-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CybXnACpCWqJTvPTD7ozgAEPaH1NdGodD7kr6S8LIZGCbqqbm9g3ABgPwjSIz9UJ Y2EXynNupMmRBEbYamZk1w== 0001104659-06-022560.txt : 20060405 0001104659-06-022560.hdr.sgml : 20060405 20060405170157 ACCESSION NUMBER: 0001104659-06-022560 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060405 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060405 DATE AS OF CHANGE: 20060405 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARRAHS ENTERTAINMENT INC CENTRAL INDEX KEY: 0000858339 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 621411755 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10410 FILM NUMBER: 06742754 BUSINESS ADDRESS: STREET 1: ONE HARRAHS COURT CITY: LAS VEGAS STATE: NV ZIP: 89119 BUSINESS PHONE: 7024076000 MAIL ADDRESS: STREET 1: ONE HARRAHS COURT CITY: LAS VEGAS STATE: NV ZIP: 89119 FORMER COMPANY: FORMER CONFORMED NAME: PROMUS COMPANIES INC DATE OF NAME CHANGE: 19920703 8-K 1 a06-8214_18k.htm CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

April 5, 2006

Date of Report (Date of earliest event reported)

 

Harrah’s Entertainment, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-10410

 

62-1411755

(State of Incorporation)

 

(Commission File Number)

 

(IRS Employer

 

 

 

 

Identification Number)

 

One Harrah’s Court

Las Vegas, Nevada 89119

(Address of principal executive offices) (Zip Code)

 

(702) 407-6000

(Registrant’s telephone number, including area code)

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 


 

Item 8.01         Other Events.

 

In connection with the filing of a registration statement under the Securities Act on Form S-3, the Registrant is filing this Current Report on Form 8-K to report the unaudited pro forma condensed combined financial statements of Harrah’s Entertainment, Inc. for the year ended December 31, 2005, which give effect to, among other things, Harrah’s acquisition of Caesars Entertainment, Inc.  The unaudited pro formas are attached hereto as Exhibit 99.1 and incorporated by reference herein.

 

Item 9.01         Financial Statements and Exhibits.

 

(d) Exhibits.  The following exhibit is being filed herewith:

 

99.1         Harrah’s Entertainment, Inc.’s Unaudited Pro Forma Condensed Combined Financial Statements for the year ended December 31, 2005.

 

2


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

HARRAH’S ENTERTAINMENT, INC.

 

 

 

 

 

 

 

 

Date:

April 5, 2006

 

By:

/s/ Michael D. Cohen

 

 

 

Michael D. Cohen

 

 

 

Vice President, Associate General Counsel

 

 

 

and Corporate Secretary

 

 

3


 

EXHIBIT INDEX

 

Exhibit
Number

 

Document Description

 

 

 

99.1

 

Harrah’s Entertainment, Inc.’s Unaudited Pro Forma Condensed Combined Financial Statements for the year ended December 31, 2005.

 

4

 EX-99.1 2 a06-8214_1ex99d1.htm EXHIBIT 99

EXHIBIT 99.1

 

HARRAH’S ENTERTAINMENT, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

The following unaudited pro forma condensed combined financial statements are derived from and should be read in conjunction with historical consolidated financial statements and related notes of Harrah’s Entertainment, Inc. (“Harrah’s Entertainment”) and Caesars Entertainment, Inc. (“Caesars”). On June 13, 2005, Caesars was merged with and into Harrah’s Operating Company, Inc. (“Harrah’s Operating”), a wholly-owned subsidiary of Harrah’s Entertainment, with Harrah’s Operating as the surviving corporation.

 

The unaudited pro forma condensed combined statement of income for the year ended December 31, 2005, gives effect to:

 

•                  the merger of Caesars with Harrah’s Operating;

 

•                  Caesars’ sale in March 2005 of its ownership and management interests in Caesars Gauteng, a casino resort near Johannesburg, South Africa;

 

•                  Harrah’s Entertainment’s and Caesars’ sales of the assets and certain related current liabilities of Harrah’s Entertainment’s East Chicago and Tunica properties and of Caesars’ Atlantic City Hilton and Bally’s Tunica properties, which were completed in April 2005;

 

•                  Caesars’ sale in June 2005 of its equity interests of Belle of Orleans, LLC, which did business as Bally’s Casino New Orleans;

 

•                  Caesars’ sale of the assets and certain related liabilities of Caesars Tahoe, which was completed in June 2005;

 

•                  Caesars’ sale of its interests in Casino Nova Scotia Halifax and Casino Nova Scotia Sydney, which was completed in May 2005;

 

•                  Harrah’s Entertainment’s financing of the cash portion of the Caesars merger with $1.9 billion in new debt, including estimated acquisition costs; and

 

•                  The classification of Grand Casino Gulfport as discontinued operations.

