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"Our second-quarter results clearly indicate that the organizational and strategic changes we've made to meet the challenges of the recession are improving our performance and paving the way for accelerated growth when the economy improves"

- Gary Loveman, chairman, chief executive officer and president of Caesars


  • Property EBITDA $542MM and Adjusted EBITDA of $526MM
  • "Revenues increased 0.4 percent ...  despite an overall decline in visitation and the temporary closures of five of our properties in the Illinois/Indiana and Louisiana/Mississippi regions due to flooding. The increase was attributable to higher spend from our most loyal customers as well as growth in hotel revenue, most notably in the Las Vegas market."
  • "Operations increased in the second quarter 2011 to $252.1 million, compared with $99.7 million for the 2010 second quarter. The increase was due to reduced property operating expenses resulting from the company's cost-reduction efforts and reduced and more focused marketing expenditures. Additionally, we recorded charges during the second quarter 2010, with no comparable amounts in 2011, for $52.2 million to fully
    reserve a note-receivable balance related to a venture for development of a casino project in Philadelphia, and $25.0 million relating to a previously disclosed contingency"
  • Eastern Band of Cherokee Indians extended their management contract by 7 years
  • "Construction progressed toward completion by December of 662 rooms in the Octavius Tower at Caesars Palace. Also in Las Vegas, we made significant progress in the planning and design of the LINQ retail, dining and entertainment experience. In Ohio, the tax and regulatory agreement with Gov. Kasich has allowed us to resume construction of the Cleveland and Cincinnati casino projects with Rock Gaming that are expected to open in the first quarter of 2012 and the second quarter of 2013, respectively. We are also working to
    develop additional potential casino opportunities domestically and abroad."
  • "Trips by rated players in 2011 decreased 9.2 percent for the second quarter...., while spend per rated-player trip increased 5.6 percent for the second quarter... The visitation declines were the result of temporary closures of five of our properties in the Illinois/Indiana and Louisiana/Mississippi regions during the second quarter due to flooding, as well as the impact of marketing programs on visitation frequency of certain customer segments. The visitation declines in the first half 2011 also included temporary closures of two other properties in the
    mentioned regions due to severe weather conditions. Cash average daily room rates saw an increase of 5.3 percent..."
  • "During the quarter and first half 2011, the Company realized cost savings of $86.2 million and $152.4 million, respectively, and has estimated cost savings yet to be realized of $161.4 million as of June 30, 2011."
  • Las Vegas 2Q trends:
    • Property visitation by rated players: +0.2%
    • Amount spent per rated-player trip: +9.2%
    • Hotel revenues: +9.5%
    • Cash ADR: +6.5%
    • Occupancy: +3.6%
  • Atlantic City 2Q trends:
    • Property visitation by rated players: -4.1%
    • Amount spent per rated-player trip: -0.1%
    • "Revenues continued to be affected by the ongoing difficult economic environment, competition from new casinos and the mid-2010 introduction of table games in the Pennsylvania market. As a result, 2011 second-quarter and first-half revenues were slightly lower than the prior year periods. Second-quarter and first-half 2011 income from operations increased due to reduced property operating expenses as a result of reduced and more focused marketing expenses, lower depreciation expense and reduced payroll-related and property-tax expenses."
  • Everywhere else 2Q trends:
    • Property visitation by rated players: -15.1%
    • Amount spent per rated-player trip: +6.4%
    • "Visitation declines....were due largely to flood-related closures and the impact of more focused marketing"
  • "Flooding of the Ohio and Mississippi Rivers during the second quarter of 2011 caused temporary closures of Horseshoe Southern Indiana, Horseshoe Tunica, Tunica Roadhouse, Harrah's Tunica and Harrah's Metropolis. Based on their locations and other factors, some properties were closed longer than others;
    however, all properties were reopened as of May 27, 2011. While the closures did contribute to the reduced revenues experienced in the affected regions, the overall financial impact on the Company's results of operations for 2011 is insignificant, after taking into account insurance coverage. Costs incurred during
    the closures, as well as those in connection with restoring the affected properties to operating condition of approximately $29 million, have not been expensed, but instead have been recorded as a receivable from third-party insurance providers. The Company also expects to receive insurance recoveries for lost profits through business-interruption insurance, which will be recognized into income in the period in which settlements with insurers are finalized."
  • Iowa/ Missouri:
    • "Revenues in the region were relatively flat in the 2011 second quarter... due to increased competitive pressures in the region and reduced visitation, offset by an increase in customer spend per trip. Income from operations and Property EBITDA for the 2011 second quarter increased due to reduced property operating expenses as a result of continued focus on effective cost management through the
      implementation of the Company's efficiency projects"
  • Louisiana/ Mississippi:
    • "Revenues in the region decreased for the 2011 second quarter... primarily due to the temporary closures of three properties in the region due to flooding."
  • Illinios/Indiana:
    • "Revenues in the region decreased for the 2011 second quarter ... primarily due to the temporary closures of two properties in the region due to flooding"
  • Other Nevada Region:
    • "Revenues for the region declined slightly from the 2010 periods due to lower guest visitation and lower customer spend per trip driven by increased competitive pressure"
  • Managed and International:
    • "Revenue increases during the second quarter 2011 were attributable to Thistledown Racetrack, which was acquired in July 2010, and increased visitation and customer spend per trip at the Company's Uruguay property, offset by declines experienced by two properties in Egypt as a result of recent political uprisings. Turmoil in the region continues to impact the Egyptian properties' income from operations and Property EBITDA."


