars. The Merger Agreement is on file with the Securities
and Exchange Commission as an exhibit to the Current Report on Form 8-K filed
by Caesars on July 16, 2004, and is incorporated by reference into this filing.
On July 22, 2004, Caesars issued a press release reporting its financial
results for the period ending June 30, 2004. The press release was filed by
Caesars on Form 8-K today, July 22, 2004. The text of the press release is as
follows:
CONTACTS: FOR IMMEDIATE RELEASE
INVESTORS MEDIA
Josh Hirsberg Robert W. Stewart
702.699.5269 702.699.5043
hirsbergj@caesars.com stewartr@caesars.com
CAESARS ENTERTAINMENT REPORTS FINANCIAL RESULTS FOR SECOND QUARTER OF 2004
LAS VEGAS, July 22, 2004 - Caesars Entertainment, Inc. (NYSE: CZR) today
reported financial results for the quarter and half-year ended June 30, 2004.
SECOND QUARTER 2004 RESULTS
For the second quarter of 2004, Caesars Entertainment reported net income of
$148 million, or $0.47 per fully diluted share. That compares to net income of
$41 million, or $0.14 per fully diluted share, for the second quarter of 2003.
Net income for the second quarter of 2004 included a one-time gain of $87
million, net of taxes, associated with the sale of the Las Vegas Hilton
(subject to adjustment for changes to working capital).
Adjusted net income for the second quarter of 2004 was $60 million, or $0.19
per diluted share. That compares to adjusted net income of $43 million, or
$0.14 per diluted share, in the second quarter of 2003.
Adjusted net income for the second quarter of 2004 excludes the $87 million
gain from the sale of the Las Vegas Hilton and $3 million of the hotel's
operating results (both included in discontinued operations); a $3 million
investment gain associated with the sale of the company's interest in an office
building in Las Vegas; $3 million in pre-opening expense for the "We Will Rock
You" musical at Paris Las Vegas and the Roman Plaza at Caesars Palace; and $2
million related to executive contract terminations. Adjusted net income for the
second quarter of 2003 excludes $2 million of discontinued operations related
to operating results for the Las Vegas Hilton.
Net revenue for the second quarter of 2004 was $1.161 billion, compared to
$1.136 billion for the second quarter of 2003. Second quarter EBITDA - earnings
before interest, taxes, depreciation and amortization and non-recurring gains
and charges - was $292 million, compared to $275 million in EBITDA in the
second quarter of 2003.
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CAESARS SECOND QUARTER EARNINGS -TWO-TWO-TWO-
(Throughout this press release, results from the Las Vegas Hilton are treated
as "discontinued operations" for the current and comparative year-ago periods.
That means Las Vegas Hilton results are excluded from such financial measures
as net revenue, EBITDA, operating income, interest expense and other items.)
FIRST HALF 2004 RESULTS
For the first half of 2004, Caesars Entertainment reported net income of $219
million - or $0.70 per diluted share. That compares to net income of $82
million - or $0.27 per diluted share - for the six month period that ended on
June 30, 2003.
Adjusted net income for the first half of 2004 was $130 million, or $0.42 per
diluted share, compared to adjusted net income of $84 million, or $0.28 per
diluted share, for the first half of 2003.
Adjusted net income for the first half of 2004 excludes the $87 million gain
from the sale of the Las Vegas Hilton and $11 million of the hotel's operating
results; the $3 million investment gain associated with the sale of the
company's interest in the Las Vegas office building; the $3 million in
pre-opening expense; the $2 million related to contract terminations; and $7
million related to prior-year corporate income tax expense in Indiana. Adjusted
net income for the first half of 2003 excludes $1 million in operating results
from the Las Vegas Hilton and $1 million in pre-opening expense associated with
the premier of "A New Day...." starring Celine Dion at Caesars Palace.
Net revenue for the first half of 2004 was $2.357 billion, up from $2.222
billion for the first half of 2003. EBITDA for the first half of 2004 was $604
million, up from $542 million for the first half of 2003.
STRONG EBITDA GROWTH, SIGNIFICANT MARGIN IMPROVEMENT
"We had a strong second quarter, reporting record net income before gains, six
percent growth in EBITDA and significant margin improvement," said Caesars
President and Chief Executive Officer Wallace R. Barr. "Continuing strength in
the Las Vegas market drove an overall increase of 35 percent in our income from
continuing operations."
SECOND QUARTER FINANCIAL HIGHLIGHTS
o The Western Region reported EBITDA of $124 million, an increase of 39
percent from $89 million in EBITDA in the second quarter of 2003. The
company's four Las Vegas Strip resorts reported a 39 percent increase
in EBITDA, driven by strong room rates, higher occupancy and increased
slot win.
o In the Eastern Region, EBITDA was $102 million, down 16 percent from
the $122 million reported for the second quarter of 2003. Despite a
strong April, the market experienced weakness in May and June.
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CAESARS SECOND QUARTER EARNINGS -THREE-THREE-THREE-
o The Mid-South Region recorded EBITDA of $63 million, even with the
results for the second quarter of 2003.
o The company completed the sale of the Las Vegas Hilton for $286
million to an affiliate of Colony Capital, LLC of Los Angeles. The
sale resulted in an after-tax gain of $87 million, which is included
in discontinued operations. Last week, the company used the $267
million in net proceeds from the sale to pay down additional debt,
bringing pro forma total debt reduction since the beginning of 2002 to
more than $1 billion.
o The company closed a new $2-billion, five-year, senior credit
facility. The proceeds from the facility were used to replace
commitments under the company's existing credit facilities and
refinance borrowings outstanding under those credit facilities.
o The company sold $375 million in Floating Rate Contingent Convertible
Senior Notes due 2024 and used the proceeds to repay a portion of the
amounts outstanding under its existing credit facilities. The
convertible notes bear interest at a per annum rate of three-month
LIBOR, adjusted quarterly.
