Harrah's Reports Anticipated Results - Tuesday 12th of April 2005
Harrah's Entertainment, Inc. (NYSE:HET) said today it expects to report Adjusted Earnings Per Share of 95 to 99 cents for the first quarter of 2005.
The estimate compares with Adjusted EPS of 76 cents reported for the first quarter of 2004 and analysts' consensus estimate of 83 cents for the first quarter of 2005.
Adjusted EPS is not a Generally Accepted Accounting Principles (GAAP) measurement but is commonly used in the gaming industry as a measure of performance and as a basis for valuation of gaming companies. In addition, analysts' per-share earnings estimates for gaming companies are comparable to Adjusted EPS.
After consideration of costs related to the pending acquisition of Caesars Entertainment, Inc., a charge resulting from the early extinguishment of debt, write-downs and reserves and project opening costs, diluted earnings per share for the first quarter are expected to be 89 to 93 cents. In the first quarter of 2004, the company reported diluted earnings per share of 73 cents.
"We expect to report strong operating results," said Gary Loveman, chairman, chief executive officer and president of Harrah's Entertainment. "Our geographic distribution, marketing expertise, nationwide customer-loyalty program and prudent capital investments produced solid performances across the country.
"The Horseshoe Gaming portfolio, acquired on July 1, 2004, continued to make a significant contribution to our earnings in the first quarter," Loveman said. "We estimate that the three Horseshoe properties added 7 to 8 cents to earnings per share in the first quarter. The early success of the Horseshoe acquisition bodes well for our pending acquisition of Caesars.
"Acquisitions were not the only growth driver during the quarter, as our organic growth continued unabated," Loveman said. "We expect to report same-store sales growth of approximately 6 percent in the first quarter. This is further evidence of the effectiveness of our cross-marketing strategy and customer-loyalty initiatives, such as Total Rewards 2 and Fast Cash."
Harrah's Chief Operating Officer Tim Wilmott commented on operating performances by region.
"Strong results at our three Southern Nevada properties propelled the West Region to what we expect will be yet another record quarter," Wilmott said. "These results more than offset weather-related declines in business at our Northern Nevada properties.
"East Region results are expected to be similar to last year's levels, as more efficient marketing spending offset business volume declines caused by inclement weather and an aggressive promotional environment," Wilmott said.
"Our significant investments in the North Central Region paid off with an expected record quarter," Wilmott said. "The addition of Horseshoe Hammond, a lower gaming tax rate in Iowa and gains driven by the recent expansion of Harrah's St. Louis all contributed to growth in this region.
"The Horseshoe acquisition also played a key role in what is expected to be a record quarter for the South Central Region," Wilmott said. "The region's performance was driven by the additions of Horseshoe Bossier City and Horseshoe Tunica, as well as yet another expected strong quarter from Harrah's New Orleans."
Management fee revenues are expected to be higher in the first quarter of 2005 due to expansion-driven increases in business at managed properties.
First-quarter corporate expenses are expected to rise compared to the year-ago quarter. Amortization of intangible assets is expected to increase as a result of the Horseshoe acquisition. Interest expense is also expected to increase due to higher debt levels associated with the Horseshoe acquisition.
The company expects to report first-quarter 2005 results on April 20, 2005.
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