Harrah’s, Rio and Tropicana post gains

Wednesday, July 21, 1999 | 10:56 a.m.

Harrah's Entertainment Inc. and Aztar Corp. reported higher second-quarter revenue and cash flow today. They are the latest casino operators to benefit from a resurgence in gambling activity in Las Vegas.

Harrah's said second-quarter net income rose to $40.5 million, or 31 cents a share, from $20.4 million, or 20 cents a share, in 1998's second period, when there were 26 percent fewer shares outstanding.

Revenue rose to $751.1 million from $478.6 million, while cash flow hit a record $182.8 million, up from $127.4 in the year-ago quarter, Harrah's said.

The financial results were aided by Harrah's Rio and Showboat acquisitions, strong performances in Atlantic City and East Chicago and an overall 15 percent same-store growth rate at Harrah's brand casinos, the company said.

"There were strong performances in cash flow in every region ... a testament to the value of our diversification and our national brand strategy," Harrah's Chairman Phil Satre said.

Revenue at the Rio in Las Vegas, acquired last Jan. 1, rose 17 percent in the latest quarter from a year ago to $115.2 million, while cash flow was up 26 percent to $25.3 million, Satre said.

Elsewhere, other Harrah's properties in Las Vegas and Laughlin posted revenue of $92.5 million and cash flow of $25.3 million, while Harrah's properties in Northern Nevada produced revenue of $75.3 million and cash flow of $17.3 million.

Harrah's Atlantic City outpaced growth in that market by nearly 50 percent, he added.

During the latest quarter, Harrah's spent $2 million for consultants to review the company's recent growth through acquisitions. The study outlined ways to cut corporate expenses $15 million annually within 12 to 18 months, the company said.

Harrah's also disclosed that it expects to sell its holdings in casino equipment supplier Sodak Gaming Inc. during the current quarter and use after-tax net of about $280 million to cut debt.

It announced Tuesday it was selling its Showboat property in Las Vegas to VSS Enterprises, a newly formed Las Vegas company. Details of the transaction haven't been disclosed.

Meanwhile, Aztar reported second-quarter net income of $1.8 million, or 4 cents a share, compared with $2.4 million, or 5 cents a share, in the 1998 period. Revenue rose to $206.7 million from $203.2 million.

The latest quarter's net included a charge of $4.1 million, or 9 cents a share, related to replacement of $200 million of 11 percent debt with $235 million of notes bearing an 8.875 percent interest rate.

"Our next goal is to replace our $180 million of 13.75 percent notes redeemable in October with funds from our reducing revolving bank credit facility, which currently bears interest at 6.9 percent," Aztar Chief Financial Officer Robert Haddock said.

Aztar's cash flow rose to $42.3 million from $40 million in the 1998 second quarter, according to Paul Rubeli, chairman.

Cash flow at the Las Vegas Tropicana rose 30 percent to $4.8 million, helped by a 96.7 percent occupancy rate and a 10 percent increase in the average daily room rate, Aztar said. Cash flow at the Ramada Express in Laughlin increased 20 percent, to $5.4 million.

The Atlantic City Tropicana posted an 11 percent gain in cash flow, to $25.7 million. Aztar's riverboat in Evansville, Ind., saw cash flow drop to $9 million from $11.5 million in the 1998 second quarter, while the smaller Caruthersville, Mo., riverboat recorded little change in its results.