Wednesday, Oct. 21, 1998 | 11:16 a.m.
Harrah's Entertainment Inc. today reported 1998 third-quarter net income of $44.2 million, or 44 cents per diluted share, compared with $52.9 million, or 52 cents per share, in the 1997 period.
The 1997 third-quarter results included a $37.4 million gain from the sale of assets, Harrah's said.
Revenue in the latest quarter jumped 33.8 percent to a record $586.2 million, while cash flow before extraordinary expenses soared to $152.2 million, up 34.3 percent from the year-ago period.
Nine-month results also showed strong improvements, with revenue up 21.1 percent, operating profit up 23.2 percent and cash flow 25.1 percent higher than the first three quarters of 1997.
Harrah's Chairman Phil Satre said the 1998 results benefited from the integration of former Showboat properties into the company and from the company's Total Gold player reward program, which has boosted cross-market play at the company's geographically diverse casinos.
Total Gold players from other locales played a major role in improvements at the company's Las Vegas Strip property, helping boost revenue 30.5 percent and cash flow 40.7 percent, Satre said.
"Increases in cross-market visitation to Harrah's Las Vegas show that we can capture demand in a market preoccupied with supply," he said. "Las Vegas continues to be the biggest recipient of our year-old Total Gold program."
Overall, Harrah's Las Vegas and Lake Tahoe resorts each reported record third-quarter revenue, while its Laughlin and Reno properties were about even, he said. Cash flow rose 26.4 percent in the company's Southern Nevada properties and 19.5 percent in Northern Nevada.
The improvements came despite "costly and unsuccessful marketing efforts" at Harrah's Las Vegas that resulted in disappointing margins in July and August, Satre said. Margins improved after the marketing programs were cancelled.
In Atlantic City, Harrah's marina district property and the Showboat, acquired in June, posted record third-quarter revenue and sharply higher cash flow and operating profits.
Record revenue also was reported for Harrah's riverboat division, though a gaming tax increase in Illinois, service disruptions in Mississippi and costs of combating a punitive Missouri ballot initiative caused a 9.5 percent drop in cash flow.
Also impacting the company's 1998 third-quarter results were higher marketing costs, higher interest expense and corporate costs related to the Showboat acquisition, and $12.3 million of project write-downs associated with the New Orleans casino project.
Last week, a bankruptcy court judge confirmed a reorganization plan for the New Orleans casino, in which Harrah's holds a minority interest. The company said work on completing that casino is expected to resume in 1998's fourth quarter and opening is scheduled before 2000.
Harrah's shares today were quoted at $15.4375, down 68.75 cents, in late-morning trading on the New York Stock Exchange.
archive
