Harrah's Entertainment Reports Q1 Results

27 Apr 2006

LAS VEGAS -- (PRESS RELEASE) -- Strong operating performances led to record first-quarter results for Harrah's Entertainment, Inc. (NYSE:HET), the world's largest gaming company.

The company said first-quarter revenues rose 93.3 percent to a record $2.4 billion from the $1.2 billion reported in the 2005 first quarter. Property Earnings Before Interest, Taxes, Depreciation and Amortization (Property EBITDA) doubled to a record $690.1 million from Property EBITDA of $343.2 million in the year-earlier period. First-quarter Adjusted Earnings Per Share (EPS) from continuing operations rose to a record $1.02, up 22.9 percent from 83 cents in the 2005 first quarter.

Property EBITDA and Adjusted EPS are not Generally Accepted Accounting Principles (GAAP) measurements but are commonly used in the gaming industry as measures 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 from continuing operations. Reconciliations of Adjusted EPS to GAAP EPS and Property EBITDA to income from operations are attached to this release.

First-quarter income from operations almost doubled to a record $453.1 million from $227.2 million in the year-earlier quarter. First-quarter net income was a record $182.4 million, up 75.7 percent from $103.8 million in the 2005 first quarter. Diluted earnings per share for the 2006 first quarter were 98 cents, up 8.9 percent from the 90 cents achieved in the 2005 first quarter.

Harrah's said the gains were driven by contributions from Caesars Entertainment, Inc., properties acquired in June 2005 and increased visitation and spending by members of the company's customer-loyalty program, Total Rewards.

First-quarter same-store sales at properties that Harrah's has operated for more than 12 months rose 10.8 percent from the year-ago quarter, while cross-market play increased 17.5 percent; the comparisons exclude properties closed for all or part of the period due to hurricane damage sustained in the third quarter of 2005.

"The 2006 first-quarter produced the best operating results in Harrah's history due to continued successful execution of an organic-growth strategy that has enabled us to record same-store sales growth in all but one of the past 34 quarters," said Gary Loveman, chairman, president and chief executive officer of Harrah's Entertainment. "In addition, we achieved our projected $80 million first-year synergy target for the Caesars properties by the end of the first quarter -- three months ahead of schedule -- and expect the first full-year number to exceed $110 million. We project our second year of Caesars ownership will yield $180 million of synergies.

"The extraordinary first-quarter performance was accomplished despite the loss of properties in Hurricanes Katrina and Rita and during a period in which our Total Rewards customer-loyalty program was not yet fully integrated into all Caesars properties," Loveman said. "Now that it is operational at every domestic property, Total Rewards is expected to produce even more substantial gains in operating results, particularly in the second half of the year.

"But the tremendous operating momentum we have achieved is not the sole reason we are confident about our future," Loveman said. "We're even more excited about the extraordinary range of growth opportunities that lie before us, both domestically and abroad. In Atlantic City, we anticipate the new luxury retail shopping complex at Caesars will open in phases beginning this June, and we are forging ahead with a $550 million expansion at Harrah's. We plan to announce details about the master plan for our center Boardwalk properties in Atlantic City -- where we have more than 20 acres available for additional development -- this summer.

"Pending regulatory approval, we expect a smaller version of the Grand Casino in Biloxi, Mississippi, will also begin serving customers this summer while we plan development of a new and larger facility, which will be the Gulf Coast's best casino-entertainment offering," Loveman said. "Racing begins at Harrah's Chester near Philadelphia in September; pending regulatory approvals, we expect to open the casino there in early 2007. We also plan an expansion of the Horseshoe Hammond property in the Chicago area, and have submitted a proposal for a large gaming-entertainment complex in Pittsburgh.

"On the international front, we are moving ahead with plans for our previously announced ventures in Spain, Slovenia and the Bahamas and have submitted our final bid for the multi-billion dollar integrated resort in Singapore," Loveman said. "We are also pursuing additional opportunities in other areas throughout the world.

"Las Vegas offers perhaps the most exciting domestic development opportunity for Harrah's," Loveman said. "Not only do we have seven existing facilities here, but we also have more than 100 undeveloped acres around those properties, giving us a much broader footprint in the world's biggest gaming market.