o The Roman Plaza, the new gateway to Caesars Palace, opened in early
July at the corner of Las Vegas Boulevard and Flamingo Road. The
elegant piazza features a new restaurant, retail space and an
amphitheater for concerts and sporting events.
o Construction proceeded on schedule and on budget for the new 949-room
hotel tower at Caesars Palace, scheduled for completion in the summer
of 2005. The project, which will bring total room capacity to nearly
3,400, is the final component of the master plan to renovate Caesars
Palace.
o Construction began on The Pier at Caesars, a $145 million luxury
retail, dining and entertainment complex, that is scheduled to open on
the Atlantic City Boardwalk in the summer of 2005. Developed and
financed by an affiliate of The Gordon Group, The Pier at Caesars will
feature Gucci, Hugo Boss, Louis Vuitton, Armani A/X, Bebe, Burberry
and other elite retailers and restaurants and will be connected
directly to Caesars Atlantic City by a sky bridge.
o Bradley Ogden, the new restaurant opened last year at Caesars Palace
by the famed Bay Area celebrity chef, was named Best New Restaurant in
the nation by the James Beard Foundation in New York. It is the first
restaurant in Las Vegas to ever win this award and in 2003 the only
restaurant outside of New York to be nominated.
o The Simon Group announced a late October opening for the
175,000-square-foot expansion of The Forum Shops at Caesars Palace,
one of the highest-yielding shopping venues in North America.
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CAESARS SECOND QUARTER EARNINGS -FOUR-FOUR-FOUR-
o In an effort to increase the participation of minority and women-owned
vendors, the company launched www.caesarsdiversity.com, a new web site
intended to make it easier for minority and women-owned firms to do
business with one of the world's leading gaming companies.
o The company opened the Caesars Entertainment LifeStrides Pharmacy
Center, the company's first on-site pharmacy, at Bally's Las Vegas.
The pharmacy offers more than 250 covered generic drugs to the
company's 15,000 Las Vegas health plan participants at no
out-of-pocket cost.
o The New Jersey Casino Control Commission, acting on the recommendation
of the state Division of Gaming Enforcement, unanimously renewed the
casino licenses for Caesars Entertainment's three Atlantic City
resorts - the Atlantic City Hilton, Bally's Atlantic City and Caesars
Atlantic City.
WESTERN REGION
EBITDA for the Western Region's seven casino resorts was $124 million in the
second quarter of 2004, up 39 percent from $89 million in the year-ago quarter.
The increase was driven by strong room rates, higher occupancy and increased
slot win on the Las Vegas Strip. Revenue Per Available Room (RevPAR) for Strip
resorts rose 12 percent and slot win on the Strip increased 22 percent in the
quarter.
At Caesars Palace, net revenue in the quarter rose to $139 million from $132
million in the second quarter of 2003. EBITDA was $30 million, even with
results for the second quarter of 2003. Overall gaming volumes at Caesars
Palace rose eight percent, while gaming win declined six percent because of
lower baccarat volume and hold. RevPAR rose six percent, due to improved
occupancy and a four percent increase in the average cash room rate.
In early July, Caesars Palace opened its new Roman Plaza, which provides a
direct entrance to the property from the pedestrian bridges that span Flamingo
Road and Las Vegas Boulevard. The 175,000 square-foot expansion of The Forum
Shops at Caesars is scheduled to open in late October, and the resort's new
949-room, luxury hotel tower is on schedule for completion in the summer of
2005.
At Paris Las Vegas, second quarter net revenue rose 15 percent, to $105
million, from the year-ago quarter. Second quarter EBITDA was $35 million, up
75 percent from $20 million reported in the second quarter of 2003. The
increase was due largely to higher gaming win and room revenues. RevPAR
increased 12 percent, driven by higher cash room rates.
At Bally's, net revenue in the second quarter rose 12 percent, to $74 million,
from the second quarter of 2003. EBITDA was $19 million, up 73 percent from the
second quarter of 2003. Gaming win rose 10 percent due to higher slot win.
RevPAR rose 13 percent, driven by higher occupancy and room rates.
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CAESARS SECOND QUARTER EARNINGS -FIVE-FIVE-FIVE-
At the Flamingo Las Vegas, net revenue for the second quarter was $97 million,
up 26 percent from the year-ago quarter. EBITDA rose 43 percent, to $33
million, from the second quarter of 2003. The results were driven by a 23
percent increase in slot win, a 17 percent increase in RevPAR and the inclusion
of results from the new Margaritaville cafe, which held its grand opening in
January of this year.
Other Nevada properties - the Reno Hilton, Caesars Tahoe and Flamingo Laughlin
- recorded combined EBITDA of $7 million in the second quarter, up from $5
million in the second quarter of 2003. (Because financial results of the Las
Vegas Hilton are classified as "discontinued operations," they are not included
in either year's figures.)
EASTERN REGION
Second quarter EBITDA from Caesars' three Atlantic City casino resorts and
management fees from its Dover Downs slot operation was $102 million, down 16
percent from the $122 million reported for the second quarter of 2003,
reflecting competition from The Borgata Hotel Casino and Spa.
At Caesars Atlantic City, second quarter net revenue declined nine percent, to
$122 million. EBITDA was $38 million, compared to $48 million in the second
quarter of 2003. The decline was due largely to a 25 percent reduction in table
win, attributable to decreases in volume and hold.
At Bally's Atlantic City, net revenue was $163 million, compared to $177
million for the second quarter of 2003. EBITDA for the second quarter was $47
million, down from $54 million in the year-ago quarter. The declines were due
to lower gaming volumes. Table game win declined 15 percent, primarily as a
result of an 11 percent drop in volume. Slot win declined five percent because
of a six percent drop in volume. RevPAR rose six percent, due to an 18 percent
increase in the average cash room rate.
