Slightly Better than the $81.1 million Recorded in 2003;
Southern Nevada Properties Particularly Strong
|LAS VEGAS, April 21, 2004 - Harrah's Entertainment,
Inc. (NYSE: HET) today reported record first-quarter revenues of
$1.11 billion, up 4.7 percent from revenues of $1.06 billion in the 2003
Property Earnings Before Interest, Taxes, Depreciation and Amortization
Property EBITDA and Adjusted EPS are not Generally Accepted Accounting Principles (GAAP) measurements but are commonly used in the gaming industry as measures of performance and as a basis for valuation of gaming companies. In addition, analysts' per-share earnings estimates for gaming companies are comparable to Adjusted EPS. Reconciliations of Adjusted EPS to GAAP EPS and Property EBITDA to income from operations are attached to this release.
First-quarter income from operations declined 1.3 percent to $188.0 million from $190.4 million in the year-earlier quarter. First-quarter net income was $81.7 million, up 0.7 percent from $81.1 million in the 2003 first quarter. Diluted earnings per share from continuing operations for the 2004 first quarter was 73 cents, matching that of the year-earlier period despite a 2.3 percent increase in the number of shares outstanding.
"Strong same-store sales growth fueled by enhancements added last year to our Total Rewards customer-loyalty program accelerated the positive momentum we developed in the fourth quarter of 2003," said Gary Loveman, Harrah's Entertainment's president and chief executive officer. "As a result, net income exceeded that of the 2003 first quarter despite the impact of gaming-tax rate increases imposed in mid-2003 in several states."
First-quarter 2004 same-store revenues increased 5.8 percent over the year-ago period. Cross-market play -- gaming by customers at Harrah's properties other than their "home" casino -- rose 23.1 percent from the first quarter of 2003. Tracked play -- gaming by customers using the company's Total Rewards player cards -- increased 12.0 percent from the year-ago first quarter.
"We benefited from increased revenues in all segments, ranging from rated retail customers who typically spend $50 or less per visit to VIP customers who spend $400 or more per visit," Loveman said.
"Our Southern Nevada operations posted particularly strong performances and we were pleased with the results from Atlantic City despite increased competition in that market due to a new casino that opened last summer," Loveman continued.
"We are optimistic about the outlook for the remainder of the year. Pending regulatory approvals, we expect to close on the previously announced acquisition of Horseshoe Gaming Holding Corp. around mid-year, adding three superb properties to our portfolio and giving us control of the Horseshoe brand worldwide," Loveman said.
"In a separate transaction, we opened Binion's Horseshoe in downtown Las Vegas on April 1 and are ready to host the 35th anniversary of the World Series of Poker -- the world's largest gaming tournament -- at that property beginning this week," Loveman said.
Harrah's acquired rights to the World Series of Poker during the first quarter. The company and a subsidiary of MTR Gaming Group, Inc. will operate the Horseshoe in Las Vegas for a one-year period with options to extend for up to two additional years.
"Last week, we opened both a new nightclub and a Diamond players' facility at Harrah's St. Louis, where our new 200-room hotel is expected to open by the end of the third quarter," Loveman said. "We are also completing plans for expansion of our North Kansas City operation.
"Next month, we will open our permanent casino at Louisiana Downs, adding 500 slot machines and raising the slot total at the facility to 1,400," Loveman said. "Also this quarter, we expect to begin site preparation for construction of our new $142 million, 450-room hotel at Harrah's New Orleans, which should bolster that property's results beginning in 2006.
"We are moving quickly to deploy Fast Cash, our coinless slot system," Loveman said. "As of March 31, we had completed conversions on more than 60 percent of the slots we plan to convert to Fast Cash and expect to be well over 90 percent completed by the end of the second quarter.
"On April 7, a committee composed of peers and members of Parliament recommended that a bill to liberalize gaming in the United Kingdom be introduced this year, marking another milestone in the development of expansion opportunities in the U.K.," Loveman said.
