Caesars Entertainment Reports Record Earnings for Fourth Quarter and Full Year 2004

Business Wire, Feb 10, 2005

LAS VEGAS -- Caesars Entertainment, Inc. (NYSE: CZR) today reported record earnings for the quarter and full year ended December 31, 2004.

Fourth quarter 2004 results

For the fourth quarter of 2004, Caesars Entertainment reported net income of $20 million, or $0.06 per fully diluted share. That compares to a net loss of $(84) million, or $(0.28) per fully diluted share, for the fourth quarter of 2003.

Previously, the company's highest reported fourth quarter net income was $17 million in 1999, resulting in earnings per diluted share of $0.05.

Adjusted net income for the fourth quarter of 2004 was $27 million, or $0.08 per diluted share. Adjusted net income for the quarter excluded $4 million in net income from five properties scheduled to be sold (classified as "discontinued operations"), an $8-million charge related to the termination of a lease at Caesars Atlantic City and an $11-million gain related to the sale of real estate in Atlantic City. Adjusted net income also excluded expenses of $16 million related to the company's pending acquisition by Harrah's Entertainment, Inc.

Adjusted net income for the fourth quarter of 2003 was $11 million, or $0.04 per diluted share. In that quarter, adjusted net income excluded a $57-million write-down (net of tax) of the book value of Flamingo Laughlin and a $38-million goodwill impairment at Caesars Tahoe, which is included in discontinued operations.

Net revenue for the fourth quarter of 2004 was $1.008 billion -- an all-time record after adjustment for discontinued operations. That compares to $946 million in the fourth quarter of 2003. Fourth quarter EBITDA -- earnings before interest, taxes, depreciation and amortization and charges and gains (and after corporate expense) -- was $216 million, compared to $188 million in the fourth quarter of 2003.

(Throughout this press release, results from the Atlantic City Hilton, Bally's Tunica, Bally's New Orleans, Caesars Tahoe and Caesars Gauteng are treated as "discontinued operations" for the current and comparative year-ago periods. Results from those properties are excluded from such financial measures as net revenue, EBITDA, operating income, interest expense and others. The company announced last year that it has entered into definitive agreements to sell its interests in each of those properties in 2005. The company completed the sale of the Las Vegas Hilton in June 2004. Results from that property are excluded from the full year 2003 and the first six months of 2004.)

2004 year-end results

Net income for the full year 2004 -- including discontinued operations, charges, gains and income tax adjustment -- was $297 million, or $0.94 per diluted share, an all-time record. Net income for 2003 was $46 million, or $0.15 per diluted share.

The previous high for annual net income was $143 million, reported for 2000, which resulted in earnings per diluted share of $0.46.

For the full year of 2004, Caesars Entertainment reported adjusted net income of $217 million -- or $0.69 per diluted share. That compares to adjusted net income of $127 million -- or $0.42 per diluted share -- for the year ended December 31, 2003.

Adjusted net income for 2004 excludes:

--An $87-million gain (included in discontinued operations net of taxes) from the sale of the Las Vegas Hilton.

--$32 million in additional income from discontinued operations from the Las Vegas Hilton, the Atlantic City Hilton, Bally's Tunica, Bally's New Orleans, Caesars Tahoe and Caesars Gauteng.

--$22 million in expense related to the pending acquisition of Caesars by Harrah's Entertainment.

--An $11-million gain related to the sale of real estate in Atlantic City.

--An $8-million charge related to the lease termination at Caesars Atlantic City.

--$7 million in pre-opening expense primarily related to the production of the musical "We Will Rock You" at Paris Las Vegas.

--$7 million in income tax expense related to a 2004 Indiana Tax Court decision involving the deductibility of gaming taxes.

--A $6-million, after-tax write-down of assets at Caesars Tahoe, included in discontinued operations.

--$5 million in income tax expense related to the settlement of a tax arbitration with Lakes Entertainment.

--$3 million of investment gain associated with the sale of the company's interest in a Las Vegas office building.

--$2 million in expense related to executive contract terminations.

Adjusted net income for 2003 excludes $57 million in asset impairments (net of taxes) related to Flamingo Laughlin; a $38-million goodwill write-down related to Caesars Tahoe (included in discontinued operations); $15 million in income from discontinued operations; and $1 million in pre-opening expense associated with the premiere of "A New Day...." starring Celine Dion at Caesars Palace.

Net revenue for the full year 2004 was $4.206 billion -- also an all-time record, after adjustment for discontinued operations -- up from $3.945 billion reported for the full year 2003. EBITDA (after corporate expense) for 2004 was $1.062 billion, compared to $932 million for 2003.