LAS VEGAS - Feb. 4, 1999 -- Park Place Entertainment Corp.
(NYSE:PPE) Thursday announced fourth-quarter and year-end 1998 results.
On Dec. 31, 1998, Park Place Entertainment Corp. (the Company) was created
through the tax-free distribution of Hilton Hotels Corp.'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 Dec. 31, 1998, distribution
by Hilton and subsequent merger with the Grand Properties had occurred
on Jan. 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 Dec. 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 from 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 Dec. 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 5 cents per diluted share, compared with 1997 fourth-quarter
earnings, before non-recurring charges, of $22 million, or 7 cents per
share. After the non-recurring charges, diluted earnings per share for
the fourth quarter of 1998 were 2 cents vs. a loss of 14 cents per share
in 1997.
For the year, earnings before non-recurring charges were $149 million,
or 49 cents per diluted share, in 1998, compared with $148 million, or
48 cents per diluted share, in 1997. Including non-recurring charges, the
1998 earnings were $139 million, or 45 cents per diluted share, compared
with $82 million, or 26 cents 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 writedown
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. "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."
Western Region
The Las Vegas Hilton reported EBITDA of $9 million in the fourth quarter
1998, compared with last year's $10 million due to a decrease in table
game drop, partially offset by improved hold percentage. For the year,
the Las Vegas Hilton reported an EBITDA increase of 29 percent to $58 million,
due primarily to an increase in high-end domestic table game play and more
effective management of individual operating departments.
Bally's Las Vegas reported EBITDA of $17 million for the fourth quarter
of 1998, down from $24 million in 1997's fourth quarter. For the year,
Bally's reported $84 million of EBITDA, compared with $93 million in 1997.
For both the quarter and the year, the property was negatively impacted
by a decrease in the table game hold percentage and higher operating costs
per occupied room.
The Flamingo Hilton-Las Vegas reported fourth-quarter EBITDA of $29
million, relatively flat with fourth-quarter 1997 results, as casino and
hotel results were comparable with the prior year's fourth quarter. In
1998, the property generated $106 million in EBITDA, compared with the
$109 million reported for 1997.
Eastern Region
The Atlantic City Hilton generated $6 million in EBITDA for the fourth
quarter, up from $5 million in the fourth quarter 1997. Full-year results
increased 28 percent to $37 million from $29 million in 1997. Improved
performance in both the quarter and the year was driven primarily by reduced
promotional spending and the new 300-room hotel tower completed in the
second half of 1997.
Bally's Park Place reported EBITDA of $27 million for the fourth quarter,
down 13 percent from the prior year's results due to increased marketing
and promotional expenses. For the full year, EBITDA from Park Place was
$157 million, compared with $155 million in 1997.
Mid-South Region
Grand Biloxi reported EBITDA of $17 million for the fourth quarter,
up 31 percent from the fourth quarter 1997. Full-year results were up 30
percent from $60 million in 1997 to $78 million in 1998. The improved performance
in both the quarter and the year was fueled by the addition of 500 hotel
rooms in February 1998.
Grand Gulfport reported $9 million in EBITDA for the fourth quarter,
up 29 percent from a year ago. For the year, EBITDA increased to $39 million
from $35 million in 1997. The increases were driven by improved operating
margins.
Grand Tunica's fourth-quarter EBITDA was $11 million, a 10 percent increase
from the prior year's fourth quarter. Full-year results were up 18 percent,
with EBITDA increasing to $46 million from $39 million. Improvements in
both the quarter and the year resulted primarily from the rooms addition
in 1998.
Other properties in the Region (Bally's New Orleans, Bally's Robinsonville
and the Flamingo-Kansas City) reported $12 million in EBITDA for the fourth
quarter of 1998, up from a loss of $1 million in the fourth quarter of
1997. Full-year 1998 performance increased to $39 million from $20 million
in 1997. Improved results in both the quarter and the year were driven
by capturing additional market share.
International
On a combined basis, the Conrad properties in Uruguay and Australia
were approximately flat in the fourth quarter at $10 million in EBITDA.
For the full year, these properties reported an EBITDA increase of 34 percent
to $47 million. The increase was generated by the company's casino in Punta
del Este, Uruguay, which had its first year of operations with a full complement
of hotel rooms and amenities in 1998.
Housed in two of Australia's grandest heritage buildings
-- the casino occupies the historic Treasury Building and the hotel is
located in the Lands Administration Building. The hotel features fine examples
of Edwardian Baroque architecture and historic sandstone walls.
The casino is housed in a Victoria-era Treasury building,
featuring three levels of gaming,
104 gaming tables and more than 1,200 gaming machines.
Games include Roulette, Blackjack, Baccarat, Mini-Baccarat, Craps, Big
Six, Sic-Bo. The casino features ornate columns and a six-story atrium
and houses the Club Conrad International, an exclusive VIP gaming facility. |
Conrad International Treasury
Casino, Brisbane
|
Looking forward to 1999: Construction of Paris-Las Vegas remains on
time and on budget, and the hotel is scheduled to open in September 1999.
Located at the four corners of the Las Vegas Strip and adjacent to Bally's,
Paris will contain 2,916 guest rooms, an 85,000-square-foot casino and
more than 140,000 square feet of meeting space. Its signature feature is
a 50-story replica of the famed Eiffel Tower with an observation deck and
a world-class restaurant with fantastic views of the Strip.
"We are optimistic about 1999, given what we believe will be strong
relative performance in our key markets driven by the location of our properties,
our marketing strategy, the 1,200 new rooms to be added in Mississippi
and the opening of Paris," said Goldberg.
Park Place is the world's largest gaming company, as measured by casino
square footage and revenues, and is the only casino gaming company with
a leading presence in Nevada, New Jersey and Mississippi -- the three largest
gaming markets in the United States. In 1999, the Company will own or have
an interest in 17 gaming properties located throughout the United States
and in Australia and Uruguay, with a total of 1.4 million square feet of
gaming space and approximately 23,000 hotel rooms.
Note: This news release contains "forward-looking statements" within
the meaning of federal securities laws, including statements concerning
business strategies and their intended results, and similar statements
concerning anticipated future events and expectations that are not historical
facts. The forward-looking statements in this news release are subject
to numerous risks and uncertainties, including the effects of economic
conditions; supply and demand changes for hotel rooms; competitive conditions
in the gaming industry, relationships with clients and property owners;
the impact of government regulations; and the availability of capital to
finance growth, which could cause actual results to differ materially from
those expressed in or implied by the statements herein.
PARK PLACE ENTERTAINMENT
Statistical Highlights
|
Year to Date Ended Dec 31,
|
|
|
1998
|
1997
|
WESTERN REGION |
|
|
Table Hold Percentage
(excluding Baccarat) |
17% |
17% |
Baccarat Hold Percentage |
33% |
24% |
Average Daily Rate |
$ 75 |
$ 77 |
Occupancy Percentage |
88% |
86% |
EASTERN REGION |
|
|
Table Hold Percentage |
15% |
15% |
Average Daily Rate |
$ 84 |
$ 90 |
Occupancy Percentage |
94% |
91% |
MID-SOUTH REGION |
|
|
Table Hold Percentage |
16% |
17% |
Average Daily Rate |
$ 70 |
$ 66 |
Occupancy Percentage |
89% |
88% |
INTERNATIONAL |
|
|
Table Hold Percentage |
17% |
19% |
Average Daily Rate |
$ 104 |
$ 99 |
Occupancy Percentage |
62% |
70% |
|