Harrah's Entertainment Reports Results for 2009 Fourth Quarter, Full-Year
- Revenues decline 7.9 percent from 2008 fourth quarter
- Fourth-Quarter Property EBITDA declines 7.3 percent
LAS VEGAS, Feb. 25 /PRNewswire/ -- Harrah's Entertainment, Inc. today reported the following financial results for the 2009 fourth quarter and full year:
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HARRAH'S ENTERTAINMENT, INC.
Company-wide Results
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
---- ---- ----------
Net revenues $2,099.1 $2,278.4 (7.9)%
Income/(loss) from
operations 150.7 (5,348.0) N/M(C)
Impairment of goodwill
and other non-
amortizing intangible
assets (12.3) (5,489.6) N/M
Income from operations,
before impairment 163.0 141.6 15.1%
Income/(loss) from
continuing operations,
net of tax (a) 298.3 (4,778.2) N/M
Property EBITDA 443.1 478.0 (7.3)%
Adjusted EBITDA (b) 418.6 453.6 (7.7)%
(a) Due to the January 1, 2009, adoption of a recent accounting
pronouncement, certain 2008 amounts have been recast to conform
to the 2009 presentation throughout this document.
(b) Does not include the pro forma effect of yet-to-be-realized cost
savings from our profitability program.
(c) "N/M" is used to reference a variance compared to a prior period
that is Not Meaningful. This reference is used in several tables
throughout this document.
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
(In Full Year Through Through Full Year Increase/
millions) 2009 Dec. 31, 2008 Jan. 27, 2008 2008 (Decrease)
---------- --------- ------------- ------------- --------- ----------
Net
revenues $8,907.4 $9,366.9 $760.1 $10,127.0 (12.0)%
Loss
from
operations (607.8) (4,237.5) (36.8) (4,274.3) 85.8%
Impairment
of
goodwill
and
other
non-
amortizing
intangible
assets (1,638.0) (5,489.6) - (5,489.6) N/M
Income/
(loss)
from
operations
before
impairment 1,030.2 1,252.1 (36.8) 1,215.3 (15.2)%
Income/
(loss)
from
continuing
operations,
net
of
tax 846.4 (5,174.7) (99.4) (5,274.1) N/M
Property
EBITDA 2,153.6 2,244.9 171.2 2,416.1 (10.9)%
Adjusted
EBITDA (a) 2,070.7 2,183.8 172.0 2,355.8 (12.1)%
(a) Does not include the pro forma effect of yet-to-be-realized cost
savings from our profitability program.
On January 28, 2008, Harrah's Entertainment was acquired by affiliates of Apollo Global Management, LLC and TPG Capital, LP. Accordingly, we have separated our 2008 historical financial results in the presentations included herein between the Successor period from January 28, 2008, through December 31, 2008, and the Predecessor period from January 1, 2008, through January 27, 2008. However, we have also combined the Successor and Predecessor periods' results for the year ended December 31, 2008, because company management believes doing so provides a meaningful presentation and a more appropriate comparison to 2009 results.
Property earnings before interest, taxes, depreciation and amortization (Property EBITDA) and Adjusted EBITDA are measurements not in accordance with Generally Accepted Accounting Principles (GAAP) but are commonly used in the gaming industry as measures of performance and as bases for valuation of gaming companies and, in the case of Adjusted EBITDA, as a measure of compliance with certain debt covenants. Reconciliations of Property EBITDA to Net income/(loss) and of Net income to Last Twelve Months (LTM) Adjusted EBITDA are attached to this release.
The company's 2009 fourth-quarter revenues fell 7.9 percent to $2,099.1 million from $2,278.4 million in the 2008 fourth quarter, primarily due to the impact of the recession on customers' discretionary spending and reduced aggregate demand, which impacted average daily room rates. Income from operations was $150.7 million, compared with a loss from operations of $5,348.0 million in the 2008 fourth quarter. Included in the fourth-quarter 2009 income from operations was a charge of $12.3 million for impairment of non-amortizing intangible assets. Included in the fourth-quarter 2008 loss from operations were $5,489.6 million of charges for impairments of goodwill and other non-amortizing intangible assets. The income from continuing operations, net of tax, for the 2009 fourth quarter was $298.3 million, compared with a loss of $4,778.2 million in the year-ago quarter.
Revenues for the full year of 2009 declined 12.0 percent to $8,907.4 million from $10,127.0 million in the full year of 2008. The loss from operations was $607.8 million in the 2009 full year, compared with a loss from operations of $4,274.3 million in 2008. Income from continuing operations, net of tax, for the full year of 2009 was $846.4 million, compared with loss from continuing operations, net of tax, of $5,274.1 million in 2008. Income from continuing operations, net of tax, for the full year 2009, includes i) impairment charges for goodwill and non-amortizing intangible assets totaling $1,638.0 million ($1,559.6 million net of taxes); and ii) gains related to the early extinguishment of debt of $4,965.5 million ($3,006.5 million net of taxes). Loss from continuing operations, net of tax, for the full year 2008, included impairment charges for goodwill and non-amortizing intangible assets totaling $5,489.6 million ($5,025.6 million net of taxes).
During the 2009 fourth quarter, Harrah's wholly owned subsidiary Harrah's Operating Company, Inc. (HOC) borrowed $1 billion in incremental term loans under its senior secured credit facilities and used a majority of the net proceeds to repay a portion of indebtedness under the Company's secured credit facilities. Also during the 2009 fourth quarter, Harrah's Entertainment purchased $948 million face value of outstanding debt related to our real estate loans for approximately $237 million, recognizing a pre-tax gain on this transaction of $688.1 million, net of transaction costs.
On January 16, 2010, Harrah's assumed management of the 2,500-room hotel at the Planet Hollywood Resort & Casino on the Las Vegas Strip. On February 18, 2010, the Nevada Gaming Commission granted final approval for Harrah's to assume ownership and management of the resort's casino and related facilities; the transaction closed February 19. Harrah's pursued the Planet Hollywood deal because of the property's proximity to Harrah's other Strip resorts, its recent upgrades and its strong brand name.
"The Planet Hollywood transaction added a new brand to our product offering in Las Vegas on attractive terms," said Gary Loveman, Harrah's chairman, president and chief executive officer. "We believe implementation of our operations-management and guest-service systems and Total Rewards customer-loyalty program will enable us to improve the resort's performance. The financing activities that boosted our liquidity during 2009 have allowed us to complete this transaction and consider others that we believe offer significant long-term growth potential.
"The impact of the economy on consumers' willingness to spend continued to affect our results throughout 2009," Loveman said. "The cost-reduction programs implemented at the end of 2008 helped mitigate the economy's impact on our operating margins last year."
A substantial portion of the debt of Harrah's Entertainment's consolidated group is issued by HOC. Therefore, the company believes it is meaningful to also provide information pertaining to the results of operations of HOC. The information for HOC assumes that a post-January 2008 swap of certain properties between HOC and Harrah's Entertainment that was consummated during the 2008 second quarter actually occurred on January 1, 2008.
HARRAH'S OPERATING COMPANY, INC.
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
---- ---- ----------
Net revenues $1,631.5 $1,752.8 (6.9)%
Income/(loss) from operations 124.5 (3,632.0) N/M
Impairment of goodwill and other
non-amortizing intangible
assets (12.3) (3,745.2) N/M
Income from operations before
impairment 136.8 113.2 20.8%
Loss from continuing operations,
net of tax (107.3) (2,976.1) 96.4%
Property EBITDA 332.7 346.1 (3.9)%
Adjusted EBITDA (a) 317.2 324.0 (2.1)%
(a) Does not include the pro forma effect of yet-to-be-realized cost
savings from our profitability program.
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net
revenues $6,873.2 $7,117.7 $577.5 $7,695.2 (10.7)%
Income/
(loss)
from
operations (369.6) (2,836.4) (43.2) (2,879.6) 87.2%
Impairment
of
goodwill
and other
non-
amortizing
intangible
assets (1,178.9) (3,745.2) - (3,745.2) N/M
Income/
(loss)
from
operations
before
impairment 809.3 908.8 (43.2) 865.6 (6.5)%
Income/
(loss)
from
continuing
operations,
net of tax 626.3 (3,390.5) (106.2) (3,496.7) N/M
Property
EBITDA 1,597.2 1,590.4 109.6 1,700.0 (6.0)%
Adjusted
EBITDA (a) 1,550.6 1,511.9 143.0 1,654.9 (6.3)%
(a) Does not include the pro forma effect of yet-to-be-realized cost
savings from our profitability program.
Summaries of results by region follow:
Las Vegas Region
While hotel occupancy remained strong at approximately 90 percent, 2009 fourth-quarter and full-year revenues declined in the Las Vegas Region from the 2008 periods due to weakness in the group travel business, lower spend per visitor and lower average daily room rates. The 2009 fourth-quarter and full-year Income/(loss) from operations improved compared with respective 2008 results due in part to reduced impairment charges in 2009. Prior to consideration of impairment charges, 2009 fourth-quarter income from operations improved slightly from the 2008 fourth quarter due to cost-saving initiatives, while full-year income from operations declined from 2008 due to lower visitor spend and lower average daily room rates.
HARRAH'S ENTERTAINMENT, INC.
Las Vegas Region
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
---- ---- ----------
Net revenues $649.2 $721.4 (10.0)%
Income/(loss) from operations 97.3 (2,485.3) N/M
Impairment of goodwill and other
non-amortizing intangible assets - (2,579.4) N/M
Income from operations before
impairment 97.3 94.1 3.4%
Property EBITDA 174.6 189.6 (7.9)%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net revenues $2,698.0 $3,000.6 $253.6 $3,254.2 (17.1)%
(Loss)/income
from
operations (681.0) (1,988.0) 51.9 (1,936.1) 64.8%
Impairment of
goodwill and
other non-
amortizing
intangible
assets (1,130.9) (2,579.4) - (2,579.4) N/M
Income from
operations
before
impairment 449.9 591.4 51.9 643.3 (30.1)%
Property
EBITDA 756.8 905.4 76.0 981.4 (22.9)%
Las Vegas Region properties include Bally's Las Vegas, Bill's Gamblin'
Hall & Saloon, Caesars Palace, Flamingo Las Vegas, Harrah's Las Vegas,
Imperial Palace, Paris and Rio.
HARRAH'S OPERATING COMPANY, INC.
Las Vegas Region
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
---- ---- ----------
Net revenues $307.5 $322.4 (4.6)%
Income/(loss) from operations 49.2 (1,076.4) N/M
Impairment of goodwill and other
non-amortizing intangible assets - (1,121.4) N/M
Income from operations before
impairment 49.2 45.0 9.3%
Property EBITDA 82.2 76.1 8.0%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net
revenues $1,215.1 $1,318.9 $118.5 $1,437.4 (15.5)%
(Loss)/
income
from
operations (481.1) (869.3) 29.7 (839.6) 42.7%
Impairment
of goodwill
and other
non-
amortizing
intangible
assets (671.8) (1,121.4) - (1,121.4) N/M
Income
from
operations 190.7 252.1 29.7 281.8 (32.3)%
before
impairment
Property
EBITDA 317.1 364.6 38.1 402.7 (21.3)%
Las Vegas Region properties include Bally's Las Vegas, Bill's Gamblin'
Hall & Saloon, Caesars Palace, and Imperial Palace.
Atlantic City Region
Reduced visitation and customer spend per trip unfavorably impacted Atlantic City Region revenues during both the 2009 fourth quarter and full year. For the fourth-quarter and full year of 2009, income from operations before impairment charges was lower than the prior year as cost-saving initiatives were unable to offset reduced revenues and increased marketing expenses, which also contributed to the 2009 fourth-quarter and full-year Property EBITDA declines.
HARRAH'S ENTERTAINMENT, INC.
Atlantic City Region
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
---- ---- ----------
Net revenues $467.4 $492.8 (5.2)%
Income/(loss) from operations 22.3 (669.4) N/M
Impairment of goodwill and other
non-amortizing intangible assets - (699.9) N/M
Income from operations before
impairment 22.3 30.5 (26.9)%
Property EBITDA 67.1 86.7 (22.6)%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net revenues $2,025.9 $2,156.0 $160.8 $2,316.8 (12.6)%
Income/
(loss) from
operations 28.3 (415.4) 18.7 (396.7) N/M
Impairment of
goodwill and
other non-
amortizing
intangible
assets (178.7) (699.9) - (699.9) N/M
Income from
operations
before
impairment 207.0 284.5 18.7 303.2 (31.7)%
Property
EBITDA 400.3 484.0 36.4 520.4 (23.1)%
Atlantic City Region properties include Bally's Atlantic City, Caesars
Atlantic City, Harrah's Atlantic City, Harrah's Chester and Showboat
Atlantic City.
