Harrah's Entertainment, Inc. News
Harrah's Entertainment Reports 2008 First-Quarter Results
COMPANY WIDE RESULTS (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $1,840.5 $760.1 $2,600.6 $2,655.6 -2.1% Property EBITDA 479.3 171.2 650.5 698.4 -6.9% Adjusted EBITDA(2) 454.0 172.0 626.0 694.6 -9.9% (1) In accordance with Generally Accepted Accounting Principles, we have separated our historical financial results for the Successor period from January 28, 2008 to March 31, 2008 and the Predecessor period from January 1, 2008 to January 27, 2008; how (2) Adjusted EBITDA is presented prior to the benefit of yet-to-be- realized cost savings. Please see reconciliation at the conclusion of this release.
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
On a combined basis, the company's first-quarter income from operations was
"Our first-quarter results reflect the consequences of challenging economic conditions," said
"We saw very strong results with the first-quarter's debut of a new tower at Harrah's
"Thanks to those new projects and other revenue-generating initiatives, as well as our geographic diversification and industry-leading customer-loyalty program, we're well-positioned to benefit from the inevitable upturn in the economy," he said.
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, which is expected to occur in second quarter 2008, has occurred. More information on the post-closing swap can be found in the company's supplemental information attached to this release.
Harrah's Operating Company: Overall (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $1,281.8 $572.2 $1,854.0 $1,975.9 -6.2% Property EBITDA 340.7 107.8 448.5 482.3 -7.0% Adjusted EBITDA (2) 303.2 141.1 444.3 486.3 -8.6% (2) Adjusted EBITDA is presented prior to the benefit of yet-to-be- realized cost savings. Please see reconciliation at the conclusion of this release. Summaries of results by region follow:
Las Vegas Region
Overall market weakness and a drop in the number of hotel rooms available at Caesars Palace due to reconstruction of the Forum Tower and at Harrah's
Harrah's Entertainment: LAS VEGAS REGION (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $609.4 $253.6 $863.0 $898.6 -4.0% Income from operations 142.9 51.9 194.8 235.6 -17.3% Property EBITDA 199.3 76.0 275.3 297.6 -7.5% 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 (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $260.5 $118.5 $379.0 $393.5 -3.7% Income from operations 56.5 29.7 86.2 101.8 -15.3% Property EBITDA 76.9 38.1 115.0 130.6 -11.9% 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
Strong initial results from an expansion at Harrah's
Harrah's Entertainment: ATLANTIC CITY REGION (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $408.2 $160.8 $569.0 $546.0 4.2% Income from operations 59.2 18.7 77.9 72.0 8.2% Property EBITDA 99.7 36.4 136.1 132.7 2.6% 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 (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $320.4 $125.8 $446.2 $429.4 3.9% Income from operations 45.0 8.0 53.0 51.9 2.1% Property EBITDA 74.1 21.9 96.0 99.3 -3.3% Atlantic City Region properties include Showboat Atlantic City, Caesars Atlantic City, Bally's Atlantic City and Harrah's Chester.
The continued strong performance at Harrah's
Harrah's Entertainment: LOUISIANA/MISSISSIPPI REGION (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $274.5 $106.1 $380.6 $390.5 -2.5% Income from operations 232.6 10.1 242.7 75.5 N/M Property EBITDA 66.9 18.6 85.5 84.1 1.7% Louisiana/Mississippi Region properties include Harrah's New Orleans, Horseshoe Bossier City, Louisiana Downs, Horseshoe Tunica, Grand Casino Tunica, Sheraton Tunica and Grand Casino Biloxi.
Strong performances at company properties in
Harrah's Entertainment: IOWA/MISSOURI REGION (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $143.0 $55.8 $198.8 $201.7 -1.4% Income from operations 30.7 7.7 38.4 33.1 16.0% Property EBITDA 40.7 13.0 53.7 52.9 1.5% Iowa/Missouri Region properties include Harrah's St. Louis, Harrah's Council Bluffs, Horseshoe Council Bluffs and Harrah's North Kansas City.
