Park Place revenue falls in second quarter

Thursday, July 24, 2003 | 10:59 a.m.

SUN STAFF AND WIRE REPORTS

Park Place Entertainment Corp. of Las Vegas, the world's largest casino resort company, today said second-quarter profit slumped 57 percent because of the war in Iraq, the SARS outbreak and the flat economy.

Net income fell to $41 million, or 14 cents a share, from $96 million, or 31 cents, in the year-earlier period. Revenue fell less than 1 percent to $1.19 billion, the company said in a statement.

Park Place's profit fell at its casinos in Las Vegas as gamblers stayed home because of the war. The company said demand picked up in May and early June after the major fighting in Iraq ended. More gamblers are visiting the company's Caesars Palace since an arena was built there for singer Celine Dion.

"They've done a good job with the Caesars Las Vegas property," said Marc Falcone, an analyst at Deutsche Bank, who has a "hold" rating on Park Place. "The Celine Dion show is having a positive impact."

Analysts expected the company to earn 14 cents a share, according to Thomson Financial. Shares of Park Place rose 8 cents to $9.03 at 12:34 p.m. in New York Stock Exchange composite trading today.

Park Place owns, manages or has a stake in 27 casinos with numerous brands including Caesars, Bally's, Paris, Flamingo, Hilton, Grand, Sheraton, Claridge, Conrad, Casino Nova Scotia and Casino Windsor.

Earnings before interest, taxes, depreciation and amortization at the company's Western casinos, including the Flamingo in Las Vegas, fell 30 percent to $94 million, Park Place said. In Atlantic City, the second-biggest casino market after Las Vegas, profit rose 6.4 percent to $125 million.

At the company's Midwest and southern casinos, including the Caesars riverboat casino in Indiana, profit rose 4.8 percent to $65 million.

Park Place opened the $95 million Las Vegas arena in March. About one- third more people are coming to Caesars Palace since performances began, while the amount of money wagered in the casino has increased 17 percent.

Park Place will change its name to Caesars Entertainment Inc. at the end of the year to attract more investors using the company's best-known casino name. Park Place Chief Executive Wallace Barr is adding new restaurants to its 37-year-old flagship casino on the Las Vegas Strip to compete with newer properties.

Park Place had $4.7 billion in debt at the end of the quarter, down from $4.9 billion at the end of the first quarter. Moody's Investors Service rates the company's debt Ba1, one notch below investment grade, with a stable outlook.

"The company had a solid recovery from a difficult April -- a month impacted by the war in Iraq, SARS fears and the uncertain national economy -- with a better-than-expected May and a steady June," Barr said in a statement.

"In the quarter, we showed strength in our Eastern and Mid-South regions. In the West, we were hurt by a travel slump in April and by low table hold throughout the quarter. However, Caesars Palace reported increasing volumes and improving trends in other key metrics. The Palace reported record cash room rates in every month of the quarter and The Colosseum continued to drive increased visitor traffic and revenue.

"As we move into the second half of the year, we'll continue to focus on controlling expenses so that we can maximize earnings from any improvements in revenue," Barr added.