HARRAH'S OPERATING COMPANY, INC.
Atlantic City Region
Fourth Quarter Percent
-------------- Increase/
2009 2008 (Decrease)
(In millions) ---- ---- ----------
Net revenues $352.1 $374.8 (6.1)%
Income/(loss) from operations 14.2 (493.1) N/M
Impairment of goodwill and other
non-amortizing intangible assets - (514.5) N/M
Income from operations before
impairment 14.2 21.4 (33.6)%
Property EBITDA 44.8 61.7 (27.4)%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net revenues $1,528.1 $1,650.8 $125.8 $1,776.6 (14.0)%
(Loss)/income
from
operations (37.2) (308.7) 8.0 (300.7) 87.6%
Impairment of
goodwill and
other non-
amortizing
intangible
assets (178.7) (514.5) - (514.5) N/M
Income from
operations
before
impairment 141.5 205.8 8.0 213.8 (33.8)%
Property
EBITDA 276.0 348.8 21.9 370.7 (25.5)%
Atlantic City Region properties include Bally's Atlantic City, Caesars
Atlantic City, Harrah's Chester and Showboat Atlantic City.
Louisiana/Mississippi Region
Reduced visitation led to declines in 2009 fourth-quarter and full-year revenues. The 2008 full year was impacted by construction disruptions related to the re-branding and remodeling of Harrah's Tunica. Also included in income from operations for the full year 2008 were insurance proceeds of $185.4 million representing final settlement of claims related to 2005 hurricane damages. Prior to consideration of the impairment charges for both years and the insurance proceeds, income from operations improved slightly year over year due to cost-saving initiatives.
HARRAH'S ENTERTAINMENT, INC./HARRAH'S OPERATING COMPANY, INC.
Louisiana/Mississippi Region
Fourth Quarter Percent
-------------- Increase/
2009 2008 (Decrease)
(In millions) ---- ---- ----------
Net revenues $285.4 $329.9 (13.5)%
Income/(loss) from operations 30.6 (299.7) N/M
Impairment of goodwill and other
non-amortizing intangible assets - (328.9) N/M
Income from operations before
impairment 30.6 29.2 4.8%
Property EBITDA 55.9 58.3 (4.1)%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net revenues $1,245.2 $1,340.8 $106.1 $1,446.9 (13.9)%
Income from
operations 181.4 28.3 10.1 38.4 N/M
Impairment
of goodwill
and other
non-
amortizing
intangible
assets (6.0) (328.9) - (328.9) N/M
Income from
operations
before
impairment 187.4 357.2 10.1 367.3 (49.0)%
Property
EBITDA 292.6 276.2 18.6 294.8 (0.7)%
Louisiana/Mississippi Region properties include Grand Casino Biloxi,
Harrah's New Orleans, Harrah's Tunica, Horseshoe Bossier City,
Horseshoe Tunica, Louisiana Downs and Tunica Roadhouse (formerly known
as Sheraton Tunica).
Iowa/Missouri Region
Fourth-quarter and full-year 2009 revenues declined from 2008 as the weak economy continued to adversely impact guest visitation. Fourth-quarter 2009 revenues and income from operations were also impacted by severe winter storms. However, income from operations before impairments for the full-year 2009 increased because of cost-saving initiatives.
HARRAH'S ENTERTAINMENT, INC./HARRAH'S OPERATING COMPANY, INC.
Iowa/Missouri Region
Fourth Quarter Percent
-------------- Increase/
2009 2008 (Decrease)
(In millions) ---- ---- ----------
Net revenues $179.5 $189.6 (5.3)%
Income/(loss) from operations 41.4 (4.6) N/M
Impairment of goodwill and other
non-amortizing intangible assets - (49.0) N/M
Income from operations before
impairment 41.4 44.4 (6.8)%
Property EBITDA 54.3 58.1 (6.5)%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net
revenues $756.6 $727.0 $55.8 $782.8 (3.3)%
Income
from
operations 187.5 108.2 7.7 115.9 61.8%
Impairment
of
goodwill
and other
non-
amortizing
intangible
assets - (49.0) - (49.0) N/M
Income
from
operations
before
impairment 187.5 157.2 7.7 164.9 13.7%
Property
EBITDA 238.4 206.1 13.0 219.1 8.8%
Iowa/Missouri Region properties include Harrah's Council Bluffs, Harrah's
North Kansas City, Harrah's St. Louis and Horseshoe Council Bluffs.
Illinois/Indiana Region
Revenues in the region declined in the fourth quarter of 2009 from the 2008 fourth quarter, due to the continuing impact of the weak economy and severe winter weather. For the full year 2009, revenues were relatively unchanged, due to increased revenues related to the 2008 expansion of the Horseshoe Hammond property, which offset the revenue declines at other properties in the region. Income from operations before impairment charges improved in the fourth quarter 2009 from the year-earlier period due to cost-saving initiatives, combined with the 2008 impact of a property tax expense adjustment. Full-year income from operations before impairment charges improved in 2009 from 2008 due to cost-saving initiatives.
HARRAH'S ENTERTAINMENT, INC./HARRAH'S OPERATING COMPANY, INC.
Illinois/Indiana Region
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
---- ---- ----------
Net revenues $271.2 $294.3 (7.8)%
Income/(loss) from operations 29.9 (597.2) N/M
Impairment of goodwill and other
non-amortizing intangible assets - (617.1) N/M
Income from operations before
impairment 29.9 19.9 50.3%
Property EBITDA 51.8 44.7 15.9%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net revenues $1,172.3 $1,098.7 $85.5 $1,184.2 (1.0)%
Income/
(loss) from
operations (35.4) (505.9) 8.7 (497.2) 92.9%
Impairment of
goodwill and
other non-
amortizing
intangible
assets (180.7) (617.1) - (617.1) N/M
Income from
operations
before
impairment 145.3 111.2 8.7 119.9 21.2%
Property
EBITDA 240.5 195.4 13.6 209.0 15.1%
Illinois/Indiana properties include Harrah's Joliet, Harrah's Metropolis,
Horseshoe Hammond and Horseshoe Southern Indiana.
Other Nevada Region
Revenues for the Other Nevada Region declined in the 2009 fourth quarter and full year from the respective periods of 2008 due to lower guest visitation and lower visitor spend per trip. For the 2009 fourth quarter and full year, cost-saving initiatives implemented throughout 2009 partially offset the earnings impact of the revenue declines. During the 2009 fourth quarter, we announced the closure of Bill's Casino in Lake Tahoe effective January 2010.
HARRAH'S ENTERTAINMENT, INC.
Other Nevada
Fourth Quarter Percent
-------------- Increase/
2009 2008 (Decrease)
(In millions) ---- ---- ----------
Net revenues $102.0 $115.0 (11.3)%
Income/(loss) from operations (1.2) (315.6) 99.6%
Impairment of goodwill and other
non-amortizing intangible assets (4.0) (318.5) N/M
Income from operations before
impairment 2.8 2.9 (3.4)%
Property EBITDA 14.9 16.0 (6.9)%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net revenues $472.6 $534.0 $38.9 $572.9 (17.5)%
Income/(loss)
from
operations 47.3 (255.9) 0.5 (255.4) N/M
Impairment of
goodwill and
other non-
amortizing
intangible
assets (4.0) (318.5) - (318.5) N/M
Income from
operations
before
impairment 51.3 62.6 0.5 63.1 (18.7)%
Property
EBITDA 101.7 109.0 4.5 113.5 (10.4)%
Other Nevada properties include Bill's Casino, Harrah's Lake
Tahoe, Harrah's Laughlin, Harrah's Reno and Harvey's Lake Tahoe.
HARRAH'S OPERATING COMPANY, INC.
Other Nevada
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
------------- ---- ---- ----------
Net revenues $70.9 $79.7 (11.0)%
Income/(loss) from operations (3.6) (219.0) 98.4%
Impairment of goodwill and other
non-amortizing intangible assets (4.0) (217.5) N/M
Income/(loss) from operations
before impairment 0.4 (1.5) N/M
Property EBITDA 7.6 6.4 18.8%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net revenues $332.5 $379.5 $26.8 $406.3 (18.2)%
Income/(loss)
from
operations 26.3 (178.5) (1.9) (180.4) N/M
Impairment of
goodwill and
other non-
amortizing
intangible
assets (4.0) (217.5) - (217.5) N/M
Income/(loss)
from
operations
before
impairment 30.3 39.0 (1.9) 37.1 (18.3)%
Property
EBITDA 60.7 66.7 1.2 67.9 (10.6)%
Other Nevada properties include Bill's Casino, Harrah's Lake Tahoe,
Harrah's Reno, and Harvey's Lake Tahoe.
Managed/International/Other
Revenues rose in the 2009 fourth quarter due to increased visitation combined with higher customer spend per trip at our international properties. Revenues for the 2009 full year declined from 2008 as result of adverse movements in exchange rates. Loss from operations before impairment charges for the 2009 fourth quarter improved from 2008 due to increased revenues and improved cost management. For the full year 2009, the loss from operations before impairment charges improved from 2008 as the impact of adverse foreign exchange rates was more than offset by increased revenues at the company's international properties and improved cost management at all of the company's international and managed properties.
HARRAH'S ENTERTAINMENT, INC.
Managed/International/Other
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
------------- ---- ---- ----------
Net revenues $144.4 $135.4 6.6%
Loss from operations (30.6) (939.4) 96.7%
Impairment of goodwill and other
non-amortizing intangible assets (8.3) (896.8) N/M
Loss from operations before
impairment (22.3) (42.6) 47.7%
Property EBITDA 24.5 24.6 (0.4)%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ --------- ----------
Net revenues $536.8 $509.8 $59.4 $569.2 (5.7)%
Loss from
operations (184.9) (1,053.0) (0.3) (1,053.3) 82.4%
Impairment of
goodwill and
other non-
amortizing
intangible
assets (137.7) (896.8) - (896.8) N/M
Loss from
operations
before
impairment (47.2) (156.2) (0.3) (156.5) 69.8%
Property
EBITDA 123.3 68.8 9.1 77.9 58.3%
Managed/International/Other results include income from our managed
properties, results of our international properties and certain marketing
and administrative expenses, including development costs, and income from
our non-consolidated subsidiaries.
HARRAH'S OPERATING COMPANY, INC.
Managed/International/Other
Fourth Quarter Percent
-------------- Increase/
(In millions) 2009 2008 (Decrease)
------------- ---- ---- ----------
Net revenues $164.9 $162.1 1.7%
Loss from operations (19.0) (923.3) 97.9%
Impairment of goodwill and other
non-amortizing intangible assets (8.3) (896.8) N/M
Loss from operations before
impairment (10.7) (26.5) 59.6%
Property EBITDA 36.1 40.8 (11.5)%
Successor Predecessor
--------- -----------
Jan. 28, 2008 Jan. 1, 2008 Combined
Full Through Through Full Percent
Year Dec. 31, Jan. 27, Year Increase/
(In millions) 2009 2008 2008 2008 (Decrease)
------------- ---- ------------- ------------ ---------- ----------
Net revenues $623.4 $602.0 $59.0 $661.0 (5.7)%
Loss from
operations (136.3) (980.2) (6.1) (986.3) 86.2%
Impairment of
goodwill and
other non-
amortizing
intangible
assets (137.7) (896.8) - (896.8) N/M
Loss from
operations
before
impairment 1.4 (83.4) (6.1) (89.5) N/M
Property
EBITDA 171.9 132.6 3.2 135.8 26.6%
Managed/International/Other results include income from our managed
properties, results of our international properties and certain marketing
and administrative expenses, including development costs, and income from
our non-consolidated subsidiaries.
Other items
During the fourth quarter 2009, we recorded a total charge of $12.3 million for the impairment of non-amortizing intangible assets. Total impairment charges in 2009 for goodwill and other non-amortizing intangible assets were $1,638.0 million, compared to the prior year charge of $5,489.6 million, all booked in the fourth quarter of 2008.
Interest expense decreased by $117.8 million in the 2009 fourth-quarter and by $272.1 million for the 2009 full-year from the respective periods of 2008 due to lower debt levels resulting from HOC debt exchanges completed in December 2008 and April 2009, and repurchases of debt in open-market transactions.
As a result of debt exchange offers, real estate debt purchases and open-market debt purchases during the year, pre-tax gains of $686.3 million and $4,965.5 million on early extinguishments of debt were recognized in the 2009 fourth quarter and full-year periods, respectively. During the fourth quarter and full year of 2008 we recognized pre-tax gains on the early extinguishment of debt of $946.0 million and $742.1 million, respectively.