 

The unaudited pro forma condensed combined statement of income assumes that each of these transactions were consummated at the beginning of 2005.

 

The unaudited pro forma condensed combined financial statements have been prepared based upon currently available information and assumptions that are deemed appropriate by Harrah’s Entertainment’s management. The pro forma information is for informational purposes only and is not intended to be indicative of the actual consolidated results that would have been reported had the transactions occurred on the date indicated, nor does the information represent a forecast of the combined financial results of Harrah’s Entertainment and Caesars for any future period.

 


 

HARRAH’S ENTERTAINMENT, INC.

PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2005

(unaudited)

 

 

 

Harrah’s
Entertainment
Historical
(Note 1)

 

Caesars
Historical
(Note 2)

 

Adjustments
for Discontinued
Operations
(Note 3)

 

Pro Forma
Adjustments
(Note 4)

 

Harrrah’s
Entertainment As Adjusted

 

 

 

(In millions, except per share amounts)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

Casino

 

$

6,071.5

 

$

1,257.2

 

$

(75.7

)

$

—

 

$

7,253.0

 

Food and beverage

 

1,097.5

 

325.0

 

(12.7

)

—

 

1,409.8

 

Rooms

 

791.8

 

336.6

 

(10.4

)

—

 

1,118.0

 

Management fees

 

75.6

 

6.6

 

—

 

—

 

82.2

 

Other

 

425.9

 

137.5

 

(4.5

)

—

 

558.9

 

Less: casino promotional allowances

 

(1,351.3

)

(206.2

)

10.6

 

—

 

(1,546.9

)

Total revenues

 

7,111.0

 

1,856.7

 

(92.7

)

—

 

8,875.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Direct

 

 

 

 

 

 

 

 

 

 

 

Casino

 

3,057.2

 

615.8

 

(38.6

)

—

 

3,634.4

 

Food and beverage

 

485.1

 

176.4

 

(5.5

)

—

 

656.0

 

Rooms

 

151.8

 

70.5

 

(2.3

)

—

 

220.0

 

Depreciation and amortization

 

496.5

 

167.4

 

(7.2

)

(43.9

)(a)

612.8

 

Write-downs, reserves and recoveries

 

248.8

 

—

 

—

 

—

 

248.8

 

Project opening costs

 

16.4

 

1.5

 

—

 

—

 

17.9

 

Property general, administrative and other

 

1,524.0

 

451.6

 

(25.9

)

29.3

(b)

1,979.0

 

Corporate expense

 

97.7

 

27.3

 

—

 

—

 

125.0

 

Merger and integration costs related to Harrah’s/Caesars merger

 

55.0

 

288.7

 

—

 

—

 

343.7

 

Losses/(income) in nonconsolidated affiliates

 

(1.2

)

(2.3

)

—

 

—

 

(3.5

)

Total operating expenses

 

6,131.3

 

1,796.9

 

(79.5

)

(14.6

)

7,834.1

 

Income from operations

 

979.7

 

59.8

 

(13.2

)

14.6

 

1,040.9

 

Interest expense, net of interest capitalized

 

(481.2

)

(127.1

)

—

 

(55.4

)(c)

(605.6

)

 

 

 

 

 

 

 

 

(0.7

)(d)

 

 

 

 

 

 

 

 

 

 

37.4

 (e)

 

 

 

 

 

 

 

 

 

 

21.4

 (f)

 

 

Losses on early extinguishment of debt

 

(3.3

)

—

 

—

 

—

 

(3.3

)

Other income, including interest income

 

8.0

 

1.0

 

—

 

—

 

9.0

 

Income before income taxes and minority interests

 

503.2

 

(66.3

)

(13.2

)

17.3

 

441.0

 

Provision for income taxes

 

(227.8

)

26.3

 

4.7

 

(0.7

)(g)

(197.5

)

Minority interests

 

(11.9

)

(3.0

)

—

 

—

 

(14.9

)

Income from continuing operations

 

$

263.5

 

$

(43.0

)

$

(8.5

)

$

16.6

 

$

228.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.78

 

 

 

 

 

 

 

$

1.26

 

Diluted

 

$

1.75

 

 

 

 

 

 

 

$

1.25

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

148.0

 

 

 

 

 

 

 

181.6

 

Weighted average common and common equivalent shares outstanding

 

150.2

 

 

 

 

 

 

 

183.5

 

 

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

 


 

 HARRAH’S ENTERTAINMENT, INC.