At the Atlantic City Hilton, second quarter net revenue was $71 million, down
from $79 million in the second quarter of 2003. Second quarter EBITDA was $15
million, down from $19 million in the second quarter of 2003. Table and slot
win declined 10 percent and eight percent, respectively, primarily because of
lower gaming volumes.
MID-SOUTH REGION
Caesars Entertainment's seven casino resorts in Indiana, Mississippi and
Louisiana reported second quarter EBITDA of $63 million, even with results for
the second quarter of 2003.
Caesars Indiana reported second quarter net revenue of $78 million, up from $75
million in the second quarter of 2003. EBITDA was $19 million, even with
results for the second quarter of 2003. The property reported a four percent
increase in gaming win and a 29 percent rise in RevPAR, driven by higher
occupancy.
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CAESARS SECOND QUARTER EARNINGS -SIX-SIX-SIX-
On the Gulf Coast, net revenue at Grand Casino Biloxi was $60 million, up from
$55 million in the year-ago quarter. EBITDA was $16 million, up 45 percent from
the $11 million recorded in the second quarter of 2003. Gaming win rose eight
percent, resulting from increases in both table and slot win.
Second quarter net revenue at Grand Casino Gulfport was $49 million, up from
$47 million in the second quarter of 2003. EBITDA was $12 million, even with
the prior year's second quarter. Gaming win rose three percent, while higher
room rates and improved occupancy drove a 17 percent increase in RevPAR.
In Northern Mississippi, Grand Casino Tunica reported net revenue of $48
million, compared to $54 million in the second quarter of last year. EBITDA was
$6 million, down 50 percent from $12 million in the second quarter of 2003.
Gaming win declined 15 percent as a result of lower table game hold and lower
slot volume.
Net revenue at the company's other two Tunica properties totaled $35 million,
up from $33 million in the second quarter of last year. EBITDA was $10 million,
even with the year-ago quarter.
INTERNATIONAL
The company's nine international properties reported combined net revenue of
$25 million, up from $23 million in the second quarter of 2003. EBITDA was $14
million, up 40 percent from the $10 million recorded in the second quarter of
last year. The results reflected improved performance at Nova Scotia, South
Africa and Australia.
CAPITAL EXPENDITURES
The company invested $141 million of capital during the second quarter of 2004.
Maintenance capital expenditures were $56 million and investments in growth
projects were $85 million. In the first half of 2004, the company has invested
$219 million of capital - $100 million for maintenance and $119 million for
growth projects. The company currently expects to spend $671 million on capital
investments in 2004. This includes maintenance capital investments of $276
million and growth capital of $395 million.
The 2004 budget for growth capital includes $197 million for the luxury room
tower and meeting space addition at Caesars Palace; $41 million for the garage
at Caesars Atlantic City, $22 million for the Roman Plaza project at Caesars
Palace; and $59 million related to development of the Mohawk Mountain Casino
Resort in New York State.
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CAESARS SECOND QUARTER EARNINGS -SEVEN-SEVEN-SEVEN-
The remaining budget for growth projects includes $18 million for selected
projects at Caesars Palace; $9 million related to "We Will Rock You" at Paris
Las Vegas; $12 million at Caesars Atlantic City, principally for a facade
renovation and construction of the bridge connecting the second floor of the
casino to the Pier at Caesars; and $10 million related to the development of a
Caesars-branded casino with the Pauma-Yuima Band of Luiseno Mission Indians in
northern San Diego County, California.
OTHER ITEMS
Depreciation and amortization in the second quarter was $112 million, compared
to $114 million in the second quarter of 2003.
Pre-opening expense in the quarter was $3 million, related to the scheduled
premiere of "We Will Rock You" at Paris Las Vegas and the opening of the Roman
Plaza at Caesars Palace.
In the quarter, the company paid $2 million related to executive contract
terminations.
Corporate expense in the second quarter was $11 million, compared to $9 million
in the second quarter of 2003. The increase is primarily related to development
activity.
Equity in earnings of unconsolidated affiliates primarily consists of earnings
from the company's ownership interests in Conrad Punta del Este in Uruguay,
Caesars Gauteng near Johannesburg, South Africa and Casino Windsor in Windsor,
Canada. For the second quarter, this item was $3 million, up from $2 million in
the second quarter of 2003.
Net interest expense in the quarter was $75 million, compared to $86 million in
the second quarter of 2003. Capitalized interest was $2 million in the second
quarter, compared to $1 million in the year-ago quarter.
The investment gain recorded in the quarter of $3 million was related to the
disposition of the company's interest in a Las Vegas office building.
The effective tax rate in the second quarter was 41.2 percent, compared to 41.9
percent in the second quarter of 2003.
BALANCE SHEET
As of June 30, 2004, the company had a cash balance of $663 million and a debt
balance of $4.5 billion.
The company had $1.3 billion available on its credit facility, subject to
covenant restrictions. Its leverage ratio, as defined by its credit facility
was 4.1 times EBITDA.
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CAESARS SECOND QUARTER EARNINGS -EIGHT-EIGHT-EIGHT-
The number of diluted shares outstanding was 313 million at the end of the
second quarter.
OTHER EVENTS
Subsequent to quarter end, the company utilized a portion of its cash on hand
to retire a $325 million, seven percent senior note issue due July 15. As a
result of this action, the company's debt balance on July 15 was $4.2 billion
and its debt leverage ratio was 3.8 times EBITDA.
On July 14, 2004, the company, Harrah's Entertainment, Inc. and Harrah's
Operating Company, Inc., a wholly-owned subsidiary of Harrah's, entered into an
Agreement and Plan of Merger, providing for the merger of Caesars with and into
Harrah's Operating Company, Inc., which would be the surviving corporation.