For the 2009 fourth quarter, we recorded a tax provision of $61.0 million on pre-tax income from continuing operations of $359.3 million, compared with a tax benefit of $212.8 million on a pre-tax loss from continuing operations of $4,991.0 million in the comparable period of 2008. For the full year 2009, we recognized a tax provision of $1,651.8 million on pre-tax income from continuing operations of $2,498.2 million, which equates to an effective tax rate of 66.1 percent. The primary differences between the Company's full-year recorded provision and the provision that would have resulted from applying the U.S. statutory tax rate of 35 percent to the Company's pre-tax income from continuing operations are the effects of non-deductible impairments of goodwill, acquisition costs, state income tax expense and other adjustments.
Harrah's Entertainment, Inc. is the world's largest provider of branded casino entertainment. Since its beginning in Reno, Nevada, more than 70 years ago, Harrah's has grown through development of new properties, expansions and acquisitions, and now operates casinos on four continents. The company's properties operate primarily under the Harrah's®, Caesars® and Horseshoe® brand names. Harrah's also owns the World Series of Poker® and a majority interest in the London Clubs International family of casinos. Harrah's Entertainment is focused on building loyalty and value with its customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. For more information, please visit www.harrahs.com.
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. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue" or "pursue," or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, new projects, strategies, future performance, the outcomes of contingencies and future financial results of Harrah's. These forward-looking statements are based on current expectations and projections about future events.
Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, the actual performance of Harrah's may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission (including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein):
- the impact of the company's significant indebtedness;
- the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming and hotel industries in particular;
- construction factors, including delays, increased costs for labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters and building permit issues;
- the effects of environmental and structural building conditions relating to our properties; access to available and reasonable financing on a timely basis;
- the ability to timely and cost-effectively integrate acquisitions into our operations;
- changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies;
- litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation;
- the ability of our customer-tracking, customer loyalty and yield-management programs to continue to increase customer loyalty and same store sales or hotel sales;
- our ability to recoup costs of capital investments through higher revenues;
- acts of war or terrorist incidents, severe weather conditions or natural disasters;
- abnormal gaming holds; and
- the effects of competition, including locations of competitors and operating and market competition.
Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Harrah's disclaims any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release.
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED SUMMARY OF OPERATIONS
(UNAUDITED)
Successor Predecessor
--------- ----------- Combined
Fourth Quarter Jan. 28, Jan. 1, --------
Ended Full Year 2008 2008 Full Year
-------------- Ended Through Through Ended
Dec. 31, Dec. 31, Dec. 31, Jan. 27, Dec. 31,
-------- -------- -------- -------- --------
(In millions) 2009 2008 2009 2008 2008 2008
------------- ---- ---- ---- ---- ---- ----
Revenues $2,099.1 $2,278.4 $8,907.4 $9,366.9 $760.1 $10,127.0
Property
operating
expenses (1,656.0) (1,800.4) (6,753.8) (7,122.0) (588.9) (7,710.9)
Depreciation
and
amortization (167.1) (174.5) (683.9) (626.9) (63.5) (690.4)
------ ------ ------ ------ ----- ------
Operating
profit 276.0 303.5 1,469.7 1,618.0 107.7 1,725.7
Project
opening
costs and
other
items (30.0) (80.6) (111.5) (45.1) (5.4) (50.5)
Impairment
of goodwill
and other
non-amortizing
intangible
assets (12.3) (5,489.6) (1,638.0) (5,489.6) - (5,489.6)
(Losses)/income
on interests
in non-
consolidated
affiliates (0.9) (0.8) (2.2) (2.1) 0.5 (1.6)
Corporate
expense (39.0) (35.8) (150.7) (131.8) (8.5) (140.3)
Acquisition
and
integration
costs - (1.0) (0.3) (24.0) (125.6) (149.6)
Amortization
of
intangible
assets (43.1) (43.7) (174.8) (162.9) (5.5) (168.4)
----- ----- ------ ------ ---- ------
Income/(loss)
from
operations 150.7 (5,348.0) (607.8) (4,237.5) (36.8) (4,274.3)
Interest
expense,
net of
interest
capitalized (487.8) (605.6) (1,892.5) (2,074.9) (89.7) (2,164.6)
Gains on
early
extinguishments
of
debt 686.3 946.0 4,965.5 742.1 - 742.1
Other income,
including
interest
income 10.1 16.6 33.0 35.2 1.1 36.3
---- ---- ---- ---- --- ----
Income/(loss)
before income
taxes 359.3 (4,991.0) 2,498.2 (5,535.1) (125.4) (5,660.5)
Income tax
(provision)
/benefit (61.0) 212.8 (1,651.8) 360.4 26.0 386.4
----- ----- -------- ----- ---- -----
Income/(loss)
from
continuing
operations,
net of
tax 298.3 (4,778.2) 846.4 (5,174.7) (99.4) (5,274.1)
Discontinued
operations,
net of
tax - 1.9 - 90.4 0.1 90.5
--- --- --- ---- --- ----
Net income
/(loss) 298.3 (4,776.3) 846.4 (5,084.3) (99.3) (5,183.6)
Less: net
income
attributable
to non-
controlling
interests (2.7) (5.8) (18.8) (12.0) (1.6) (13.6)
---- ---- ----- ----- ---- -----
Net income
/(loss)
attributable
to Harrah's
Entertainment,
Inc. $295.6 $(4,782.1) $827.6 $(5,096.3) $(100.9) $(5,197.2)
====== ========= ====== ========= ======= =========
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL OPERATING INFORMATION
(UNAUDITED)
Successor Predecessor
--------- ----------- Combined
Jan. 28, Jan. 1, --------
Fourth Quarter Full Year 2008 2008 Full Year
Ended Ended Through Through Ended
Dec. 31, Dec. 31, Dec. 31, Jan. 27, Dec. 31,
-------- -------- -------- -------- --------
(In millions) 2009 2008 2009 2008 2008 2008
---- ---- ---- ---- ---- ----
Revenues
Las Vegas
Region $649.2 $721.4 $2,698.0 $3,000.6 $253.6 $3,254.2
Atlantic
City
Region 467.4 492.8 2,025.9 2,156.0 160.8 2,316.8
Louisiana
/Mississippi
Region 285.4 329.9 1,245.2 1,340.8 106.1 1,446.9
Iowa
/Missouri
Region 179.5 189.6 756.6 727.0 55.8 782.8
Illinois
/Indiana
Region 271.2 294.3 1,172.3 1,098.7 85.5 1,184.2
Other
Nevada
Region 102.0 115.0 472.6 534.0 38.9 572.9
Managed
/International
/Other 144.4 135.4 536.8 509.8 59.4 569.2
----- ----- ----- ----- ---- -----
Net
Revenues $2,099.1 $2,278.4 $8,907.4 $9,366.9 $760.1 $10,127.0
======== ======== ======== ======== ====== =========
Income/(Loss)
from
operations
Las Vegas
Region $97.3 $(2,485.3) $(681.0) $(1,988.0) $51.9 $(1,936.1)
Atlantic City
Region 22.3 (669.4) 28.3 (415.4) 18.7 (396.7)
Louisiana
/Mississippi
Region 30.6 (299.7) 181.4 28.3 10.1 38.4
Iowa
/Missouri
Region 41.4 (4.6) 187.5 108.2 7.7 115.9
Illinois
/Indiana
Region 29.9 (597.2) (35.4) (505.9) 8.7 (497.2)
Other
Nevada
Region (1.2) (315.6) 47.3 (255.9) 0.5 (255.4)
Managed
/International
/Other (30.6) (939.4) (184.9) (1,053.0) (0.3) (1,053.3)
Corporate
Expense (39.0) (35.8) (150.7) (131.8) (8.5) (140.3)
Acquisition
and
integration
costs - (1.0) (0.3) (24.0) (125.6) (149.6)
--- ---- ---- ----- ------ ------
Total
(loss)
/income
from
operations $150.7 $(5,348.0) $(607.8) $(4,237.5) $(36.8) $(4,274.3)
====== ========= ======= ========= ====== =========
Property
EBITDA (a)
Las Vegas
Region $174.6 $189.6 $756.8 $905.4 $76.0 $981.4
Atlantic
City
Region 67.1 86.7 400.3 484.0 36.4 520.4
Louisiana
/Mississippi
Region 55.9 58.3 292.6 276.2 18.6 294.8
Iowa
/Missouri
Region 54.3 58.1 238.4 206.1 13.0 219.1
Illinois
/Indiana
Region 51.8 44.7 240.5 195.4 13.6 209.0
Other
Nevada
Region 14.9 16.0 101.7 109.0 4.5 113.5
Managed
/International
/Other 24.5 24.6 123.3 68.8 9.1 77.9
---- ---- ----- ---- --- ----
Total
Property
EBITDA $443.1 $478.0 $2,153.6 $2,244.9 $171.2 $2,416.1
====== ====== ======== ======== ====== ========
Project opening
costs and
other items
Project
opening
costs $(0.7) $(2.6) $(3.6) $(28.9) $(0.7) $(29.6)
Insurance
proceeds
for
hurricane
losses - - - 185.4 - 185.4
Other
write-downs,
reserves
and
recoveries (29.3) (78.0) (107.9) (201.6) (4.7) (206.3)
----- ----- ------ ------ ---- ------
Total
Project
opening
costs
and
other
items $(30.0) $(80.6) $(111.5) $(45.1) $(5.4) $(50.5)
====== ====== ======= ====== ===== ======
(a) Property EBITDA (earnings before interest, taxes, depreciation and
amortization) consists of income/(loss) from operations before
depreciation and amortization, write-downs, reserves and recoveries,
project opening costs, corporate expense, acquisition and integration
costs, income/(losses) on interests in non-consolidated affiliates and
amortization of intangible assets. Property EBITDA is a supplemental
financial measure used by management, as well as industry analysts, to
evaluate our operations. However, Property EBITDA should not be
construed as an alternative to loss from operations (as an indicator
of our operating performance) or to Cash flows from operating
activities (as a measure of liquidity) as determined in accordance
with generally accepted accounting principles. All companies do not
calculate EBITDA in the same manner. As a result, Property EBITDA as
presented by our Company may not be comparable to similarly titled
measures presented by other companies.
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET INCOME ATTRIBUTABLE TO HARRAH'S ENTERTAINMENT, INC.
(UNAUDITED)
Fourth Quarter Ended Dec. 31, 2009
----------------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In Millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $649.2 $467.4 $285.4 $179.5
Property operating expenses (474.6) (400.3) (229.5) (125.2)
------ ------ ------ ------
Property EBITDA 174.6 67.1 55.9 54.3
Depreciation and
amortization (47.0) (40.8) (20.4) (12.8)
----- ----- ----- -----
Operating profit 127.6 26.3 35.5 41.5
Project opening costs and
other items (11.3) (0.3) 0.5 (0.1)
Impairment of goodwill
and other non-amortizing
intangible assets - - - -
Income/(losses) on
interests in nonconsolidated
affiliates - - 0.1 -
Corporate expense - - - -
Amortization of intangible
assets (19.0) (3.7) (5.5) -
----- ---- ---- ---
Income/(loss) from
operations 97.3 22.3 30.6 41.4
---- ---- ---- ----
Interest expense, net
of interest capitalized
Gains on early
extinguishments of
debt
Other income,
including interest
income
Income from continuing
operations before
income taxes
Provision for income
taxes
Net income
Less: net income
attributable to
non-controlling
interests
Net income
attributable to
Harrah's
Entertainment, Inc.
Fourth Quarter Ended Dec. 31, 2009
----------------------------------
Illinois/ Other
Indiana Nevada
(In Millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $271.2 $102.0 $144.4 $2,099.1
Property operating expenses (219.4) (87.1) (119.9) (1,656.0)
------ ----- ------ --------
Property EBITDA 51.8 14.9 24.5 443.1
Depreciation and amortization (20.9) (8.4) (16.8) (167.1)
----- ---- ----- ------
Operating profit 30.9 6.5 7.7 276.0
Project opening costs and other
items (0.6) (0.2) (18.0) (30.0)
Impairment of goodwill and
other non- amortizing
intangible assets - (4.0) (8.3) (12.3)
Income/(losses) on interests
in nonconsolidated
affiliates - - (1.0) (0.9)
Corporate expense - - (39.0) (39.0)
Amortization of intangible
assets (0.4) (3.5) (11.0) (43.1)
---- ---- ----- -----
Income/(loss) from
operations 29.9 (1.2) (69.6) 150.7
---- ---- -----
Interest expense, net of
interest capitalized (487.8)
Gains on early extinguishments
of debt 686.3
Other income, including
interest income 10.1
----
Income from continuing
operations before income
taxes 359.3
Provision for income
taxes (61.0)
-----
Net income 298.3
Less: net income
attributable to
non-controlling interests (2.7)
----
Net income attributable to
Harrah's Entertainment, Inc. $295.6
======
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S ENTERTAINMENT, INC.
