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December 20, 2014

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Harrah’s swings to profit in fourth quarter

Harrah's Entertainment Financial Information

  4Q 2009 4Q 2008 % Change 3Q 2009
Revenue $2.09 billion $2.27 billion -7.9% $2.282 billion
Net income $295.6 million ($4.78 billion) N/A ($1.62 billion)

Harrah's Entertainment Inc. today reported a profit of $295.6 million in the fourth quarter, even as the recession contributed to a 10 percent decline in net revenue for its big hotel-casinos on the Las Vegas Strip.

The profit compares to a loss of $4.782 billion in 2008's fourth quarter, when the Las Vegas company booked special costs of $5.49 billion to write down the value of goodwill and other intangible assets.

Harrah's attributed some of its profit in 2009's fourth quarter to financial engineering. Its interest expense fell by $118 million in the quarter and it posted a pre-tax gain of $686 million due to debt exchanges and other purchases of its debt at discounted prices.

The Las Vegas properties, including such stalwarts as Caesars Palace and the Flamingo, generated net revenue of $649.2 million and earnings before interest, taxes, depreciation and amortization of $174.6 million, down 7.9 percent.

Worldwide, net revenue of $2.099 billion was down 7.9 percent.

The results do not include operations from the 2,500-room Planet Hollywood gaming resort on the Las Vegas Strip, which Harrah's acquired this month.

The company didn't break out room rates, but they fell as Harrah's maintained a 90 percent occupancy rate on the Las Vegas Strip. Competitors Las Vegas Sands Corp. and MGM Mirage last week reported similar weakness for their Las Vegas Strip properties as the recession continued to hamper business.

Harrah's said 2009 fourth-quarter and full-year revenue declined in Las Vegas from the 2008 periods due to weakness in the group travel business, lower spend per visitor and lower average daily room rates.

"The impact of the economy on consumers’ willingness to spend continued to affect our results throughout 2009," Chairman and Chief Executive Gary Loveman said in a statement. "The cost-reduction programs implemented at the end of 2008 helped mitigate the economy’s impact on our operating margins last year."

"The Planet Hollywood transaction added a new brand to our product offering in Las Vegas on attractive terms," he said. "We believe implementation of our operations-management and guest-service systems and Total Rewards customer-loyalty program will enable us to improve the resort’s performance. The financing activities that boosted our liquidity during 2009 have allowed us to complete this transaction and consider others that we believe offer significant long-term growth potential.''

Elsewhere around the country:

--Atlantic City net revenue was off 5.2 percent to $467.4 million

--Louisiana and Mississippi net revenue fell 13.5 percent to $285.4 million

--Iowa and Missouri were off 5.3 percent to $179.5 million

--Illinois and Indiana fell 7.8 percent to $271.2 million

--Nevada properties in Laughlin, Reno and Lake Tahoe saw revenue fall 11.3 percent to $102 million

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