Harrah's reports Q4 results

27 Feb 2007

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Harrah's Entertainment, Inc. (NYSE:HET) today reported the following financial results for the 2006 fourth quarter:

COMPANY WIDE RESULTS
(in millions, except per share amounts)


                                        2006      2005     Percent
                                       Fourth    Fourth    Increase
                                       Quarter   Quarter  (Decrease)
                                      --------- --------- ----------

Revenues                              $2,430.6  $2,095.1       16.0%
Property EBITDA                          562.8     533.1        5.6%
Adjusted EPS from Continuing
 Operations                           $   0.45  $   0.77      -41.6%


                                          2006      2005     Percent
                                          Full      Full     Increase
                                          Year      Year    (Decrease)
                                       ---------- --------- ----------

Revenues                                $9,673.9  $7,010.0       38.0%
Property EBITDA                          2,610.3   1,927.2       35.4%
Adjusted EPS from Continuing
 Operations                             $   3.34  $   3.55       -5.9%

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

On a GAAP basis, fourth-quarter income from operations was $229.7 million, an increase of 47.4 percent from the year-ago quarter. Income from continuing operations was $39.4 million, compared with a loss of $24.5 million posted in the 2005 fourth quarter. Diluted EPS from continuing operations were 21 cents, compared with a loss per share of 13 cents in the year-ago quarter. The 2006 and 2005 fourth-quarter results were impacted by $20.7 million and $138.6 million, respectively, in charges to recognize the impairment of certain intangible assets.

Fourth-quarter same-store sales at properties that Harrah's has operated for more than 12 months rose 6.8 percent from the year-ago quarter. The comparison excludes properties closed in the prior year period due to hurricane damage sustained in the third quarter of 2005.

For full-year 2006, revenues rose 38.0 percent to $9.7 billion from $7.0 billion in 2005. Property EBITDA increased to $2.6 billion, up 35.4 percent from $1.9 billion in 2005. Adjusted EPS from Continuing Operations were $3.34, compared with $3.55 in 2005.

Full-year income from operations was $1.6 billion, up 51.3 percent from $1.0 billion in 2005. Income from continuing operations in 2006 was $523.9 million, compared with $316.3 million in 2005, while 2006 diluted earnings per share from continuing operations were $2.79, compared with $2.10 a year earlier. Results for 2005 include the contribution of the Caesars business subsequent to the acquisition date of June 13, 2005.

Fourth-Quarter Highlights

Harrah's entered into a definitive agreement with affiliates of Texas Pacific Group (TPG) and Apollo Management, L.P. (Apollo) to acquire the company in an all-cash transaction. Under terms of the agreement, Harrah's stockholders will receive $90 in cash for each outstanding Harrah's share. On February 8, 2007, Harrah's filed a preliminary proxy statement with the Securities and Exchange Commission that provides details regarding the pending sale of the company.
In December 2006, Harrah's completed the acquisition of London Clubs, which operates seven casinos in the United Kingdom, two in Egypt and one in South Africa, and has four others under development in the UK.
On October 2, Harrah's announced a definitive agreement to acquire the Barbary Coast, giving the company control of three of the four corners of Las Vegas Boulevard and Flamingo Road. Coupled with previously completed land-purchase agreements, the Barbary Coast transaction will give Harrah's control of about 350 acres at or near the center of the Las Vegas Strip.

"During the 2006 fourth quarter, continued robust visitation in the Las Vegas Region, due in large part to completion of the integration of our Total Rewards customer-loyalty program into the Caesars legacy properties, drove revenues to a record level," said Gary Loveman, Harrah's Entertainment chairman, president and chief executive officer. "Development costs and narrower margins in Atlantic City than in the 2005 fourth quarter impacted overall Property EBITDA and, combined with higher interest expenses, affected per-share results."

Regional Results

Summaries of results by region follow below. Results for 2005 include the operations of the Caesars Entertainment, Inc. properties, subsequent to their acquisition on June 13, 2005.

LAS VEGAS REGION
(in millions)

              2006    2005    Percent     2006      2005     Percent
             Fourth  Fourth   Increase    Full      Full     Increase
             Quarter Quarter (Decrease)   Year      Year    (Decrease)

Total
 Revenues    $825.8  $715.0       15.5% $3,267.2  $1,950.0       67.5%
Income from
 operations   192.3   145.6       32.1%    828.2     441.1       87.8%
Property
 EBITDA       246.5   205.7       19.8%  1,042.9     586.9       77.7%

Las Vegas Region properties include Harrah's Las Vegas, Rio, Bally's
 Las Vegas, Paris, Flamingo Las Vegas, Caesars Palace and Imperial
 Palace.

Increased visitation and continued growth in cross-market and cross-property play contributed to a 15.5 percent gain in fourth-quarter revenues and a 19.8 percent increase in Property EBITDA in the Las Vegas Region. The 2006 results include the Imperial Palace, which was acquired near the end of 2005.