(UNAUDITED)
Fourth Quarter Ended Dec. 31, 2008
----------------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In Millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $721.4 $492.8 $329.9 $189.6
Property operating expenses (531.8) (406.1) (271.6) (131.5)
------ ------ ------ ------
Property EBITDA 189.6 86.7 58.3 58.1
Depreciation and
amortization (46.2) (47.0) (20.4) (13.2)
----- ----- ----- -----
Operating profit 143.4 39.7 37.9 44.9
Project opening costs
and other items (30.4) (5.4) (3.4) (0.5)
Impairment of goodwill and
other non-amortizing
intangible assets (2,579.4) (699.9) (328.9) (49.0)
Income/(losses) on
interests in
nonconsolidated affiliates - - 0.2 -
Corporate expense - - - -
Acquisition and
integration costs - - - -
Amortization of
intangible assets (18.9) (3.8) (5.5) -
----- ---- ---- ---
Loss from operations (2,485.3) (669.4) (299.7) (4.6)
-------- ------ ------ ----
Interest expense, net
of interest capitalized
Gains on early
extinguishments
of debt
Other income,
including interest
income
Loss from continuing
operations
before income
taxes
Benefit for
income taxes
Loss from continuing
operations,
net of tax
Discontinued
operations,
net of tax
Net loss
Less: net income
attributable
to non-controlling
interests
Net loss attributable
to Harrah's Entertainment,
Inc.
Fourth Quarter Ended Dec. 31, 2008
----------------------------------
Illinois/ Other
Indiana Nevada
(In Millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $294.3 $115.0 $135.4 $2,278.4
Property operating expenses (249.6) (99.0) (110.8) (1,800.4)
------ ----- ------ --------
Property EBITDA 44.7 16.0 24.6 478.0
Depreciation and amortization (21.6) (8.7) (17.4) (174.5)
----- ---- ----- ------
Operating profit 23.1 7.3 7.2 303.5
Project opening costs
and other items (2.8) (0.9) (37.2) (80.6)
Impairment of goodwill and
other non-amortizing
intangible assets (617.1) (318.5) (896.8) (5,489.6)
Income/(losses) on interests
in nonconsolidated affiliates - - (1.0) (0.8)
Corporate expense - - (35.8) (35.8)
Acquisition and integration
costs - - (1.0) (1.0)
Amortization of intangible
assets (0.4) (3.5) (11.6) (43.7)
---- ---- ----- -----
Loss from operations (597.2) (315.6) (976.2) (5,348.0)
------ ------ ------
Interest expense, net of
interest capitalized (605.6)
Gains on early extinguishments
of debt 946.0
Other income, including
interest income 16.6
----
Loss from continuing
operations before income
taxes (4,991.0)
Benefit for income taxes 212.8
-----
Loss from continuing
operations, net of tax (4,778.2)
Discontinued operations, net
of tax 1.9
---
Net loss (4,776.3)
Less: net income attributable
to non-controlling interests (5.8)
----
Net loss attributable to
Harrah's Entertainment, Inc. $(4,782.1)
=========
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET INCOME ATTRIBUTABLE TO HARRAH'S ENTERTAINMENT, INC.
(UNAUDITED)
Successor
---------
Full Year Ended Dec. 31, 2009
-----------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In millions) Region Region Region Region
---------- ------ ------ ------ ------
Net Revenues $2,698.0 $2,025.9 $1,245.2 $756.6
Property operating
expenses (1,941.2) (1,625.6) (952.6) (518.2)
-------- -------- ------ ------
Property EBITDA 756.8 400.3 292.6 238.4
Depreciation and
amortization (186.2) (174.2) (81.6) (50.6)
------ ------ ----- -----
Operating profit 570.6 226.1 211.0 187.8
Project opening costs
and other items (44.7) (4.0) (2.4) (0.3)
Impairment of
goodwill and other
non-amortizing
intangible assets (1,130.9) (178.7) (6.0) -
Income/(losses)
on interests
in non-consolidated
affiliates - - 0.7 -
Corporate expense - - - -
Acquisition and
integration costs - - - -
Amortization of
intangible assets (76.0) (15.1) (21.9) -
----- ----- ----- ---
(Loss)/income
from operations (681.0) 28.3 181.4 187.5
------ ---- ----- -----
Interest expense,
net of interest
capitalized
Gains on early
extinguishments
of debt
Other income,
including interest
income
Income from
continuing operations
before income taxes
Provision for income
taxes
Net income
Less: net income
attributable to non-
controlling interests
Net Income
attributable to
Harrah's Entertainment,
Inc.
Successor
---------
Full Year Ended Dec. 31, 2009
-----------------------------
Illinois/ Other
Indiana Nevada
(In millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $1,172.3 $472.6 $536.8 $8,907.4
Property operating expenses (931.8) (370.9 ) (413.5) (6,753.8)
------ ------ ------ --------
Property EBITDA 240.5 101.7 123.3 2,153.6
Depreciation and amortization (84.9) (34.8) (71.6) (683.9)
----- ----- ----- ------
Operating profit 155.6 66.9 51.7 1,469.7
Project opening costs and
other items (8.9) (1.7) (49.5) (111.5)
Impairment of goodwill and
other non-amortizing
intangible assets (180.7) (4.0) (137.7) (1,638.0)
Income/(losses) on interests in
non-consolidated affiliates - - (2.9) (2.2)
Corporate expense - - (150.7) (150.7)
Acquisition and integration
costs - - (0.3) (0.3)
Amortization of intangible
assets (1.4) (13.9) (46.5) (174.8)
---- ----- ----- ------
(Loss)/income from
operations (35.4) 47.3 (335.9) (607.8)
----- ---- ------
Interest expense, net of
interest capitalized (1,892.5)
Gains on early extinguishments
of debt 4,965.5
Other income, including
interest income 33.0
----
Income from continuing
operations before income
taxes 2,498.2
Provision for income taxes (1,651.8)
--------
Net income 846.4
Less: net income attributable
to non-controlling
interests (18.8)
-----
Net Income attributable to
Harrah's Entertainment, Inc. $827.6
======
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S ENTERTAINMENT, INC.
(UNAUDITED)
Combined
--------
Full Year Ended Dec. 31, 2008
-----------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $3,254.2 $2,316.8 $1,446.9 $782.8
Property operating
expenses (2,272.8) (1,796.4) (1,152.1) (563.7)
-------- -------- -------- ------
Property EBITDA 981.4 520.4 294.8 219.1
Depreciation and
amortization (188.7) (191.1) (82.8) (53.2)
------ ------ ----- -----
Operating profit 792.7 329.3 212.0 165.9
Project opening
costs and
other items (78.8) (10.4) 175.6 (0.8)
Impairment of
goodwill and
other non-amortizing
intangible assets (2,579.4) (699.9) (328.9) (49.0)
Income/(losses) on
interests
in non-consolidated
affiliates - - 0.4 -
Corporate expense - - - -
Acquisition and
integration costs - - - -
Amortization of
intangible assets (70.6) (15.7) (20.7) (0.2)
----- ----- ----- ----
Loss/(income) from
operations (1,936.1) (396.7) 38.4 115.9
-------- ------ ---- -----
Interest expense,
net of interest
capitalized
Gains on early
extinguishments of
debt
Other income,
including interest
income
Loss from continuing
operations before
income taxes
Benefit for income taxes
Loss from continuing
operations, net of tax
Discontinued operations,
net of tax
Net loss
Less: net income
attributable to
non-controlling
interests
Net loss attributable to
Harrah's Entertainment,
Inc.
Combined
--------
Full Year Ended Dec. 31, 2008
-----------------------------
Illinois/ Other
Indiana Nevada
(In millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $1,184.2 $572.9 $569.2 $10,127.0
Property operating expenses (975.2) (459.4) (491.3) (7,710.9)
------ ------ ------ --------
Property EBITDA 209.0 113.5 77.9 2,416.1
Depreciation and amortization (66.0) (36.6) (72.0) (690.4)
----- ----- ----- ------
Operating profit 143.0 76.9 5.9 1,725.7
Project opening costs and
other items (21.3) (1.0) (113.8) (50.5)
Impairment of goodwill and
other non-amortizing
intangible assets (617.1) (318.5) (896.8) (5,489.6)
Income/(losses) on interests
in non-consolidated
affiliates - - (2.0) (1.6)
Corporate expense - - (140.3) (140.3)
Acquisition and integration
costs - - (149.6) (149.6)
Amortization of intangible
assets (1.8) (12.8) (46.6) (168.4)
---- ----- ----- ------
Loss/(income) from
operations (497.2) (255.4) (1,343.2) (4,274.3)
------ ------ --------
Interest expense, net of
interest capitalized (2,164.6)
Gains on early
extinguishments of debt 742.1
Other income, including
interest income 36.3
----
Loss from continuing
operations before income
taxes (5,660.5)
Benefit for income taxes 386.4
-----
Loss from continuing
operations, net of tax (5,274.1)
Discontinued operations, net
of tax 90.5
----
Net loss (5,183.6)
Less: net income attributable
to non-controlling interests (13.6)
-----
Net loss attributable to
Harrah's Entertainment, Inc. $(5,197.2)
=========
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S ENTERTAINMENT, INC.
(UNAUDITED)
Successor
---------
Jan. 28, 2008 Through Dec. 31, 2008
-----------------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $3,000.6 $2,156.0 $1,340.8 $727.0
Property operating
expenses (2,095.2) (1,672.0) (1,064.6) (520.9)
-------- -------- -------- ------
Property EBITDA 905.4 484.0 276.2 206.1
Depreciation
and amortization (170.0) (175.4) (74.2) (48.1)
------ ------ ----- -----
Operating profit 735.4 308.6 202.0 158.0
Project opening
costs and
other items (74.4) (10.3) 175.0 (0.8)
Impairment of
goodwill and
other
non-amortizing
intangible
assets (2,579.4) (699.9) (328.9) (49.0)
Income/(losses)
on interests
in nonconsolidated
affiliates - - 0.4 -
Corporate expense - - - -
Acquisition and
integration
costs - - - -
Amortization of
intangible
assets (69.6) (13.8) (20.2) -
----- ----- ----- ---
(Loss)/income
from
operations (1,988.0) (415.4) 28.3 108.2
-------- ------ ---- -----
Interest expense,
net of interest
capitalized
Gains on early
extinguishments
of debt
Other income,
including interest
income
Loss from
continuing
operations before
income taxes
Benefit for income
taxes
Loss from
continuing
operations,
net of tax
Discontinued
operations,
net of tax
Net income
Less: net income
attributable to
non-controlling
interests
Net loss
attributable to
Harrah's Entertainment,
Inc.
Successor
---------
Jan. 28, 2008 Through Dec. 31, 2008
-----------------------------------
Illinois/ Other
Indiana Nevada
(In millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $1,098.7 $534.0 $509.8 $9,366.9
Property operating
expenses (903.3) (425.0) (441.0) (7,122.0)
------ ------ ------ --------
Property EBITDA 195.4 109.0 68.8 2,244.9
Depreciation and
amortization (61.7) (32.7) (64.8) (626.9)
----- ----- ----- ------
Operating profit 133.7 76.3 4.0 1,618.0
Project opening costs
and other items (21.3) (1.0) (112.3) (45.1)
Impairment of goodwill
and other non-amortizing
intangible assets (617.1) (318.5) (896.8) (5,489.6)
Income/(losses) on
interests in
nonconsolidated affiliates - - (2.5) (2.1)
Corporate expense - - (131.8) (131.8)
Acquisition and
integration costs - - (24.0) (24.0)
Amortization of intangible
assets (1.2) (12.7) (45.4) (162.9)
---- ----- ----- ------
(Loss)/income from
operations (505.9) (255.9) (1,208.8) (4,237.5)
------ ------ --------
Interest expense, net
of interest capitalized (2,074.9)
Gains on early
extinguishments of debt 742.1
Other income, including
interest income 35.2
----
Loss from continuing
operations before income
taxes (5,535.1)
Benefit for income taxes 360.4
-----
Loss from continuing
operations, net of tax (5,174.7)
Discontinued operations, net
of tax 90.4
----
Net income (5,084.3)
Less: net income attributable
to non-controlling interests (12.0)
-----
Net loss attributable to
Harrah's Entertainment, Inc. $(5,096.3)
=========
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S ENTERTAINMENT, INC.