"Over the past eight years, we have demonstrated our ability to drive customer visitation to multiple Harrah's properties across the wide range of markets we serve," Loveman said. "That ability will serve us well in the future as we execute the stages of our master development plan for Las Vegas, which we will unveil this summer, and bodes well for other high-return projects that will introduce the Harrah's brands to a global audience."

First-quarter highlights:

-Harrah's New Orleans Casino reopened on February 17, nearly six months after Hurricane Katrina made landfall near the city. Work continues on a 26-story, 450-room luxury hotel adjacent to the casino; the project is expected to open in September 2006.

-Harrah's announced plans -- pending regulatory approvals -- to reopen Grand Casino Biloxi this summer in the first phase of the company's plans to develop a destination resort on the Mississippi Gulf Coast. The facility will feature a 500-room hotel, a 35,000-square-foot casino, two restaurants and a 16,000-square-foot spa. Harrah's expects to announce plans for a larger resort at the site in mid-2006.

-After the end of the 2006 first quarter, Harrah's entered into a non-binding letter of intent to acquire -- subject to execution of definitive agreements and regulatory approvals -- the assets of Casino Magic Biloxi from Pinnacle Entertainment, Inc. The approximately 18-acre site is immediately adjacent to the Grand Casino site.

-Harrah's and joint-venture partner, Keppel Land, submitted a bid for Caesars Singapore, an integrated resort at Marina Bay in Singapore, whose government is expected to select a winning bid around mid-year.

-Gary Loveman was named "Best CEO" in the gaming and lodging industry by Institutional Investor magazine, based on the votes of more than 1,700 analysts and portfolio managers at nearly 500 money-management firms. Loveman has received the award every year since assuming the position of Harrah's CEO in 2003.

-Separately, Institutional Investor recognized Harrah's as "America's Most Shareholder-Friendly Company" in the gaming and lodging industry. Analyst and portfolio manager votes in the inaugural poll were based on the quality of companies' corporate governance and investor relations practices.