 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL STATEMENTS

 

Note 1 - Harrah’s Entertainment’s Basis of Presentation

 

Historical financial information for Harrah’s Entertainment for the year ended December 31, 2005, has been derived from Harrah’s Entertainment’s historical financial statements.

 

Note 2 - Caesars Basis of Presentation

 

Historical financial information for Caesars from January 1, 2005, through June 13, 2005, has been derived from Caesars’ historical financial statements. Certain reclassifications have been made to the historical Caesars financial statements to conform to the presentation used in Harrah’s Entertainment’s historical financial statements. Such reclassifications had no effect on Caesars’ previously reported income from continuing operations.

 

Note 3 - Adjustments for Discontinued Operations

 

The operating results of Grand Casino Gulfport have been classified as discontinued operations to conform to its presentation in Harrah’s Entertainment’s financial statements subsequent to the June 13, 2005 merger.

 


 

Note 4 - Pro Forma Statement of Income Adjustments

 

Following are brief descriptions of the pro forma adjustments to the statement of income to reflect the merger of Caesars with Harrah’s Operating.  For purposes of this pro forma financial information, depreciation expense related to property and equipment is based on Harrah’s Entertainment’s estimated useful lives of 10 to 40 years for buildings, riverboats and barges and 2 to 15 years for furniture, fixtures and equipment.  Estimated useful lives and amortization periods of property, equipment and intangible assets are being determined during the purchase price allocation and are subject to further adjustment.

 

Pro forma results for the year ended December 31, 2005, include non-recurring charges of $289 million recorded by Caesars prior to the completion of the merger related to the change in control of the company, which, for Caesars’ stock incentive plan, became effective on March 11, 2005, when Caesars’ stockholders approved the merger with Harrah’s Entertainment.

 

The unaudited pro forma condensed combined financial statements do not reflect any synergistic benefits that may be realized through the combination of the two companies or costs that may be incurred in integrating their operations. We estimate that we will realize approximately $80 million of synergies in the first twelve months after the merger.

 

(a)          Adjusts depreciation expense based on the fair values and estimated lives assigned to buildings, riverboats, furniture, fixtures and equipment in the preliminary purchase price allocation.

 

(b)         Records amortization of estimated intangible assets identified in the preliminary purchase price allocation.  The amortizing intangible assets include customer relationships (14-year weighted-average useful life), contract rights
(7-year estimated life), gaming rights (20-year estimated useful life) and trademarks (5-year estimated useful life).

 

(c)          Reflects increase in interest expense comprised of incremental borrowings incurred by Harrah’s Entertainment to fund the cash portion of the merger, including transaction costs. The pro forma interest expense arising from the additional borrowings has been computed using Harrah’s Entertainment’s average interest rate as of December 31, 2005, which was 6.4%. Each 1/8% change in the estimated interest rate on the approximate $1.9 billion borrowed to finance the cash portion of the merger would result in a change in interest expense of $2.4 million for the year ended December 31, 2005.

 

(d)         Reflects additional interest expense for the amortization of deferred finance charges arising from the incremental borrowings incurred by Harrah’s Entertainment (see (c) above) to fund the acquisition of Caesars.

 

(e)          Reflects reduction of interest expense for the amortization of the mark-to-market adjustment of Caesars’ debt recorded as of the acquisition date.

 

(f)            Reflects reduction of interest expense on the assumption that net proceeds from the sales of Harrah’s East Chicago and Harrah’s Tunica properties and of Caesars’ Atlantic City Hilton, Bally’s Casino Tunica, Bally’s Casino New Orleans, Caesars Tahoe, Casino Nova Scotia Halifax and Casino Nova Scotia Sydney properties and Caesars’ interests in Caesars Gauteng were used to reduce outstanding debt at the beginning of the periods.

 

(g)         Records the estimated tax effect of the pro forma adjustments and on the historical taxable income of Caesars. The estimated tax rate was calculated using the federal statutory rate of 35% adjusted for non-deductible goodwill impairment charges, the change in the mix of taxable income among various states and the addition of foreign income subsequent to the merger of Caesars with Harrah’s Operating.

 

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