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Accounting review charge pushes Harrah's into 4Q loss; some weakness seen in casinos

Accounting review charge pushes Harrah's into 4Q loss; some weakness seen in casinos

Harrah's Entertainment, which was recently taken private, said Wednesday it swung to a fourth-quarter loss, hurt by charges from accounting reviews, as its top executive described pockets of weakness in the casino market.
The Las Vegas-based casino operator, the world's largest gambling company by revenue, posted a loss of $47.8 million (euro31.77 million), or 26 cents per share, in the three months ending Dec. 31. Those figures compared with a profit of $47.6 million (euro31.64 million), or 25 cents, a year earlier.
Adjusted net income totaled $80.1 million (euro53.24 million), or 42 cents, compared with $84.9 million (euro56.43 million), or 45 cents, in the fourth quarter of 2006.
Quarterly revenue climbed 8 percent to $2.63 billion (euro1.75 billion).
Harrah's said results were hurt by $169.6 million (euro112.74 million) in a pretax write-off of impairment charges resulting from required accounting reviews at its Caesars Indiana in Elizabeth, Ind. and London Clubs International PLC.
London Clubs operates seven casinos in the U.K., two in Egypt, one in South Africa and is a consultant for a casino in Lebanon. The company was acquired by Harrah's in 2006.
Affiliates of private equity firms Apollo Global Management LLC and TPG Capital LP completed their $17.3 billion (euro11.5 billion) acquisition of Harrah's in January. The company operates 50 casinos worldwide, including Caesars Palace, Flamingo and Bally's in Las Vegas.
For the year, Harrah's earned $619.4 million (euro411.73 million), or $3.26 (euro2.17) per share, compared with $535.8 million (euro356.16 million), or $2.85 (euro1.89) per share, in 2006. Revenue rose to $10.82 billion (euro7.19 billion) from $9.67 billion (euro6.43 billion) in 2006.
In a call with analysts, Harrah's chief executive Gary Loveman described the company's regional market as "mixed," citing its Harrah's New Orleans property as generating strong early numbers in 2008.
"Other markets, the results have been more modest. In Las Vegas, the gaming business has held up well, but room rates are off a little bit," Loveman said.
Jonathan Halkyard, the company's chief financial officer, said the convention market in Las Vegas had started to soften as corporations reacted to the economic downturn by scaling back expenses.
"We're seeing more cancellations and smaller number of participants for any group that might attend a large show," Halkyard said.
Revenue for the quarter in Las Vegas casinos rose to $905.2 million (euro601.7 million), up from $825.8 million (euro548.92 million) last year. Income from Las Vegas area casinos rose to $199.2 million (euro132.41 million), compared with $192.3 million (euro127.83 million) a year earlier.
Harrah's casinos in the Atlantic City region saw income drop to $61.1 million (euro40.61 million) from $64.3 million (euro42.74 million) in the fourth quarter of 2006.
Loveman said Harrah's Chester Casino and Racetrack in Pennsylvania helped offset more further losses in the region, which he attributed to new smoking restrictions, increased promotional spending and competition from new gambling halls in Pennsylvania.


Updated : 2021-04-16 16:43 GMT+08:00