Imposition of a smoking ban in
Harrah's Entertainment: ILLINOIS/INDIANA REGION (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $208.1 $85.5 $293.6 $324.5 -9.5% Income from operations 27.2 8.7 35.9 51.1 -29.7% Property EBITDA 36.5 13.6 50.1 68.2 -26.5% Illinois/Indiana Region properties include Horseshoe Hammond, Harrah's Joliet, Harrah's Metropolis and Caesars Indiana.
Other Nevada Region
First-quarter revenues and Property EBITDA for the Other Nevada Region declined due to weakness in the
Harrah's Entertainment: OTHER NEVADA (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $107.7 $38.9 $146.6 $153.6 -4.6% Income from operations 14.1 0.5 14.6 20.5 -28.8% Property EBITDA 23.2 4.5 27.7 32.8 -15.5% Other Nevada properties include Harrah's Reno, Harrah's Lake Tahoe, Harvey's Lake Tahoe, Bill's Casino and Harrah's Laughlin. Harrah's Operating Company: OTHER NEVADA (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $75.7 $26.8 $102.5 $108.2 -5.3% Income from operations 8.2 (1.9) 6.3 8.1 -22.2% Property EBITDA 13.7 1.2 14.9 17.8 -16.3% Other Nevada properties include Harrah's Reno, Harrah's Lake Tahoe, Harvey's Lake Tahoe and Bill's Casino.
Managed/International/Other
The first-quarter decline in Property EBITDA was due primarily to a new smoking ban that impacted volume and a lower table-game hold percentage at London Clubs International properties and termination of a Native American management contract in
Harrah's Entertainment: MANAGED/INTERNATIONAL/OTHER (in millions) Successor Predecessor Period Period Jan. 28, Jan. 1, 2008 2008 Combined(1) Predecessor through through Three Months Ended Percent Mar. 31, Jan. 27, Mar. 31, Increase 2008 2008 2008 2007 (Decrease) Total revenues $89.6 $59.4 $149.0 $140.7 5.9% Income from operations (27.2) (0.3) (27.5) 0.8 N/M Property EBITDA 13.0 9.1 22.1 30.1 -26.6% Managed, international and 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
First-quarter corporate expenses were lower than in the 2007 first period due to continued realization of cost savings and efficiencies.
Interest expense increased significantly from the 2007 first quarter due to higher debt levels associated with the company's purchase by affiliates of Apollo Global Management and TPG Capital. Results were also impacted by a first-quarter 2008 charge of
The effective tax rate for the 2008 first quarter was 23.4 percent compared with 37.5 percent in the 2007 first quarter. The effective rate is lower in the 2008 period due primarily to non-deductible merger costs, international income taxes and state income taxes.
Discontinued operations for the 2008 first quarter reflect insurance proceeds of
Harrah's will host a conference today at
Harrah's Entertainment, Inc. is the world's largest provider of branded casino entertainment. Since its beginning in
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 substantial indebtedness incurred to finance the consummation of the acquisition of the company by affiliates of TPG Capital and Apollo Management; 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.
