Harrah’s reports record profit in second quarter

By Liz Benston (contact)

Wednesday, July 21, 2004 | 10:48 a.m.

Strong growth at the company's Nevada properties and increased gambler use of the company's Total Rewards slot club card helped boost second-quarter profit at Harrah's Entertainment Inc. to record levels, executives said today.

The company reported second-quarter profit of $90.2 million or 79 cents per share compared to profit of $76.7 million or 69 cents per share a year earlier.

Cross-market play -- or gambling by players at casinos outside of their home region -- rose 12 percent during the quarter. Gambling by players using the company's Total Rewards card increased 9 percent.

Excluding one-time write-downs and other charges, the company earned $90 million in the second quarter compared to $81.8 million in the 2003 quarter. On a per share basis, the company earned 79 cents -- in line with analysts' estimates -- compared to 74 cents a year ago. Revenue rose 4.5 percent to $1.1 billion and cash flow grew 6.2 percent to $301.1 million.

Revenue at Southern Nevada casinos grew 23.2 percent to $272.7 million from the second quarter of last year, the company said.

Southern Nevada cash flow increased 35.6 percent to $82.7 million. Revenue at Harrah's Las Vegas rose 16 percent and cash flow was up 40 percent. At the Rio, revenue rose 14 percent and cash flow jumped 28 percent. Harrah's has had success luring Harrah's customers from other regions to Las Vegas, Harrah's Chief Operating Officer Tim Wilmott said.

"We're getting a greater share of our customer trip budgets," he said.

CEO Gary Loveman also today defended the merits of the company's recently announced deal to buy Caesars Entertainment Inc. Harrah's can use its Total Rewards program to boost profit across Caesars' casinos, which generate about 70 percent of revenue from slots much like Harrah's, Loveman said. Hotel rooms at Harrah's Las Vegas earn more for the company per room, including gambling dollars spent by guests, than Caesars' Flamingo, Paris and Bally's properties, for example, he said.