Gambling giant Harrah's reports billion-dollar loss

Oct 27, 2009 11:28 PM
Staff & Wire Reports |

The world's largest casino company said Tuesday that it lost $1.6 billion during the third quarter as fewer people gambled, fewer groups visited and the value of its assets fell.

The loss at privately held Harrah's Entertainment Inc.(HET)  for July through September reflected a $1.33 billion drop in the value of its assets.

The company—which operates more than 50 casinos around the world under the Harrah's, Caesar's and other brands—lost $129.7 million during the same quarter a year earlier.

CEO Gary Loveman said in a statement that falling consumer spending was to blame.

The Las Vegas-based company's revenue fell abroad and in every U.S. market where it operates. Overall, it dropped 13.7 percent to $2.28 billion from $2.65 billion a year earlier. Harrah's lost nearly $779 million in its home market, its largest, where there were fewer visitors and each spent less than a year earlier.

Its occupancy rate was 90 percent, but the struggle to fill the rooms—especially on weekdays with conventioneers and other business travelers—led to rate cuts.

Loveman said the company was still working to cut its expenses and debt.

Harrah's did not release a new figure for its long-term debt but reported during the third quarter that it owed $19.3 billion as of June 30. The company told the Securities and Exchange Commission in August that it would owe $661.2 million by the end of 2011.

Harrah's took out a new $1 billion term loan during the third quarter to pay down its existing debt, and it exchanged $45 million in notes due next year and in 2011 for new notes due later.

Harrah's also said it cut its operating expenses for the third quarter by $285.7 million, or 14 percent, compared with the previous year.

Harrah's $1.6 billion quarterly loss included a $1.05 billion loss from operations plus the cost of interest expenses and taxes. Harrah's said its operations income would have been $278.4 million if it hadn't written down the value of its assets.

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