HARRAH'S ENTERTAINMENT, INC. CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED) Successor Predecessor (In millions) Jan. 28, 2008 Jan. 1, 2008 Combined (1) Predecessor Through Through Three Months Ended Mar. 31, Mar. 31, 2008 Jan. 27, 2008 2008 2007 Revenues $1,840.5 $760.1 $2,600.6 $2,655.6 Property operating expenses (1,361.2) (588.9) (1,950.1) (1,957.2) Depreciation and amortization (124.2) (63.5) (187.7) (190.3) Operating profit 355.1 107.7 462.8 508.1 Corporate expense (24.7) (8.5) (33.2) (33.4) Merger and integration costs (17.0) (125.6) (142.6) (4.0) Income/(losses) on interests in nonconsolidated affiliates 0.7 0.5 1.2 (0.1) Amortization of intangible assets (32.3) (5.5) (37.8) (17.9) Project opening costs and other items 156.0 (5.4) 150.6 (1.5) Income from operations 437.8 (36.8) 401.0 451.2 Interest expense, net of interest capitalized (467.9) (89.7) (557.6) (185.8) Losses on early extinguishments of debt (211.3) - (211.3) - Other income, including interest income 7.7 1.1 8.8 8.2 (Loss)/income before income taxes and minority interests (233.7) (125.4) (359.1) 273.6 Income tax benefit/ (provision) 58.1 26.0 84.1 (100.3) Minority interests 1.4 (1.6) (0.2) (6.1) (Loss)/income from continuing operations (174.2) (101.0) (275.2) 167.2 Discontinued operations, net of tax 87.3 0.1 87.4 18.1 Net (loss)/income $(86.9) $(100.9) $(187.8) $185.3 HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL OPERATING INFORMATION (UNAUDITED) Successor Predecessor (In millions) Jan. 28, 2008 Jan. 1, 2008 Combined (1) Predecessor Through Through Three Months Ended Mar. 31, Mar. 31, 2008 Jan. 27, 2008 2008 2007 Revenues Las Vegas Region $609.4 $253.6 $863.0 $898.6 Atlantic City Region 408.2 160.8 569.0 546.0 Louisiana/Mississippi Region 274.5 106.1 380.6 390.5 Iowa/Missouri Region 143.0 55.8 198.8 201.7 Illinois/Indiana Region 208.1 85.5 293.6 324.5 Other Nevada Region 107.7 38.9 146.6 153.6 Managed/International /Other 89.6 59.4 149.0 140.7 Total Revenues $1,840.5 $760.1 $2,600.6 $2,655.6 Income/(loss) from operations Las Vegas Region $142.9 $51.9 $194.8 $235.6 Atlantic City Region 59.2 18.7 77.9 72.0 Louisiana/Mississippi Region 232.6 10.1 242.7 75.5 Iowa/Missouri Region 30.7 7.7 38.4 33.1 Illinois/Indiana Region 27.2 8.7 35.9 51.1 Other Nevada Region 14.1 0.5 14.6 20.5 Managed/International/ Other (27.2) (0.3) (27.5) 0.8 Corporate Expense (24.7) (8.5) (33.2) (33.4) Merger and integration costs (17.0) (125.6) (142.6) (4.0) Total Income/(loss) from operations $437.8 $(36.8) $401.0 $451.2 Property EBITDA(a) Las Vegas Region $199.3 $76.0 $275.3 $297.6 Atlantic City Region 99.7 36.4 136.1 132.7 Louisiana/Mississippi Region 66.9 18.6 85.5 84.1 Iowa/Missouri Region 40.7 13.0 53.7 52.9 Illinois/Indiana Region 36.5 13.6 50.1 68.2 Other Nevada Region 23.2 4.5 27.7 32.8 Managed/International/ Other 13.0 9.1 22.1 30.1 Total Property EBITDA $479.3 $171.2 $650.5 $698.4 Project opening costs and other items Project opening costs $(2.8) $(0.7) $(3.5) $(8.9) Insurance proceeds for hurricane losses 185.4 - 185.4 18.7 Other write-downs, reserves and recoveries (26.6) (4.7) (31.3) (11.3) Total Project opening costs and other items $156.0 $(5.4) $150.6 $(1.5) (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 January 28, 2008 Through March 31, 2008 Las Atlantic Louisiana/ Iowa/ Vegas City Mississippi Missouri Region Region Region Region Revenues $609.4 $408.2 $274.5 $143.0 Property operating expenses (410.1) (308.5) (207.6) (102.3) Property EBITDA 199.3 99.7 66.9 40.7 Depreciation and amortization (34.6) (34.0) (15.0) (9.7) Operating profit 164.7 65.7 