Harrah s Entertainment, Inc. September 2008

Transcription

1 Harrah s Entertainment, Inc. September 2008

2 Forward Looking Statements Certain information in this presentation may be considered forward-looking information within the meaning of the Private Securities Litigation Reform Act of This information is based on the Company's current expectations and actual results could vary materially depending on risks and uncertainties that may affect the Company's operations, markets, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, industry and economic conditions, competitive, legal, governmental and technological factors. There is no assurance that the Company's expectations will be realized. The Company assumes no obligation to update any forward-looking information contained in this presentation should circumstances change, except as otherwise required by securities and other applicable laws. Market data and other statistical information used throughout this presentation are based on independent industry publications, government publications, reports by market research firms or other published independent sources. Some data are also based on our good faith estimates which are derived from our review of internal surveys, as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy and completeness. 2

3 Corporate Structure Harrah s Entertainment, Inc. Guarantor of new and existing HOC Debt Guarantor of leases for PropCo debt LTM Revenue: $10.7 bn LTM Adjusted EBITDA: $2.7 bn PropCo Borrowing Structure HOC Borrowing Structure Other (1) $6.5 bn CMBS Debt CMBS Borrowers Harrah s Operating Company, Inc. ( HOC ) $2.0 bn Revolver (Undrawn) $7.3 bn Term Loan B Facility $6.8 bn New Senior Notes/Bridge $4.6 bn Existing Senior Unsecured Notes LTM Revenue: $2.7 bn LTM Adjusted EBITDA: $0.8 bn LTM Revenue: $8.0 bn LTM Adjusted EBITDA: $1.9 bn All Material Operating Subsidiaries Subsidiary Pledgors under New Credit Facility and Guarantors under Senior Unsecured Bridge Facility / Notes Underlying Properties Harrah's Las Vegas Rio Flamingo Las Vegas Paris Las Vegas Harrah's Atlantic City Harrah's Laughlin LTM through of 6/30/08 Includes captive insurance subsidiaries. Includes 10 casino clubs in the UK, 2 in Egypt and 1 in South Africa. Imperial Palace Bill s Gamblin Hall & Saloon Bally's Las Vegas Caesars Palace Harrah's Lake Tahoe Bill's Lake Tahoe Harveys Lake Tahoe Bally's Atlantic City Underlying Properties Caesars Atlantic City Showboat Atlantic City Harrah s Chester (PA) Harrah's New Orleans (LA) Harrah's Louisiana Downs (LA) Horseshoe Bossier City (LA) Horseshoe Tunica (MS) Grand Tunica (MS) Grand Biloxi (MS) Sheraton Tunica (MS) Harrah's Council Bluffs (IA) Horseshoe Council Bluffs / Bluffs Run (IA) Harrah's North Kansas City (MO) Harrah's St. Louis (MO) Harrah's Joliet (IL) Harrah's Metropolis (IL) Horseshoe Hammond (IN) Caesars Indiana Harrah's Reno Harrah s Ak-Chin Harrah s Rincon Harrah s Cherokee Casino Windsor Conrad Punta Del Este London Clubs (2) 125 acres of developable land in Las Vegas 175 acres of land in Macau 3

4 Business & Market Overviews

5 Company Snapshot One of the world s largest and most diversified gaming companies #1 or #2 market share in almost every major market in the U.S. 51 casinos in six countries (1) Approximately 40,000 hotel rooms and suites, 3 million square feet of casino gaming space, and 2 million square feet of convention center space (1) Industry leading loyalty program (Total Rewards) with over 40 million members A Portfolio of Winning Brands LTM 6/30/08 Net Revenue ($10.7 Billion) (2) LTM 6/30/08 Property EBITDA ($2.7 Billion) (2) Other Nevada, 6% Managed / Intl / Other, 5% Iowa / Missouri, 8% Managed / Intl / Other, 3% Other Nevada, 5% Iowa / Missouri, 7% Las Vegas, 33% Illinois / Indiana, 9% Las Vegas, 41% Illinois / Indiana, 12% Mississippi / Louisiana, 12% Mississippi / Louisiana, 14% Atlantic City, 23% Atlantic City, 22% (1) As of June 30, 2008, HOC and its subsidiaries own or manage 45 of the Harrah s Entertainment casinos. (2) Property EBITDA excludes corporate overhead, normalizations and pro forma cost savings. HOC LTM Net Revenue of $8.0 billion and Property EBITDA of $1.8 billion. 5

