2008-08-08 06:00:00
Harrah’s Entertainment Reports 2008 Second-Quarter Global Results
- Revenues decline 3.7 percent from 2007 second quarter
- Property EBITDA declines 9.5 percent
LAS VEGAS, Aug. 8 /EMWNews/ -- Harrah's Entertainment, Inc. today
reported the following financial results for the 2008 second quarter and
first half:
HARRAH'S ENTERTAINMENT, INC.
Company-wide Results
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $2,602.1 $2,701.7 (3.7)%
Property EBITDA 646.0 713.9 (9.5)%
Adjusted EBITDA (1) 634.3 713.4 (11.1)%
(1) Does not include the pro forma effect of yet-to-be realized cost
savings.
In accordance with Generally Accepted Accounting Principles, we have
separated our historical financial results for the Successor period from
January 28, 2008 to June 30, 2008 and the Predecessor period from January
1, 2008 to January 27, 2008; however, we have also combined the Successor
and Predecessor periods' results for the six months ended June 30, 2008, in
the presentations included herein because Company management believes that
it enables a meaningful presentation and comparison of results.
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $4,442.6 $760.1 $5,202.7 $5,357.4 (2.9)%
Property EBITDA 1,125.2 171.2 1,296.4 1,412.4 (8.2)%
Adjusted
EBITDA (1) 1,088.3 172.0 1,260.3 1,408.0 (10.5)%
(1) Does not include the pro forma effect of yet-to-be realized cost
savings.
Property Earnings Before Interest, Taxes, Depreciation and Amortization
(Property EBITDA) and Adjusted EBITDA are not Generally Accepted Accounting
Principles (GAAP) measurements but are commonly used in the gaming industry
as measures of performance and as bases for valuation of gaming companies
and, in the case of Adjusted EBITDA, as a measure of compliance with
certain debt covenants. Reconciliations of Property EBITDA to income from
operations and Adjusted EBITDA to income from continuing operations are
attached to this release.
On January 28, 2008, Harrah's Entertainment was acquired by affiliates
of Apollo Global Management, LLC and TPG Capital, LP in a transaction
valued at $30.7 billion, including assumption of $12.4 billion of debt and
approximately $1.0 billion of acquisition costs. Harrah's stockholders
received $90 cash for each share of common stock, or a total of $17.3
billion.
The company's second-quarter income from operations was $323.1 million,
compared with $477.9 million in the 2007 second quarter. The net loss for
the 2008 second quarter was $97.6 million, compared with net income of
$237.5 million in the year-ago quarter.
First-half revenues declined 2.9 percent to $5.2 billion from $5.4
billion in the first six months of 2007. Income from operations totaled
$724.1 million in the 2008 first half, compared with $929.1 million in the
prior-year period. The net loss for the first six months of 2008 was $285.4
million, compared with net income of $422.8 million in the first half of
2007.
"The first half of the year presented us with the most turbulent
economic conditions the casino-entertainment industry has faced in years,"
said Gary Loveman, Harrah's chairman, president and chief executive
officer. "Customer visitation fell in the second quarter as consumers coped
with higher fuel costs, declining asset values, the impact of widespread
flooding in the Midwest and other financial challenges.
"During the second quarter, we reduced certain costs in response to
reduced demand, but continued to fund for the future," Loveman said. "We
completed the re-branding of Caesars Indiana to Horseshoe Southern Indiana
and Grand Tunica to Harrah's Casino Tunica.
"Today we celebrate the grand opening of the $485 million expansion at
Horseshoe Hammond in Northern Indiana, and we remain on track with the
expansion of the hotel tower and convention center areas at Caesars Palace
in Las Vegas," Loveman said. "Further, we have completed the $565 million
expansion of Harrah's Atlantic City."
A substantial portion of the debt of Harrah's Entertainment's
consolidated group is issued by Harrah's Operating Company, Inc., (HOC) a
wholly owned subsidiary of Harrah's Entertainment, Inc. Therefore, the
company believes it is meaningful to also provide information pertaining
solely to the results of operations of HOC. The information for HOC assumes
that a post-closing swap of certain properties between HOC and Harrah's
Entertainment that was consummated during the second quarter actually
occurred on January 1, 2007.
HARRAH'S OPERATING COMPANY
Overall
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $1,783.4 $2,023.0 (11.8)%
Property EBITDA 436.7 526.6 (17.1)%
Adjusted EBITDA (1) 424.2 534.2 (20.6)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $3,072.7 $577.5 $3,650.2 $4,010.7 (9.0)%
Property EBITDA 779.9 109.6 889.5 1,012.9 (12.2)%
Adjusted
EBITDA (1) 725.5 143.0 868.5 1,020.5 (14.9)%
(1)Does not include the pro forma effect of yet-to-be realized cost
savings.