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	Harrah's Entertainment Reports Q1 Results 27 Apr 2006 <a href='https://ad.casinocity.com/adclick.php?n=a21efcd1'><img src='https://ad.casinocity.com/adview.php?what=-site:vendors/width:250/RON&n=a21efcd1' border='0' alt='' /></a> LAS VEGAS -- (PRESS RELEASE) -- Strong operating performances led to record first-quarter results for Harrah's Entertainment, Inc. (NYSE:HET), the world's largest gaming company. The company said first-quarter revenues rose 93.3 percent to a record $2.4 billion from the $1.2 billion reported in the 2005 first quarter. Property Earnings Before Interest, Taxes, Depreciation and Amortization (Property EBITDA) doubled to a record $690.1 million from Property EBITDA of $343.2 million in the year-earlier period. First-quarter Adjusted Earnings Per Share (EPS) from continuing operations rose to a record $1.02, up 22.9 percent from 83 cents in the 2005 first quarter. Property EBITDA and Adjusted EPS are not Generally Accepted Accounting Principles (GAAP) measurements but are commonly used in the gaming industry as measures 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 from continuing operations. Reconciliations of Adjusted EPS to GAAP EPS and Property EBITDA to income from operations are attached to this release. First-quarter income from operations almost doubled to a record $453.1 million from $227.2 million in the year-earlier quarter. First-quarter net income was a record $182.4 million, up 75.7 percent from $103.8 million in the 2005 first quarter. Diluted earnings per share for the 2006 first quarter were 98 cents, up 8.9 percent from the 90 cents achieved in the 2005 first quarter. Harrah's said the gains were driven by contributions from Caesars Entertainment, Inc., properties acquired in June 2005 and increased visitation and spending by members of the company's customer-loyalty program, Total Rewards. First-quarter same-store sales at properties that Harrah's has operated for more than 12 months rose 10.8 percent from the year-ago quarter, while cross-market play increased 17.5 percent; the comparisons exclude properties closed for all or part of the period due to hurricane damage sustained in the third quarter of 2005. "The 2006 first-quarter produced the best operating results in Harrah's history due to continued successful execution of an organic-growth strategy that has enabled us to record same-store sales growth in all but one of the past 34 quarters," said Gary Loveman, chairman, president and chief executive officer of Harrah's Entertainment. "In addition, we achieved our projected $80 million first-year synergy target for the Caesars properties by the end of the first quarter -- three months ahead of schedule -- and expect the first full-year number to exceed $110 million. We project our second year of Caesars ownership will yield $180 million of synergies. "The extraordinary first-quarter performance was accomplished despite the loss of properties in Hurricanes Katrina and Rita and during a period in which our Total Rewards customer-loyalty program was not yet fully integrated into all Caesars properties," Loveman said. "Now that it is operational at every domestic property, Total Rewards is expected to produce even more substantial gains in operating results, particularly in the second half of the year. "But the tremendous operating momentum we have achieved is not the sole reason we are confident about our future," Loveman said. "We're even more excited about the extraordinary range of growth opportunities that lie before us, both domestically and abroad. In Atlantic City, we anticipate the new luxury retail shopping complex at Caesars will open in phases beginning this June, and we are forging ahead with a $550 million expansion at Harrah's. We plan to announce details about the master plan for our center Boardwalk properties in Atlantic City -- where we have more than 20 acres available for additional development -- this summer. "Pending regulatory approval, we expect a smaller version of the Grand Casino in Biloxi, Mississippi, will also begin serving customers this summer while we plan development of a new and larger facility, which will be the Gulf Coast's best casino-entertainment offering," Loveman said. "Racing begins at Harrah's Chester near Philadelphia in September; pending regulatory approvals, we expect to open the casino there in early 2007. We also plan an expansion of the Horseshoe Hammond property in the Chicago area, and have submitted a proposal for a large gaming-entertainment complex in Pittsburgh. "On the international front, we are moving ahead with plans for our previously announced ventures in Spain, Slovenia and the Bahamas and have submitted our final bid for the multi-billion dollar integrated resort in Singapore," Loveman said. "We are also pursuing additional opportunities in other areas throughout the world. "Las Vegas offers perhaps the most exciting domestic development opportunity for Harrah's," Loveman said. "Not only do we have seven existing facilities here, but we also have more than 100 undeveloped acres around those properties, giving us a much broader footprint in the world's biggest gaming market. "Over the past eight years, we have demonstrated our ability to drive customer visitation to multiple Harrah's properties across the wide range of markets we serve," Loveman said. "That ability will serve us well in the future as we execute the stages of our master development plan for Las Vegas, which we will unveil this summer, and bodes well for other high-return projects that will introduce the Harrah's brands to a global audience." First-quarter highlights: -Harrah's New Orleans Casino reopened on February 17, nearly six months after Hurricane Katrina made landfall near the city. Work continues on a 26-story, 450-room luxury hotel adjacent to the casino; the project is expected to open in September 2006. -Harrah's announced plans -- pending regulatory approvals -- to reopen Grand Casino Biloxi this summer in the first phase of the company's plans to develop a destination resort on the Mississippi Gulf Coast. The facility will feature a 500-room hotel, a 35,000-square-foot casino, two restaurants and a 16,000-square-foot spa. Harrah's expects to announce plans for a larger resort at the site in mid-2006. -After the end of the 2006 first quarter, Harrah's entered into a non-binding letter of intent to acquire -- subject to execution of definitive agreements and regulatory approvals -- the assets of Casino Magic Biloxi from Pinnacle Entertainment, Inc. The approximately 18-acre site is immediately adjacent to the Grand Casino site. -Harrah's and joint-venture partner, Keppel Land, submitted a bid for Caesars Singapore, an integrated resort at Marina Bay in Singapore, whose government is expected to select a winning bid around mid-year. -Gary Loveman was named "Best CEO" in the gaming and lodging industry by Institutional Investor magazine, based on the votes of more than 1,700 analysts and portfolio managers at nearly 500 money-management firms. Loveman has received the award every year since assuming the position of Harrah's CEO in 2003. -Separately, Institutional Investor recognized Harrah's as "America's Most Shareholder-Friendly Company" in the gaming and lodging industry. Analyst and portfolio manager votes in the inaugural poll were based on the quality of companies' corporate governance and investor relations practices.