6 Differentiated Business Strategy Drive Profitable Sales Growth Leverage scale and Total Rewards program to generate same store gaming revenue growth and cross-market play - Hub and spoke network of properties - Highly scalable existing infrastructure - Application of centralized marketing to new properties/operations Pursue targeted investments in proven markets Focuses on organizational restructuring, teleservices reorganization and procurement savings Increase Profitability Substantial progress against $164M savings goal Ongoing rationalization of property labor and marketing costs Maximize Cash Flow Stable, predictable revenue High operating margins Low maintenance capex Growth capex channeled to highest return uses 6

7 Highly Strategic Las Vegas Market Position Harrah s has the #2 Market Share in Las Vegas, With 8 Properties 28% of the Strip s revenue and 25% of the Strip s positions 160 contiguous acres on the east side of the Strip combined with 170 acres on the west side 125 acres of developable land Harrah s controls three of the 4 Corners at the intersection of Flamingo and Las Vegas Blvd Las Vegas Property Map To Downtown Stratosphere Fontainebleau* Circus Circus The Strip Sahara Riviera LV Hilton W. Desert Inn Rd Spring Mountain Rd Rio Echelon* New Frontier Plaza* Montreux* Treasure Island Venetian Mirage Caesar s Caesars Flamingo Rd 15 Palms Bellagio Cosmopolitan* Harmon Blvd City Center* Monte Carlo Tropicana Ave New York New York Excaliber Luxor Mandalay Bay Fashion Show Mall 604 Convention Center Encore* Wynn The Wynn Golf Club Palazzo* Royale Sands Expo Bally s University of Nevada Paris Las Vegas Tropicana Ave McCarran Int l Airport E. Desert Inn Rd Harrah s Imperial Palace Flamingo Bill s Barbary Gamblin Coast Hall Hard Rock * Aladdin/Planet Hollywood Hollywood Hooters ** MGM Grand Tropicana HOC * Denotes property either under development or planned for development. PropCo Harrah s Undeveloped Land 7

8 Drives Market Outperformance ($ in millions) Property Casino Space (sq. ft.) Rooms & Suites Caesars Palace 129,900 3,350 Rio Hotel & Casino 107,000 2,520 Harrah s Las Vegas Paris Las Vegas 90,300 85,000 2,530 2,920 Harrah s Las Vegas Flamingo Las Vegas 76,800 3,500 Bally s Las Vegas Imperial Palace 75,000 2,640 Bally s Las Vegas 66,400 2,810 Paris Las Vegas Bill s Gamblin Hall & Saloon 42, TOTAL 672,900 20,480 HET Las Vegas LTM Net Revenues HET Las Vegas LTM EBITDA $3,542 $1,123 Caesars Palace Rio Hotel & Casino 8

9 Atlantic City Snapshot ($ in millions) Property Casino Space (sq. ft.) Rooms & Suites Bally s Atlantic City 225,800 1,740 Caesars Atlantic City 145,000 1,140 Harrah s Atlantic City Harrah s Atlantic City 160,800 1,630 Showboat Atlantic City 124,200 1,330 Showboat Atlantic City Harrah s Chester (PA) 92, TOTAL 747,800 5,840 HET Atlantic City LTM Net Revenues HET Atlantic City LTM EBITDA $2,402 $595 Bally s Atlantic City Note: LTM as of 6/30/08. Caesars Atlantic City 9