Summaries of results by region follow:
Las Vegas Region
Second-quarter results for the company's Las Vegas Region were lower
than in the year-ago quarter due to reduced visitation and lower spend per
trip. First-half declines were driven by lower spend per trip and fewer
hotel rooms available due to room remodeling and remediation projects at
three Harrah's properties.
HARRAH'S ENTERTAINMENT, INC.
Las Vegas Region
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $873.1 $922.5 (5.4)%
Income from operations 199.0 238.8 (16.7)%
Property EBITDA 286.4 306.5 (6.6)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $1,482.5 $253.6 $1,736.1 $1,821.1 (4.7)%
Income from
operations 341.9 51.9 393.8 474.5 (17.0)%
Property EBITDA 485.8 76.0 561.8 604.1 (7.0)%
Las Vegas Region properties include Harrah's Las Vegas, Rio, Bally's Las
Vegas, Paris, Flamingo Las Vegas, Caesars Palace, Imperial Palace and
Bill's Gamblin' Hall & Saloon since its acquisition on February 27, 2007.
HARRAH'S OPERATING COMPANY
Las Vegas Region
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $380.9 $412.2 (7.6)%
Income from operations 83.8 109.8 (23.7)%
Property EBITDA 114.9 142.3 (19.3)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $641.4 $118.5 $759.9 $805.8 (5.7)%
Income from
operations 140.3 29.7 170.0 210.8 (19.4)%
Property EBITDA 192.0 38.1 230.1 272.1 (15.4)%
Las Vegas Region properties include Bally's Las Vegas, Caesars Palace,
Imperial Palace and Bill's Gamblin' Hall & Saloon since its acquisition on
February 27, 2007.
Atlantic City Region
Second-quarter revenue gains were attributable to strong results at
Harrah's Chester and the phased opening of the expansion at Harrah's
Atlantic City; those properties' performances partially offset the impact
of reduced visitation, smoking restrictions and new competition in key
feeder markets. Income from operations declined due to reduced visitor
volume and higher advertising spending.
First-half results also benefited from strong performances at Harrah's
Chester and from Harrah's Atlantic City, which opened in phases during the
first half of the year. Income from operations was affected by the Atlantic
City smoking restrictions and competition from slot parlors in feeder
markets.
HARRAH'S ENTERTAINMENT, INC.
Atlantic City Region
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $599.8 $592.6 1.2 %
Income from operations 71.3 77.2 (7.6)%
Property EBITDA 133.1 143.4 (7.2)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $1,008.0 $160.8 $1,168.8 $1,138.7 2.6 %
Income from
operations 130.5 18.7 149.2 149.3 (0.1)%
Property EBITDA 232.8 36.4 269.2 276.2 (2.5)%
Atlantic City Region properties include Harrah's Atlantic City, Showboat
Atlantic City, Caesars Atlantic City, Bally's Atlantic City and Harrah's
Chester.
HARRAH'S OPERATING COMPANY
Atlantic City Region
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $460.4 $471.0 (2.3)%
Income from operations 51.3 63.5 (19.2)%
Property EBITDA 95.0 111.8 (15.0)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $780.9 $125.8 $906.7 $900.3 0.7 %
Income from
operations 96.4 8.0 104.4 115.4 (9.5)%
Property EBITDA 169.1 21.9 191.0 211.1 (9.5)%
Atlantic City Region properties include Showboat Atlantic City, Caesars
Atlantic City, Bally's Atlantic City and Harrah's Chester.
Louisiana/Mississippi Region
Combined second-quarter revenues declined for the Louisiana/Mississippi
Region as a result of lower visitor volume due in part to disruptions
during the renovation in preparation for the re-branding of Grand Casino
Tunica, which became Harrah's Casino Tunica in mid-May. Income from
operations was lower than in the year-earlier second quarter, when $37.0
million of insurance proceeds were included in the results.
Combined first-half revenues decreased due to a decline in visitation
in the Tunica market and the impact of disruptions during the renovations
at the former Grand Tunica. Income from operations in the first half of
2008 includes $185.4 million of insurance proceeds in excess of the net
book value of impacted assets, costs and expenses related to 2005
hurricanes, while the 2007 first-half income from operations includes $55.7
million of such insurance proceeds.
HARRAH'S ENTERTAINMENT, INC.
Louisiana/Mississippi Region
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $368.2 $389.0 (5.3)%
Income from operations 46.1 93.6 (50.7)%
Property EBITDA 77.2 88.8 (13.1)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $642.6 $106.1 $748.7 $779.5 (4.0)%
Income from
operations 278.8 10.1 288.9 169.2 70.7 %
Property EBITDA 144.1 18.6 162.7 172.9 (5.9)%
Louisiana/Mississippi Region properties include Harrah's New Orleans,
Horseshoe Bossier City, Louisiana Downs, Horseshoe Tunica, Harrah's
Tunica, Sheraton Tunica and Grand Casino Biloxi.
Iowa/Missouri Region
Combined second-quarter and first-half revenues were lower than in the
year-ago periods due primarily to competition from a new facility that
opened in the St. Louis market. Income from operations was higher in the
2008 second quarter as a result of cost savings, especially at our Iowa
operations.