Following the approval and adoption of the Agreement and Plan of Merger by the
stockholders of Caesars and Harrah's and upon the receipt of all necessary
gaming and other approvals, and the satisfaction or waiver of all other
conditions precedent, each outstanding share of common stock of Caesars will be
exchanged for either $17.75 in cash or 0.3247 shares of Harrah's common stock,
at the election of each Caesars stockholder, subject to pro-ration as provided
for in the Agreement and Plan of Merger.
GUIDANCE
The company is providing the following guidance based on the current
competitive, economic, regulatory, tax and political environment and current
expectations for Caesars Entertainment property performance. Changes in any of
these factors as well as other factors that may or may not be currently known
to management will affect this guidance.
Guidance will be revised when management becomes aware that financial results
have been affected and reasonably believes that the company will no longer
achieve the guidance range outlined below.
The guidance for adjusted earnings per share is a non-GAAP financial measure.
This measure excludes items considered non-recurring from an operating
perspective.
In the past, examples of non-recurring items that have not been included in
adjusted earnings per share are pre-opening expenses, asset impairments and
write-downs, investment gains and losses, discontinued operations, contract and
litigation settlements and other non-recurring items.
ADJUSTED DILUTED EARNINGS PER SHARE
THIRD QUARTER 2004 FULL YEAR 2004
$0.19 - $0.21 $0.69- $0.71
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CAESARS SECOND QUARTER EARNINGS -NINE-NINE-NINE
NON-GAAP FINANCIAL MEASURES
Adjusted net income, adjusted earnings per share and EBITDA are non-GAAP
financial measurements. EBITDA is earnings before interest, taxes, depreciation
and amortization (including depreciation from unconsolidated subsidiaries),
pre-opening expense, asset impairments, write-downs, contract and litigation
settlements, investment gains and losses, discontinued operations and other
non-recurring items.
Adjusted net income, adjusted earnings per share and EBITDA are presented as
supplemental disclosures because this is how the company reviews and analyzes
its performance and the performance of its properties. These measures are used
widely within the gaming industry as indicators of performance and of the value
of gaming companies.
This information should not be considered as an alternative to any measure of
performance as promulgated under accounting principles generally accepted in
the United States, such as operating income, net income or net cash provided by
operating activities.
Caesars Entertainment's calculation of adjusted net income, adjusted earnings
per share and EBITDA may be different from the calculation used by other
companies and therefore comparability may be limited. The company has included
schedules in the tables that accompany this release that: 1) Reconcile EBITDA
to operating income and net income and 2) Reconcile net income to adjusted net
income.
INVESTOR CONFERENCE CALL
Caesars Entertainment has scheduled an investor conference call for today at
8:00 a.m. PDT (10:00 a.m. CDT and 11:00 a.m. EDT). The call can be accessed by
calling 1-877-226-4294 or by visiting the Caesars Entertainment web site at
WWW.CAESARS.COM and selecting the Investor tab. International callers should
dial 1-706-643-0366.
A replay of the conference call is available through July 29 by calling
1-800-642-1687 or by visiting the Caesars Entertainment web site. The
international replay number is 1-706-645-9291. The replay reservation number
for both domestic and international callers is 8364385.
ABOUT CAESARS ENTERTAINMENT
Caesars Entertainment, Inc. (NYSE: CZR) is one of the world's leading gaming
companies. With $4.5 billion in annual net revenue, 28 properties on four
continents, 26,000 hotel rooms, two million square feet of casino space and
52,000 employees, the Caesars portfolio is among the strongest in the industry.
Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand
Casinos, Hilton and Paris brand names. The company has its corporate
headquarters in Las Vegas.
Additional information on Caesars Entertainment can be accessed through the
company's web site at WWW.CAESARS.COM .
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CAESARS SECOND QUARTER EARNINGS -TEN-TEN-TEN-
ADDITIONAL INFORMATION ABOUT THE ACQUISITION AND WHERE TO FIND IT
In connection with Harrah's proposed acquisition of Caesars (the
"Acquisition"), Caesars and Harrah's intend to file relevant materials with the
Securities and Exchange Commission ("SEC"), including a registration statement
on Form S-4 that will contain a prospectus and a joint proxy statement.
INVESTORS AND SECURITY HOLDERS OF CAESARS ARE URGED TO READ THESE MATERIALS
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT HARRAH'S, CAESARS AND THE ACQUISITION.
The proxy statement, prospectus and other relevant materials (when they become
available), and any other documents filed by Harrah's or Caesars with the SEC,
may be obtained free of charge at the SEC's web site at www.sec.gov. In
addition, investors and security holders may obtain free copies of the
documents filed with the SEC by directing a written request to: Caesars
Entertainment, Inc., 3930 Howard Hughes Parkway, Las Vegas, Nevada 89109,
Attention: Investor Relations or Harrah's, One Harrah's Court, Las Vegas,
Nevada 89119, Attention: Investor Relations. Investors and security holders are
urged to read the proxy statement, prospectus and the other relevant materials
when they become available before making any voting or investment decision with
respect to the Acquisition.
Caesars and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from the stockholders of Caesars in
connection with the Acquisition. Information about the executive officers and
directors of Caesars and their ownership of Caesars common stock is set forth
in the proxy statement for Caesars' 2004 Annual Meeting of Stockholders, which
was filed with the SEC on April 16, 2004. Investors and security holders may
obtain additional information regarding the direct and indirect interests of
Caesars and its executive officers and directors in the Acquisition by reading
the proxy statement and prospectus regarding the Acquisition when it becomes
available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.
SAFE HARBOR
This document includes "forward-looking statements" intended to qualify for the
safe harbor from liability established by the Private Securities Litigation
Reform Act of 1995. You can identify these statements by the fact that they do
not relate strictly to historical or current facts. These statements contain
words such as "may," "will," "project," "might," "expect," "believe,"
"anticipate," "intend," "could," "would," "estimate," "continue" or "pursue,"
or the negative or other variations thereof or comparable terminology. In
particular, they include statements relating to, among other things, future
actions, strategies, future performance, future financial results of Caesars
and Harrah's and Harrah's anticipated acquisition of Caesars. These
forward-looking statements are based on current expectations and projections
about future events.