10 The Leader in Regional Markets ($ in millions) Market Properties Casino Space (sq. ft.) Rooms & Suites LTM Net Revenues LTM EBITDA 2007 Market Revenues Harrah s Market Share (1) Louisiana / Mississippi (2) 7 427,500 3,550 $1,508 $332 $3,267 37% Illinois / Indiana (3) 4 188, $1,288 $234 $4,034 32% Iowa / Missouri (4) 4 286,900 1,140 $799 $223 $2,105 37% TOTAL ,300 5,650 $3,535 $789 Note: LTM as of 6/30/08. All properties included in HOC. Source of market revenues and Harrah s market share: State gaming commission and control boards. (1) Market Share based on year ending Dec.2007 (2) Louisiana / Mississippi market defined as Shreveport Bossier City, LA, New Orleans, LA, Gulfcoast and Tunica, MS. (3) Illinois / Indiana market defined as Chicagoland and Southern Illinois and Indiana. (4) Iowa / Missouri market defined as Council Bluffs, IA, St. Louis, MO, and Kansas City, MO. Caesars Indiana Grand Casino Biloxi Grand Casino Tunica 10

11 Growing International Presence London Clubs International Properties in London, Egypt and South Africa Total Casino Space: 143,200 sq. ft. Total Hotel Rooms & Suites: 190 Macau Orient Golf Course 18-hole golf course on 175 acres in Cotai Acquired in September 2007 Casino Windsor, Ontario (1) Casino Space:100,000 sq. ft. Hotel Rooms & Suites: 340 Conrad Punta Del Este Resort & Casino, Uruguay Only Las Vegas style resort and casino in Uruguay Total Casino Space: 44,500 sq. ft. 510 slot machines, 50 table games Total Hotel Rooms & Suites: 300 The Golden Nugget London VENETIAN CITY OF GALAXY DREAMS FOUR SEASONS SHERATON ST. REGIS FAR EAST Nature MACAU HILTON preserve STUDIO CITY CONRAD MACAU DOME FAIRMONT RAFFLES BORDER CROSSING TBD MACAU ORIENT GOLF (OWNED BY HARRAH S) RESERVOIR Fifty London 175 Acres on Cotai Strip in Macau (1) HOC owns a 50% interest in Windsor Casino Limited, which manages the property. Emerald Safari South Africa 11

12 Investment For Growth

13 Harrah s Atlantic City Expansion Project Overview New Waterfront hotel tower, connected to existing Bayview Tower Number of Hotel Rooms: 851 Number of Suites: 109 Amentities: Elizabeth Arden Red Door Spa; The Pool (80,000 gallon pool under 90ft. glass dome w/82 degree temp); Daytime pool with cabanas and club atmosphere at night; The Waterfront Shops (7 unique shops); Taste of the Shore Food Court (4 eateries), Waterfront Buffet, new Reflections Cafe and McCormick & Schmick s (located on existing property) Official opening ceremony March 6,

14 Horseshoe Hammond Expansion Project Overview Riverboat casino on Indiana side of Lake Michigan Casino Space: 48,300 sq. ft. Slot Machines: 1,940 Table Games: 60 Expanded casino space of 108,000 sq. ft. will include +3,200 slots and 94 table games including 40 poker tables Officially opened July 29,

15 Caesars Palace Las Vegas Expansion Project Overview New hotel tower and convention space on Flamingo Road next to existing Augustus Tower Number of hotel rooms: 662 Number of suites: 68 New convention space: 110,000 s.f. 3 Pool Villas; 3 new pools Renovate buffet, Race & Sports Book, miscellaneous restaurants, casino space Hotel and convention space scheduled to open Summer

16 Harrah s Kansas Project Overview Awarded sole gaming contract in southcentral Kansas Subject to completion of background investigations and licensing requirements $485M resort casino 2,000 slots, 50 tables, WSOP Poker Room 175 hotel rooms, including 30 suites and 5 pool villas 30,000 square feet of convention space 5 restaurants, including celebrity concepts 18 hole championship golf course JV with local real estate developers Attractive project due to proximity to Wichita and limited competition in area Project located within 20 minute drive of Wichita city center Also within driving distance of Oklahoma City Opening expected in August