HARRAH'S ENTERTAINMENT, INC.
Iowa/Missouri Region
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $196.3 $205.3 (4.4)%
Income from operations 40.3 37.2 8.3%
Property EBITDA 53.8 56.9 (5.4)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $339.3 $55.8 $395.1 $407.0 (2.9)%
Income from
operations 71.0 7.7 78.7 70.3 11.9 %
Property EBITDA 94.5 13.0 107.5 109.8 (2.1)%
Iowa/Missouri Region properties include Harrah's St. Louis, Harrah's
Council Bluffs, Horseshoe Council Bluffs and Harrah's North Kansas City.
Illinois/Indiana Region
A smoking ban in Illinois led to lower 2008 second-quarter and
first-half results in the Illinois/Indiana Region. The first-half numbers
were also impacted by heavy rains and flooding that lead to closure of our
Southern Indiana property, now known as Horseshoe Southern Indiana, for
four days in March 2008.
Construction has been completed on a $485 million renovation of
Horseshoe Hammond that celebrates its grand opening today.
HARRAH'S ENTERTAINMENT, INC.
Illinois/Indiana Region
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $294.5 $321.8 (8.5)%
Income from operations 42.7 50.1 (14.8)%
Property EBITDA 59.9 66.3 (9.7)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $502.6 $85.5 $588.1 $646.2 (9.0)%
Income from
operations 69.8 8.7 78.5 101.2 (22.4)%
Property EBITDA 96.4 13.6 110.0 134.4 (18.2)%
Illinois/Indiana properties include Horseshoe Hammond, Harrah's Joliet,
Harrah's Metropolis and Horseshoe Southern Indiana.
Other Nevada Region
Second-quarter and first-half results for the Other Nevada Region
declined due to lower spend per trip in the Reno and Laughlin markets,
increased competition in Reno and higher promotional costs.
HARRAH'S ENTERTAINMENT, INC.
Other Nevada
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $140.8 $154.2 (8.7)%
Income from operations 11.8 22.3 (47.1)%
Property EBITDA 24.5 34.7 (29.4)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $248.6 $38.9 $287.5 $307.9 (6.6)%
Income from
operations 25.9 0.5 26.4 42.7 (38.2)%
Property EBITDA 47.6 4.5 52.1 67.5 (22.8)%
Other Nevada properties include Harrah's Reno, Harrah's Lake Tahoe,
Harveys Lake Tahoe, Bill's Casino and Harrah's Laughlin.
HARRAH'S OPERATING COMPANY
Other Nevada
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $96.6 $108.0 (10.6)%
Income from operations 4.9 10.6 (53.8)%
Property EBITDA 12.5 20.3 (38.4)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $172.3 $26.8 $199.1 $216.3 (8.0)%
Income from
operations 13.1 (1.9) 11.2 18.8 (40.4)%
Property EBITDA 26.2 1.2 27.4 38.2 (28.3)%
Other Nevada properties include Harrah's Reno, Harrah's Lake Tahoe,
Harveys Lake Tahoe and Bill's Casino.
Managed/International/Other
Second-quarter revenues increased due to the inclusion of three new
London Clubs International properties that opened in 2007. Income from
operations was impacted by a smoking ban, lower table-games hold percentage
and higher gaming taxes, all of which affected LCI results.
Second-quarter and first-half results from managed properties were
lower due to termination of a Native American management contract in June
2007 and lower operating results from other managed properties.
HARRAH'S ENTERTAINMENT, INC.
Managed/International/Other
Successor Predecessor Percent
Second Quarter Increase/
(In millions) 2008 2007 (Decrease)
Total revenues $129.4 $116.3 11.3%
Income from operations (46.4) (11.2) N/M
Property EBITDA 11.1 17.3 (35.8)%
Successor Predecessor
Jan. 28, Jan. 1,
2008 2008 Combined Predecessor
through through Six Months Ended Percent
June 30, Jan. 27, June 30, Increase/
(In millions) 2008 2008 2008 2007 (Decrease)
Total revenues $219.0 $59.4 $278.4 $257.0 8.3%
Income from
operations (73.6) (0.3) (73.9) (10.4) N/M
Property EBITDA 24.0 9.1 33.1 47.5 (30.3)%
Managed/International/Other results include income from our managed
properties, results of our international properties and certain marketing
and administrative expenses, including development costs, and income from
our non-consolidated subsidiaries.
Other items
Interest expense increased significantly from the 2007 second quarter
and first half due to higher debt levels associated with the company's
acquisition, which was consummated in the 2008 first quarter.
Second-quarter results were favorably affected by a credit of $61.0 million
due to an increase in the fair value of the company's derivative
instruments. For the first six months of the year, the change in the fair
value of the derivative instruments increased interest expense by $80.8
million. The average interest rate on the company's variable-rate debt,
including the impact of the derivative instruments, was 5.5 percent at June
30, 2008.
