Park Place Entertainment Corporation (NYSE: PPE) announces fourth quarter and year end 1998 results.
On December 31, 1998, Park Place Entertainment Corporation (the Company) was created through the tax-free distribution of Hilton Hotels Corporation`s gaming division to its shareholders and the subsequent merger with the Mississippi operations of Grand Casinos, Inc. (the Grand Properties). The financial information herein is presented on a pro forma basis as if the December 31, 1998 distribution by Hilton and subsequent merger with the Grand Properties had occurred on January 1, 1997. The Company believes the pro forma information is a more meaningful presentation than the historical results for comparative reasons.
Pro forma net revenues for the Company were $712 million for the quarter ended December 31, 1998, a 4 percent increase over net revenues of $685 million in the fourth quarter 1997. For the year, net revenues came in at $2.9 billion, an 8 percent increase fro m the prior year.
Fourth quarter 1998 pro forma earnings before interest, taxes, depreciation and amortization and non-cash items (EBITDA) were $139 million, up 3 percent from 1997. For the year ended December 31, 1998, EBITDA increased 10 percent to $683 million from $619 million in the prior year. The full-year increase was driven primarily by operating improvements and additional rooms in the Eastern, Mid-South and International Regions, while the Western Region was flat with the prior year, despite challenging market conditions.
The Company reported fourth quarter earnings, before non-recurring charges, of $16 million, or $0.05 per diluted share compared to 1997 fourth quarter earnings, before non-recurring charges, of $22 million or $0.07 per share. After the non-recurring charges, diluted earnings per share for the fourth quarter of 1998 were $0.02 versus a loss of ($0.14) per share in 1997.
For the year, earnings before non-recurring charges were $149 million or $0.49 per diluted share in 1998 co mpared to $148 million or $0.48 per diluted share in 1997. Including non-recurring charges, the 1998 earnings were $139 million or $0.45 per diluted share compared to $82 million or $0.26 per diluted share in 1997.
Results in 1998 and 1997 were impacted by one-time pre-tax charges totaling $16 million and $102 million, respectively, associated with the write-down of riverboat assets. In both years, the charges were taken in the fourth quarter.
“We are very excited to have our first earnings report as an independent company,” said Arthur Goldberg, president and CEO. He went on to say, “We have a collection of leading assets in great locations in the three primary gaming markets in the United States. Our geographic diversification, when combined with our strong balance sheet, gives us a competitive advantage.”