17 Investment Strengths

18 Market Leader with Unparalleled Scale Harrah s is the world s largest and most diversified gaming company 51 casinos across 6 countries (1) #1 or #2 share in almost every major domestic market #1 Reno / Lake Tahoe #2 Las Vegas Black Hawk / Central City Cripple Creek #1 Council Bluffs #2 #1 #1 Kansas City St. Louis Chicagoland #1 Detroit Chester Atlantic City #1 #2 Laughlin Tunica #1 #1 Shreveport / Bossier City Vicksburg HOC Property PropCo Property Native American Casino Managed by HOC #1 #2 Major Gaming Market #1 Market Share #2 Market Share Lake Charles #1 Biloxi New Orleans Unparalleled Scale and Diversification Drives Growth and Stability Note: Joint venture interest in Canadian property not directly owned. (1) HOC owns or manages 45 casinos. 18

19 Most Diversified Gaming Operator LTM 6/30/08 EBITDA by Geography Harrah s (1) MGM Mirage Wynn Iowa / Missouri, 8% Managed / Intl / Other, 3% Other Nevada, 5% Other, 3% Mississippi, 4% AC (Borgota ) (2), 5% Detroit, 6% Illinois / Indiana, 9% Las Vegas, 41% Las Vegas, 42% Mississippi / Louisiana, 12% Macau, 58% Atlantic City, 22% Las Vegas Strip, 82% Station (3) Boyd Las Vegas Sands (4) Managed, 22% AC (Borgota ) (2), 19% Las Vegas, 37% Las Vegas Locals, 50% Las Vegas Locals, 78% Midwest / South, 31% Macau, 63% Source: Derived or extrapolated from public company filings and available third party analyst reports. (1) Represents HET consolidated. (2) Borgata is 50/50 owned by MGM/Boyd. (3) Based off 2007 operating income as reported. (4) Based off Adjusted EBITDAR. 19

20 Portfolio of Leading Brands Each brand has a strong identity and enjoys powerful customer recognition Diverse collection of brands appeals to wide range of customer preferences and encourages multiple visits 20

21 Superior Business Model: Generating Same Store Gaming Revenue Growth and Cross-Market Play Brand Loyalty Hydrogen Decision science capabilities 21

22 Strong and Predictable Free Cash Flow Generation Stable and predictable revenues Favorable business mix with over 70% of gross revenue driven by casino operations High operating margins Profitability improvement program implemented in 2006 Reasonable capital expenditure requirements Well-maintained asset base ($4.6 billion of total capex since 2004) Capital expenditures channeled to highest return uses 22

23 Substantial Land Value 125 Undeveloped Las Vegas Acres 175 Acres on Cotai Strip in Macau VENETIAN Acres GALAXY FOUR SEASONS CITY OF DREAM S SHERAT ON ST. REGIS (1) Acres FAR EAST 3.87 Acres Flamingo Road Nature preserve BORDER CROSSING MACAU STUDIO CITY HILTON CONRA D FAIRMON T RAFFLES MACAU DOME Las Vegas Blvd Acres MACAU ORIENT GOLF (OWNED BY HARRAH S) TBD RESERVOIR 125 undeveloped Las Vegas acres surrounding the Strip Purchased Macau Orient Golf in September 2007 Illustrative Illustrative Value / Acre ($mm) Value ($mm) (a) Purchase price: $578 million $30 $3, , , , ,250 (a) Based on 125 acres (1) Total size of indicated plot is acres, with acres owned by Harrah s. Note: Values shown for Las Vegas land are for illustrative purposes only and do not reflect any performed land value appraisals by the Company. 23

24 Harrah s Entertainment, Inc. September 2008