LAS VEGAS, February 6, 2003—Park Place Entertainment Corporation (NYSE: PPE) today reported financial results for the quarter and full year ended December 31, 2002.
For the fourth quarter of 2002, Park Place reported a net loss of $(18) million, or $(0.06) per diluted share, including non-recurring items of $52 million. Adjusted earnings, excluding non-recurring items, were $0.05 per diluted share, exceeding the consensus of analysts’ estimates.
Fourth quarter non-recurring items include $9 million related to a contract settlement with the company’s former president and chief executive officer, who resigned in November 2002. The company also recorded a $43 million charge in connection with the buyout of its partner in Bally’s Lakeshore Casino in New Orleans, the settlement of all outstanding litigation involving the partnership and the revaluation of the property.
For the year-ago quarter, the company reported a net loss of $(16) million, or $(0.05) per diluted share, including goodwill amortization. Results for the fourth quarter of 2001 did not include any non-recurring items.
Fourth quarter adjusted earnings of $0.05 per diluted share compare to an adjusted loss of $(0.01) per diluted share for the fourth quarter of 2001, excluding goodwill amortization.
Net revenue for the fourth quarter of 2002 was $1.106 billion, up slightly from $1.102 billion for the fourth quarter of 2001. Despite essentially flat revenues, earnings before interest, taxes, depreciation, amortization and non-recurring items (EBITDA) was $228 million for the fourth quarter of 2002, up 18 percent from the $194 million reported for the fourth quarter of 2001.
Property EBITDA, which excludes corporate expense, was $246 million for the fourth quarter, up 17 percent from the $211 million in property EBITDA reported for the fourth quarter of 2001.
The substantial year-over-year increase in EBITDA was due largely to the company’s cost-reduction program, which has begun to yield significant results. Total operating expenses in the fourth quarter were $864 million, down four percent - or $35 million - from the $899 million reported for the fourth quarter of 2001.
For the full year of 2002, Park Place reported adjusted net income of $160 million, or $0.53 per diluted share. That compares to an adjusted net income of $144 million, or $0.48 per diluted share, for the year ended December 31, 2001. Adjusted net income excludes non-recurring items, pre-opening expense, the cumulative effect of the accounting change related to goodwill and amortization of goodwill in 2001.
Including the effect of the goodwill accounting change, non-recurring items and pre-opening expense, the net loss for full year 2002 was $(821) million, or $(2.70) per diluted share. For 2001, the net loss including non-recurring items, pre-opening expense and goodwill amortization was $(24) million, or $(0.08) per diluted share.
In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” the company recorded a non-cash charge in the first quarter of 2002 of $979 million to write down the value of goodwill associated with previous acquisitions.
Net revenue for the full year 2002 was $4.652 billion, compared to $4.581 billion for the full year of 2001. EBITDA for 2002 was $1.107 billion, up from $1.078 billion for 2001. Property EBITDA, which excludes corporate expense, was $1.176 billion for 2002, up four percent from the $1.135 billion in property EBITDA reported for 2001.
“We’re beginning to realize significant benefits from the strategy we put in place in 2002,” said Park Place President and Chief Executive Officer Wallace R. Barr. “Our cost reduction program is producing tangible results and we’ve strengthened our balance sheet by paying down nearly $400 million of indebtedness.
“Across the company, we’re delivering exciting new attractions for our guests - including The Colosseum at Caesars Palace - on budget and on time. We’re using new technology to build stronger relationships with our customers and put more power into our brands. And we’re exploring some potentially attractive opportunities at home and overseas,” Barr added. “After a year of hard work, Park Place clearly is on the right path.”