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Howard Stutz

Caesars suffers $220.6 million quarterly loss, sees positive signs from Las Vegas

1 November 2012

LAS VEGAS -- Caesars Entertainment Inc. suffered a net loss of $220.6 million in the third quarter, blaming noncash charges of $419 million for the decline compared with a year ago.

During a conference call with investors and analysts Wednesday, Caesars Chairman Gary Loveman said the company's four casinos in Atlantic City that were closed by Hurricane Sandy could reopen by the weekend.

Company spokesman Gary Thompson told Reuters there was moderate to heavy damage to roofs and upper floors at some of the casinos.

Thompson said work crews could repair facilities in time to open when New Jersey lifts its emergency declaration.

Atlantic City is a concern among gaming analysts.

The market has suffered considerably since 2008, and any additional business disruption could continue to depress the market.

KDP Investment Advisors gaming analyst Barbara Cappaert said she would be adjusting fourth-quarter and 2013 estimates as the impact of Hurricane Sandy on Atlantic City emerges.

"Our concern in the near-term is that the economic devastation will have a drag on Atlantic City results by at least 10 percent," Cappaert said. "This will certainly not help gain Caesars the momentum it needs to improve its credit metrics."

During the quarter, Caesars' Atlantic City casinos saw revenues decline $20.2 million or 4.1 percent during the quarter due to lower casino spending from declining visits by customers.

The company, which operates 10 casinos on or near the Strip, said Wednesday that net revenues for the quarter that ended Sept. 30 increased less than 1 percent to $2.198 billion. The company credited revenues from its interactive operations, which include social gaming operator Playtika Ltd.

"Generally speaking Caesars' results were in line with our expectations," Cappaert said.

Caesars also said higher revenues from its management contract for the Horseshoe Cleveland helped offset by lower casino revenues in all the company's markets, except for Las Vegas and the Illinois-Indiana region.

"Thanks primarily to growth in our interactive operations and a continued emphasis on expense reductions, we achieved about the same net revenues despite more competitive markets and the challenges posed by the continuing weakness of the U.S. economy," Caesars Entertainment Chairman Gary Loveman said in a statement.

The company said "sluggish economic conditions" caused customer visitation and spending to decline in several regions. However, Las Vegas saw a nearly 8 percent increase in customer spending per trip.

Caesars expects to close the $610 million sale of its Harrah's St. Louis casino to Penn National Gaming early this month.

The proceeds will be used to reinvest into the company's core properties, including the remodeling of the Imperial Palace, which will be renamed The Quad, which is adjacent to the $550 million Linq development on the Strip.

Linq is scheduled to open in phases in the second half of 2013.

Caesars continues to expand into new markets.

The company will open the $450 million Horseshoe Cincinnati next spring and is planning to open a casino in Baltimore.

Both projects are being developed in conjunction with Rock Gaming of Detroit.

"We moved forward with the expansion of our distribution network into growth markets while we continued to invest in our hub markets of Las Vegas and Atlantic City," Loveman said.

Shares of Caesars Entertainment on Wednesday closed down 6 cents, or 1.03 percent, at $5.79 on the Nasdaq Global Select.
Caesars suffers $220.6 million quarterly loss, sees positive signs from Las Vegas is republished from