Harrah's Entertainment Reports Results for 2009 Fourth Quarter, Full-Year
Revenues Decline 7.9 Percent From 2008 Fourth Quarter - Fourth-Quarter Property EBITDA Declines 7.3 Percent
Harrah's Entertainment, Inc. today reported the following financial results for the 2009 fourth quarter and full year:
The company's 2009 fourth-quarter revenues fell 7.9 percent to $2,099.1 million from $2,278.4 million in the 2008 fourth quarter, primarily due to the impact of the recession on customers' discretionary spending and reduced aggregate demand, which impacted average daily room rates. Income from operations was $150.7 million, compared with a loss from operations of $5,348.0 million in the 2008 fourth quarter. Included in the fourth-quarter 2009 income from operations was a charge of $12.3 million for impairment of non-amortizing intangible assets. Included in the fourth-quarter 2008 loss from operations were $5,489.6 million of charges for impairments of goodwill and other non-amortizing intangible assets. The income from continuing operations, net of tax, for the 2009 fourth quarter was $298.3 million, compared with a loss of $4,778.2 million in the year-ago quarter.
Revenues for the full year of 2009 declined 12.0 percent to $8,907.4 million from $10,127.0 million in the full year of 2008. The loss from operations was $607.8 million in the 2009 full year, compared with a loss from operations of $4,274.3 million in 2008. Income from continuing operations, net of tax, for the full year of 2009 was $846.4 million, compared with loss from continuing operations, net of tax, of $5,274.1 million in 2008. Income from continuing operations, net of tax, for the full year 2009, includes i) impairment charges for goodwill and non-amortizing intangible assets totaling $1,638.0 million ($1,559.6 million net of taxes); and ii) gains related to the early extinguishment of debt of $4,965.5 million ($3,006.5 million net of taxes). Loss from continuing operations, net of tax, for the full year 2008, included impairment charges for goodwill and non-amortizing intangible assets totaling $5,489.6 million ($5,025.6 million net of taxes).
During the 2009 fourth quarter, Harrah's wholly owned subsidiary Harrah's Operating Company, Inc. (HOC) borrowed $1 billion in incremental term loans under its senior secured credit facilities and used a majority of the net proceeds to repay a portion of indebtedness under the Company's secured credit facilities. Also during the 2009 fourth quarter, Harrah's Entertainment purchased $948 million face value of outstanding debt related to our real estate loans for approximately $237 million, recognizing a pre-tax gain on this transaction of $688.1 million, net of transaction costs.
On January 16, 2010, Harrah's assumed management of the 2,500-room hotel at the Planet Hollywood Resort & Casino on the Las Vegas Strip. On February 18, 2010, the Nevada Gaming Commission granted final approval for Harrah's to assume ownership and management of the resort's casino and related facilities; the transaction closed February 19. Harrah's pursued the Planet Hollywood deal because of the property's proximity to Harrah's other Strip resorts, its recent upgrades and its strong brand name.
"The Planet Hollywood transaction added a new brand to our product offering in Las Vegas on attractive terms," said Gary Loveman, Harrah's chairman, president and chief executive officer. "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.
"The impact of the economy on consumers' willingness to spend continued to affect our results throughout 2009," Loveman said. "The cost-reduction programs implemented at the end of 2008 helped mitigate the economy's impact on our operating margins last year."
A substantial portion of the debt of Harrah's Entertainment's consolidated group is issued by HOC. Therefore, the company believes it is meaningful to also provide information pertaining to the results of operations of HOC. The information for HOC assumes that a post-January 2008 swap of certain properties between HOC and Harrah's Entertainment that was consummated during the 2008 second quarter actually occurred on January 1, 2008.
