Park Place Entertainment Corporation (NYSE: PPE) today reported financial results for the quarter and six months ended June 30, 2002.
Second Quarter 2002 Results:
For the second quarter of 2002, Park Place reported net income of $96 million, or $0.31 per diluted share, including a one-time investment gain of $39 million, net of tax, from the sale of its interest in Jupiters Limited, an Australian casino company. That compares to results for the second quarter of last year of $61 million, or $0.20 per diluted share, excluding goodwill amortization of $13 million.
Adjusted earnings per share for the second quarter, excluding the investment gain and pre-opening charges, were $0.19 per diluted share compared to $0.20 per diluted share for the second quarter of last year.
Net revenue for the second quarter of 2002 was $1.198 billion, up from $1.171 billion for the second quarter of 2001. Earnings before interest, taxes, depreciation, amortization, pre-opening expenses and the investment gain from Jupiters (EBITDA) were $310 million for the second quarter of 2002, even with the prior year.
First Half 2002 Results:
For the first six months of 2002, Park Place reported adjusted net income of $97 million, or $0.32 per diluted share, excluding the cumulative effect of an accounting change for goodwill and the investment gain. Including the effect of the goodwill accounting change and the investment gain, the company recorded a net loss for the first six months of 2002 of ($843) million, or ($2.76) per diluted share. In the first six months of 2001, net income excluding goodwill amortization was $118 million, or $0.39 per diluted share.
Net revenue for the first half of 2002 was $2.356 billion, compared to $2.332 billion for the first half of 2001. EBITDA for the first six months of 2002 was $589 million, down from $625 million for the first half of 2001.
In accordance with Statement of Financial Accounting Standard Number 142, “Goodwill and Other Intangible Assets,” the company recorded a non-cash charge in the first quarter of this year of $979 million to write down the value of goodwill associated with previous acquisitions.
Second Quarter Highlights:
* Continued margin improvement at Las Vegas Strip and Atlantic City properties
* 8% increase in Eastern Region EBITDA, led by 13% increase at Caesars
* Record second quarter results at Caesars Indiana - EBITDA up by 29%
* Recovery on the Las Vegas Strip, with all PPE Strip properties showing continuing improvement
* 9% increase in EBITDA at Caesars Palace, in spite of construction disruption
* Completion of the sale of 20% equity in Australian casinos for $120 million while retaining management contract
* Substantial continued debt reduction—$255 million in Q2, $354 million YTD
* Completion of $25 million Gateway project linking Claridge to Bally`s AC and indoor connection of three casino resorts spanning five city blocks
* Major entertainment and boxing events by Park Place at the renovated Boardwalk Hall in Atlantic City
* Agreement with Simon Group to commence Forum Shops III at Caesars Palace
* Joint Venture with Jimmy Buffett bringing Margaritaville to Flamingo Las Vegas
* Agreement for Gordon Group to develop and finance renovation of Ocean One with enclosed retail connection across the Boardwalk to Caesars AC
* Colosseum at Caesars Palace on schedule and on budget
* Continued roll-out of Connection Card, with strong cross-property play increases
“Our results for the quarter confirmed the strength of our diverse portfolio, with gains in every domestic region over last year,” said Park Place President and Chief Executive Officer Thomas E. Gallagher. “Our emphasis on performance improvement, combined with major initiatives this year in restaurants, entertainment and technology, are providing an excellent platform for future growth. We`re keeping a close eye on the economy and travel trends, but we`re encouraged by the recovery we have seen in Las Vegas.”
“We`ve also delivered on our commitment to debt reduction. During the quarter, we paid down $255 million of debt, for a year-to-date total reduction of $354 million,” Gallagher said.
“Park Place showed strength across all of our domestic regions in the second quarter,” said Park Place Chief Operating Officer Wallace R. Barr. “We launched significant new initiatives to grow our revenues and also made important progress in improving profitability. The changes we have made over the past few months are now delivering results. We also led the return of top quality entertainment and sports events to Atlantic City and experienced superior returns from such events, adding to our position as the leader in that market,” said Barr.
“We had a successful second quarter, with consistent performance across most of our domestic portfolio,” said Park Place Chief Financial Officer Harry C. Hagerty. “We also continued to drive initiatives aimed at long-term, sustainable increases in our profitability and returns on capital. We have significant opportunities throughout our company. The sheer size of our enterprise makes the potential rewards well worth the effort.”