By: Las Vegas Now Staff
Harrah's Entertainment, which was recently taken private, said Wednesday it swung to a fourth-quarter loss due to impairment charges, as its top executive described pockets of softness in the casino market.
The Las Vegas-based casino operator, the world's largest gambling company by revenue, reported a loss of $47.8 million in the three months ending Dec. 31, or 26 cents per share, compared with a profit of $47.6 million, or 25 cents per share, a year earlier.
Adjusted net income was $80.1 million, or 42 cents per share, compared with $84.9 million, or 45 cents per share in the fourth quarter of 2006.
The company said revenue climbed 8 percent to $2.63 billion from $2.43 billion in the previous year.
Harrah's said results were hurt by $169.6 million in a pre-tax write-off of impairment charges resulting from annual 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 Apollo Global Management LLC and TPG Capital LP completed their $17.3 billion acquisition of Harrah's in January. The company operates 50 casinos worldwide, including Caesars Palace, Flamingo and Bally's in Las Vegas and Harrah's, the Showboat, Caesars Atlantic City and Bally's in Atlantic City, N.J.
For the year, Harrah's earned $619.4 million, $3.26 per share, compared with $535.8 million, or $2.85 per share, in 2006. Revenue rose to $10.82 billion from $9.67 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 posting 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 also had started to soften.
“We're seeing more cancellations and smaller number of participants for any group of that might attend a large show,” Halkyard said.
Revenue for the quarter in Las Vegas casinos rose to $905.2 million, up from $825.8 million last year. Income from Las Vegas area casinos rose to $199.2 million, compared with $192.3 million
from year-ago figures.
Harrah's casinos in the Atlantic City region saw income drop to $61.1 million from $64.3 million in the fourth quarter a year ago.
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.
(Copyright 2008 by The Associated Press. All Rights Reserved.)
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