51.9 31.0 Amortization of intangible assets (13.2) (4.5) (4.6) (0.2) Income on interests in nonconsolidated affiliates - - - - Project opening costs and other items (8.6) (2.0) 185.3 (0.1) Corporate expense - - - - Merger and integration costs - - - - Income/(loss) from operations* $142.9 $59.2 $232.6 $30.7 Predecessor January 1, 2008 Through January 27, 2008 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 Successor January 28, 2008 Through March 31, 2008 Illinois/ Other Indiana Nevada Region Region Other Total Revenues $208.1 $107.7 $89.6 $1,840.5 Property operating expenses (171.6) (84.5) (76.6) (1,361.2) Property EBITDA 36.5 23.2 13.0 479.3 Depreciation and amortization (8.4) (6.6) (15.9) (124.2) Operating profit 28.1 16.6 (2.9) 355.1 Amortization of intangible assets (0.4) (2.5) (6.9) (32.3) Income on interests in nonconsolidated affiliates - - 0.7 0.7 Project opening costs and other items (0.5) - (18.1) 156.0 Corporate expense - - (24.7) (24.7) Merger and integration costs - - (17.0) (17.0) Income/(loss) from operations* $27.2 $14.1 $(68.9) $437.8 Predecessor January 1, 2008 Through January 27, 2008 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) HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL INFORMATION RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS (UNAUDITED) (In millions) Combined (1) Three Months Ended March 31, 2008 Las Atlantic Louisiana/ Iowa/ Vegas City Mississippi Missouri Region Region Region Region Revenues $863.0 $569.0 $380.6 $198.8 Property operating expenses (587.7) (432.9) (295.1) (145.1) Property EBITDA 275.3 136.1 85.5 53.7 Depreciation and amortization (53.3) (49.7) (23.6) (14.8) Operating profit 222.0 86.4 61.9 38.9 Amortization of intangible assets (14.2) (6.4) (5.1) (0.4) Losses on interests in nonconsolidated affiliates - - - - Project opening costs and other items (13.0) (2.1) 185.9 (0.1) Corporate expense - - - - Merger and integration costs - - - - Income/(loss) from operations* $194.8 $77.9 $242.7 $38.4 Predecessor Three Months Ended March 31, 2007 Revenues $898.6 $546.0 $390.5 $201.7 Property operating expenses (601.0) (413.3) (306.4) (148.8) Property EBITDA 297.6 132.7 84.1 52.9 Depreciation and amortization (54.5) (49.5) (24.5) (18.8) Operating profit 243.1 83.2 59.6 34.1 Amortization of intangible assets (3.5) (6.4) (2.0) (0.8) Losses on interests in nonconsolidated affiliates - - - - Project opening costs and other items (4.0) (4.8) 17.9 (0.2) Corporate expense - - - - Merger and integration costs - - - - Income/(loss) from operations* $235.6 $72.0 $75.5 $33.1 Combined (1) Three Months Ended March 31, 2008 Illinois/ Other Indiana Nevada Region Region Other Total Revenues $293.6 $146.6 $149.0 $2,600.6 Property operating expenses (243.5) (118.9) (126.9) (1,950.1) Property EBITDA 50.1 27.7 22.1 650.5 Depreciation and amortization (12.7) (10.5) (23.1) (187.7) Operating profit 37.4 17.2 (1.0) 462.8 Amortization of intangible assets (1.0) (2.6) (8.1) (37.8) Losses on interests in nonconsolidated affiliates - - 1.2 1.2 Project opening costs and other items (0.5) - (19.6) 150.6 Corporate expense - - (33.2) (33.2) Merger and integration costs - - (142.6) (142.6) Income/(loss) from operations* $35.9 $14.6 $(203.3) $401.0 Predecessor Three Months Ended March 31, 2007 Revenues $324.5 $153.6 $140.7 $2,655.6 Property operating expenses (256.3) (120.8) (110.6) (1,957.2) Property EBITDA 68.2 32.8 30.1 698.4 Depreciation and amortization (14.1) (12.0) (16.9) (190.3) Operating profit 54.1 20.8 13.2 508.1 Amortization of intangible assets (2.0) (0.2) (3.0) (17.9) Losses on interests in nonconsolidated affiliates - - (0.1) (0.1) Project opening costs and other items (1.0) (0.1) (9.3) (1.5) Corporate expense - - (33.4) (33.4) Merger and integration costs - - (4.0) (4.0) Income/(loss) from operations* $51.1 $20.5 $(36.6) $451.2 * 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 CALCULATION OF 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