Readers are cautioned that forward-looking statements are not guarantees of
future performance or results and involve risks and uncertainties that cannot
be predicted or quantified and, consequently, the actual performance or results
of Caesars and 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 SEC (including the sections
entitled "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained therein):
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CAESARS SECOND QUARTER EARNINGS -ELEVEN-ELEVEN-ELEVEN-
financial community and rating agency perceptions of Harrah's and Caesars', the
effects of economic, credit and capital market conditions on the economy in
general, and on gaming and hotel companies in particular; construction factors,
including delays, zoning issues, environmental restrictions, soil and water
conditions, weather and other hazards, site access matters and building permit
issues; the effects of environmental and structural building conditions
relating to our properties; the ability to timely and cost-effectively
integrate into Harrah's operations the companies that it acquires, including
with respect to its acquisition of Caesars; access to available and feasible
financing, including financing for Harrah's acquisition of Caesars, on a timely
basis; changes in laws (including increased tax rates), regulations or
accounting standards, third-party relations and approvals, and decisions of
courts, regulators and governmental bodies; litigation outcomes and judicial
actions, including gaming legislative action, referenda and taxation; the
ability of our customer-tracking, customer loyalty and yield-management
programs to continue to increase customer loyalty and 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.
Caesars disclaims any obligation to update the forward-looking statements. You
are cautioned not to place undue reliance on these forward-looking statements
which speak only as of the date stated, or if no date is stated, as of the date
of this press release.
# # #
(FINANCIAL TABLES FOLLOW)
CAESARS ENTERTAINMENT, INC.
Summary Statements of Operations
(Amounts in millions, except per share amounts)
(unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ---------------
2004 2003 2004 2003
------- ------- ------- -------
Net revenue $1,161 $1,136 $2,357 $2,222
------- ------- ------- -------
Operating costs and expenses 862 855 1,745 1,677
Depreciation and amortization 112 114 221 225
Pre-opening expense 3 - 3 1
Contract termination fee 2 - 2 -
Corporate expense 11 9 22 17
------- ------- ------- -------
Total costs and expenses 990 978 1,993 1,920
------- ------- ------- -------
Equity in earnings of unconsolidated
affiliates 3 2 11 11
------- ------- ------- -------
Operating income 174 160 375 313
Net interest expense 75 86 153 168
Investment gain (3) - (3) -
------- ------- ------- -------
Income from continuing operations
before taxes and
minority interest 102 74 225 145
Income tax provision 42 31 100 61
Minority interest, net 2 - 4 1
------- ------- ------- -------
Income from continuing operations 58 43 121 83
Discontinued operations
Income (loss) from discontinued
operations (including gain on
disposal of $87 million), net
of taxes 90 (2) 98 (1)
------- ------- ------- -------
Net income $148 $41 $219 $82
======= ======= ======= =======
Basic earnings per share
Income from continuing operations $0.19 $0.14 $0.39 $0.28
Discontinued operations, net of
taxes - Las Vegas Hilton 0.29 - 0.32 (0.01)
------- ------- ------- -------
Net income $0.48 $0.14 $0.71 $0.27
======= ======= ======= =======
Diluted earnings per share
Income from continuing operations $0.19 $0.14 $0.39 $0.27
Discontinued operations, net of
taxes - Las Vegas Hilton 0.28 - 0.31 -
------- ------- ------- -------
Net income $0.47 $0.14 $0.70 $0.27
======= ======= ======= =======
Weighted average shares outstanding
Basic 308 301 307 301
Diluted 313 302 312 302
CAESARS ENTERTAINMENT, INC.
Property Operating Information
(Amounts in millions)
(unaudited)
Three Months Ended
June 30, 2004
--------------------------------------
Net Operating Deprecia- Pre-
Revenue Income tion and opening
(Loss) Amor- Expense
tization
--------------------------------------
WESTERN REGION
Caesars Palace $139 $17 $12 $1
Paris Las Vegas 105 25 8 2
Bally's Las Vegas 74 9 10 -
Flamingo Las Vegas 97 27 6 -
Reno Hilton 31 - 2 -
Caesars Tahoe 19 (3) 3 -
Flamingo Laughlin 28 4 1 -
--------------------------------------
493 79 42 3
--------------------------------------
EASTERN REGION
Bally's Atlantic City 163 31 16 -
Caesars Atlantic City 122 27 11 -
Atlantic City Hilton 71 10 5 -
Dover Downs 2 2 - -
--------------------------------------
358 70 32 -
--------------------------------------
MID-SOUTH REGION
Grand Biloxi 60 11 5 -
Grand Tunica 48 - 6 -
Caesars Indiana 78 12 7 -
Grand Gulfport 49 8 4 -
Sheraton Tunica 20 5 2 -
Bally's New Orleans 15 1 - -
Bally's Tunica 15 1 2 -
Regional Overhead - (1) - -
--------------------------------------
285 37 26 -
--------------------------------------
INTERNATIONAL and Other 25 3 10 -
CORPORATE - (15) 2 -
--------------------------------------
TOTAL $1,161 $174 $112 $3
======================================
Three Months Ended
June 30, 2004
--------------------------------
Contract Deprecia- EBITDA
Termi- tion from
nation Unconsol-
Fee idated
Affiliates
--------------------------------
WESTERN REGION
Caesars Palace $- $- $30
Paris Las Vegas - - 35
Bally's Las Vegas - - 19
Flamingo Las Vegas - - 33
Reno Hilton - - 2
Caesars Tahoe - - -
Flamingo Laughlin - - 5
--------------------------------
- - 124
--------------------------------
EASTERN REGION
Bally's Atlantic City - - 47
Caesars Atlantic City - - 38
Atlantic City Hilton - - 15
Dover Downs - - 2
--------------------------------
- - 102
--------------------------------
MID-SOUTH REGION
Grand Biloxi - - 16