For the 2008 second quarter, tax benefits were generated by operating
losses at an effective rate of 20.5 percent, whereas in the second quarter
of 2007, operating income resulted in tax expenses at an effective rate of
37.3 percent.
Harrah's will host a conference today at 8 a.m. Pacific Daylight Time
to discuss its 2008 second-quarter results. Persons from the United States
and Canada who are interested in participating in the call should dial
1-877-876-8924, or 1-706-758-4271 for international callers, approximately
10 minutes before the call start time. A taped replay of the conference
call will be available at 1-800-642-1687, or 1-706-645-9291 for
international callers, beginning at 9 a.m. PDT the day of the call. The
replay will be available through 8:59 p.m. PDT August 22. The pass code
number for the conference call and replay is 54273574.
Harrah's Entertainment, Inc. is the world's largest provider of branded
casino entertainment. Since its beginning in Reno, Nevada, more than 70
years ago, Harrah's has grown through development of new properties,
expansions and acquisitions, and now operates casinos on four continents.
The company's properties operate primarily under the Harrah's(R),
Caesars(R) and Horseshoe(R) brand names; Harrah's also owns the London
Clubs International family of casinos and the World Series of Poker(R).
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. For more information, please visit http://www.harrahs.com.
This release includes "forward-looking statements" intended to qualify
for the safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. You can identify these statements by the
fact that they do not relate strictly to historical or current facts. These
statements contain words such as "may," "will," "project," "might,"
"expect," "believe," "anticipate," "intend," "could," "would," "estimate,"
"continue" or "pursue," or the negative or other variations thereof or
comparable terminology. In particular, they include statements relating to,
among other things, future actions, new projects, strategies, future
performance, the outcomes of contingencies 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 "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained therein): the outcome of any legal
proceedings that have been, or will be, instituted against the company
related to the acquisition of the company by affiliates of TPG Capital and
Apollo Management; the impact of the company's significant indebtedness;
the effects of local and national economic, credit and capital market
conditions on the economy in general, and on the gaming and hotel
industries in particular; construction factors, including delays, increased
costs for labor and materials, availability of labor and materials, 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; access to available and reasonable financing on a timely basis;
the ability to timely and cost-effectively integrate acquisition into our
operations; changes in laws, including increased tax rates, smoking bans,
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 or hotel sales; our ability to recoup costs of
capital investments through higher revenues; acts of war or terrorist
incidents or natural disasters; abnormal gaming holds; the potential
difficulties in employee retention as a result of the sale of the company
to affiliates of TPG Capital and Apollo Management; 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.
ADD: /FIRST AND FINAL ADD -- LAF507 -- Harrah's Entertainment, Inc.
Earnings/
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED SUMMARY OF OPERATIONS
(UNAUDITED)
Prede-
Prede- Successor cessor Prede-
Successor cessor Jan. 28, Jan. 1, Combined cessor
Second 2008 2008 Six
Quarter Ended Through Through Months Ended
June 30, June 30, June 30, Jan. 27, June 30,
(In millions) 2008 2007 2008 2008 2008 2007
Revenues $2,602.1 $2,701.7 $4,442.6 $760.1 $5,202.7 $5,357.4
Property
operating
expenses (1,956.1) (1,987.8) (3,317.4) (588.9) (3,906.3) (3,945.0)
Depreciation
and
amortization (176.2) (204.3) (300.4) (63.5) (363.9) (394.6)
Operating
profit 469.8 509.6 824.8 107.7 932.5 1,017.8
Corporate
expense (36.6) (26.6) (61.3) (8.5) (69.8) (60.1)
Merger and
integration
costs (5.1) (3.5) (22.1) (125.6) (147.7) (7.6)
Income on
interests in
nonconsolidated