(UNAUDITED)
Predecessor
-----------
Jan. 1, 2008 Through Jan. 27, 2008
----------------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $253.6 $160.8 $106.1 $55.8
Property operating expenses (177.6) (124.4) (87.5) (42.8)
------ ------ ----- -----
Property EBITDA 76.0 36.4 18.6 13.0
Depreciation and amortization (18.7) (15.7) (8.6) (5.1)
----- ----- ---- ----
Operating profit 57.3 20.7 10.0 7.9
Project opening costs and
other items (4.4) (0.1) 0.6 -
Income on interests in
non-consolidated affiliates - - - -
Corporate expense - - - -
Acquisition and integration
costs - - - -
Amortization of intangible
assets (1.0) (1.9) (0.5) (0.2)
---- ---- ---- ----
Income/(loss) from
operations 51.9 18.7 10.1 7.7
---- ---- ---- ---
Interest expense, net of
interest capitalized
Other income, including
interest income
Loss from continuing
operations before income
taxes
Benefit for income taxes
Loss from continuing
operations, net of tax
Discontinued operations, net
of tax
Net loss
Less: net income attributable
to non- controlling
interests
Net loss attributable to
Harrah's Entertainment, Inc.
Predecessor
-----------
Jan. 1, 2008 Through Jan. 27, 2008
----------------------------------
Illinois/ Other
Indiana Nevada
(In millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $85.5 $38.9 $59.4 $760.1
Property operating expenses (71.9) (34.4) (50.3) (588.9)
----- ----- ----- ------
Property EBITDA 13.6 4.5 9.1 171.2
Depreciation and amortization (4.3) (3.9) (7.2) (63.5)
---- ---- ---- -----
Operating profit 9.3 0.6 1.9 107.7
Project opening costs and
other items - - (1.5) (5.4)
Income on interests in non-
consolidated affiliates - - 0.5
0.5
Corporate expense - - (8.5) (8.5)
Acquisition and integration
costs - - (125.6) (125.6)
Amortization of intangible
assets (0.6) (0.1) (1.2) (5.5)
---- ---- ---- ----
Income/(loss) from operations 8.7 0.5 (134.4) (36.8)
--- --- ------
Interest expense, net of
interest capitalized (89.7)
Other income, including
interest income 1.1
---
Loss from continuing
operations before income
taxes (125.4)
Benefit for income taxes 26.0
----
Loss from continuing
operations, net of tax (99.4)
Discontinued operations, net
of tax 0.1
---
Net loss (99.3)
Less: net income attributable
to non-controlling
interests (1.6)
----
Net loss attributable to
Harrah's Entertainment, Inc. $(100.9)
=======
HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME/(LOSS) ATTRIBUTABLE TO HARRAH'S
ENTERTAINMENT, INC. TO ADJUSTED EBITDA
(UNAUDITED)
Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual
items and other adjustments required or permitted in calculating covenant
compliance under the indenture governing the senior notes, first lien
notes, second lien notes and/or our senior secured credit facilities. We
believe that the inclusion of supplementary adjustments to EBITDA applied
in presenting Adjusted EBITDA are appropriate to provide additional
information to investors about certain material non-cash items and about
unusual items that we do not expect to continue at the same level in the
future. Because not all companies use identical calculations, our
presentation of Adjusted EBITDA may not be comparable to other similarly
titled measures of other companies.
The following table reconciles Net income/(loss) attributable to Harrah's
Entertainment, Inc. to Adjusted EBITDA for the Successor quarters ended
December 31, 2009 and 2008.
Quarter Ended
-------------
Dec. 31, Dec. 31,
(In millions) 2009 2008
------------- -------- --------
Net income/(loss) attributable to Harrah's
Entertainment, Inc. $295.6 $(4,782.1)
Interest expense, net 477.7 590.1
Provision/(benefit) for income taxes 61.0 (212.8)
Depreciation and amortization 213.2 221.7
----- -----
EBITDA (a) 1,047.5 (4,183.1)
Project opening costs, abandoned projects and
development costs (b) 0.7 2.9
Acquisition and integration costs - 1.0
Gains on early extinguishments of debt (c) (686.3) (946.0)
Discontinued operations, net of tax - (1.9)
Net income attributable to non-controlling
interests, net of distributions (d) (1.7) (3.8)
Impairment of goodwill and other intangible
assets 12.3 5,489.6
Non-cash expense for stock compensation
benefits (e) 3.8 4.0
Other non-recurring or non-cash items (f) 42.3 90.9
---- ----
Adjusted EBITDA(f) $418.6 $453.6
====== ======
(a) Amount will differ from amounts previously reported as the starting
point has been changed from Income/(loss) from continuing operations
to Net income/(loss) attributable to Harrah's Entertainment, Inc.
(b) Represents (i) project opening costs incurred in connection with
expansion and renovation projects at various properties;
(ii) write-off of abandoned development projects; and
(iii) non-recurring strategic planning and restructuring costs.
(c) Represents (i) the difference between the net book value and cash
paid for notes exchanged and retired for cash; (ii) the difference
between the net book value of the old notes and the fair market value
of new notes issued; and (iii) the write-off of historical
unamortized deferred financing costs and unamortized market value
premiums/discounts.
(d) Represents minority owners' share of income from our majority-owned
subsidiaries, net of cash distributions to minority owners.
(e) Represents non-cash stock-based compensation expense.
(f) Represents the elimination of other non-recurring or non-cash items
such as litigation awards and settlements, severance and relocation
costs, excess gaming taxes, gains and losses from disposal of assets,
equity in non-consolidated subsidiaries (net of distributions) and
one-time costs relating to new state gaming legislation.
(g) Does not include the full period estimated impact of newly completed
construction projects or the cost savings yet-to-be-realized from our
newly identified and previously announced profitability improvement
program.
HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET (LOSS)/INCOME ATTRIBUTABLE TO HARRAH'S
ENTERTAINMENT, INC. TO ADJUSTED EBITDA
(UNAUDITED)
Last twelve months (LTM) Adjusted EBITDA is defined as EBITDA further
adjusted to exclude unusual items and other adjustments required or
permitted in calculating covenant compliance under the indenture governing
the senior notes, first lien notes, second lien notes and/or our senior
secured credit facilities. We believe that the inclusion of supplementary
adjustments to EBITDA applied in presenting LTM Adjusted EBITDA are
appropriate to provide additional information to investors about certain
material non-cash items and about unusual items that we do not expect to
continue at the same level in the future. Because not all companies use
identical calculations, our presentation of LTM Adjusted EBITDA may not be
comparable to other similarly titled measures of other companies.
The following table reconciles Net (loss)/income attributable to Harrah's
Entertainment, Inc. to LTM Adjusted EBITDA for the year ended December 31,
2009, the Successor period from January 28, 2008 through December 31,
2008, and for the Predecessor period from January 1, 2008 through January
27, 2008. We have also combined the Successor and Predecessor periods'
results for the year ended December 31, 2008, in the presentation below
because company management believes that it enables a meaningful
presentation and comparison of results to the Successor year ended
December 31, 2009.
Successor Predecessor Successor Combined
----------- ---------
Jan. 1, Jan. 28, Jan. 1,
Year 2008 2008 2008
Ended Through Through Through
Dec. 31, Jan. 27, Dec. 31, Dec. 31,
(In millions) 2009 2008 2008 2008
---- ---- ---- ----
Net (loss)/income
attributable to Harrah's
Entertainment, Inc. $827.6 $(100.9) $(5,096.3) $(5,197.2)
Interest expense, net 1,859.2 89.7 2,041.2 2,130.9
(Benefit)/provision for
income taxes 1,651.8 (26.0) (360.4) (386.4)
Depreciation and
amortization 872.0 72.7 805.2 877.9
----- ---- ----- -----
EBITDA (a) 5,210.6 35.5 (2,610.3) (2,574.8)
Project opening costs,
abandoned projects and
development costs (b) 3.5 0.9 31.6 32.5
Acquisition and integration
costs 0.3 125.6 24.0 149.6
Gains on early
extinguishments of
debt (c) (4,965.5) - (742.1) (742.1)
Discontinued operations, net
of tax - (0.1) (90.4) (90.5)
Net income attributable to
non-controlling interests,
net of distributions (d) (1.5) 1.0 (7.4) (6.4)
Impairment of goodwill and
other intangible assets 1,638.0 - 5,489.6 5,489.6
Non-cash expense for stock
compensation benefits (e) 16.3 2.4 16.3 18.7
Income from insurance claims
for hurricane losses (f) - - (185.4) (185.4)
Other non-recurring or
non-cash items (g) 169.0 6.7 249.9 256.6
Pro forma adjustment for
acquired, new or disposed
properties(h) 17.0 8.0
Pro forma adjustment for
yet-to-be realized cost
savings (i) 208.8 501.5
----- -----
LTM adjusted EBITDA $2,296.5 $2,857.3
======== ========
(a) Amount will differ from amounts previously reported as the starting
point has been changed from Income/(loss) from continuing operations
to Net income/(loss) attributable to Harrah's Entertainment, Inc.
(b) Represents (i) project opening costs incurred in connection with
expansion and renovation projects at various properties; (ii) write-
off of abandoned development projects; and (iii) non-recurring
strategic planning and restructuring costs.
(c) Represents (i) the difference between the net book value and cash paid
for notes exchanged and retired for cash; (ii) the difference between
the net book value of the old notes and the fair market value of new
notes issued; and (iii) the write-off of historical unamortized
deferred financing costs and unamortized market value
premiums/discounts.
(d) Represents minority owners' share of income from our majority-owned
subsidiaries, net of cash distributions to minority owners.
(e) Represents non-cash stock-based compensation expense.
(f) Represents non-recurring insurance recoveries related to Hurricane
Katrina.
(g) Represents the elimination of other non-recurring or non-cash items
such as litigation awards and settlements, severance and relocation
costs, excess gaming taxes, gains and losses from disposal of assets,
equity in non-consolidated subsidiaries (net of distributions) and
one-time costs relating to new state gaming legislation.
(h) Represents the full period estimated impact of newly completed
construction projects.
(i) Represents the cost savings yet-to-be-realized from our newly
identified and previously announced profitability improvement program.
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S OPERATING COMPANY, INC.
(UNAUDITED)
Fourth Quarter Ended Dec. 31, 2009
----------------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
------ ------ ------ ------
(In millions)
-------------
Net Revenues $307.5 $352.1 $285.4 $179.5
Property
operating
expenses (225.3) (307.3) (229.5) (125.2)
------ ------ ------ ------
Property EBITDA 82.2 44.8 55.9 54.3
Depreciation and
amortization (21.6) (28.2) (20.4) (12.8)
----- ----- ----- -----
Operating profit 60.6 16.6 35.5 41.5
Project opening
costs and other
items (3.3) (0.1) 0.5 (0.1)
Impairment of
goodwill and
other non-
amortizing
intangible
assets - - - -
Income/(loss)
on interests in
non-
consolidated
affiliates - 0.4 0.1 -
Corporate
expense - - - -
Amortization of
intangible
assets (8.1) (2.7) (5.5) -
---- ---- ---- ---
Income/(loss)
from operations 49.2 14.2 30.6 41.4
---- ---- ---- ----
Interest
expense, net of
interest
capitalized
Losses on early
extinguishments
of debt
Other income
including
interest income
Loss from
continuing
operations
before income
taxes
Benefit for
income taxes
Net loss
Less: net income
attributable to
non-
controlling
interests
Net loss
attributable to
Harrah's
Entertainment,
Inc.
Fourth Quarter Ended Dec. 31, 2009
----------------------------------
Illinois/ Other
Indiana Nevada
Region Region Other Total
------ ------ ----- -----
(In millions)
-------------
Net Revenues $271.2 $70.9 $164.9 $1,631.5
Property
operating
expenses (219.4) (63.3) (128.8) (1,298.8)
------ ----- ------ --------
Property EBITDA 51.8 7.6 36.1 332.7
Depreciation and
amortization (20.9) (6.5) (16.8) (127.2)
----- ---- ----- ------
Operating profit 30.9 1.1 19.3 205.5
Project opening
costs and
other items (0.6) (0.1) (18.1) (21.8)
Impairment of
goodwill
and other non-
amortizing
intangible
assets - (4.0) (8.3) (12.3)
Income/(loss) on
interests in
non-
consolidated
affiliates - - (1.0) (0.5)
Corporate expense - - (18.2) (18.2)
Amortization of
intangible assets (0.4) (0.6) (10.9) (28.2)
---- ---- ----- -----
Income/(loss)
from
operations 29.9 (3.6) (37.2) 124.5
---- ---- -----
Interest expense,
net of
interest
capitalized (433.5)
Losses on early
extinguishments
of debt (1.8)
Other income
including
interest income 9.9
---
Loss from
continuing
operations
before income
taxes (300.9)
Benefit for
income taxes 193.6
-----
Net loss (107.3)
Less: net income
attributable
to non-
controlling
interests (1.8)
----
Net loss
attributable to
Harrah's
Entertainment,
Inc. $(109.1)
=======
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S OPERATING COMPANY, INC.
