Harrah’s posts record quarter, year results

Gary Thompson

Thursday, Feb. 11, 1999 | 11:14 a.m.

Harrah's Entertainment Inc. said today its customer-rewards program, a strong performance in Midwestern markets and the Showboat Inc. acquisition helped it to achieve record financial results in 1998.

Fourth-quarter net income rose to $14.2 million, or 14 cents per diluted share, from $12.1 million, or 12 cents a share, in the 1997 quarter. Revenue jumped to $524.7 million from $398 million.

Full-year net climbed to $102 million, or $1 a share, from $99.4 million, or 98 cents a share, in 1997. Revenue reached $2 billion in 1998, up from $1.62 billion in 1997.

The net income figures for the 1998 fourth quarter and full year reflected a series of one-time events, including project opening costs, write-downs and reserves, venture restructuring costs and gains on sales of nonoperating assets, the company said.

Excluding the extraordinary items, fourth-quarter net was 20 cents a share and full-year net $1.19 a share, Harrah's said. Analysts had estimated the numbers at 20 cents and $1.25.

Harrah's stock was up 56.25 cents, or 3.9 percent, to $14.9375 a share in early afternoon trading today.

Cash flow at Harrah's Southern Nevada operations rose to $81 million in 1998 from $67.8 million in 1997, reflecting the benefits of its customer-loyalty program Total Gold, according the Chairman Phil Satre. Southern Nevada revenue rose to $346.3 million in 1998 from $288.2 million in 1997.

"Cross-market play increased 80 percent at Harrah's Las Vegas in 1998," Satre said. "These results give us confidence we will continue to build loyalty for our brand as well as the Las Vegas property with our loyalty marketing and distribution strategy.

But fourth-quarter cash flow and operating profits from Southern Nevada declined slightly due to significantly higher spending on advertising in the competitive market, Harrah's said.

In Atlantic City, the company posted sharply higher full-year revenue, cash flow and operating profit due to the acquisition of Showboat Atlantic City in June and a strong performance by the Harrah's hotel-casino there.

Harrah's riverboat casinos posted higher revenue and cash flow for the year, though operating profits declined slightly due to spending on a Missouri election initiative and higher tax rates in Joliet.

Harrah's Indian casino management operations also reported higher results due to the opening of new properties in Kansas and North Carolina.

Satre said Harrah's merger with Rio Hotel & Casino, which became effective Jan. 1, a full year's revenue from Showboat and its customer service strategy should help make 1999 a strong year.

Based in Memphis, Tenn., Harrah's plans to move its headquarters to Las Vegas.