Caesars Entertainment Corporation (CZR)

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Caesars Entertainment (CZR)

Q4 2012 Earnings Call

February 25, 2013 5:00 pm ET


Eric Hession - Vice President of Finance and Treasurer

Gary W. Loveman - Chairman, Chief Executive Officer, President and Chairman of Executive Committee

Donald A. Colvin - Chief Financial Officer and Executive Vice President


Shaun C. Kelley - BofA Merrill Lynch, Research Division

David Farber

Susan Berliner - JP Morgan Chase & Co, Research Division

James Taylor

Chad Beynon - Macquarie Research

Richard A. Hightower - ISI Group Inc., Research Division

Peter A. Dalena - Citigroup Inc, Research Division

Kevin Coyne - Goldman Sachs Group Inc., Research Division



Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Caesars Entertainment Fourth Quarter 2012 Earnings Call. [Operator Instructions] Thank you. I will now turn the call over to Eric Hession. You may begin your conference.

Eric Hession

Thank you, Mike. Good afternoon, and welcome to Caesars Entertainment Fourth Quarter Results Conference Call. Joining me today are Gary Loveman, our Chief Executive Officer; and Donald Colvin, our Chief Financial Officer. Following our prepared remarks, we will turn the call over to your questions. A copy of our press release, today's prepared remarks and a replay of this conference call will be available in the Investor Relations section of our website at

Before I turn the call over to Gary, I would like to call your attention to the following information. The Safe Harbor disclaimer in our public documents covers this call and the simultaneous live webcast at The forward-looking statements made during this conference call reflect the opinion of management as of the date of this call. There are risks and uncertainties with such statements, which are detailed in our filings with the SEC. Please be advised that developments subsequent to this call are likely to cause these statements to become outdated with the passage of time. We do not intend, however, to update the information provided today prior to our next quarterly conference call.

Further, today we are reporting on fourth quarter and full year 2012 results. These results are not necessarily indicative of results of future periods. Also, please note that prior to this call, we furnished a Form 8-K of this afternoon's press release to the SEC. Property EBITDA and adjusted EBITDA are non-GAAP financial measures. Reconciliations of net income and loss to property EBITDA and net income and loss to adjusted EBITDA can be found in the table of our press release.

This call, the website and its replay are the properties of Caesars. It's not for rebroadcast or use by any other party without a prior written consent of Caesars. If you do not agree with these terms, please disconnect now. And by remaining on the line, you agree to be bound by these terms.

I would now like to turn the call over to our CEO, Gary Loveman.

Gary W. Loveman

Thank you, Eric, and thanks to all of you for joining us on the call this afternoon. During 2012, we made significant progress on the implementation of our strategy to increase shareholder value and improve our financial flexibility. We executed this strategy against a backdrop of ongoing uncertainty in the macroeconomic picture in this country and consumer weakness in the U.S. economy that negatively affected discretionary consumer spending and, ultimately, our gaming results. We benefited from increased customer spending per trip, further growth in our social and mobile games businesses, the addition of management fee income for Horseshoe Cleveland and our continued leadership in nearly every domestic market in which we operate. These top new developments, however, were offset by particularly negative results in Atlantic City, driven by the impact of Hurricane Sandy, as well as lower visitation in several of our regional markets.

Our advances in 2012 provide the foundation for future value creation as we transition to the realization phase of our growth strategy. In 2013, we plan to continue to advance our efforts to create value in 3 key areas: First, reinvigorating and expanding the core of our network; second, expanding distribution domestically in via our social and mobile games businesses; and finally, realizing our emerging opportunities including international expansion and real-money online gaming in the United States.

Our efforts to revitalize and expand the core include the increased emphasis on the development of the diversity of hospitality assets, particularly in Vegas where we have more projects underway than any of our peers. We believe there is significant potential to further capitalize on our considerable presence at the 50-yard line in Las Vegas by continuing to enhance these assets.

The LINQ is critical to these efforts that it helps our plans to revitalize the center strip area, where our properties are concentrated. The LINQ will not only drive revenue from the Missions to the High Roller observation wheel and leasing revenue, but also from the millions of visitors experience -- that this experience will draw to our neighboring property. We also plan to upgrade in Vegas, which we expect to result in increases in ADR.

At the LINQ site nearly all of the field for the retail, dining, entertainment corner is in place and the High Roller is getting tall. More than 80% of the leasable space has been committed and were on track to open at the end of this year. The High Roller will open in the first half of this year. I refer you to the Investor Relations section of for a series on photos on the current state of the LINQ construction, as well as our other projects.

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