(UNAUDITED)
Fourth Quarter Ended Dec. 31, 2008
----------------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
Region Region Region Region
------ ------ ------ ------
(In millions)
-------------
Net Revenues $322.4 $374.8 $329.9 $189.6
Property operating
expenses (246.3) (313.1) (271.6) (131.5)
------ ------ ------ ------
Property EBITDA 76.1 61.7 58.3 58.1
Depreciation and
amortization (20.9) (33.0) (20.4) (13.2)
----- ----- ----- -----
Operating profit 55.2 28.7 37.9 44.9
Project opening costs and
other items (2.1) (4.6) (3.4) (0.5)
Impairment of goodwill
and other non-
amortizing intangible
assets (1,121.4) (514.5) (328.9) (49.0)
Income/(loss) on
interests in non-
consolidated affiliates - - 0.2 -
Corporate expense - - - -
Acquisition and
integration costs - - - -
Amortization of
intangible assets (8.1) (2.7) (5.5) -
---- ---- ---- ---
Loss from operations (1,076.4) (493.1) (299.7) (4.6)
-------- ------ ------ ----
Interest expense, net of
interest capitalized
Gains on early
extinguishments of debt
Other income, including
interest income
Loss from continuing
operations before income
taxes
Benefit for income taxes
Loss from continuing
operations, net of tax
Discontinued operations,
net of tax
Net loss
Less: net income
attributable to non-
controlling interests
Net loss attributable to
Harrah's Entertainment,
Inc.
Fourth Quarter Ended Dec. 31, 2008
----------------------------------
Illinois/ Other
Indiana Nevada
Region Region Other Total
------ ------ ----- -----
(In millions)
-------------
Net Revenues $294.3 $79.7 $162.1 $1,752.8
Property operating
expenses (249.6) (73.3) (121.3) (1,406.7)
------ ----- ------ --------
Property EBITDA 44.7 6.4 40.8 346.1
Depreciation and
amortization (21.6) (6.6) (17.5) (133.2)
----- ---- ----- ------
Operating profit 23.1 (0.2) 23.3 212.9
Project opening costs and
other items (2.8) (0.7) (37.3) (51.4)
Impairment of goodwill
and other non-
amortizing intangible
assets (617.1) (217.5) (896.8) (3,745.2)
Income/(loss) on
interests in non-
consolidated affiliates - - (1.0) (0.8)
Corporate expense - - (17.7) (17.7)
Acquisition and
integration costs - - (1.0) (1.0)
Amortization of
intangible assets (0.4) (0.6) (11.5) (28.8)
---- ---- ----- -----
Loss from operations (597.2) (219.0) (942.0) (3,632.0)
------ ------ ------
Interest expense, net of
interest capitalized (496.2)
Gains on early
extinguishments of debt 946.0
Other income, including
interest income 14.2
----
Loss from continuing
operations before income
taxes (3,168.0)
Benefit for income taxes 191.9
Loss from continuing
operations, net of tax (2,976.1)
Discontinued operations,
net of tax 1.9
---
Net loss (2,974.2)
Less: net income
attributable to non-
controlling interests (4.8)
----
Net loss attributable to
Harrah's Entertainment,
Inc. $(2,979.0)
=========
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET INCOME ATTRIBUTABLE TO HARRAH'S OPERATING COMPANY, INC.
(UNAUDITED)
Successor
---------
Year Ended Dec. 31, 2009
------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $1,215.1 $1,528.1 $1,245.2 $756.6
Property
operating
expenses (898.0) (1,252.1) (952.6) (518.2)
------ -------- ------ ------
Property EBITDA 317.1 276.0 292.6 238.4
Depreciation and
amortization (84.6) (123.5) (81.6) (50.6)
----- ------ ----- -----
Operating profit 232.5 152.5 211.0 187.8
Project opening
costs and other
items (9.5) (2.7) (2.4) (0.3)
Impairment of
goodwill and
other non-
amortizing
intangible
assets (671.8) (178.7) (6.0) -
Income/(loss) on
interests in
non-
consolidated
affiliates - 2.6 0.7 -
Corporate expense - - - -
Acquisition and
integration
costs - - - -
Amortization of
intangible
assets (32.3) (10.9) (21.9) -
----- ----- ----- ---
(Loss)/income
from operations (481.1) (37.2) 181.4 187.5
------ ----- ----- -----
Interest expense,
net of interest
capitalized
Gains on early
extinguishments
of debt
Other income,
including
interest income
Income from
continuing
operations
before income
taxes
Provision for
income taxes
Net income
Less: net income
attributable to
non-controlling
interests
Net income
attributable to
Harrah's
Entertainment,
Inc.
Successor
---------
Year Ended Dec. 31, 2009
------------------------
Illinois/ Other
Indiana Nevada
(In millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $1,172.3 $332.5 $623.4 $6,873.2
Property operating
expenses (931.8) (271.8) (451.5) (5,276.0)
------ ------ ------ --------
Property EBITDA 240.5 60.7 171.9 1,597.2
Depreciation and
amortization (84.9) (26.7) (71.6) (523.5)
----- ----- ----- ------
Operating profit 155.6 34.0 100.3 1,073.7
Project opening
costs
and other items (8.9) (1.5) (49.5) (74.8)
Impairment of
goodwill
and other non-
amortizing
intangible
assets (180.7) (4.0) (137.7) (1,178.9)
Income/(loss) on
interests in non-
consolidated
affiliates - - (2.9) 0.4
Corporate expense - - (74.5) (74.5)
Acquisition and
integration costs - - (0.3) (0.3)
Amortization of
intangible assets (1.4) (2.2) (46.5) (115.2)
---- ---- ----- ------
(Loss)/income from
operations (35.4) 26.3 (211.1) (369.6)
----- ---- ------
Interest expense,
net of interest
capitalized (1,678.5)
Gains on early
extinguishments of
debt 3,929.6
Other income,
including interest
income 32.0
----
Income from
continuing
operations before
income taxes 1,913.5
Provision for income
taxes (1,287.2)
--------
Net income 626.3
Less: net income
attributable
to non-
controlling
interests (13.5)
-----
Net income
attributable to
Harrah's
Entertainment,
Inc. $612.8
======
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S OPERATING COMPANY, INC.
(UNAUDITED)
Combined
--------
Year Ended Dec. 31, 2008
------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $1,437.4 $1,776.6 $1,446.9 $782.8
Property operating
expenses (1,034.7) (1,405.9) (1,152.1) (563.7)
-------- -------- -------- ------
Property EBITDA 402.7 370.7 294.8 219.1
Depreciation and
amortization (82.0) (137.1) (82.8) (53.2)
----- ------ ----- -----
Operating profit 320.7 233.6 212.0 165.9
Project opening
costs and other
items (8.4) (7.9) 175.6 (0.8)
Impairment of
goodwill and other
non-amortizing
intangible assets (1,121.4) (514.5) (328.9) (49.0)
Income/(loss) on
interests in non-
consolidated
affiliates - - 0.4 -
Corporate expense - - - -
Acquisition and
integration costs - - - -
Amortization of
intangible assets (30.5) (11.9) (20.7) (0.2)
----- ----- ----- ----
(Loss)/income from
operations (839.6) (300.7) 38.4 115.9
------ ------ ---- -----
Interest expense,
net of interest
capitalized
Gains on early
extinguishments of
debt
Other income,
including interest
income
Loss from continuing
operations before
income taxes
Benefit for income
taxes
Income from
continuing
operations, net of
tax
Discontinued
operations, net of
tax
Net loss
Less: net income
attributable to
non-controlling
interests
Net loss
attributable to
Harrah's
Entertainment, Inc.
Combined
--------
Year Ended Dec. 31, 2008
------------------------
Illinois/ Other
Indiana Nevada
(In millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $1,184.2 $406.3 $661.0 $7,695.2
Property operating
expenses (975.2) (338.4) (525.2) (5,995.2)
------ ------ ------ --------
Property EBITDA 209.0 67.9 135.8 1,700.0
Depreciation and
amortization (66.0) (28.0) (72.0) (521.1)
----- ----- ----- ------
Operating profit 143.0 39.9 63.8 1,178.9
Project opening
costs and
other items (21.3) (0.7) (104.9) 31.6
Impairment of
goodwill and
other non-
amortizing
intangible assets (617.1) (217.5) (896.8) (3,745.2)
Income/(loss) on
interests
in non-consolidated
affiliates - - (1.9) (1.5)
Corporate expense - - (80.1) (80.1)
Acquisition and
integration
costs - - (149.6) (149.6)
Amortization of
intangible
assets (1.8) (2.1) (46.5) (113.7)
---- ---- ----- ------
(Loss)/income from
operations (497.2) (180.4) (1,216.0) (2,879.6)
------ ------ --------
Interest expense,
net of
interest
capitalized (1,794.0)
Gains on early
extinguishments
of debt 742.1
Other income,
including
interest income 34.7
----
Loss from continuing
operations before
income taxes (3,896.8)
Benefit for income
taxes 400.1
Income from continuing
operations, net
of tax (3,496.7)
Discontinued operations,
net of tax 90.5
----
Net loss (3,406.2)
Less: net income
attributable to non-
controlling interests (7.8)
----
Net loss attributable to
Harrah's Entertainment,
Inc. $(3,414.0)
=========
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S OPERATING COMPANY, INC.
(UNAUDITED)
Successor
---------
Jan. 28, 2008 Through Dec. 31, 2008
-----------------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $1,318.9 $1,650.8 $1,340.8 $727.0
Property operating
expenses (954.3) (1,302.0) (1,064.6) (520.9)
------ ------ ------ ------
Property EBITDA 364.6 348.8 276.2 206.1
Depreciation and
amortization (74.6) (125.2) (74.2) (48.1)
------ ------ ------ ------
Operating profit 290.0 223.6 202.0 158.0
Project opening
costs and other
items (8.4) (7.8) 175.0 (0.8)
Impairment of
goodwill and other
non-amortizing
intangible assets (1,121.4) (514.5) (328.9) (49.0)
Income/(loss) on
interests in non-
consolidated
affiliates - - 0.4 -
Corporate expense - - - -
Acquisition and
integration costs - - - -
Amortization of
intangible assets (29.5) (10.0) (20.2) -
------ ------ ------ ------
(Loss)/income from
operations (869.3) (308.7) 28.3 108.2
------ ------ ------ ------
Interest expense,
net of interest
capitalized
Gains on early
extinguishments
of debt
Other income,
including
interest income
Loss from continuing
operations before
income taxes
Benefit for income
taxes
Loss from continuing
operations,
net of tax
Discontinued
operations,
net of tax
Net loss
Less: net income
attributable to
non-controlling
interests
Net loss attributable
to Harrah's
Entertainment,
Inc.
Successor
---------
Jan. 28, 2008 Through Dec. 31, 2008
-----------------------------------
Illinois/ Other
Indiana Nevada
(In millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $1,098.7 $379.5 $602.0 $7,117.7
Property operating
expenses (903.3) (312.8) (469.4) (5,527.3)
------ ------ ------ ------
Property EBITDA 195.4 66.7 132.6 1,590.4
Depreciation and
amortization (61.7) (25.0) (64.8) (473.6)
------ ------ ------ ------
Operating profit 133.7 41.7 67.8 1,116.8
Project opening
costs and other
items (21.3) (0.7) (103.5) 32.5
Impairment of
goodwill and
other non-amortizing
intangible assets (617.1) (217.5) (896.8) (3,745.2)
Income/(loss) on
interests in
non-consolidated
affiliates - - (2.4) (2.0)
Corporate expense - - (106.3) (106.3)
Acquisition and
integration costs - - (24.0) (24.0)
Amortization of
intangible assets (1.2) (2.0) (45.3) (108.2)
------ ------ ------ ------
(Loss)/income from
operations (505.9) (178.5) (1,110.5) (2,836.4)
------ ------ --------
Interest expense,
net of interest
capitalized (1,704.3)
Gains on early
extinguishments
of debt 742.1
Other income,
including interest
income 29.6
------
Loss from continuing
operations before
income taxes (3,769.0)
Benefit for income
taxes 378.5
------
Loss from continuing
operations,
net of tax (3,390.5)
Discontinued
operations,
net of tax 90.4
------
Net loss (3,300.1)
Less: net income
attributable to
non-controlling
interests (6.4)
------
Net loss attributable
to Harrah's
Entertainment,
Inc. $(3,306.5)
=========
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO
NET LOSS ATTRIBUTABLE TO HARRAH'S OPERATING COMPANY, INC.