Predecessor Successor Combined (1) (In millions) Jan. 1, Jan. 28, Jan. 1, 2008 2008 2008 Through Through Through Dec. 31, Mar. 31, Jan. 27, Mar. 31, Mar. 31, 2007 2007 2008 2008 2008 LTM Income/(loss) from continuing operations $527.2 $167.2 $(101.0) $(174.2) $(275.2) $84.8 Interest expense, net 780.8 185.0 89.7 460.8 550.5 1,146.3 Provision/ (benefit) for income taxes 350.1 100.3 (26.0) (58.1) (84.1) 165.7 Depreciation and amortization 934.7 218.8 72.7 159.9 232.6 948.5 EBITDA 2,592.8 671.3 35.4 388.4 423.8 2,345.3 Project opening costs, abandoned projects and development costs(a) 29.8 10.2 0.9 2.7 3.6 23.2 Merger and integration costs(b) 13.4 4.0 125.6 17.0 142.6 152.0 Losses on early extinguishment of debt(c) 2.0 - - 211.3 211.3 213.3 Minority interests, net of distributions(d)(4.8) 3.4 1.0 (2.2) (1.2) (9.4) Impairment of goodwill, intangible assets and investment securities(e) 169.6 - - - - 169.6 Non-cash expense for stock compensation benefits(f) 53.0 12.3 2.4 1.6 4.0 44.7 Income from insurance claims for hurricane losses(g) (130.3) (18.7) - (185.4) (185.4) (297.0) Other non- recurring or non-cash items(h) 84.0 7.8 6.7 20.6 27.3 103.5 Pro forma adjustment for acquired, new or disposed properties(i) 3.3 4.3 - - - (1.0) Pro forma adjustment for yet-to-be realized cost savings (j) 67.1 Adjusted EBITDA $2,811.3 (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 Acquisition, 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, A WHOLLY OWNED SUBSIDIARY OF HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL INFORMATION RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS (UNAUDITED) (In millions) Successor January 28, 2008 Through March 31, 2008 Las Atlantic Louisiana/ Iowa/ Vegas City Mississippi Missouri Region Region Region Region Revenues $260.5 $320.4 $274.5 $143.0 Property operating expenses (183.6) (246.3) (207.6) (102.3) Property EBITDA 76.9 74.1 66.9 40.7 Depreciation and amortization (14.8) (25.1) (15.0) (9.7) Operating profit 62.1 49.0 51.9 31.0 Amortization of intangible assets (5.6) (2.5) (4.6) (0.2) Income on interests in nonconsolidated affiliates - - - - Project opening costs and other Items - (1.5) 185.3 (0.1) Corporate expense - - - - Merger and integration costs - - - - Income/(loss) from operations* $56.5 $45.0 $232.6 $30.7 Predecessor January 1, 2008 Through January 27, 2008 Revenues $118.5 $125.8 $106.1 $55.8 Property operating expenses (80.4) (103.9) (87.5) (42.8) Property EBITDA 38.1 21.9 18.6 13.0 Depreciation and amortization (7.4) (11.9) (8.6) (5.1) Operating profit 30.7 10.0 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 - (0.1) 0.6 - Corporate expense - - - - Merger and integration costs - - - - Income/(loss) from operations* $29.7 $8.0 $10.1 $7.7 Successor January 28, 2008 Through March 31, 2008 Illinois/ Other Indiana Nevada Region Region Other Total Revenues $208.1 $75.7 $(0.4) $1,281.8 Property operating expenses (171.6) (62.0) 32.4 (941.0) Property EBITDA 36.5 13.7 32.0 340.8 Depreciation and amortization (8.4) (5.0) (15.4) (93.4) Operating profit 28.1 8.7 16.6 247.4 Amortization of intangible assets (0.4) (0.5) (6.9) (20.7) Income on interests in nonconsolidated affiliates - - 0.7 0.7 Project opening costs and