Thursday, March 5, 2009 | 3:14 p.m.
Sun archives
- Harrah’s announces plan to reduce debt burden (2-4-09)
- Strip building boom, buyouts were ill-timed, and many see more pain in ’09 (3-1-09)
- Harrah’s wants class-action suit over debt swap dismissed (2-27-09)
- Harrah's hit with class-action lawsuit over debt plan (2-16-09)
- Harrah’s seeking $740 million from credit line (2-13-09)
- Harrah’s makes cost-cutting moves (2-12-09)
Harrah's Entertainment Inc. today disclosed preliminary financial results for the fourth quarter of 2008 and, as expected, they showed steep declines in revenue and cash flow as the recession deterred visitation to Las Vegas and slowed activity at many of Harrah's casinos nationwide.
The hotel-casino company also said that when it reports final numbers for the fourth quarter later this month, it will take a huge noncash writeoff to reflect the decline in value of its goodwill and other intangible assets. Unlike real estate and equipment, goodwill is an intangible asset. It reflects the value of the company's brands in the marketplace.
In a regulatory filing, the Las Vegas company said the writedown will total $5.288 billion to $5.504 billion.
Harrah's said this "reflects factors impacted by current market conditions, including lower valuation multiples for gaming assets and higher discount rates resulting from on-going turmoil in the credit markets.'' The writedown won't affect ongoing operations, Harrah's said.
The company estimated that revenue for the quarter totaled $2.232 billion to $2.324 billion and that cash flow was $468 million to $488 million, compared to revenue in the 2007 fourth quarter of $2.627 billion and cash flow of $622.8 million.
The loss from continuing operations for the 2008 quarter, after the goodwill writedown, was estimated at $4.596 billion to $4.784 billion.
Harrah's also said it will post a one-time gain for the quarter of $927 million to $965 million for the early extinguishment of debt.
Deutsche Bank analyst Andrew Zarnett said in a research note on the quarterly numbers that Harrah's continues to face "deteriorating fundamentals in Las Vegas, competitive pressure in Missouri and Atlantic City and a tepid economic environment.''
"While management did not break out results by property, we believe that fourth-quarter results benefited from management's aggressive cost-cutting initiatives (lay-offs, eliminating employee benefits, canceling matched contributions and deferring project capital expenditure - Caesars Octavius hotel expansion) and stronger performances'' at properties in Indiana, Iowa and Missouri, he wrote.
The numbers were disclosed one day after Harrah's, struggling to service a debt load last reported at more than $24 billion, announced a plan to exchange $2.8 billion in bonds for new notes with an extended due date.
Steve Green can be reached at 990-7714 or [email protected].
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