Grand Tunica - - 6
Caesars Indiana - - 19
Grand Gulfport - - 12
Sheraton Tunica - - 7
Bally's New Orleans - - 1
Bally's Tunica - - 3
Regional Overhead - - (1)
--------------------------------
- - 63
--------------------------------
INTERNATIONAL and Other - 1 14
CORPORATE 2 - (11)
--------------------------------
TOTAL $2 $1 $292
================================
Three Months Ended
June 30, 2003
----------------------------------------------
Net Operating Deprecia- Deprecia- EBITDA
Revenue Income tion and tion
(Loss) Amor- from
tization Unconsol-
idated
Affiliates
----------------------------------------------
WESTERN REGION
Caesars Palace $132 $16 $14 $- $30
Paris Las Vegas 91 11 9 - 20
Bally's Las Vegas 66 2 9 - 11
Flamingo Las Vegas 77 17 6 - 23
Reno Hilton 31 - 2 - 2
Caesars Tahoe 19 (3) 3 - -
Flamingo Laughlin 27 1 2 - 3
----------------------------------------------
443 44 45 - 89
----------------------------------------------
EASTERN REGION
Bally's Atlantic City 177 38 16 - 54
Caesars Atlantic City 134 36 12 - 48
Atlantic City Hilton 79 14 5 - 19
Dover Downs 1 1 - - 1
----------------------------------------------
391 89 33 - 122
----------------------------------------------
MID-SOUTH REGION
Grand Biloxi 55 7 4 - 11
Grand Tunica 54 6 6 - 12
Caesars Indiana 75 10 9 - 19
Grand Gulfport 47 9 3 - 12
Sheraton Tunica 18 4 3 - 7
Bally's New Orleans 15 - - - -
Bally's Tunica 15 3 - - 3
Regional Overhead - (1) - - (1)
----------------------------------------------
279 38 25 - 63
----------------------------------------------
INTERNATIONAL and Other 23 - 9 1 10
CORPORATE - (11) 2 - (9)
----------------------------------------------
TOTAL $1,136 $160 $114 $1 $275
==============================================
NOTE: All Property Operating Information excludes the results of Las
Vegas Hilton which is classified as discontinued operations for all
periods presented.
CAESARS ENTERTAINMENT, INC.
Property Operating Information
(Amounts in millions)
(unaudited)
Six Months Ended
June 30, 2004
--------------------------------------
Net Operating Deprecia- Pre-
Revenue Income tion and opening
(Loss) Amor- Expense
tization
--------------------------------------
WESTERN REGION
Caesars Palace $311 $51 $25 $1
Paris Las Vegas 221 60 16 2
Bally's Las Vegas 149 21 19 -
Flamingo Las Vegas 188 51 12 -
Reno Hilton 64 - 5 -
Caesars Tahoe 39 (5) 5 -
Flamingo Laughlin 56 8 2 -
-------- -----------------------------
1,028 186 84 3
-------- -----------------------------
EASTERN REGION
Bally's Atlantic City 318 55 30 -
Caesars Atlantic City 241 53 22 -
Atlantic City Hilton 139 16 10 -
Dover Downs 3 3 - -
-------- -----------------------------
701 127 62 -
-------- -----------------------------
MID-SOUTH REGION
Grand Biloxi 122 21 10 -
Grand Tunica 101 4 12 -
Caesars Indiana 157 24 14 -
Grand Gulfport 96 15 8 -
Sheraton Tunica 40 10 5 -
Bally's New Orleans 30 1 - -
Bally's Tunica 32 5 3 -
Regional Overhead - (2) - -
-------- -----------------------------
578 78 52 -
-------- -----------------------------
INTERNATIONAL and Other 50 12 19 -
CORPORATE - (28) 4 -
-------- -----------------------------
TOTAL $2,357 $375 $221 $3
======== =============================
Six Months Ended
June 30, 2004
---------------------------
Contract Deprecia- EBITDA
Termi- tion
nation from
Fee Unconsol-
idated
Affiliates
---------------------------
WESTERN REGION
Caesars Palace $- $- $77
Paris Las Vegas - - 78
Bally's Las Vegas - - 40
Flamingo Las Vegas - - 63
Reno Hilton - - 5
Caesars Tahoe - - -
Flamingo Laughlin - - 10
---------------------------
- - 273
---------------------------
EASTERN REGION
Bally's Atlantic City - - 85
Caesars Atlantic City - - 75
Atlantic City Hilton - - 26
Dover Downs - - 3
---------------------------
- - 189
---------------------------
MID-SOUTH REGION
Grand Biloxi - - 31
Grand Tunica - - 16
Caesars Indiana - - 38
Grand Gulfport - - 23
Sheraton Tunica - - 15
Bally's New Orleans - - 1
Bally's Tunica - - 8
Regional Overhead - - (2)
---------------------------
- - 130
---------------------------
INTERNATIONAL and Other - 3 34
CORPORATE 2 - (22)
---------------------------
TOTAL $2 $3 $604
===========================
Six Months Ended
June 30, 2003
-------------------------------------------------------
Net Operating Deprecia- Pre- Deprecia- EBITDA
Revenue Income tion and opening tion
(Loss) Amor- Expense from
tization Unconsol-
idated
Affiliates
-------------------------------------------------------
WESTERN REGION
Caesars Palace $254 $30 $26 $1 $- $57
Paris Las
Vegas 186 30 16 - - 46
Bally's Las
Vegas 137 10 19 - - 29
Flamingo Las
Vegas 153 35 12 - - 47
Reno Hilton 61 (1) 5 - - 4
Caesars Tahoe 42 (2) 5 - - 3
Flamingo
Laughlin 55 4 4 - - 8
-------- ----------------------------------------------
888 106 87 1 - 194
-------- ----------------------------------------------
EASTERN REGION
Bally's
Atlantic City 334 59 32 - - 91
Caesars
Atlantic City 252 61 24 - - 85
Atlantic City
Hilton 148 21 11 - - 32
Dover Downs 2 2 - - - 2
-------- ----------------------------------------------
736 143 67 - - 210
-------- ----------------------------------------------
MID-SOUTH
REGION
Grand Biloxi 110 14 8 - - 22
Grand Tunica 106 10 13 - - 23
Caesars
Indiana 146 20 16 - - 36
Grand Gulfport 91 17 6 - - 23
Sheraton
Tunica 38 9 5 - - 14
Bally's New
Orleans 30 1 - - - 1
Bally's Tunica 32 7 1 - - 8
Regional
Overhead - (2) - - - (2)
-------- ----------------------------------------------
553 76 49 - - 125
-------- ----------------------------------------------
INTERNATIONAL
and Other 45 9 18 - 3 30
CORPORATE - (21) 4 - - (17)
-------- ----------------------------------------------
TOTAL $2,222 $313 $225 $1 $3 $542
======== ==============================================
NOTE: All Property Operating Information excludes the results of Las
Vegas Hilton which is classified as discontinued operations for all
periods presented.