other Items (0.5) - (18.1) 165.1 Corporate expense - - (41.5) (41.5) Merger and integration costs - - (17.0) (17.0) Income/(loss) from operations* $27.2 $8.2 $(66.2) $334.0 Predecessor January 1, 2008 Through January 27, 2008 Revenues $85.5 $26.8 $53.7 $572.2 Property operating expenses (71.9) (25.6) (52.4) (464.5) Property EBITDA 13.6 1.2 1.3 107.7 Depreciation and amortization (4.3) (3.0) (6.9) (47.2) Operating profit 9.3 (1.8) (5.6) 60.5 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 - - (1.4) (0.9) Corporate expense - - 26.2 26.2 Merger and integration costs - - (125.6) (125.6) Income/(loss) from operations* $8.7 $(1.9) $(107.1) $(44.8) HARRAH'S OPERATING COMPANY, A WHOLLY OWNED SUBSIDIARY OF HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL INFORMATION RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS (UNAUDITED) (In millions) Combined (1) Three Months Ended March 31, 2008 Las Atlantic Louisiana/ Iowa/ Vegas City Mississippi Missouri Region Region Region Region Revenues $379.0 $446.2 $380.6 $198.8 Property operating expenses (264.0) (350.2) (295.1) (145.1) Property EBITDA 115.0 96.0 85.5 53.7 Depreciation and amortization (22.2) (37.0) (23.6) (14.8) Operating profit 92.8 59.0 61.9 38.9 Amortization of intangible assets (6.6) (4.4) (5.1) (0.4) Income on interests in nonconsolidated affiliates - - - - Project opening costs and other Items - (1.6) 185.9 (0.1) Corporate expense - - - - Merger and integration costs - - - - Income/(loss) from operations* $86.2 $53.0 $242.7 $38.4 Predecessor Three Months Ended March 31, 2007 Revenues $393.5 $429.4 $390.5 $201.7 Property operating expenses (262.9) (330.1) (306.4) (148.8) Property EBITDA 130.6 99.3 84.1 52.9 Depreciation and amortization (21.9) (37.1) (24.5) (18.8) Operating profit 108.7 62.2 59.6 34.1 Amortization of intangible assets (3.3) (6.4) (2.0) (0.8) Losses on interests in nonconsolidated affiliates - - - - Project opening costs and other Items (3.6) (3.9) 17.9 (0.2) Corporate expense - - - - Merger and integration costs - - - - Income/(loss) from operations* $101.8 $51.9 $75.5 $33.1 Combined (1) Three Months Ended March 31, 2008 Illinois/ Other Indiana Nevada Region Region Other Total Revenues $293.6 $102.5 $53.3 $1,854.0 Property operating expenses (243.5) (87.6) (20.0) (1,405.5) Property EBITDA 50.1 14.9 33.3 448.5 Depreciation and amortization (12.7) (8.0) (22.3) (140.6) Operating profit 37.4 6.9 11.0 307.9 Amortization of intangible assets (1.0) (0.6) (8.1) (26.2) Income on interests in nonconsolidated affiliates - - 1.2 1.2 Project opening costs and other Items (0.5) - (19.5) 164.2 Corporate expense - - (15.3) (15.3) Merger and integration costs - - (142.6) (142.6) Income/(loss) from operations* $35.9 6.3 $(173.3) $289.2 Predecessor Three Months Ended March 31, 2007 Revenues $324.5 $108.2 $128.1 $1,975.9 Property operating expenses (256.3) (90.4) (98.7) (1,493.6) Property EBITDA 68.2 17.8 29.4 482.3 Depreciation and amortization (14.1) (9.4) (16.7) (142.5) Operating profit 54.1 8.4 12.7 339.8 Amortization of intangible assets (2.0) (0.2) (3.1) (17.8) Losses on interests in nonconsolidated affiliates - - (0.1) (0.1) Project opening costs and other Items (1.0) (0.1) (9.2) (0.1) Corporate expense - - (21.6) (21.6) Merger and integration costs - - (4.0) (4.0) Income/(loss) from operations* $51.1 $8.1 $(25.3) $296.2 * 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 OPERATING COMPANY, A WHOLLY OWNED SUBSIDIARY OF HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL INFORMATION CALCULATION OF 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.
