Harrah’s reports fourth-quarter profit amid declining revenue

Harrah's Entertainment posted a fourth-quarter profit of $298.3 million even though the company saw revenues continue to decline because of weak customer spending, the gaming company reported Thursday.

Revenues declined 7.9 percent to $2.1 billion in the fourth quarter ending Dec, 31, down from $2.28 billion posted for the same period in 2008.

For 2009, revenues fell 12 percent to $8.9 billion from $10.13 billion in 2008. Despite the decline, Harrah's posted a profit of $846.4 million for the year.

Cash flow, defined as earnings before interest, taxes, depreciation and amortization, declined 7.7 percent to $418.6 million for the quarter. Cash flow fell 12.1 percent to $2.07 billion in 2009.

The profits come after steep write-downs in 2008 that helped push the company to a $5.27 billion loss for the year.

"The impact of the economy on consumers' willingness to spend continued to affect our results throughout 2009," Harrah's Chairman and Chief Executive Officer Gary Loveman said in a statement. "The cost-reduction programs implemented at the end of 2008 helped mitigate the economy's impact on our operating margins last year."

Las Vegas revenues, which account for nearly 30 percent of the company's business, declined 10 percent in the fourth quarter to $649.2 million from $721.4 million in the fourth quarter 2008.

The company blamed the decline on "weakness in the group travel business, lower spend per visitor and lower average daily room rates," despite hotel room occupancy of nearly 90 percent.

Quarterly cash flow dropped 7.9 percent to $174.6 million.

In 2009, revenues in Las Vegas fell 17.1 percent to $2.7 billion and cash flow dropped 22.9 percent to $756.8 million.

The company owns eight casinos locally including Rio, Caesars Palace, Bally's, Paris Las Vegas, Harrah's, Flamingo, Bill's and Imperial Palace. The company closed on its purchase of the Planet Hollywood Resort on Feb. 19 for $70 million and the assumption of debt.

Harrah's has been privately owned by private-equity firms Apollo Management and TPG Capital since early 2008.

Loveman told Reuters this week the company could launch an initial public offering as early as 2013. The current owners would likely wait for the economy to recover, Loveman said. The legalization of online poker in the United States could be another factor on going public, he told Reuters.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.