affiliates 0.5 3.8 1.3 0.5 1.8 3.6
Amortization of
intangible
assets (48.2) (17.9) (80.5) (5.5) (86.0) (35.7)
Project opening
costs and
other items (57.3) 12.5 98.7 (5.4) 93.3 11.1
Income/(loss)
from
operations 323.1 477.9 760.9 (36.8) 724.1 929.1
Interest
expense,
net of
interest
capitalized (468.0) (176.6) (935.9) (89.7) (1,025.6) (362.4)
Losses on
early
extinguishments
of debt - - (211.3) - (211.3) -
Other income,
including
interest
income 3.8 15.6 11.5 1.1 12.6 23.8
(Loss)/income
before income
taxes and
minority
interests (141.1) 316.9 (374.8) (125.4) (500.2) 590.5
Income tax
benefit/
(provision) 43.5 (116.3) 101.7 26.0 127.7 (216.6)
Minority
interests (0.4) (5.1) 1.0 (1.6) (0.6) (11.2)
(Loss)/income
from
continuing
operations (98.0) 195.5 (272.1) (101.0) (373.1) 362.7
Discontinued
operations,
net of tax 0.4 42.0 87.6 0.1 87.7 60.1
Net (loss)/
income $(97.6) $237.5 $(184.5) $(100.9) $(285.4) $422.8
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL OPERATING INFORMATION
(UNAUDITED)
Prede-
Prede- Successor cessor Prede-
Successor cessor Jan. 28, Jan. 1, Combined cessor
Second 2008 2008 Six
Quarter Ended Through Through Months Ended
June 30, June 30, June 30, Jan. 27, June 30,
(In millions) 2008 2007 2008 2008 2008 2007
Revenues
Las Vegas
Region $873.1 $922.5 $1,482.5 $253.6 $1,736.1 $1,821.1
Atlantic
City Region 599.8 592.6 1,008.0 160.8 1,168.8 1,138.7
Louisiana/
Mississippi
Region 368.2 389.0 642.6 106.1 748.7 779.5
Iowa/
Missouri
Region 196.3 205.3 339.3 55.8 395.1 407.0
Illinois/
Indiana
Region 294.5 321.8 502.6 85.5 588.1 646.2
Other
Nevada
Region 140.8 154.2 248.6 38.9 287.5 307.9
Managed/
International/
Other 129.4 116.3 219.0 59.4 278.4 257.0
Total
Revenues $2,602.1 $2,701.7 $4,442.6 $760.1 $5,202.7 $5,357.4
Income/(loss)
from operations
Las Vegas
Region $199.0 $238.8 $341.9 $51.9 $393.8 $474.5
Atlantic
City Region 71.3 77.2 130.5 18.7 149.2 149.3
Louisiana/
Mississippi
Region 46.1 93.6 278.8 10.1 288.9 169.2
Iowa/Missouri
Region 40.3 37.2 71.0 7.7 78.7 70.3
Illinois/
Indiana
Region 42.7 50.1 69.8 8.7 78.5 101.2
Other Nevada
Region 11.8 22.3 25.9 0.5 26.4 42.7
Managed/
International/
Other (46.4) (11.2) (73.6) (0.3) (73.9) (10.4)
Corporate
Expense (36.6) (26.6) (61.3) (8.5) (69.8) (60.1)
Merger and
integration
costs (5.1) (3.5) (22.1) (125.6) (147.7) (7.6)
Total
Income/
(loss)
from
operations $323.1 $477.9 $760.9 $(36.8) $724.1 $929.1
Property
EBITDA (a)
Las Vegas
Region $286.4 $306.5 $485.8 $76.0 $561.8 $604.1
Atlantic
City Region 133.1 143.4 232.8 36.4 269.2 276.2
Louisiana/
Mississippi
Region 77.2 88.8 144.1 18.6 162.7 172.9
Iowa/Missouri
Region 53.8 56.9 94.5 13.0 107.5 109.8
Illinois/
Indiana
Region 59.9 66.3 96.4 13.6 110.0 134.4
Other Nevada
Region 24.5 34.7 47.6 4.5 52.1 67.5
Managed/
International/
Other 11.1 17.3 24.0 9.1 33.1 47.5
Total
Property
EBITDA $646.0 $713.9 $1,125.2 $171.2 $1,296.4 $1,412.4
Project
opening
costs and
other items
Project
opening
costs $(7.2) $(8.3) $(10.0) $(0.7) $(10.7) $(17.2)
Insurance
proceeds for
hurricane
losses - 37.0 185.4 - 185.4 55.7
Other write-
downs,
reserves and
recoveries (50.1) (16.2) (76.7) (4.7) (81.4) (27.4)
Total
Project
opening
costs and
other
items $(57.3) $12.5 $98.7 $(5.4) $93.3 $11.1
(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, merger and integration costs,
income/(losses) on interests in non-consolidated 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
RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS
(UNAUDITED)
(In millions) Successor
Second Quarter Ended June 30, 2008
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
Revenues $873.1 $599.8 $368.2 $196.3
Property operating
expenses (586.7) (466.7) (291.0) (142.5)
Property EBITDA 286.4 133.1 77.2 53.8
Depreciation and
amortization (48.4) (53.8) (22.5) (13.6)
Operating profit 238.0 79.3 54.7 40.2
Amortization of
intangible assets (18.2) (5.7) (6.1) 0.2
Income on interests in
nonconsolidated
affiliates - - - -
Project opening costs
and other items (20.8) (2.3) (2.5) (0.1)
Corporate expense - - - -
Merger and integration
costs - - - -
Income/(loss) from
operations* $199.0 $71.3 $46.1 $40.3
Illinois/ Other
Indiana Nevada
Region Region Other Total
Revenues $294.5 $140.8 $129.4 $2,602.1
Property operating
expenses (234.6) (116.3) (118.3) (1,956.1)
Property EBITDA 59.9 24.5 11.1 646.0