In connection with the acquisition of the Company by affiliates of Apollo Global Management, LLC and TPG Capital, LP, eight of our properties and their related operating assets were spun off from Harrah's Operating Company to Harrah's Entertainment through a series of distributions, liquidations, transfers and contributions, collectively referred to as the "the CMBS Spin- Off." The eight properties, as of the closing, are Harrah's
The following table reconciles EBITDA and Adjusted EBITDA of Harrah's Operating for the Predecessor period from
HARRAH'S OPERATING COMPANY, A WHOLLY OWNED SUBSIDIARY OF HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL INFORMATION RECONCILIATION OF EBITDA TO ADJUSTED EBITDA (UNAUDITED) Predecessor Successor Combined (1) (In millions) Jan. 1, Jan. 28, Jan. 1, 2008 2008 2008 Through Through Through Dec. 31, Mar. 31, Jan. 27, Mar. 31, Mar. 31, 2007 2007 2008 2008 2008 LTM Income/(loss) from continuing operations $163.1 $68.7 $(109.1) $(177.9) $(287.0) $(192.6) Interest expense, net 776.0 184.0 85.7 375.8 461.5 1,053.5 Provision/(benefit) for income taxes 170.1 46.2 (21.7) (71.9) (93.6) 30.3 Depreciation and amortization 727.2 170.9 56.4 117.5 173.9 730.2 EBITDA 1,836.4 469.8 11.3 243.5 254.8 1,621.4 Project opening costs, abandoned projects and development costs(a) 26.9 8.8 0.9 2.2 3.1 21.2 Merger and integration costs(b) 9.4 2.8 125.6 17.0 142.6 149.2 Losses on early extinguishment of debt(c) 2.0 - - 211.3 211.3 213.3 Minority interests, net of distributions(d) (3.7) 3.6 0.8 (2.7) (1.9) (9.2) Impairment of goodwill, intangible assets and investment securities(e) 155.9 - - - - 155.9 Non-cash expense for stock compensation benefits(f) 38.2 8.9 1.7 1.1 2.8 32.1 Income from insurance claims for hurricane losses(g) (130.3) (18.7) - (185.4) (185.4) (297.0) Other non- recurring or non-cash items(h) 55.6 6.8 0.8 16.2 17.0 65.8 Pro forma adjustment for acquired, new or disposed properties(i) 3.3 4.3 - - - (1.0) Pro forma \ adjustment for yet-to-be realized cost savings (j) 47.0 Adjusted EBITDA $1,998.7 (k) 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. (l) Represents costs in connection with the Acquisition, 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. (m) Represents premiums paid and the write-off of historical unamortized deferred financing costs. (n) Represents minority owners' share of income from our majority-owned subsidiaries, net of cash distributions to minority owners. (o) Represents impairment of intangible assets and i
Search Our News Using Google Search
Can't find what you want? Try using Google:
