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Gary Loveman
Chairman, Chief Executive Officer and President
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Safe Harbor StatementThis presentation 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, strategies, future performance, and future financial results of Harrah's Entertainment, Inc. 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 or results 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): financial community and rating agency perceptions of Harrah's; the effects of economic, credit and capital market conditions on the economy in general, and on gaming and hotel companies in particular; construction factors, including delays, 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; the ability to timely and cost-effectively integrate into Harrah's operations the companies that it acquires, access to available and feasible financing on a timely basis; changes in laws (including increased tax rates), 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; our ability to recoup costs of capital investments through higher revenues; acts of war or terrorist incidents; 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.Confidential and Proprietary
2005
At the foot of a steep growth curve through acquisition…
1998
1999
2004
2005
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
At the foot of a steep growth curve overseas…
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
At the foot of a steep growth curve in Las Vegas…
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
At the foot of a steep growth curve in Atlantic City…
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Company OverviewLargest provider of branded casino entertainment
4 million square feet of casino space
40,000 hotel rooms
100,000 employees
40 million Total Rewards members
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Industry’s Broadest Footprint
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
A Portfolio of Winning Brands
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Financial Strength
Only investment-grade gaming company
Borrows at industry’s most competitive rates
Nearly $2 billion of capacity under revolver
Revenues of $8.7 billion on a pro-forma basis in 2004
Highest dividend yield in the gaming industry 2.0%
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Diversity Of Cash Flow Provides Stability, Funds Growth
Region # Properties % EBITDALas Vegas 7 35%Atlantic City 5 26%LA/MS 5 9%Illinois/Indiana 4 11%Iowa/MO 4 9%Managed / Intl / Other 12 10%TOTAL 37 100%
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
#1 or #2 in every market in which we compete
Atlantic CityChicagolandMississippiS. IllinoisShreveport/ Bossier CityNew OrleansReno/TahoeCouncil Bluffs
Las VegasSt. LouisKansas CityLaughlin
HET gained share in nearly all of its markets (thru 3Q05)
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
HET Core Strategy
Brand Loyalty
Decision ScienceCapabilities
Drive same-store growth, cross-market play throughsuperior marketing and technological capabilities
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Evidence of HET’s organic growth engine
*2005 based on 16.7% growth in Cross Market Play to date.
Cross-market play
CAGR: 18%
749 8811,063
1,2561,456
1,670
0200400600800
1,0001,2001,4001,6001,800
2000 2001 2002 2003 2004 2005*
4.9%
7.5%6.5%
1.5%
5.7%7.5%
0%
5%
10%
2000 2001 2002 2003 2004 Thru3Q05
Same-store sales growth
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
4%0%-1%
10%4%3%
16%11%11%
Local(< 70 miles)
Regional(70 – 300 miles)
National(300+ miles)
VIP
AEP
Retail
Loyalty strategy reflected in 3Q resilience
Third-quarter rated customer trip growth
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Total Rewards: implications for 4 Caesars LV properties
60%
15%
21%
5%
HET
Tour & Travel
FIT
Convention
Total Rewards /Connection Card 20%
30%
39%
11%
CEI
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Horseshoe – Merger Success
$0.00
$0.05
$0.10
$0.15
3Q04 4Q04 1Q05 2Q05 3Q05
Horseshoe Market Share EPS Accretion
$0.37 of AccretionSince Merger Closing
0%
5%
10%
15%
20%
25%
30%
35%
Hammond Tunica Bossier City
12 months ended June 2004 Last tw elve months
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Growth opportunity
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Controllable growth pipeline
Organic
Caesars synergiesTotal Rewards Revenue managementStrategic Sourcing
LV Master PlanAC Center Boardwalk New OrleansMetropolisCouncil Bluffs Caesars Indiana
Reinvestment
El Reino, SpainHarrah’s ChesterBaha MarEyeing select markets in Asia, Europe
New Development
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
El Reino – Ciudad Real, Spain• 50,000 sq. ft. casino
• 850 hotel rooms
• 3,000 seat Colosseum theater
• Conference center
• 30,000 sq. ft. spa
• Multiple restaurants, bars
• Forum retail shops
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Harrah’s Chester Casino and Racetrack
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Baha Mar – Nassau, Bahamas
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Baha Mar – Nassau, Bahamas
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Prime Center StripLand Bank
18,000 Total GuestRooms
132.5 Acres fromHarrah’s to Bally’s /Paris
80 Acres at CPLV, 63 Acres at Rio
1.25 miles of StripFrontage
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
An attractive value
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
* Peer Group includes: MGM, STN, BYD, PENN, AZR
Valuation Comparison
* Peer Group includes: MGM, STN, BYD, PENN, AZR
5.5x6.5x7.5x8.5x9.5x
10.5x
Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06
Forw
ard
EV/E
BIT
DA
Mul
tiple
HET Peer Group Average
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Consistent Value Creation
0%
5%
10%
2002 2003 2004 Thru 3Q05
ROICWACC`
HET ROIC vs. WACC comparison
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Despite successful growth record, HET prospects discounted
Current Firm Value = NOPAT / WACC
83%
62%
58%
48%
42%
41%
39%
26%
17%
38%
42%
52%
58%
59%
61%
74%
113%
Ameristar
Penn
Harrah's
MGM Mirage
Boyd
Station
LVS
Kerzner
WYNN
Future Firm Value = EV – Current ValuePeer Avg future value = 57% EV (as
of 12/29)
6.6B
2.9B
13.2B
6.3B
6.2B
24.9B
22.5B
3.2B
1.9B
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
HET focused on shareholder value
Source: Bloomberg
-150%
-50%
50%
150%
250%
350%
450%
Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05
HET SP500
25% Per Annum
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
Positioned for long-term growth
Stable, diversified cash flow from operations
Consistent value creation
Strong position in each market of operation
Strong development track record
Modest value given growth prospects
Balance-sheet capacity to handle large developments, reinvestment
Continued focus on shareholder value creation
Harrah’s Entertainment, Inc.Confidential and Proprietary
2005
This presentation and all trademarks appearing in this presentation are the sole and exclusive property of Harrah's License Company, LLC for use by its related companies (collectively,
"Harrah's"). This presentation and its contents is confidential and proprietary to Harrah's and may not be used or reproduced in whole or in part without Harrah's express prior written authorization.
Trademarks not owned by Harrah's that appear in this presentation are the property of the respective owners.
© 2005, Harrah's License Company, LLC.