Depreciation and
amortization (13.1) (9.2) (15.6) (176.2)
Operating profit 46.8 15.3 (4.5) 469.8
Amortization of
intangible assets (0.2) (3.5) (14.7) (48.2)
Income on interests in
nonconsolidated
affiliates - - 0.5 0.5
Project opening costs
and other items (3.9) - (27.7) (57.3)
Corporate expense - - (36.6) (36.6)
Merger and integration
costs - - (5.1) (5.1)
Income/(loss) from
operations* $42.7 $11.8 $(88.1) $323.1
Predecessor
Second Quarter Ended June 30, 2007
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
Revenues $922.5 $592.6 $389.0 $205.3
Property operating
expenses (616.0) (449.2) (300.2) (148.4)
Property EBITDA 306.5 143.4 88.8 56.9
Depreciation and
amortization (62.3) (53.8) (25.0) (18.5)
Operating profit 244.2 89.6 63.8 38.4
Amortization of
intangible assets (3.5) (6.4) (2.0) (0.8)
Income on interests
in nonconsolidated
affiliates - - - -
Project opening costs
and other items (1.9) (6.0) 31.8 (0.4)
Corporate expense - - - -
Merger and integration
costs - - - -
Income/(loss) from
operations* $238.8 $77.2 $93.6 $37.2
Illinois/ Other
Indiana Nevada
Region Region Other Total
Revenues $321.8 $154.2 $116.3 $2,701.7
Property operating
expenses (255.5) (119.5) (99.0) (1,987.8)
Property EBITDA 66.3 34.7 17.3 713.9
Depreciation and
amortization (13.9) (11.9) (18.9) (204.3)
Operating profit 52.4 22.8 (1.6) 509.6
Amortization of
intangible assets (2.0) (0.2) (3.0) (17.9)
Income on interests
in nonconsolidated
affiliates - - 3.8 3.8
Project opening costs
and other items (0.3) (0.3) (10.4) 12.5
Corporate expense - - (26.6) (26.6)
Merger and integration
costs - - (3.5) (3.5)
Income/(loss) from
operations* $50.1 $22.3 $(41.3) $477.9
* 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.
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS
(UNAUDITED)
(In millions) Successor
January 28, 2008 Through June 30, 2008
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
Revenues $1,482.5 $1,008.0 $642.6 $339.3
Property operating
expenses (996.7) (775.2) (498.5) (244.8)
Property EBITDA 485.8 232.8 144.1 94.5
Depreciation and
amortization (83.1) (87.9) (37.4) (23.3)
Operating profit 402.7 144.9 106.7 71.2
Amortization of
intangible assets (31.4) (10.2) (10.7) -
Income on interests in
nonconsolidated
affiliates - - - -
Project opening costs
and other items (29.4) (4.2) 182.8 (0.2)
Corporate expense - - - -
Merger and integration
costs - - - -
Income/(loss) from
operations* $341.9 $130.5 $278.8 $71.0
Illinois/ Other
Indiana Nevada
Region Region Other Total
Revenues $502.6 $248.6 $219.0 $4,442.6
Property operating
expenses (406.2) (201.0) (195.0) (3,317.4)
Property EBITDA 96.4 47.6 24.0 1,125.2
Depreciation and
amortization (21.5) (15.7) (31.5) (300.4)
Operating profit 74.9 31.9 (7.5) 824.8
Amortization of
intangible assets (0.7) (5.9) (21.6) (80.5)
Income on interests in
nonconsolidated
affiliates - - 1.3 1.3
Project opening costs
and other items (4.4) (0.1) (45.8) 98.7
Corporate expense - - (61.3) (61.3)
Merger and integration
costs - - (22.1) (22.1)
Income/(loss) from
operations* $69.8 $25.9 $(157.0) $760.9
Predecessor
January 1, 2008 Through January 27, 2008
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
Revenues $253.6 $160.8 $106.1 $55.8
Property operating
expenses (177.6) (124.4) (87.5) (42.8)
Property EBITDA 76.0 36.4 18.6 13.0
Depreciation and
amortization (18.7) (15.7) (8.6) (5.1)
Operating profit 57.3 20.7 10.0 7.9
Amortization of
intangible assets (1.0) (1.9) (0.5) (0.2)
Income on interests in
nonconsolidated
affiliates - - - -
Project opening costs
and other items (4.4) (0.1) 0.6 -
Corporate expense - - - -
Merger and integration
costs - - - -
Income/(loss) from
operations* $51.9 $18.7 $10.1 $7.7
Illinois/ Other
Indiana Nevada
Region Region Other Total
Revenues $85.5 $38.9 $59.4 $760.1
Property operating
expenses (71.9) (34.4) (50.3) (588.9)
Property EBITDA 13.6 4.5 9.1 171.2
Depreciation and
amortization (4.3) (3.9) (7.2) (63.5)
Operating profit 9.3 0.6 1.9 107.7
Amortization of
intangible assets (0.6) (0.1) (1.2) (5.5)
Income on interests in
nonconsolidated
affiliates - - 0.5 0.5
Project opening costs
and other items - - (1.5) (5.4)
Corporate expense - - (8.5) (8.5)
Merger and integration
costs - - (125.6) (125.6)
Income/(loss) from
operations* $8.7 $0.5 $(134.4) $(36.8)
* 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.