  • The changes they've made in their operations are allowing results to improve despite the lack of an economic recovery
  • Project Renewal: created centralized department - to accelerate adoption of best practices and leverage scale to reduce costs
  • By year end they will install PRISM at 3 more properties - basically allows them to make real time offers to their customers based on their play activity at the device while the player is still on the device
  • Believes momentum is building in Congress to allow US citizens to play online poker.
  • Expect Cleveland opening in 1Q12, Cinniccinati is expected to open in 2Q13
  • Creating 4 additional VIP salons in Las Vegas at Caesar's
  • Seeing sustained growth in the LV ADRs and better forward bookings
  • Saw generally positive fundamentals in their Midwest region as well
  • $390-$450MM of capex for the year
  • Decline in trips was due to a decline in lower rated categories
  • Trends for group bookings are very strong in Las Vegas for the balance of the year.
  • AC - trends are stabilizing and they are focusing on driving more trips from profitable customer segments
    • non-lodger spend per trip and trips were down


  • Recent trends since stock market collapse?
    • No changes in trends since market degradation
  • Benefits of their cost savings are expected to be seen in the 2H11 and 2012 in relation to Project renewal
  • How broad based was the EBITDA growth in Las Vegas results?
    • Pretty broad based. During the past few quarter PH was the primary driver of growth for them, but that's anniversied now.  There was a hold improvement YoY but not material. Particular strength in Caesar Palace though
  • Project Renewal targets?
    • Early innings of ramping up savings
  • Revenue impact of floods: $50-75MM - they added the EBITDA loss back to their Adjusted EBITDA though - so no impact there
  • Not anticipating a pullback in group bookings
  • In AC they are looking at every source of efficiency gains - union contracts, etc
  • Flood only impacted the operating company. Recognized a $29MM insurance receivable, which was an offset to flood related costs they incurred. Also assumed a $14MM recovery of losses to profits incurred.
  • Feel that poker bill will pass - its just a question of when and on the back of which bill
  • In MA there is also a sense of inevitability on the passage of gaming. Thinks that something will be introduced in early September and hopefully something enacted by Halloween
  • Promotional environment?
    • The environment has been rational and thinks that it can remain so for some time
  • 40-50% of their savings this year have been driven by savings on marketing and promotional spending
  • Early cost cuts post 2008 were driven by declines in volume and right sizing the orginization to lower visitation levels. The Project Renewal cuts are due to efficiency gains and marketing improvements - so flying in high rollers more efficiently. Expect to realize all of their targeted savings by end of 2012- and the run rate will be realized by 2Q/3Q.  10-15% of this program is related to labor scheduling and staffing approach
  • Have seen a general trend of higher international visitation
  • Seeing nice trends in terms of rate improvement in Las Vegas and the mix is getting better more towards Casino and Group segments
  • Rated play is between 75-80% as a % of total play across their portfolio and a little lower in Las Vegas