<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 4, 1999
Park Place Entertainment Corporation
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(Exact Name of Registrant as
Specified in Charter)
Delaware 1-14573 88-0400631
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(State or Other (Commission (IRS Employer
Jurisdiction of File Identification
Incorporation) Number) No.)
3930 Howard Hughes Parkway
Las Vegas, Nevada 89109
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(Address of Principal
Executive Offices)
(702) 699-5000
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(Registrant's telephone
number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
On February 4, 1999, the Registrant announced its earnings for its
fourth fiscal quarter and the fiscal year ended December 31, 1998. A copy of
the press release is attached hereto as Exhibit 99 and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
7(c) Exhibits
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99 Press Release of Park Placement Entertainment
Corporation, dated February 4, 1999.
2
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
HILTON HOTELS CORPORATION
Dated: February 4, 1998 By: /s/ SCOTT A. LAPORTA
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Name: Scott A. LaPorta
Title: Executive Vice President and
Chief Financial Officer
3
<PAGE>
Contact: Geoffrey Davis
702-699-5037
PARK PLACE ENTERTAINMENT CORPORATION REPORTS FOURTH
QUARTER AND YEAR END 1998 RESULTS
LAS VEGAS, NEVADA-February 4, 1999 - Park Place Entertainment Corporation
(NYSE:PPE) announces fourth quarter and year end 1998 results.
On December 31, 1998, Park Place Entertainment Corporation (the Company) was
created through the tax-free distribution of Hilton Hotels Corporation's
gaming division to its shareholders and the subsequent merger with the
Mississippi operations of Grand Casinos, Inc. (the Grand Properties). The
financial information herein is presented on a pro forma basis as if the
December 31, 1998 distribution by Hilton and subsequent merger with the Grand
Properties had occurred on January 1, 1997. The Company believes the pro
forma information is a more meaningful presentation than the historical
results for comparative reasons.
Pro forma net revenues for the Company were $712 million for the quarter
ended December 31, 1998, a 4 percent increase over net revenues of $685
million in the fourth quarter 1997. For the year, net revenues came in at
$2.9 billion, an 8 percent increase from the prior year.
Fourth quarter 1998 pro forma earnings before interest, taxes, depreciation
and amortization and non-cash items (EBITDA) were $139 million, up 3 percent
from 1997. For the year ended December 31, 1998, EBITDA increased 10 percent
to $683 million from $619 million in the prior year. The full-year increase
was driven primarily by operating improvements and additional rooms in the
Eastern, Mid-South and International Regions, while the Western Region was
flat with the prior year, despite challenging market conditions.
<PAGE>
The Company reported fourth quarter earnings, before non-recurring charges,
of $16 million, or $0.05 per diluted share compared to 1997 fourth quarter
earnings, before non-recurring charges, of $22 million or $0.07 per share.
After the non-recurring charges, diluted earnings per share for the fourth
quarter of 1998 were $0.02 versus a loss of ($0.14) per share in 1997.
For the year, earnings before non-recurring charges were $149 million or
$0.49 per diluted share in 1998 compared to $148 million or $0.48 per diluted
share in 1997. Including non-recurring charges, the 1998 earnings were $139
million or $0.45 per diluted share compared to $82 million or $0.26 per
diluted share in 1997.
Results in 1998 and 1997 were impacted by one-time pre-tax charges totaling
$16 million and $102 million, respectively, associated with the write-down of
riverboat assets. In both years, the charges were taken in the fourth quarter.
"We are very excited to have our first earnings report as an independent
company," said Arthur Goldberg, president and CEO. He went on to say, "We
have a collection of leading assets in great locations in the three primary
gaming markets in the United States. Our geographic diversification, when
combined with our strong balance sheet, gives us a competitive advantage."
WESTERN REGION
The Las Vegas Hilton reported EBITDA of $9 million in the fourth quarter
1998, compared with last year's $10 million due to a decrease in table game
drop, partially offset by improved hold percentage. For the year, the Las
Vegas Hilton reported an EBITDA increase of 29 percent to $58 million, due
primarily to an increase in high-end domestic table game play and more
effective management of individual operating departments.
Bally's Las Vegas reported EBITDA of $17 million for the fourth quarter of
1998, down from $24 million in 1997's fourth quarter. For the year, Bally's
reported $84 million of EBITDA compared to $93 million in 1997. For both the
quarter and the year, the property was negatively impacted by a decrease in
the table game hold percentage and higher operating costs per occupied room.