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS
(UNAUDITED)
(In millions) Combined
Six Months Ended June 30, 2008
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
Revenues $1,736.1 $1,168.8 $748.7 $395.1
Property operating
expenses (1,174.3) (899.6) (586.0) (287.6)
Property EBITDA 561.8 269.2 162.7 107.5
Depreciation and
amortization (101.8) (103.6) (46.0) (28.4)
Operating profit 460.0 165.6 116.7 79.1
Amortization of
intangible assets (32.4) (12.1) (11.2) (0.2)
Income on interests in
nonconsolidated
affiliates - - - -
Project opening costs
and other items (33.8) (4.3) 183.4 (0.2)
Corporate expense - - - -
Merger and integration
costs - - - -
Income/(loss) from
operations* $393.8 $149.2 $288.9 $78.7
Illinois/ Other
Indiana Nevada
Region Region Other Total
Revenues $588.1 $287.5 $278.4 $5,202.7
Property operating
expenses (478.1) (235.4) (245.3) (3,906.3)
Property EBITDA 110.0 52.1 33.1 1,296.4
Depreciation and
amortization (25.8) (19.6) (38.7) (363.9)
Operating profit 84.2 32.5 (5.6) 932.5
Amortization of
intangible assets (1.3) (6.0) (22.8) (86.0)
Income on interests in
nonconsolidated
affiliates - - 1.8 1.8
Project opening costs
and other items (4.4) (0.1) (47.3) 93.3
Corporate expense - - (69.8) (69.8)
Merger and integration
costs - - (147.7) (147.7)
Income/(loss) from
operations* $78.5 $26.4 $(291.4) $724.1
Predecessor
Six Months Ended June 30, 2007
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
Revenues $1,821.1 $1,138.7 $779.5 $407.0
Property operating
expenses (1,217.0) (862.5) (606.6) (297.2)
Property EBITDA 604.1 276.2 172.9 109.8
Depreciation and
amortization (116.8) (103.3) (49.5) (37.2)
Operating profit 487.3 172.9 123.4 72.6
Amortization of
intangible assets (6.9) (12.8) (4.0) (1.6)
Income on interests in
nonconsolidated
affiliates - - - -
Project opening costs
and other items (5.9) (10.8) 49.8 (0.7)
Corporate expense - - - -
Merger and integration
costs - - - -
Income/(loss) from
operations* $474.5 $149.3 $169.2 $70.3
Illinois/ Other
Indiana Nevada
Region Region Other Total
Revenues $646.2 $307.9 $257.0 $5,357.4
Property operating
expenses (511.8) (240.4) (209.5) (3,945.0)
Property EBITDA 134.4 67.5 47.5 1,412.4
Depreciation and
amortization (28.0) (24.0) (35.8) (394.6)
Operating profit 106.4 43.5 11.7 1,017.8
Amortization of
intangible assets (4.0) (0.4) (6.0) (35.7)
Income on interests in
nonconsolidated
affiliates - - 3.6 3.6
Project opening costs
and other items (1.2) (0.4) (19.7) 11.1
Corporate expense - - (60.1) (60.1)
Merger and integration
costs - - (7.6) (7.6)
Income/(loss) from
operations* $101.2 $42.7 $(78.1) $929.1
* 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.
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF EBITDA TO ADJUSTED EBITDA
(UNAUDITED)
Adjusted EBITDA is defined as EBITDA further adjusted to exclude
unusual items and other adjustments required or permitted in calculating
covenant compliance under the indenture governing the senior notes and
senior toggle notes, the interim loan agreement and/or our new senior
credit facilities. We believe that the inclusion of supplementary
adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate
to provide additional information to investors about certain material
non-cash items and about unusual items that we do not expect to continue at
the same level in the future. Because not all companies use identical
calculations, our presentation of Adjusted EBITDA may not be comparable to
other similarly titled measures of other companies.
The following table reconciles EBITDA and Adjusted EBITDA of Harrah's
Entertainment, Inc. for the Predecessor period from January 1, 2008 to
January 27, 2008 and for the Successor period from January 28, 2008 to June
30, 2008.
