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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission file number 1-14573

PARK PLACE ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

PARK PLACE ENTERTAINMENT CORPORATION
INDEX

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PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions, except par value)
(unaudited)

See notes to condensed consolidated financial statements

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PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(unaudited)

See notes to condensed consolidated financial statements

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PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)

See notes to condensed consolidated financial statements

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PARK PLACE ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1.    The Company

        Park Place Entertainment Corporation ("Park Place" or the "Company"), a Delaware corporation, was formed in June 1998. The Company is primarily engaged in the ownership, operation, and development of gaming facilities. The operations of the Company currently are conducted under the Caesars, Bally's, Paris, Flamingo, Grand, Hilton, and Conrad brands. The Company operates and consolidates seventeen wholly owned casino/hotels located in the United States; of which eight are located in Nevada; four are located in Atlantic City, New Jersey; and five are located in Mississippi. Additionally, the Company operates and consolidates an 82 percent owned and managed riverboat casino in Harrison County, Indiana, a 49.9 percent owned and managed riverboat casino in New Orleans, Louisiana, the casino operations of Caesars Palace at Sea on two cruise ships, and two partially owned and managed casinos in Nova Scotia, Canada. The Company partially owns and manages two casinos internationally, one located in Johannesburg, South Africa and one located in Punta del Este, Uruguay which are accounted for under the equity method. In Windsor, Canada, the Company has a 50 percent interest in a company that provides management services to the Casino Windsor. The Company also provides management services to two casinos in Queensland, Australia and the slot operations at the Dover Downs racetrack in Delaware. The Company views each casino property as an operating segment and all such operating segments have been aggregated into one reporting segment. Each casino property derives its revenues from services such as casino operations, room rental and food and beverage sales.

Note 2.    Basis of Presentation

        The condensed consolidated financial statements include the accounts of the Company, its subsidiaries, and investments in unconsolidated affiliates that are accounted for under the equity method. The Company exercises significant influence over those investments accounted for under the equity method. All material intercompany accounts and transactions are eliminated.

        The condensed consolidated financial statements included herein are unaudited and have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of results for the interim periods have been made. The results for the three and nine month periods are not necessarily indicative of results to be expected for the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, and the Company's Quarterly Report on Form 10-Q for the quarters ended March 31, 2002 and June 30, 2002.

Reclassifications

        The condensed consolidated financial statements for prior periods reflect certain reclassifications to conform to classifications adopted in the current period. These reclassifications have no effect on previously reported net income.

        Emerging Issues & Task Force Issue No. 00-14 ("EITF 00-14") "Accounting for Certain Sales Incentives," which was effective January 1, 2002, focuses on the accounting for, and presentation of, discounts, coupons, and rebates. EITF 00-14 requires that cash or equivalent amounts provided or

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returned to customers as part of a transaction should not be shown as an expense but should be recorded as an offset to the related revenue. The Company's casinos offer cash inducements and match-play coupons to customers to encourage visitation and play at the casinos. The Company adopted the provisions of EITF 00-14 for 2001 year-end reporting.

        With the adoption of the new standard, the prior-year periods have been reclassified to conform to the new presentation. This resulted in a reduction of casino revenues (and a corresponding reduction in casino expenses) of $33 million and $100 million for the three and nine months ended September 30, 2001, respectively. The requirements of EITF 00-14 did not have an impact on previously reported operating income or net income.

        Beginning with the quarter ended September 30, 2002, the Company has reclassified its presentation of equity in earnings from unconsolidated affiliates. The Company previously reported equity in earnings from unconsolidated affiliates as a component of other revenues. The Company will report the results of its unconsolidated affiliates as a separate component of operating income (loss) on its statements of operations under a separate caption titled "Equity in Earnings of Unconsolidated Affiliates." This reclassification has no impact on operating income (loss), net income (loss), or earnings (loss) per share as reflected on its consolidated statements of operations and no impact on its consolidated balance sheets or statements of cash flows.

Note 3.    Goodwill and Other Intangible Assets—Adoption of Statement of Financial Accounting Standards No. 142

        On January 1, 2002, the Company adopted the provisions of SFAS No. 142, "Accounting for Goodwill and Other Intangible Assets." Under SFAS No. 142, goodwill and indefinite-lived intangible assets are no longer amortized but are reviewed at least annually for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives (but with no maximum life).

        As of January 1, 2002, the Company had approximately $1.8 billion of unamortized goodwill. Approximately two-thirds of the total related to the acquisition of the Bally's properties in 1996, while the remainder related primarily to the Caesars acquisition in December 1999. In accordance with the initial adoption of SFAS No. 142, each property with assigned goodwill is to be valued as an operating entity. If the fair value of the operating entity is greater than the book value, including assigned goodwill, no further testing is required. However, if the book value, including goodwill, is greater than the fair value of the operating entity, the assets and liabilities of the operating entity will need to be valued. The difference between the fair value of the operating entity and the fair value of the assets is the implied fair value of goodwill. To the extent that the implied fair value of goodwill is less than the book value of goodwill, an impairment charge will be recognized as a cumulative effect of a change in accounting upon adoption.

        The Company engaged an independent company to assist in the valuation of properties with a significant amount of assigned goodwill. The fair value of the operating entities was determined using a combination of a discounted cash flow model, a guideline company method using valuation multiples and similar transactions method. Based on this analysis and the tests noted above, the Company completed its implementation analysis of goodwill arising from prior acquisitions and recorded an impairment charge of $979 million which has been recorded as a cumulative effect of accounting change in the first quarter of 2002. There were no other additions or adjustments to goodwill during the nine months ended September 30, 2002.

        For the three and nine months ended September 30, 2001, the Company recorded goodwill amortization of $12 million and $37 million, respectively. If SFAS No. 142 had been in effect for the

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three and nine months ended September 30, 2001, the Company would have reported the following (in millions, except per share amounts):

Note 4.    Stock Repurchase

        The Board of Directors of the Company has approved an aggregate of 40 million shares under a common stock repurchase program. For the three months and nine months ended September 30, 2002, the Company repurchased 1.6 million shares at a cost of $14 million and 1.9 million shares at a cost of $17 million, respectively. Cumulatively, through September 30, 2002, the Company has repurchased a total of 23 million shares of its common stock at an average cost of $11.37 per share, resulting in 17 million shares remaining available under the stock repurchase program.

Note 5.    Earnings (Loss) Per Share

        Basic earnings (loss) per share ("EPS") is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. The basic weighted-average number of common shares outstanding for the three months ended September 30, 2002 and 2001 was 301 million and 299 million, respectively, and 302 million and 298 million for the nine months ended September 30, 2002 and 2001, respectively. Diluted EPS reflects the effect of assumed stock option exercises. The dilutive effect of the assumed exercise of stock options increased the weighted-average number of common shares by 2 million for both the three and nine months ended September 30, 2002, respectively. For the three and nine months ended September 30, 2001, the assumed exercise of stock options would have increased the weighted-average shares by 3 million and 4 million, respectively; however, the additional shares were excluded from the EPS calculations because of the net losses from continuing operations experienced during those periods.

Note 6.    Comprehensive Income (Loss)

        Comprehensive income (loss) is the total of net income (loss) and all other non-stockholder changes in equity. Comprehensive income (loss) for the three and nine months ended September 30, 2002 and 2001 is as follows (in millions):

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Note 7.    Long-Term Debt

        Long-term debt is as follows (in millions):

        In March 2002, the Company issued $375 million of 7.875% Senior Subordinated Notes due 2010 through a private placement offering to institutional investors. The Company has completed an exchange of these notes for notes registered under the Securities Act of 1933, as amended. The notes are redeemable at any time prior to their maturity at the "Make-Whole" premiums described in the indenture governing such notes. The notes are unsecured obligations, rank equal with the Company's other senior subordinated indebtedness and are junior to all the Company's senior indebtedness. Proceeds from this offering were used to reduce borrowings under the credit facilities.

        The Company has two principal credit facilities. The first is a 364-day revolving credit facility expiring in August 2003 (the "364-day Facility") with total availability to the Company of $700 million. As of September 30, 2002, the Company had $0 drawn against the 364-day Facility. The second facility (the "Multi-year Facility"), structured in two parts, provides for aggregate availability to the Company as of September 30, 2002, of $2.0 billion. At December 31, 2003, availability to the Company under the Multi-year Facility will be reduced by $600 million; the remaining $1.4 billion of availability expires on December 31, 2005. As of September 30, 2002, the Company had $1.44 billion drawn under the Multi-year Facility.

        The credit facilities contain financial covenants including a maximum leverage ratio (total debt to ebitda, as defined) of 5.25 to 1.00 as of September 30, 2002 which adjusts to 5.00 to 1.00 as of December 31, 2002, and 4.75 to 1.00 for each of the quarterly testing periods ending March 31, 2003 and June 30, 2003, and 4.50 to 1.00, thereafter. The minimum interest coverage ratio (ebitda, as defined, to interest expense) is 2.50 to 1.00 for the period ended September 30, 2002 and adjusts to 2.75 to 1.00 for each of the quarterly testing periods thereafter. As of September 30, 2002, the Company was in compliance with the applicable covenants.

        The Company's $300 million 7.95% Senior Notes, due August 2003, are included in long-term debt as of September 30, 2002 as the Company intends to refinance with either (1) a new note issue with maturity greater than one year or (2) borrowings under its Multi-year Facility.

Note 8.    Commitments and Contingencies

Baluma Holdings, S.A.

        Over the past several years, the Company has provided capital (in the form of loans) to Baluma Holdings, S.A. ("Holdings"), the ultimate parent of Baluma, S.A. ("Baluma," the entity that owns the Conrad Punta del Este (the "Resort"), in Punta del Este, Uruguay). Two promissory notes (the "Baluma Loans"), aggregating $80 million in principal, matured on July 31, 2002; the principal, together with certain accrued and unpaid interest, was not repaid. The Baluma Loans are secured by a first priority lien on all of the assets comprising the Resort and on the stock of Baluma. The Company and Holdings are currently negotiating a restructuring of the Baluma Loans. In the event that the Company is unable to negotiate a restructuring acceptable to all affected parties, it may consider

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exercising its rights as secured creditor. The Company intends to continue to operate the Resort pursuant to the Management Agreement. As described elsewhere in this report, the Resort is currently suffering the adverse effects of the economic turmoil in Argentina, Brazil and Uruguay.

Litigation

        Park Place and its subsidiaries are party to various legal proceedings incidental to their business. The Company believes that all of the actions brought against it are without merit and will continue to vigorously defend against them. While any proceeding or litigation has an element of uncertainty, the Company believes that the final outcome of any one of these matters is not likely to have a material adverse effect upon the Company's results of operations or financial position. For a discussion of certain material litigation to which the Company and its subsidiaries are a party, see the Company's Annual Report on Form 10-K for the year ended December 31, 2001 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002 and June 30, 2002.

        In the matter captioned Catskill Development, L.L.C., et al. v. Park Place Entertainment Corporation, et al., which was previously detailed in the Company's Form 10-K for the year ended December 31, 2001, and Form 10-Q for the quarter ended June 30, 2002, on August 22, 2002, the United States District Court for the Southern District of New York granted the Company's motion for summary judgment dismissing plaintiffs' remaining two claims for tortuous interference with contractual relations and tortuous interference with prospective business relations. On May 14, 2001, the Court had dismissed plaintiffs' other two claims. On August 26, 2002, the Court dismissed plaintiffs' complaint in its entirety. Plaintiffs have appealed the dismissal of the compliant and various other rulings of the Court.

        In the matter captioned Scutti Enterprises, L.L.C. v. Park Place Entertainment Corporation, which was previously detailed in the Company's Form 10-K for the year ended December 31, 2001, and Form 10-Q for the quarter ended June 30, 2002, plaintiff's complaint was dismissed with prejudice on March 13, 2002 by the United States District Court for the District of New York. Plaintiffs have appealed the Court's dismissal of the action and have also moved to vacate the Court's dismissal of its claim for tortuous interference with contractual relations.

        In the matter captioned Park Place Entertainment Corporation, et al. v. Arquette, et al., which was previously detailed in the Company's Form 10-K for the year ended December 31, 2001, and Form 10-Q for the quarter ended June 30, 2002, on September 9, 2002, the Supreme Court of the State of New York, County of Franklin, denied both the Company's motion to dismiss defendants' counterclaim and defendants' cross-motion to dismiss the complaint.

        In the matter captioned Stratosphere Litigation, L.L.C. v. Grand Casinos, Inc., a Minnesota Corporation, which was previously detailed in the Company's Form 10-K for the year ended December 31, 2001, on April 4, 2001, the United States District Court entered a judgment in favor of Grand on all counts. On August 13, 2002, that judgment was affirmed by the Ninth Circuit Court of Appeals.

        In the identical matters captioned Dalton, et al. v. Pataki et al. and Karr v. Pataki, et al., which were previously detailed in the Company's Form 10-K for the year ended December 31, 2001, and the Form 10-Q for the quarter ended June 30, 2002, the Supreme Court of the State of New York, County of Albany, on October 30, 2002, denied the Company's motion to dismiss the first three causes of action and consolidated the matters.

Note 9.    Impairment Losses and Other

        During the third quarter of 2002, the Company recognized $10 million in non-recurring items related to the cancellation of an energy contract with Enron Corporation and damage caused by tropical storms in the Gulf Coast. The voluntary termination of the Enron contract resulted in a one-time charge of approximately $7.5 million. In addition, tropical storms in the Gulf Coast caused

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$2.5 million in damage to our properties there. The Company will be unable to seek reimbursement for such losses because they do not exceed the deductibles applicable under the Company's various insurance policies.

        During the third quarter of 2001, the Company recognized impairment losses on the Las Vegas Hilton and the sale of the Flamingo Reno totaling $143 million.

Note 10.    Investment Gain (Loss)

        In April 2002, the Company completed the sale of its 19.9 percent equity interest in Jupiters Limited and received total gross proceeds of approximately $120 million. As a result of this transaction, the Company recorded a one-time pre-tax gain of $44 million in April 2002. This gain has been recorded as an investment gain in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2002. Although the Company has sold its equity interest in Jupiters Limited, it continues to manage Jupiters' two Queensland casino hotels.

        During the third quarter of 2001, the Company recognized impairment losses on investments totaling $32 million primarily related to senior discount notes of Aladdin Gaming Holdings, LLC.

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

        Our results of operations include the following properties whose operations are fully consolidated except as noted: