Harrah's Entertainment Reports Strong Q3

3 Nov 2005

LAS VEGAS -- (PRESS RELEASE) -- Harrah's Entertainment, Inc. (NYSE:HET) today reported record third-quarter revenues of $2.3 billion, up 78.2 percent from revenues of $1.3 billion in the 2004 third quarter.

Property Earnings Before Interest, Taxes, Depreciation and Amortization (Property EBITDA) rose 77.1 percent in the third quarter to a record $662.8 million from Property EBITDA of $374.2 million in the year-earlier period. Third-quarter Adjusted Earnings Per Share (EPS) was $1.05, down 3.7 percent from the $1.09 achieved in 2004's third quarter. Adjusted EPS from continuing operations were $1.01 in the period compared to $1.02 in the same period last year.

Results for this reporting period include a full third-quarter contribution from Caesars Entertainment, Inc., acquired by Harrah's Entertainment on June 13, 2005.

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. Reconciliations of Adjusted EPS to GAAP EPS and Property EBITDA to income from operations are attached to this release.

Third-quarter income from operations rose 60.9 percent to a record $414.9 million from $257.8 million in the year-earlier quarter. Third-quarter net income was a record $169.0 million, up 42.3 percent from $118.8 million in the 2004 third quarter. Diluted earnings per share for the 2005 third quarter was 91 cents, down 14.2 percent from the $1.06 achieved in the 2004 third quarter.

In two important gauges of customer loyalty -- same-store sales growth and cross-market play -- Harrah's also posted gains. In the quarter, the company recorded 3.8 percent growth in same-store sales, and 13.5 percent growth in cross-market play on a year-over-year basis, including the hurricane-affected properties. Excluding the hurricane-affected properties, same-store sales growth was a robust 7.3 percent.

In the third quarter, Harrah's experienced solid growth in year-over-year gaming revenue in nearly every operating market, and reached records in several markets.

For the first nine months of 2005, revenues rose 50.6 percent to $5.1 billion from $3.4 billion in the year-ago period. Property EBITDA increased to $1.4 billion, up 52.7 percent from $928.1 million in the first nine months of 2004. Adjusted EPS was $2.99, 13.3 percent higher than the $2.64 achieved in the first nine months of 2004. Adjusted EPS from continuing operations was $2.85, 16.3 percent higher than the $2.45 achieved in the first nine months of 2004.

Nine-month income from operations was $874.6 million, up 39.7 percent from $626.1 million in the first nine months of 2004. Net income rose 30.2 percent to $378.6 million from $290.8 million in the first nine months of 2004. Nine-month diluted earnings per share was $2.71, up 5.0 percent from $2.58 in the first nine months of 2004. Year-to-date performance includes results of the Caesars business since the acquisition date of June 13, 2005. Year-to-date 2004 includes results of the Horseshoe properties subsequent to their July 1, 2004, acquisition.

Third-quarter highlights for Harrah's Entertainment include:

- Harrah's signed an agreement with Imperial Palace, LLC, to acquire the Imperial Palace Hotel & Casino in Las Vegas. The Imperial Palace occupies an 18.5-acre site on the Las Vegas Strip, situated between Harrah's Las Vegas and the Flamingo, across the Strip from Caesars Palace. This agreement only pertains to the Imperial Palace operations in Las Vegas.

- Harrah's Entertainment launched the second season of its popular World Series of Poker® Circuit with an expanded schedule that brings high-stakes poker action and excitement to players in Harrah's casinos around the country. The 2005-06 Circuit began August 11 at Grand Casino Tunica and includes events at other Harrah's casinos in venues such as Las Vegas, Atlantic City, and Lake Tahoe.

- Harrah's Operating Company, Inc., a wholly owned subsidiary of Harrah's Entertainment, Inc., completed the private placement of $750 million of its 5.75% Senior Notes due 2017 and the private placement of $250 million of its 5.625% Senior Notes due 2015.

- For the sixth consecutive year, Harrah's Entertainment led the gaming industry in Casino Player's Best of Gaming Awards, the magazine's annual poll of gaming customers from across the country. Harrah's properties received first-place awards in a record 375 categories, up 47 percent from last year's performance. The company's 869 total awards were a 45 percent improvement over last year; the previous record was 598, set by Harrah's in 2003. The company's performance was boosted by the addition of Caesars' casinos, which received a total of 141 awards, including 62 first-place finishes.

- For the fifth consecutive year, Harrah's Entertainment was named to the Dow Jones Sustainability World Index, a listing of the world's leading socially responsible companies. Harrah's remains the only U.S. gaming or lodging company on the index, a distinction it has held since 2001. The index is a compilation of more than 300 companies from 24 countries, including 66 from the United States, selected for their economic, environmental and social performance. Just three U.S. companies -- Harrah's, McDonald's Corp. and Starbucks Corp. -- were included in the index's Travel & Leisure sector.

- Harrah's continued marked progress toward full integration of the Caesars properties during this period. The rollout of Total Rewards and Harrah's revenue- and yield-management systems to all Caesars properties is slated to begin in the fourth quarter and run through April 2006.

"In the third quarter of this year, Harrah's continued to make strong and solid progress toward our strategic goals," said Gary Loveman, Harrah's chairman, chief executive officer and president. "Our same-store sales growth and cross-market play numbers clearly indicate our customer base is loyal, that our operations are resilient, and that we are realizing our planned acquisition synergies."

"The value of our industry's most diversified property portfolio and the effectiveness of Harrah's Total Rewards loyalty program were never more in evidence than during the third quarter of 2005," Loveman said. "Customers continued visiting our casino properties nationwide throughout the quarter."