(UNAUDITED)
Predecessor
-----------
Jan. 1, 2008 Through Jan. 27, 2008
----------------------------------
Las Atlantic Louisiana/ Iowa/
Vegas City Mississippi Missouri
(In millions) Region Region Region Region
------------- ------ ------ ------ ------
Net Revenues $118.5 $125.8 $106.1 $55.8
Property operating
expenses (80.4) (103.9) (87.5) (42.8)
----- ------ ----- -----
Property EBITDA 38.1 21.9 18.6 13.0
Depreciation and
amortization (7.4) (11.9) (8.6) (5.1)
----- ------ ----- -----
Operating profit 30.7 10.0 10.0 7.9
Project opening costs
and other items - (0.1) 0.6 -
Income on interests
in non-consolidated
affiliates - - - -
Corporate expense - - - -
Acquisition and
integration costs - - - -
Amortization of
intangible assets (1.0) (1.9) (0.5) (0.2)
----- ------ ----- -----
Income/(loss) from
operations 29.7 8.0 10.1 7.7
----- ------ ----- -----
Interest expense,
net of interest
capitalize
Other income, including
interest income
Loss from continuing
operations before
income taxes
Benefit for income
taxes
Loss from continuing
operations, net of tax
Discontinued operations,
net of tax
Net loss
Less: net income
attributable to
non-controlling
interests
Net loss attributable
to Harrah's
Entertainment,
Inc.
Predecessor
-----------
Jan. 1, 2008 Through Jan. 27, 2008
----------------------------------
Illinois/ Other
Indiana Nevada
(In millions) Region Region Other Total
------------- ------ ------ ----- -----
Net Revenues $85.5 $26.8 $59.0 $577.5
Property operating
expenses (71.9) (25.6) (55.8) (467.9)
----- ------ ----- -----
Property EBITDA 13.6 1.2 3.2 109.6
Depreciation and
amortization (4.3) (3.0) (7.2) (47.5)
----- ------ ----- -----
Operating profit 9.3 (1.8) (4.0) 62.1
Project opening costs
and other items - - (1.4) (0.9)
Income on interests in
non-consolidated
affiliates - - 0.5 0.5
Corporate expense - - 26.2 26.2
Acquisition and
integration costs - - (125.6) (125.6)
Amortization of
intangible assets (0.6) (0.1) (1.2) (5.5)
----- ------ ----- -----
Income/(loss) from
operations 8.7 (1.9) (105.5) (43.2)
----- ------ -----
Interest expense,
net of interest
capitalize (89.7)
Other income,
including interest
income 5.1
------
Loss from continuing
operations before
income taxes (127.8)
Benefit for income
taxes 21.6
------
Loss from continuing
operations, net of
tax (106.2)
Discontinued
operations,
net of tax 0.1
------
Net loss (106.1)
Less: net income
attributable to
non-controlling
interests (1.4)
------
Net loss attributable
to Harrah's
Entertainment,
Inc. $(107.5)
=======
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
CALCULATION OF ADJUSTED EBITDA
(UNAUDITED)
Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual
items and other adjustments required or permitted in calculating covenant
compliance under the indenture governing the senior notes, first lien
notes, second lien notes and/or our senior secured credit facilities. We
believe that the inclusion of supplementary adjustments to EBITDA applied
in presenting Adjusted EBITDA are appropriate to provide additional
information to investors about certain material non-cash items and about
unusual items that we do not expect to continue at the same level in the
future. Because not all companies use identical calculations, our
presentation of Adjusted EBITDA may not be comparable to other similarly
titled measures of other companies.
In connection with the acquisition of the Company by affiliates of Apollo
Global Management, LLC and TPG Capital, LP, eight of our properties and
their related operating assets were spun off from Harrah's Operating
Company to Harrah's Entertainment through a series of distributions,
liquidations, transfers and contributions, collectively referred to as the
"the CMBS Spin-Off." The eight properties, as of the closing, are Harrah's
Las Vegas, Rio, Flamingo Las Vegas, Harrah's Atlantic City, Showboat
Atlantic City, Harrah's Lake Tahoe, Harvey's Lake Tahoe and Bill's Lake
Tahoe. Subsequent to the closing, Paris Las Vegas and Harrah's Laughlin
and their related operating assets were spun off from Harrah's Operating
Company and its subsidiaries to Harrah's Entertainment, and Harrah's Lake
Tahoe, Harvey's Lake Tahoe, Bill's Lake Tahoe and Showboat Atlantic City
and their related operating assets were transferred to subsidiaries of
Harrah's Operating Company from Harrah's Entertainment (the "Post-Close
CMBS Transaction"). The properties spun off from Harrah's Operating
Company and owned by Harrah's Entertainment, whether at closing or after
the subsequent transfer, are collectively referred to as "the CMBS
properties." We refer to the CMBS Spin-Off and the Post-Closing CMBS
Transaction as the "CMBS Transactions."
Also in connection with the acquisition by affiliates of Apollo and TPG,
London Clubs International Limited ("London Clubs") and its subsidiaries,
with the exception of the subsidiaries related to the South Africa
operations, became subsidiaries of Harrah's Operating Company ("the London
Clubs Transfer"). London Clubs and its subsidiaries were previously
subsidiaries of Harrah Entertainment.
The following table reconciles Net loss attributable to Harrah's Operating
Company, Inc. to Adjusted EBITDA for the Successor period quarters ended
December 31, 2009 and 2008.
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS ATTRIBUTABLE TO HARRAH'S OPERATING
COMPANY, INC. TO ADJUSTED EBITDA
(UNAUDITED)
Quarter Ended
-------------
Dec. 31, Dec. 31,
(In millions) 2009 2008
------------- ---- ----
Net loss attributable to Harrah's
Operating Company, Inc. $(109.1) $(2,979.0)
Interest expense, net 423.6 482.3
Benefit for income taxes (193.6) (191.9)
Depreciation and amortization 158.4 165.5
----- ------
EBITDA (a) 279.3 (2,523.1)
Project opening costs, abandoned
projects and development costs (b) 0.6 2.9
Acquisition and integration costs - 1.0
Losses/(gains) on early
extinguishments of debt (c) 1.8 (946.0)
Discontinued operations, net of tax - (1.9)
Net income attributable to non-
controlling interests, net of
distributions (d) (1.6) (3.3)
Impairment of goodwill and other non-
amortizing intangible assets 12.3 3,745.2
Non-cash expense for stock
compensation benefits (e) 2.7 2.9
Other non-recurring or non-cash
items (f) 22.1 46.3
---- ----
Adjusted EBITDA(g) $317.2 $324.0
====== ======
(a) Amount will differ from amounts previously reported as the starting
point has been changed from Income/(loss) from continuing operations
to Net income/(loss) attributable to Harrah's Operating Company, Inc.
(b) Represents (i) project opening costs incurred in connection with
expansion and renovation projects at various properties; (ii) write-
off of abandoned development projects; and (iii) non-recurring
strategic planning and restructuring costs.
(c) Represents (i) the difference between the net book value and cash paid
for notes exchanged and retired for cash; (ii) the difference between
the net book value of the old notes and the fair market value of new
notes issued; and (iii) the write-off of historical unamortized
deferred financing costs and unamortized market value
premiums/discounts.
(d) Represents minority owners' share of income from our majority-owned
subsidiaries, net of cash distributions to minority owners.
(e) Represents non-cash compensation expense related to stock options.
(f) Represents the elimination of other non-recurring or non-cash items
such as litigation awards and settlements, severance and relocation
costs, excess gaming taxes, gains and losses from disposal of assets,
equity in non-consolidated subsidiaries (net of distributions) and
one-time costs relating to new state gaming legislation.
(g) Does not include the full period estimated impact of newly completed
construction projects or the cost savings yet-to-be realized from our
newly identified and previously announced profitability improvement
program.
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET (LOSS)/INCOME ATTRIBUTABLE TO HARRAH'S OPERATING
COMPANY, INC. TO LTM ADJUSTED EBITDA
(UNAUDITED)
LTM Adjusted EBITDA is defined as EBITDA further adjusted to exclude
unusual items and other adjustments required or permitted in calculating
the covenant compliance under the indenture governing the senior notes,
first lien notes, second lien notes and/or our senior secured credit
facilities. We believe that the inclusion of supplementary adjustments to
EBITDA applied in presenting LTM Adjusted EBITDA are appropriate to
provide additional information to investors about certain material
non-cash items and about unusual items that we do not expect to continue
at the same level in the future. Because not all companies use identical
calculations, our presentation of LTM Adjusted EBITDA may not be
comparable to other similarly titled measures of other companies.
The following table reconciles Net (loss)/income attributable to Harrah's
Operating Company, Inc. to LTM Adjusted EBITDA for the Successor period
ended December 31, 2009, the Successor period from January 28, 2008
through December 31, 2009, and for the Predecessor period from January 1,
2008 through January 27, 2008. We have also combined the Successor and
Predecessor periods' results for the year ended December 31, 2008, in the
presentation below because company management believes that it enables a
meaningful presentation and comparison of results to the Successor period
ended December 31, 2009.
Successor Predecessor Successor Combined
--------- ----------- --------- --------
Jan. 1, Jan. 28, Jan. 1,
Year 2008 2008 2008
Ended Through Through Through
Dec. 31, Jan. 27, Dec. 31, Dec. 31,
(In millions) 2009 2008 2008 2008
------------- ---- ---- ---- ----
Net (loss)/income
attributable to Harrah's
Operating
Company, Inc. $612.8 $(107.5) $(3,306.5) $(3,414.0)
Interest expense, net 1,646.2 85.7 1,675.4 1,761.1
(Benefit)/provision for
income taxes 1,287.2 (21.6) (378.5) (400.1)
Depreciation and
amortization 652.0 56.7 597.2 653.9
------- ----- ----- -----
EBITDA(a) 4,198.2 13.3 (1,412.4) (1,399.1)
Project opening costs,
abandoned projects and
development costs (b) 3.3 0.9 30.0 30.9
Acquisition and
integration costs 0.3 125.6 24.0 149.6
(Gains)/losses on early
extinguishments of
debt (c) (3,929.6) - (742.1) (742.1)
Discontinued operations,
net of tax - (0.1) (90.4) (90.5)
Net income attributable to
non-controlling interests,
net of distributions (d) (1.8) 0.8 (7.2) (6.4)
Impairment of goodwill and
other non-amortizing
intangible assets 1,178.9 - 3,745.2 3,745.2
Non-cash expense for stock
compensation benefits (e) 12.0 1.7 12.1 13.8
Income from insurance
claims for hurricane
losses (f) - - (185.4) (185.4)
Other non-recurring or
non-cash items (g) 89.3 0.8 130.1 130.9
Pro forma adjustment
for new properties(h) 17.0 8.0
Pro forma adjustment for
yet-to-be realized cost
savings (i) 150.3 361.1
------- -----
LTM adjusted EBITDA $1,717.9 $2,016.0
======== ========
(a) Amount will differ from amounts previously reported as the starting
point has been changed from Income/(loss) from continuing operations
to Net income/(loss) attributable to Harrah's Operating Company, Inc.
(b) Represents (i) project opening costs incurred in connection with
expansion and renovation projects at various properties; (ii) write-
off of abandoned development projects; and (iii) non-recurring
strategic planning and restructuring costs.
(c) Represents (i) the difference between the net book value and cash paid
for notes exchanged and retired for cash; (ii) the difference between
the net book value of the old notes and the fair market value of new
notes issued; and (iii) the write-off of historical unamortized
deferred financing costs and unamortized market value
premiums/discounts.
(d) Represents minority owners' share of income from our majority-owned
subsidiaries, net of cash distributions to minority owners.
(e) Represents non-cash compensation expense related to stock options.
(f) Represents non-recurring insurance recoveries related to Hurricane
Katrina.
(g) Represents the elimination of other non-recurring or non-cash items
such as litigation awards and settlements, severance and relocation
costs, excess gaming taxes, gains and losses from disposal of assets,
equity in non-consolidated subsidiaries (net of distributions) and
one-time costs relating to new state gaming legislation.
(h) Represents the full period estimated impact of newly completed
construction projects.
(i) Represents the cost savings yet-to-be realized from our newly
identified and previously announced profitability improvement program.