"We are pleased that the committee recognizes the economic benefits gaming's expansion can bring to the U.K. and the need for Parliament to move quickly on the proposed legislation," Loveman said. "If Parliament does act favorably this year on legislation that includes the opportunity for us to earn a fair return on our investment, we plan to move forward aggressively into the U.K. regional casino market with our joint-venture partner, Gala Group Ltd."
Among the first-quarter highlights:
Strong cross-market play at the company's two Las Vegas properties helped Harrah's West Region achieve record results. Southern Nevada revenues rose 13.3 percent, income from operations gained 45.7 percent and Property EBITDA increased 29.2 percent from the 2003 first quarter.
Competition from Native American casinos in Northern California required increased marketing expenses that impacted results from Northern Nevada. Revenues rose 1.2 percent to a record level from the first quarter last year, but income from operations fell 27.5 percent and Property EBITDA was down 13.6 percent.
"We expect the outstanding performances of the Rio and Harrah's Las Vegas to continue," said Tim Wilmott, Harrah's chief operating officer.
East Region Quarter Results Rise
Despite new competition in Atlantic City, the strong performance of the Showboat led to record combined results for Harrah's two East Region properties. First-quarter revenues rose 1.9 percent, income from operations gained 2.3 percent and Property EBITDA increased 4.8 percent from the year-earlier period.
"We believe the recent expansion of the Showboat and the earlier expansion at Harrah's Atlantic City proved prudent as the market growth that began with the opening last summer of Atlantic City's first new hotel-casino in 12 years continues to accelerate," Wilmott said.
North Central Region Reports Lower Results For Quarter
Continued competitive pressures and higher gaming-tax rates than in the year-ago quarter led to declines in 2004 first-quarter results from the company's North Central Region. Revenues were down 0.9 percent from the first quarter of 2003, while income from operations declined 22.4 percent and Property EBITDA fell 15.1 percent.
Combined first-quarter revenues at Harrah's East Chicago, Joliet and Metropolis facilities fell 2.2 percent, income from operations declined 31.3 percent, and Property EBITDA was 25.8 percent lower.
At the company's two Iowa properties, combined first-quarter revenues were 3.4 percent higher than in the year-ago period and income from operations was 6.0 percent lower, but Property EBITDA rose 5.4 percent to a first-quarter record.
Combined first-quarter revenues at Harrah's St. Louis and North Kansas
South Central Region Reports Record First-Quarter Results
The South Central Region, which includes Harrah's Louisiana and Mississippi properties, reported record first-quarter revenues and income from operations. Revenues rose 12.1 percent, income from operations increased 2.3 percent, while Property EBITDA fell 0.7 percent.
The 2004 first quarter included results from Louisiana Downs, where 900 slot machines were introduced in May 2003.
"The May opening of an expanded Louisiana Downs, the expected closing of the Horseshoe Gaming acquisition around mid-year and the beginning of construction this summer on our new hotel at Harrah's New Orleans are expected to bolster future results from this region," Wilmott said.
Managed Properties And Other Items
First-quarter management-fee revenues were down 14.9 percent from the year-ago period due to the extension of management contracts at lower fee schedules.
First-quarter development costs rose to $3.3 million from $2.8 million in the 2003 first quarter.
Corporate expense rose 21.7 percent in the 2004 first quarter from the year-earlier period. Interest expense was down 1.1 percent from the 2003 first quarter.
The effective tax rate after minority interest for the 2004 first quarter
was 37.1 percent, equal to the full-year 2003 rate but lower than in the
year-earlier first quarter.
Founded 66 years ago, Harrah's Entertainment, Inc. owns or manages through various subsidiaries 26 casinos in the United States, primarily under the Harrah's brand name. Harrah's Entertainment is focused on building loyalty and value with its valued customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership.
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.
Harrah's Entertainment, Inc.
Web Site: http://www.harrahs.com
|Also See:||Harrah's Entertainment, Inc. Proceeding with Construction of a $142 million, 450-room Hotel Tower at Harrah's New Orleans Casino / March 2004|