The Flamingo Hilton-Las Vegas reported fourth quarter EBITDA of $29 million,
relatively flat with fourth quarter 1997 results, as casino and hotel results
were comparable with the prior year's fourth quarter. In 1998, the property
generated $106 million in EBITDA compared with the $109 million reported for
1997.
<PAGE>
EASTERN REGION
The Atlantic City Hilton generated $6 million in EBITDA for the fourth
quarter, up from $5 million in the fourth quarter 1997. Full year results
increased 28 percent to $37 million from $29 million in 1997. Improved
performance in both the quarter and the year was driven primarily by reduced
promotional spending and the new 300 room hotel tower completed in the second
half of 1997.
Bally's Park Place report EBITDA of $27 million for the fourth quarter, down
13 percent from the prior year's results due to increased marketing and
promotional expenses. For the full year, EBITDA from Park Place was $157
million compared to $155 million in 1997.
MID-SOUTH REGION
Grand Biloxi reported EBITDA of $17 million for the fourth quarter up 31
percent from the fourth quarter 1997. Full year results were up 30 percent
from $60 million in 1997 to $78 million in 1998. The improved performance in
both the quarter and the year was fueled by the addition of 500 hotel rooms
in February 1998.
Grand Gulfport reported $9 million in EBITDA for the fourth quarter, up 29
percent from a year ago. For the year, EBITDA increased to $39 million from
$35 million in 1997. The increase were driven by improved operating margins.
Grand Tunica's fourth quarter EBITDA was $11 million, a 10 percent increase
from the prior year's fourth quarter. Full year results were up 18 percent,
with EBITDA increasing to $46 million from $39 million. Improvements in both
the quarter and the year resulted primarily from the rooms addition in 1998.
Other properties in the Region (Bally's New Orleans, Bally's Robinsonville
and the Flamingo-Kansas City) reported $12 million in EBITDA for the fourth
quarter of 1998 up from a loss of $1 million in the fourth quarter of 1997.
Full year 1998 performance increased to $39 million from $20 million in 1997.
Improved results in both the quarter and the year were driven by capturing
additional market share.
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INTERNATIONAL
On a combined basis, the Conrad properties in Uruguay and Australia were
approximately flat in the fourth quarter at $10 million in EBITDA. For the
full year, these properties reported an EBITDA increase of 34 percent to $47
million. The increase was generated by our casino in Punta del Este, Uruguay,
which had its first year of operations with a full complement of hotel rooms
and amenities in 1998.
Looking forward to 1999, construction of Paris-Las Vegas remains on time and
on budget and is scheduled to open in September 1999. Located at the four
corners of the Las Vegas Strip and adjacent to Bally's, Paris will contain
2,916 guest rooms, an 85,000 sq. ft. casino and more than 140,000 sq. ft. of
meeting space. Its signature feature is a 50-story replica of the famed
Eiffel Tower with an observation deck and a world-class restaurant with
fantastic views of the Strip.
"We are optimistic about 1999 given what we believe will be strong relative
performance in our key markets driven by the location of our properties, our
marketing strategy, the 1,200 new rooms to be added in Mississippi and the
opening of Paris," said Arthur Goldberg.
Park Place is the world's largest gaming company, as measured by casino
square footage and revenues, and is the only casino gaming company with a
leading presence in Nevada, New Jersey and Mississippi-the three largest
gaming markets in the United States. In 1999, the Company will own or have an
interest in 17 gaming properties located throughout the United States and in
Australia and Uruguay, with a total of 1.4 million square feet of gaming
space and approximately 23,000 hotel rooms.
NOTE: THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF FEDERAL SECURITIES LAW, INCLUDING STATEMENTS CONCERNING BUSINESS
STRATEGIES AND THEIR INTENDED RESULTS, AND SIMILAR STATEMENTS CONCERNING
ANTICIPATED FUTURE EVENTS AND EXPECTATIONS THAT ARE NOT HISTORICAL FACTS. THE
FORWARD-LOOKING STATEMENTS IN THIS PRESS RELEASE ARE SUBJECT TO NUMEROUS
RISKS AND UNCERTAINTIES, INCLUDING THE EFFECTS OF ECONOMIC CONDITIONS; SUPPLY
AND DEMAND CHANGES FOR HOTEL ROOMS; COMPETITIVE CONDITIONS IN THE GAMING
INDUSTRY, RELATIONSHIPS WITH CLIENTS AND PROPERTY OWNERS; THE IMPACT OF
GOVERNMENT REGULATIONS; AND THE AVAILABILITY OF CAPITAL TO FINANCE GROWTH,
WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN
OR IMPLIED BY THE STATEMENTS HEREIN.