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	Harrah's Entertainment Reports Strong Q3 3 Nov 2005 LAS VEGAS -- (PRESS RELEASE) -- Harrah's Entertainment, Inc. (NYSE:HET) today reported record third-quarter revenues of $2.3 billion, up 78.2 percent from revenues of $1.3 billion in the 2004 third quarter. Property Earnings Before Interest, Taxes, Depreciation and Amortization (Property EBITDA) rose 77.1 percent in the third quarter to a record $662.8 million from Property EBITDA of $374.2 million in the year-earlier period. Third-quarter Adjusted Earnings Per Share (EPS) was $1.05, down 3.7 percent from the $1.09 achieved in 2004's third quarter. Adjusted EPS from continuing operations were $1.01 in the period compared to $1.02 in the same period last year. Results for this reporting period include a full third-quarter contribution from Caesars Entertainment, Inc., acquired by Harrah's Entertainment on June 13, 2005. 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. Reconciliations of Adjusted EPS to GAAP EPS and Property EBITDA to income from operations are attached to this release. Third-quarter income from operations rose 60.9 percent to a record $414.9 million from $257.8 million in the year-earlier quarter. Third-quarter net income was a record $169.0 million, up 42.3 percent from $118.8 million in the 2004 third quarter. Diluted earnings per share for the 2005 third quarter was 91 cents, down 14.2 percent from the $1.06 achieved in the 2004 third quarter. In two important gauges of customer loyalty -- same-store sales growth and cross-market play -- Harrah's also posted gains. In the quarter, the company recorded 3.8 percent growth in same-store sales, and 13.5 percent growth in cross-market play on a year-over-year basis, including the hurricane-affected properties. Excluding the hurricane-affected properties, same-store sales growth was a robust 7.3 percent. In the third quarter, Harrah's experienced solid growth in year-over-year gaming revenue in nearly every operating market, and reached records in several markets. For the first nine months of 2005, revenues rose 50.6 percent to $5.1 billion from $3.4 billion in the year-ago period. Property EBITDA increased to $1.4 billion, up 52.7 percent from $928.1 million in the first nine months of 2004. Adjusted EPS was $2.99, 13.3 percent higher than the $2.64 achieved in the first nine months of 2004. Adjusted EPS from continuing operations was $2.85, 16.3 percent higher than the $2.45 achieved in the first nine months of 2004. Nine-month income from operations was $874.6 million, up 39.7 percent from $626.1 million in the first nine months of 2004. Net income rose 30.2 percent to $378.6 million from $290.8 million in the first nine months of 2004. Nine-month diluted earnings per share was $2.71, up 5.0 percent from $2.58 in the first nine months of 2004. Year-to-date performance includes results of the Caesars business since the acquisition date of June 13, 2005. Year-to-date 2004 includes results of the Horseshoe properties subsequent to their July 1, 2004, acquisition. Third-quarter highlights for Harrah's Entertainment include: - Harrah's signed an agreement with Imperial Palace, LLC, to acquire the Imperial Palace Hotel & Casino in Las Vegas. The Imperial Palace occupies an 18.5-acre site on the Las Vegas Strip, situated between Harrah's Las Vegas and the Flamingo, across the Strip from Caesars Palace. This agreement only pertains to the Imperial Palace operations in Las Vegas. - Harrah's Entertainment launched the second season of its popular World Series of Poker® Circuit with an expanded schedule that brings high-stakes poker action and excitement to players in Harrah's casinos around the country. The 2005-06 Circuit began August 11 at Grand Casino Tunica and includes events at other Harrah's casinos in venues such as Las Vegas, Atlantic City, and Lake Tahoe. - Harrah's Operating Company, Inc., a wholly owned subsidiary of Harrah's Entertainment, Inc., completed the private placement of $750 million of its 5.75% Senior Notes due 2017 and the private placement of $250 million of its 5.625% Senior Notes due 2015. - For the sixth consecutive year, Harrah's Entertainment led the gaming industry in Casino Player's Best of Gaming Awards, the magazine's annual poll of gaming customers from across the country. Harrah's properties received first-place awards in a record 375 categories, up 47 percent from last year's performance. The company's 869 total awards were a 45 percent improvement over last year; the previous record was 598, set by Harrah's in 2003. The company's performance was boosted by the addition of Caesars' casinos, which received a total of 141 awards, including 62 first-place finishes. - For the fifth consecutive year, Harrah's Entertainment was named to the Dow Jones Sustainability World Index, a listing of the world's leading socially responsible companies. Harrah's remains the only U.S. gaming or lodging company on the index, a distinction it has held since 2001. The index is a compilation of more than 300 companies from 24 countries, including 66 from the United States, selected for their economic, environmental and social performance. Just three U.S. companies -- Harrah's, McDonald's Corp. and Starbucks Corp. -- were included in the index's Travel & Leisure sector. - Harrah's continued marked progress toward full integration of the Caesars properties during this period. The rollout of Total Rewards and Harrah's revenue- and yield-management systems to all Caesars properties is slated to begin in the fourth quarter and run through April 2006. "In the third quarter of this year, Harrah's continued to make strong and solid progress toward our strategic goals," said Gary Loveman, Harrah's chairman, chief executive officer and president. "Our same-store sales growth and cross-market play numbers clearly indicate our customer base is loyal, that our operations are resilient, and that we are realizing our planned acquisition synergies." "The value of our industry's most diversified property portfolio and the effectiveness of Harrah's Total Rewards loyalty program were never more in evidence than during the third quarter of 2005," Loveman said. "Customers continued visiting our casino properties nationwide throughout the quarter."