(In millions) Predecessor Successor Combined
Jan. 1, Jan. 28 Jan. 1
2008 2008 2008
Through Through Through
Dec. 31, June 30, Jan. 27, June 30, June 30,
2007 2007 2008 2008 2008 LTM
Income/(loss)
from
continuing
operations $527.2 $362.7 $(101.0) $(272.1) $(373.1) $(208.6)
Interest
expense, net 780.8 359.0 89.7 925.0 1,014.7 1,436.5
Provision/
(benefit) for
income taxes 350.1 216.6 (26.0) (101.7) (127.7) 5.8
Depreciation
and
amortization 934.7 451.6 72.7 389.2 461.9 945.0
EBITDA 2,592.8 1,389.9 35.4 940.4 975.8 2,178.7
Project
opening
costs,
abandoned
projects and
development
costs (a) 29.8 19.0 0.9 11.6 12.5 23.3
Merger and
integration
costs (b) 13.4 7.6 125.6 22.1 147.7 153.5
Losses on early
extinguishment
of debt (c) 2.0 - - 211.3 211.3 213.3
Minority interests,
net of
distributions (d) (4.8) 4.0 1.0 (5.4) (4.4) (13.2)
Impairment of
goodwill,
intangible
assets and
investment
securities (e) 169.6 - - - - 169.6
Non-cash
expense for
stock
compensation
benefits (f) 53.0 26.5 2.4 6.8 9.2 35.7
Income from
insurance
claims for
hurricane
losses (g) (130.3) (55.7) - (185.7) (185.7) (260.3)
Other non-
recurring or
non-cash
items (h) 84.0 13.9 6.7 87.2 93.9 164.0
Pro forma
adjustment
for acquired,
new or
disposed
properties (i) 3.3 2.8 - - - 0.5
Pro forma
adjustment
for yet-to-
be realized
cost savings (j) 54.6
Adjusted EBITDA $2,719.7
a) Represents (i) project opening costs incurred in connection with the
integration of acquired properties and with expansion and renovation
projects at various properties, (ii) write-off of abandoned
development projects and (iii) non-recurring strategic planning and
restructuring costs.
b) Represents costs in connection with the Merger, including review of
certain strategic matters by the special committee established by
Harrah's Entertainment's Board of Directors, and costs for
consultants and dedicated internal resources executing the plans for
the integration of Caesars into Harrah's.
c) Represents premiums paid and the write-off of historical unamortized
deferred financing costs.
d) Represents minority owners' share of income from our majority-owned
subsidiaries, net of cash distributions to minority owners.
e) Represents impairment of intangible assets and impairment of
investment securities.
f) Represents non-cash compensation expense related to stock options.
g) Represents non-recurring insurance recoveries related to Hurricane
Katrina.
h) Represents the elimination of other non-recurring and non-cash items
such as litigation awards and settlements, severance and relocation
costs, excess gaming taxes, gains and losses from disposal of
assets, equity in non-consolidated subsidiaries (net of
distributions) and one-time costs relating to new state gaming
legislation.
i) Represents the full year/period estimated impact of acquired, new
and disposed properties.
j) Represents the cost savings realized from our previously announced
profitability improvement program.
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS
(UNAUDITED)
(In millions) Successor
Second Quarter Ended June 30, 2008
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
Revenues $380.9 $460.4 $368.2 $196.3
Property operating
expenses (266.0) (365.4) (291.0) (142.5)
Property EBITDA 114.9 95.0 77.2 53.8
Depreciation and
amortization (21.3) (39.3) (22.5) (13.6)
Operating profit 93.6 55.7 54.7 40.2
Amortization of
intangible assets (7.7) (3.0) (6.1) 0.2
Income on interests in
nonconsolidated
affiliates - - - -
Project opening costs
and other items (2.1) (1.4) (2.5) (0.1)
Corporate expense - - - -
Merger and integration
costs - - - -
Income/(loss) from
operations* $83.8 $51.3 $46.1 $40.3
Illinois/ Other
Indiana Nevada
Region Region Other Total
Revenues $294.5 $96.6 $(13.5) $1,783.4
Property operating
expenses (234.6) (84.1) 36.9 (1,346.7)
Property EBITDA 59.9 12.5 23.4 436.7
Depreciation and
amortization (13.1) (7.0) (15.6) (132.4)
Operating profit 46.8 5.5 7.8 304.3
Amortization of
intangible assets (0.2) (0.6) (14.8) (32.2)
Income on interests in
nonconsolidated
affiliates - - 0.5 0.5
Project opening costs
and other items (3.9) - (27.9) (37.9)
Corporate expense - - (28.8) (28.8)
Merger and integration
costs - - (5.1) (5.1)
Income/(loss) from
operations* $42.7 $4.9 $(68.3) $200.8
Predecessor
Second Quarter Ended June 30, 2007
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
Revenues $412.2 $471.0 $389.0 $205.3
Property operating
expenses (269.9) (359.2) (300.2) (148.4)
Property EBITDA 142.3 111.8 88.8 56.9
Depreciation and
amortization (27.1) (40.2) (25.0) (18.5)
Operating profit 115.2 71.6 63.8 38.4
Amortization of
intangible assets (3.3) (6.4) (2.0) (0.8)
Income on interests in
nonconsolidated
affiliates - - - -
Project opening costs
and other i
Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89
Get Unlimited Organic Website Traffic to your Website
TheNFG.com now offers Organic Lead Generation & Traffic Solutions