The following tables present the condensed combined statement of
operations of Harrah's Operating Company, Inc. for the quarter and full
year ended December 31, 2009, the quarter ended December 31, 2008, the
Successor period from January 28, 2008 through December 31, 2008, and the
Predecessor period from January 1, 2008 through January 27, 2008, taking
into consideration the CMBS Transactions and the London Clubs Transfer:
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED DEC. 31, 2009
(UNAUDITED)
HET Parent
and Other
Harrah's
Entertainment
Subsidiaries
and Harrah's
(In millions) HOC(a) Accounts (b) Entertainment(c)
------------- ------ ------------ ----------------
Revenues $1,631.5 $467.6 $2,099.1
Property operating expenses (1,298.8) (357.2) (1,656.0)
Depreciation and amortization (127.2) (39.9) (167.1)
------ ----- ------
Operating profit 205.5 70.5 276.0
Project opening costs and
other items (21.8) (8.2) (30.0)
Impairment of goodwill and
other non-amortizing
intangible assets (12.3) - (12.3)
Loss on interests in non-
consolidated affiliates (0.5) (0.4) (0.9)
Corporate expense (18.2) (20.8) (39.0)
Acquisition and integration
costs - - -
Amortization of intangible
assets (28.2) (14.9) (43.1)
------ ----- ------
Income from operations 124.5 26.2 150.7
Interest expense, net of
interest
capitalized (433.5) (54.3) (487.8)
(Losses)/gains on early
extinguishment of debt (1.8) 688.1 686.3
Other income, including
interest income 9.9 0.2 10.1
------ ----- ------
(Loss)/income before income
taxes (300.9) 660.2 359.3
Income tax benefit/(provision) 193.6 (254.6) (61.0)
------ ----- ------
Net (loss)/income (107.3) 405.6 298.3
Less: net income attributable
to non-controlling interests (1.8) (0.9) (2.7)
------ ----- ------
Net (loss)/income
attributable to Harrah's
Operating Company, Inc. $(109.1) $404.7 $295.6
======= ====== ======
(a) Represents the financial information of HOC.
(b) Represents the removal of (i) the financial information of all
subsidiaries of Harrah's Entertainment that are not a component of
HOC, primarily, captive insurance companies and the CMBS properties;
and (ii) accounts at Harrah's Entertainment parent company.
(c) Represents the financial information of Harrah's Entertainment.
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED DEC. 31, 2008
(UNAUDITED)
HET Parent
and Other
Harrah's
Entertainment
Subsidiaries
and Harrah's
(In millions) HOC(a) Accounts(b) Entertainment(c)
------------- ------ ------------ ----------------
Revenues $1,752.8 $525.6 $2,278.4
Property operating expenses (1,406.7) (393.7) (1,800.4)
Depreciation and amortization (133.2) (41.3) (174.5)
------ ----- ------
Operating profit 212.9 90.6 303.5
Project opening costs and
other items (51.4) (29.2) (80.6)
Impairment of goodwill and
other non-amortizing
intangible assets (3,745.2) (1,744.4) (5,489.6)
Loss on interests in
non-consolidated affiliates (0.8) - (0.8)
Corporate expense (17.7) (18.1) (35.8)
Acquisition and integration
costs (1.0) - (1.0)
Amortization of intangible
assets (28.8) (14.9) (43.7)
------ ----- ------
Loss from operations (3,632.0) (1,716.0) (5,348.0)
Interest expense, net of
interest capitalized (496.2) (109.4) (605.6)
Gain on early extinguishment
of debt 946.0 - 946.0
Other income, including
interest income 14.2 2.4 16.6
------ ----- ------
Loss before income taxes (3,168.0) (1,823.0) (4,991.0)
Income tax benefit 191.9 20.9 212.8
Loss from continuing
operations,
net of tax (2,976.1) (1,802.1) (4,778.2)
Discontinued operations,
net of tax 1.9 - 1.9
------ ----- ------
Net loss (2,974.2) (1,802.1) (4,776.3)
Less: net income attributable
to non-controlling interests (4.8) (1.0) (5.8)
------ ----- ------
Net loss attributable to
Harrah's Operating Company,
Inc. $(2,979.0) $(1,803.1) $(4,782.1)
========= ========= =========
(a) Represents the financial information of HOC..
(b) Represents the financial information of (i) all subsidiaries of
Harrah's Entertainment that are not a component of HOC, namely,
captive insurance companies and the CMBS properties, and (ii) accounts
at Harrah's Entertainment parent company.
(c) Represents the financial information of Harrah's Entertainment.
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
CONDENSED COMBINED STATEMENT OF OPERATIONS
(SUCCESSOR)
FOR THE YEAR ENDED DEC. 31, 2009
(UNAUDITED)
HET Parent
and Other
Harrah's
Entertainment
Subsidiaries
and Harrah's
(In millions) HOC(a) Accounts(b) Entertainment(c)
------------- ------ ------------ ----------------
Revenues $6,873.2 $2,034.2 $8,907.4
Property operating expenses (5,276.0) (1,477.8) (6,753.8)
Depreciation and amortization (523.5) (160.4) (683.9)
------ ----- ------
Operating profit 1,073.7 396.0 1,469.7
Project opening costs and
other items (74.8) (36.7) (111.5)
Impairment of goodwill and
other non-amortizing
intangible assets (1,178.9) (459.1) (1,638.0)
Income/(loss) on interests
in non-consolidated affiliates 0.4 (2.6) (2.2)
Corporate expense (74.5) (76.2) (150.7)
Acquisition and integration
costs (0.3) - (0.3)
Amortization of intangible
assets (115.2) (59.6) (174.8)
------ ----- ------
Loss from operations (369.6) (238.2) (607.8)
Interest expense, net of
interest capitalized (1,678.5) (214.0) (1,892.5)
Gains on early extinguishment
of debt 3,929.6 1,035.9 4,965.5
Other income, including
interest income 32.0 1.0 33.0
------ ----- ------
Income before income taxes 1,913.5 584.7 2,498.2
Income tax provision (1,287.2) (364.6) (1,651.8)
-------- ------ --------
Net income 626.3 220.1 846.4
Less: net income attributable
to non-controlling interests (13.5) (5.3) (18.8)
------ ----- ------
Net income attributable to
Harrah's Operating Company,
Inc. $612.8 $214.8 $827.6
====== ====== ======
(a) Represents the financial information of HOC.
(b) Represents the financial information of (i) all subsidiaries of
Harrah's Entertainment that are not a component of HOC, primarily,
captive insurance companies and the CMBS properties, and (ii) accounts
at Harrah's Entertainment parent company.
(c) Represents the financial information of Harrah's Entertainment.
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(SUCCESSOR)
FOR THE PERIOD FROM JAN. 28, 2008 THROUGH DEC. 31, 2008
(UNAUDITED)
HET Parent
and Other
Harrah's
Entertainment
Subsidiaries
and Harrah's
(In millions) HOC(a) Accounts(b) Entertainment(c)
------------- ------ ------------ ----------------
Revenues $7,117.7 $2,249.2 $9,366.9
Property operating expenses (5,527.3) (1,594.7) (7,122.0)
Depreciation and amortization (473.6) (153.3) (626.9)
------ ----- ------
Operating profit 1,116.8 501.2 1,618.0
Project opening costs and
other items 32.5 (77.6) (45.1)
Impairment of goodwill and
other non-amortizing
intangible assets (3,745.2) (1,744.4) (5,489.6)
Loss on interests in
non-consolidated affiliates (2.0) (0.1) (2.1)
Corporate expense (106.3) (25.5) (131.8)
Acquisition and integration
costs (24.0) - (24.0)
Amortization of intangible
assets (108.2) (54.7) (162.9)
------ ----- ------
Loss from operations (2,836.4) (1,401.1) (4,237.5)
Interest expense, net of
interest capitalized (1,704.3) (370.6) (2,074.9)
Gain on early extinguishment
of debt 742.1 - 742.1
Other income, including
interest income 29.6 5.6 35.2
------ ----- ------
Loss before income taxes (3,769.0) (1,766.1) (5,535.1)
Income tax benefit/(provision) 378.5 (18.1) 360.4
------ ----- ------
Loss from continuing
operations, net of tax (3,390.5) (1,784.2) (5,174.7)
Discontinued operations,
net of tax 90.4 - 90.4
------ ----- ------
Net loss (3,300.1) (1,784.2) (5,084.3)
Less: net income attributable
to non-controlling interests (6.4) (5.6) (12.0)
------ ----- ------
Net loss attributable to
Harrah's Operating Company,
Inc. $(3,306.5) $(1,789.8) $(5,096.3)
========= ========= =========
(a) Represents the financial information of HOC.
(b) Represents the removal of (i) financial information of all
subsidiaries of Harrah's Entertainment that are not a component of
HOC, namely, captive insurance companies, the CMBS properties and
South Africa interests; and (ii) accounts at Harrah's Entertainment
parent company.
(c) Represents the financial information of Harrah's Entertainment.
HARRAH'S OPERATING COMPANY, INC., A WHOLLY OWNED SUBSIDIARY OF
HARRAH'S ENTERTAINMENT, INC.
CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(PREDECESSOR)
FOR THE PERIOD FROM JAN. 1, 2008 THROUGH JAN. 27, 2008
(UNAUDITED)
HET
Parent and
Other
Harrah's
Enter-
tainment
London Subsid-
HOC Clubs CMBS Hist- iaries Harrah's
Restruc- Trans- Trans- orical and Enter-
(In millions) tured fer(a) actions(b) HOC(c) Accounts(d) tainment(e)
------------- ----- ------ ---------- ------ ----------- -----------
Revenues $577.5 $(34.0) $182.3 $725.8 $ 34.3 $760.1
Property
operating
expenses (467.9) 34.0 (126.5) (560.4) (28.5) (588.9)
Depreciation
and
amortization (47.5) 1.6 (16.0) (61.9) (1.6) (63.5)
----- ---- ----- ----- ---- -----
Operating
profit/
(loss) 62.1 1.6 39.8 103.5 4.2 107.7
Project
opening
costs and
other
items (0.9) 0.7 (4.5) (4.7) (0.7) (5.4)
Income
on
interests
in non-
consolidated
affiliates 0.5 - - 0.5 - 0.5
Corporate
expense 26.2 - (34.7) (8.5) - (8.5)
Acquisition
and
integration
costs (125.6) - - (125.6) - (125.6)
Amortization
of
intangible
assets (5.5) 0.2 - (5.3) (0.2) (5.5)
----- ---- ----- ----- ---- -----
(Loss)/income
from
operations (43.2) 2.5 0.6 (40.1) 3.3 (36.8)
Interest
expense,
net of
interest
capitalized (89.7) - - (89.7) - (89.7)
Other income/
(expense)
including
interest
income 5.1 (3.3) (4.0) (2.2) 3.3 1.1
----- ---- ----- ----- ---- -----
(Loss)/
income
before
income
taxes (127.8) (0.8) (3.4) (132.0) 6.6 (125.4)
Income tax
benefit/
(provision) 21.6 (0.9) 1.2 21.9 4.1 26.0
----- ---- ----- ----- ---- -----
(Loss)/
income
from
continuing
operations,
net of tax (106.2) (1.7) (2.2) (110.1) 10.7 (99.4)
Discontinued
operations,
net of tax 0.1 - - 0.1 - 0.1
----- ---- ----- ----- ---- -----
Net (loss)/
income (106.1) (1.7) (2.2) (110.0) 10.7 (99.3)
Less: net
income
attributable
to non-
controlling
interests (1.4) 0.9 (0.2) (0.7) (0.9) (1.6)
----- ---- ----- ----- ---- -----
Net (loss)/
income
attributable
to Harrah's
Operating
Company,
Inc. $(107.5) $(0.8) $(2.4) $(110.7) $9.8 $(100.9)
======= ===== ===== ======= ==== =======
(a) Reflects the inclusion of the London Clubs operating results pursuant
to the London Clubs Transfer, in which London Clubs and its
subsidiaries became subsidiaries of HOC.
(b) Reflects the removal of the operating results of the CMBS properties,
pursuant to the CMBS Transactions in which certain properties and
operations of HOC were spun-off into a separate borrowing structure
and held side-by-side with HOC under Harrah's Entertainment. The
operating expenses of HOC include unallocated costs attributable to
services that have been performed by HOC on behalf of the CMBS
properties. These costs are primarily related to corporate functions
such as accounting, tax, treasury, payroll and benefits
administration, risk management, legal, and information management and
technology. The CMBS spin-off reflects the push-down of corporate
expense of $34.7 million that was unallocated at January 27, 2008.
Following the Acquisition, many of these services will continue to be
provided by HOC pursuant to a shared services agreement with the CMBS
properties.
(c) Represents the historical financial information of HOC.
(d) Represents the removal of (i) the financial information of all
subsidiaries of Harrah's Entertainment that are not a component of
HOC, namely, captive insurance companies and London Clubs and its
subsidiaries; and (ii) accounts at Harrah's Entertainment parent
company.
(e) Represents the financial information of Harrah's Entertainment.
SOURCE Harrah's Entertainment, Inc.
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