Harrah's Entertainment ( HET) says it will take third-quarter charges of at least $10 million related to the recent hurricanes that battered the Gulf Coast. The Las Vegas-based gaming company plans to record a $10 million charge related to its New Orleans casino, which Harrah's shut down after Hurricane Katrina. But the company also expects to record an additional, as-yet unspecified charge related to its Lake Charles, La., resort, which sustained significant damage from Hurricane Rita. A spokesman said the company is still assessing the damage at Lake Charles, where the casino is located in a boat. Analysts, on average, estimate Harrah's earned $1.07 a share in the third quarter, according to Thomson First Call. Harrah's, which is the world's largest casino operator, has insurance covering property damage and business interruption at all of its resorts that were damaged by the hurricanes. Among them were the Grand Casino Biloxi and Grand Casino Gulfport, along the Mississippi coast, which got hammered by Hurricane Katrina. But Harrah's said it expects to receive property insurance payments at least equal to the value of those two resorts, so it doesn't expect to record an impairment charge on them. The company said it has a $15 million insurance deductible on the two properties and has already received more than $30 million in payments. Harrah's says business-interruption policies should reimburse the company while it is rebuilding the two Mississippi resorts and for six months afterward. At the New Orleans casino, Harrah's has a total deductible of $10 million. Business-interruption insurance should reimburse the company while it rebuilds and for 120 days afterward. The company doesn't yet know when it will reopen in New Orleans and says it is unable to estimate the additional costs of completing a luxury hotel next to the casino that was under construction when Hurricane Katrina ravaged the city.
Given that the Lake Charles resort was damaged more recently by Hurricane Rita, Harrah's has yet to estimate whether it will recover the full value of the property. The company has a combined deductible on both property damage and business interruption there of $10 million and believes it has already exceeded it. Harrah's shares were up 45 cents, or 0.7%, to $64.05 Thursday.