###
<PAGE>
PARK PLACE ENTERTAINMENT
PRO FORMA SUMMARY INCOME STATEMENT
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Year to Date Ended
December 31, December 31,
1998 1997 1998 1997
---- ---- ------ ------
<S> <C> <C> <C> <C>
Net Revenue $ 712 $685 $2,900 $2,682
Operating costs and expenses 563 537 2,184 2,020
Depreciation and amortization 72 73 284 261
Other non-recurring expenses(a) 16 102 16 102
----- ------ ------ ------
Operating profit (loss) before
corporate expense 61 (27) 416 299
Corporate expense 10 7 33 37
----- ------ ------ ------
Operating income (loss) 51 (34) 383 262
Net interest expense 30 30 119 106
----- ------ ------ ------
Income (loss) before taxes and
minority interest 21 (64) 264 156
Income tax provision (benefit) 14 (21) 122 70
Minority interest, net 1 1 3 4
----- ------ ------ ------
Net income (loss) $ 6 $ (44) $ 139 $ 82
----- ------ ------ ------
----- ------ ------ ------
Pro forma net income per share
Basic $0.02 $(0.14) $ 0.46 $ 0.27
Diluted $0.02 $(0.14) $ 0.45 $ 0.26
Pro forma net income per share,
before non-recurring expenses
Basic $0.05 $0.07 $ 0.49 $ 0.48
Diluted $0.05 $0.07 $ 0.49 $ 0.48
Pro forma weighted average share
outstanding
Basic 303 307 303 307
Diluted 305 310 306 310
</TABLE>
(1) Other non-recurring expenses includes charges associated with write downs
of riverboat assets, including the Flamingo Kansas City property in 1997
<PAGE>
PARK PLACE ENTERTAINMENT
PRO FORMA EBITDA (1)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR TO DATE ENDED
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
WESTERN REGION
Flamingo Las Vegas $ 29 $ 28 $ 106 $ 109
Bally's Las Vegas 17 24 84 93
Las Vegas Hilton 9 10 58 45
Other 9 9 50 53
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64 71 298 300
EASTERN REGION
Bally's Park Place 27 31 157 155
Atlantic City Hilton 6 5 37 29
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33 36 194 184
MID-SOUTH REGION
Grand Biloxi 17 13 78 60
Grand Tunica 11 10 46 39
Grand Gulfport 9 7 39 35
Other 12 (1) 39 20
Regional Overhead (7) (5) (25) (17)
-------- -------- -------- --------
42 24 177 137
INTERNATIONAL
Uruguay and Australia 10 11 47 35
CORPORATE (10) (7) (33) (37)
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TOTAL $ 139 $ 135 $ 683 $ 619
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
(1) EBITDA is earnings before interest, taxes, depreciation, amortization and
non-cash items.
<PAGE>
PARK PLACE ENTERTAINMENTS
STATISTICAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended Year to Date Ended
December 31, December 31,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
WESTERN REGION
Table Hold Percentage (excluding Baccarat) 15% 15% 17% 17%
Baccarat Hold Percentage 34% 29% 33% 24%
Average Daily Rage $ 78 $ 79 $ 75 $ 77
Occupancy Percentage 86% 83% 88% 86%
EASTERN REGION
Table Hold Percentage 15% 15% 15% 15%
Average Daily Rate $ 81 $ 85 $ 84 $ 90
Occupancy Percentage 94% 87% 94% 91%
MID-SOUTH REGION
Table Hold Percentage 16% 18% 16% 17%
Average Daily Rate $ 81 $ 63 $ 70 $ 66
Occupancy Percentage 84% 84% 89% 88%
INTERNATIONAL
Table Hold Percentage 18% 16% 17% 19%
Average Daily Rate $102 $ 92 $104 $ 99
Occupancy Percentage 65% 69% 62% 70%
</TABLE>