Caesars Entertainment, Inc.
Property Operating Information
(Unaudited)
Three Months Ended
June 30, 2004
---------------------------------------
Table Occupancy APR ADR RevPAR
Hold % % (1) (2) (3)
---------- --------- ----- ----- ------
WESTERN REGION
Caesars Palace 12.9% 98.4% $157 $154 $152
Paris Las Vegas 16.0% 94.2% $140 $135 $128
Bally's Las Vegas 15.9% 95.9% $100 $99 $95
Flamingo Las Vegas 17.0% 98.1% $91 $90 $88
Reno Hilton 13.5% 82.2% $71 $71 $58
Caesars Tahoe 13.8% 85.5% $111 $111 $95
Flamingo Laughlin 17.9% 84.5% $38 $35 $30
---------- --------- ----- ----- ------
14.4% 93.1% $104 $102 $95
---------- --------- ----- ----- ------
EASTERN REGION
Bally's Atlantic City 15.1% 96.6% $114 $89 $86
Caesars Atlantic City 15.1% 98.0% $123 $91 $89
Atlantic City Hilton 15.5% 96.4% $100 $89 $86
---------- --------- ----- ----- ------
15.2% 97.0% $113 $90 $87
---------- --------- ----- ----- ------
MID-SOUTH REGION
Grand Biloxi 14.8% 96.0% $82 $68 $65
Grand Tunica 12.3% 76.9% $59 $58 $45
Caesars Indiana 16.8% 95.4% $101 $102 $97
Grand Gulfport 19.6% 92.4% $89 $75 $70
Sheraton Tunica 20.3% 96.6% $69 $65 $63
Bally's New Orleans 15.8% n/a n/a n/a n/a
Bally's Tunica 19.1% 92.3% $50 $42 $39
---------- --------- ----- ----- ------
16.0% 88.7% $77 $70 $62
---------- --------- ----- ----- ------
Three Months Ended
June 30, 2003
----------------------------------
Table Occupancy APR ADR RevPAR
Hold % (1) (2) (3)
%
----- --------- ----- ----- ------
WESTERN REGION
Caesars Palace 14.7% 95.0% $151 $151 $143
Paris Las Vegas 12.1% 95.4% $120 $120 $114
Bally's Las Vegas 14.7% 93.7% $88 $89 $84
Flamingo Las Vegas 16.8% 96.5% $78 $78 $75
Reno Hilton 21.8% 80.5% $65 $64 $52
Caesars Tahoe 14.7% 86.2% $108 $107 $92
Flamingo Laughlin 17.5% 83.3% $36 $33 $27
----- --------- ----- ----- ------
14.6% 91.7% $93 $93 $86
----- --------- ----- ----- ------
EASTERN REGION
Bally's Atlantic City 15.8% 97.1% $96 $84 $81
Caesars Atlantic City 17.5% 98.8% $127 $93 $92
Atlantic City Hilton 15.5% 97.8% $111 $90 $88
----- --------- ----- ----- ------
16.4% 97.8% $108 $88 $86
----- --------- ----- ----- ------
MID-SOUTH REGION
Grand Biloxi 14.2% 97.3% $78 $68 $66
Grand Tunica 19.7% 84.3% $50 $51 $43
Caesars Indiana 17.0% 87.8% $102 $85 $75
Grand Gulfport 15.3% 91.0% $67 $66 $60
Sheraton Tunica 15.3% 98.1% $57 $61 $60
Bally's New Orleans 17.0% n/a n/a n/a n/a
Bally's Tunica 18.7% 90.8% $44 $38 $34
----- --------- ----- ----- ------
16.6% 90.1% $67 $63 $56
----- --------- ----- ----- ------
NOTE: All Property Operating Information excludes the results of Las
Vegas Hilton which is classified as discontinued operations for all
periods presented.
(1) APR is Average Paying Rate and is calculated by dividing cash room
revenue by cash rooms occupied.
(2) ADR is Average Daily Rate and is calculated by dividing total room
revenue by total rooms occupied.
(3) RevPAR is defined as Revenue Per Available Room and is calculated
by dividing total room revenue by rooms available.
CAESARS ENTERTAINMENT, INC.
