Thursday, Feb. 10, 2005 | 10:42 a.m.
Caesars Entertainment Inc. swung from a loss to a profit in the fourth quarter as the company's Las Vegas casinos posted strong results compared with year-ago earnings pulled down by one-time expenses.
The company reported a profit of $20 million compared with a net loss of $84 million in the fourth quarter of 2003.
"Las Vegas is one of the hottest tourist destination (markets) in the nation right now -- and the entire industry is benefiting," Caesars Chief Executive Officer Wally Barr said in a statement.
During a conference call today, Barr said bookings in Las Vegas so far this year were looking up and that the company hopes to reap rewards from continued upgrades to its resorts. The company also experienced a strong Super Bowl weekend and opening of the Chinese New Year holiday this week, he said.
"From where we stand today, 2005 looks very promising," Barr said.
The fourth-quarter results include a $4 million profit from casinos scheduled to be sold, an $8 million charge related to a lease termination and $16 million in expenses related to the company's pending acquisition by Harrah's Entertainment Inc.
The 2003 quarter included a $57 million charge to write-down the asset value of the company's Flamingo Laughlin property and a $38 million write-down of operating value of Caesars Tahoe, which is scheduled to be sold.
On a per share basis, earnings were 6 cents per share compared with a loss of 28 cents per share a year earlier.
Excluding those one-time charges, company earnings were $27 million in the fourth quarter or 8 cents per share -- meeting analysts' expectations -- compared with $11 million or 4 cents per share a year ago.
Revenue for the fourth quarter, including promotional expenses, rose 7 percent to $1.01 billion -- an all time record, company officials said.
Profit margins rose at the company's Las Vegas Strip properties, driven primarily by Caesars Palace, Barr said.
At Caesars Palace, table game volume rose 9 percent, slot machine volume rose 13 percent and total gaming revenue rose 48 percent. Cash room rates rose 19 percent. Occupancy fell 2 percentage points to 90.4 percent in the fourth quarter but average room rates rose $22 per day to $168.
Revenue at company's Las Vegas, Reno and Laughlin properties rose 16 percent to $480 million. Earnings before interest, taxes, depreciation and amortization -- a key indicator of casino performance -- rose 43 percent to $119 million.
For the full year 2004, Caesars Palace reported a 54 percent increase in earnings before interest, taxes, depreciation and amortization to $149 million -- an all-time record.
A 34-day labor strike that began in October hurt the company's Atlantic City properties and cost the company about $10 million in the quarter, or 2 cents per share.
Last year, profit at Caesars Entertainment rose fivefold to $297 million, driven in part by an $87 million gain on the sale of the Las Vegas Hilton to Colony Capital and $32 million in additional income from the Hilton and other properties scheduled to be sold.
Revenue for 2004 rose 7 percent to $4.21 billion -- also an all-time record.
Company officials declined to comment on the company's pending acquisition by Harrah's but said the deal is on track for approval by the end of June.
CIBC World Markets analyst William Schmitt said in a research note today that Caesars shares should continue to trade relative to Harrah's stock price because of the pending sale to Harrah's.
According to the buyout agreement, Caesars shareholders are entitled to receive about .32 shares of Harrah's stock for each share of Caesars.
Caesars shares rose 10 cents to $20.39 in early trading today.
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