Caesars Entertainment reports $1.756 billion in quarterly loss on Atlantic City weakness
Caesars Entertainment Corp. said Tuesday it lost $1.756 billion in the fourth quarter because of a deteriorating market in Atlantic City, which resulted in nearly $2 billion of noncash impairment charges to the casino company’s balance sheet.
Las Vegas-based Caesars said in a statement the company’s net revenue for the period ended Dec. 31 rose 3.2 percent to $2.078 billion,.
A year ago, Caesars’ said its net loss was $435.8 million.
Caesars Chief Financial Officer Donald Colvin said one write-off taken in the quarter was $102 million for the company’s failed attempt to win a Boston-area casino license.
The net loss didn’t surprise investors. Caesars revealed a potential range for the loss earlier this month when the company announced plans to sell Bally’s Las Vegas, The Quad, The Cromwell and Harrah’s New Orleans to its 58-percent owned subsidiary, Caesars Growth Partners.
In 2013, the company spun off Caesars Growth Partners as a separate publicly traded company to focus on expansion and to help reduce Caesars’ gaming industry-high debt, which is $20.9 billion, down from $23 billion in previous quarter.
Caesars Chairman Gary Loveman said during a conference call with analysts to discuss the fourth-quarter results that the sale “is an important step in our efforts to improve the health” of Caesars Entertainment.
Caesars Growth Partners owns the Octavius Tower at Caesars Palace, Planet Hollywood Resort, the company’s interactive division and the under-construction Horseshoe Casino Baltimore, which opens this summer.
Efforts to improve the company’s capital structure “remain a key priority,” Loveman told investors. He said the sale of the four casinos to the subsidiary was just one step.
“The process to address Caesars’ condition is well underway, but will take quite some time to achieve,” Loveman said.
Caesars said it created an joint-venture company between the subsidiaries to manage and operate the casinos. Customers and employees will not see any changes to operations, Loveman said.
Caesars Growth Partners will spend $223 million to upgrade hotel rooms at The Quad, which are at the bottom end of the Strip’s average daily room rates.
The company said it would spend $950 million to $1.15 billion to improve its properties in 2014.
Caesars Growth Partners is responsible for more than half of the expenses, including finishing renovation of The Cromwell in May and opening the Baltimore casino.
Financial results from Caesars Growth Partners are consolidated within Caesars Entertainment and were not broken out.
In Las Vegas, Caesars said its net revenue during the quarter increased 7.6 percent to $799.4 million and increased 1.3 percent to $3.07 billion for all 2013. Gains in room revenue and food and beverage revenue at the company’s nine Strip resorts fueled the uptick.
For all of 2013, Caesars said its net revenue fell less than 1 percent to $8.559 billion.
“While the operating environment remained challenging in the fourth quarter, we are encouraged by volume and visitation trends in our core market of Las Vegas,” Loveman said. “We are optimistic about the prospects for Las Vegas.”
Loveman said the centerpiece attraction of the company’s $550 million Linq, the High Roller observation wheel, is expected to open in a few weeks.
Revenue for Caesars Interactive Entertainment, the company division overseeing the World Series of Poker, online gaming and social gaming, increased 52 percent in 2013 to $316.6 million. The company didn’t break out results for its Internet poker business in Nevada.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