Property Operating Information
(unaudited)
Six Months Ended
June 30, 2004
----------------------------------
Table Occupancy APR ADR RevPAR
Hold % (1) (2) (3)
%
----- --------- ----- ----- ------
WESTERN REGION
Caesars Palace 15.8% 97.8% $161 $157 $154
Paris Las Vegas 17.3% 94.3% $146 $141 $133
Bally's Las Vegas 14.8% 94.9% $108 $106 $101
Flamingo Las Vegas 17.3% 95.6% $93 $91 $87
Reno Hilton 15.9% 81.9% $71 $70 $57
Caesars Tahoe 14.4% 85.2% $112 $116 $99
Flamingo Laughlin 18.8% 86.1% $34 $32 $27
----- --------- ----- ----- ------
16.1% 92.4% $107 $105 $97
----- --------- ----- ----- ------
EASTERN REGION
Bally's Atlantic City 15.6% 95.7% $107 $83 $80
Caesars Atlantic City 16.3% 97.0% $112 $89 $86
Atlantic City Hilton 16.2% 93.1% $90 $84 $78
----- --------- ----- ----- ------
16.0% 95.5% $105 $85 $81
----- --------- ----- ----- ------
MID-SOUTH REGION
Grand Biloxi 15.3% 96.4% $77 $65 $63
Grand Tunica 14.1% 75.1% $57 $57 $42
Caesars Indiana 17.3% 94.4% $94 $95 $89
Grand Gulfport 18.8% 90.8% $73 $65 $59
Sheraton Tunica 19.1% 97.7% $69 $64 $63
Bally's New Orleans 16.6% n/a n/a n/a n/a
Bally's Tunica 19.6% 93.2% $48 $41 $38
----- --------- ----- ----- ------
16.4% 87.8% $70 $65 $57
----- --------- ----- ----- ------
Six Months Ended
June 30, 2003
--------------------------------------
Table Occupancy % APR ADR RevPAR
Hold % (1) (2) (3)
------- ----------- ----- ----- ------
WESTERN REGION
Caesars Palace 15.5% 93.2% $153 $150 $140
Paris Las Vegas 11.6% 95.2% $127 $127 $121
Bally's Las Vegas 14.7% 92.9% $95 $96 $89
Flamingo Las Vegas 17.0% 94.6% $81 $80 $76
Reno Hilton 18.2% 79.3% $67 $66 $53
Caesars Tahoe 15.8% 85.5% $113 $118 $101
Flamingo Laughlin 17.4% 85.8% $33 $30 $26
------- ----------- ----- ----- ------
14.9% 91.0% $97 $96 $88
------- ----------- ----- ----- ------
EASTERN REGION
Bally's Atlantic City 15.8% 96.7% $86 $78 $76
Caesars Atlantic City 17.6% 98.3% $112 $89 $88
Atlantic City Hilton 16.3% 94.1% $97 $85 $80
------- ----------- ----- ----- ------
16.6% 96.6% $96 $83 $80
------- ----------- ----- ----- ------
MID-SOUTH REGION
Grand Biloxi 14.0% 97.5% $69 $62 $61
Grand Tunica 18.5% 82.1% $50 $52 $42
Caesars Indiana 17.0% 88.7% $86 $79 $70
Grand Gulfport 14.5% 90.2% $59 $59 $53
Sheraton Tunica 15.0% 97.8% $56 $60 $59
Bally's New Orleans 17.4% n/a n/a n/a n/a
Bally's Tunica 18.7% 90.4% $46 $38 $34
------- ----------- ----- ----- ------
16.1% 89.4% $61 $59 $53
------- ----------- ----- ----- ------
NOTE: All Property Operating Information excludes the results of Las
Vegas Hilton which is classified as discontinued operations for all
periods presented.
(1) APR is Average Paying Rate and is calculated by dividing cash room
revenue by cash rooms occupied.
(2) ADR is Average Daily Rate and is calculated by dividing total room
revenue by total rooms occupied.
(3) RevPAR is defined as Revenue Per Available Room and is calculated
by dividing total room revenue by rooms available.
CAESARS ENTERTAINMENT, INC.
Reconciliation of EBITDA to Net Income
(Amounts in millions, except per share amounts)
(unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
------------- -------------
2004 2003 2004 2003
------ ------ ------ ------
EBITDA(1) $292 $275 $604 $542
Depreciation and amortization (112) (114) (221) (225)
Depreciation from unconsolidated
subs (1) (1) (3) (3)
Pre-opening expense (3) - (3) (1)
Contract termination fee (2) - (2) -
------ ------ ------ ------
Operating income 174 160 375 313
Net interest expense (75) (86) (153) (168)
Investment gain 3 - 3 -
Income tax provision (42) (31) (100) (61)
Minority interest, net (2) - (4) (1)
Discontinued operations, net of
taxes - Las Vegas Hilton 90 (2) 98 (1)
------ ------ ------ ------
Net income $148 $41 $219 $82
====== ====== ====== ======
Earnings per share
Basic $0.48 $0.14 $0.71 $0.27
Diluted $0.47 $0.14 $0.70 $0.27
Weighted average shares outstanding
Basic 308 301 307 301
Diluted 313 302 312 302
(1) EBITDA is earnings before interest, taxes, depreciation and
amortization, pre-opening, contract termination fee, investment
gain and discontinued operations.
CAESARS ENTERTAINMENT, INC.
Reconciliation of Net Income to Adjusted Net Income
(Amounts in millions, except per share amounts)
(unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
------------- -------------
2004 2003 2004 2003
------ ------ ------ ------
Net income $148 $41 $219 $82
Adjustments:
Pre-opening expense 3 - 3 1
Contract termination fee 2 - 2 -
Investment gain (3) - (3) -
Indiana taxes, net - - 7 -
Discontinued operations, net of
taxes - Las Vegas Hilton (90) 2 (98) 1
------ ------ ------ ------
Adjusted net income $60 $43 $130 $84
====== ====== ====== ======
Adjusted earnings per share
Basic $0.19 $0.14 $0.42 $0.28
Diluted $0.19 $0.14 $0.42 $0.28
Weighted average shares outstanding
Basic 308 301 307 301
Diluted 313 302 312 302