ATLANTIC CITY REGION
(in millions)

              2006    2005    Percent     2006      2005     Percent
             Fourth  Fourth   Increase    Full      Full     Increase
             Quarter Quarter (Decrease)   Year      Year    (Decrease)

Total
 Revenues    $500.0  $481.4        3.9% $2,071.4  $1,485.7       39.4%
Income from
 operations    64.3    96.6      -33.4%    420.5     353.6       18.9%
Property
 EBITDA       123.9   138.5      -10.5%    620.9     493.2       25.9%

Atlantic City Region properties include Harrah's Atlantic City,
 Showboat Atlantic City, Caesars Atlantic City, Bally's Atlantic City
 and Harrah's Chester.

Atlantic City Region revenues rose 3.9 percent due to the strong performance at Harrah's Atlantic City. Property EBITDA declined 10.5 percent due to the expansion of a competing casino and promotional activities in the market. Harrah's Chester operated at a loss in the fourth quarter as the property prepared for the January 22, 2007, opening of a 2,750-slot casino.

LOUISIANA/MISSISSIPPI REGION
(in millions)

             2006    2005     Percent     2006      2005     Percent
            Fourth   Fourth   Increase    Full      Full     Increase
            Quarter Quarter  (Decrease)   Year      Year    (Decrease)

Total
 Revenues   $365.0  $ 236.4       54.4% $1,384.3  $1,067.3       29.7%
Income
 from
 operations   31.7   (107.4)     129.5%    233.4      21.1        N/M
Property
 EBITDA       65.7     59.6       10.2%    330.8     252.2       31.2%

Louisiana/Mississippi Region properties include Harrah's New Orleans,
 Horseshoe Bossier City, Louisiana Downs, Horseshoe Tunica, Grand
 Casino Tunica, Sheraton Tunica and Grand Casino Biloxi.

Revenues for the Louisiana/Mississippi Region increased 54.4 percent and Property EBITDA was up 10.2 percent from the 2005 fourth quarter, when Harrah's New Orleans and Grand Casino Biloxi were closed due to hurricane damage. Lower volume and increased promotional activity in the Tunica market affected Property EBITDA in the 2006 fourth quarter.

IOWA/MISSOURI REGION
(in millions)

                  2006    2005    Percent    2006    2005    Percent
                 Fourth  Fourth   Increase   Full    Full    Increase
                 Quarter Quarter (Decrease)  Year    Year   (Decrease)

Total Revenues   $202.7  $186.1        8.9% $809.7  $734.9       10.2%
Income from
 operations        32.9    26.5       24.2%  132.2   119.1       11.0%
Property EBITDA    53.2    47.8       11.3%  215.5   196.9        9.4%

Iowa/Missouri Region properties include Harrah's St. Louis, Harrah's
 Council Bluffs, Horseshoe Council Bluffs and Harrah's North Kansas
 City.

A continued strong performance at Horseshoe Council Bluffs and an improved performance at Harrah's St. Louis buoyed results in the Iowa/Missouri Region, where revenues rose 8.9 percent and Property EBITDA was up 11.3 percent in the 2006 fourth quarter.

ILLINOIS/INDIANA REGION
(in millions)

              2006    2005    Percent     2006      2005     Percent
             Fourth  Fourth   Increase    Full      Full     Increase
             Quarter Quarter (Decrease)   Year      Year    (Decrease)

Total
 Revenues    $312.9  $276.7       13.1% $1,239.5  $  999.5       24.0%
Income from
 operations    52.5    38.8       35.3%    225.2     177.1       27.2%
Property
 EBITDA        68.9    55.0       25.3%    285.2     223.9       27.4%

Illinois/Indiana Region properties include Horseshoe Hammond, Harrah's
 Joliet, Harrah's Metropolis and Caesars Indiana.

Revenues rose 13.1 percent and Property EBITDA increased 25.3 percent in the Illinois/Indiana Region, as all properties posted improved fourth-quarter results.

OTHER NEVADA
(in millions)

                  2006    2005    Percent    2006    2005    Percent
                 Fourth  Fourth   Increase   Full    Full    Increase
                 Quarter Quarter (Decrease)  Year    Year   (Decrease)

Total Revenues   $146.0  $144.2        1.2% $640.8  $615.7        4.1%
Income from
 operations        17.3    16.0        8.1%  107.7   103.3        4.3%
Property EBITDA    30.8    29.5        4.4%  160.9   152.4        5.6%

Other Nevada properties include Harrah's Reno, Harrah's Lake Tahoe,
 Harvey's Lake Tahoe, Bill's Casino and Harrah's Laughlin.

Other Nevada revenues rose 1.2 percent and margins improved due primarily to a strong performance at Harrah's Laughlin.

MANAGED/INTERNATIONAL/OTHER
(in millions)

                2006     2005    Percent    2006     2005    Percent
                Fourth  Fourth   Increase    Full    Full    Increase
               Quarter  Quarter (Decrease)   Year    Year   (Decrease)

Total Revenues    78.2    55.3       41.4%   261.0   156.9       66.3%
Income from
 operations     (106.6)  (14.2)       N/M   (176.1)  (33.6)       N/M
Property
 EBITDA          (26.2)   (3.0)       N/M    (45.9)   21.7        N/M

Managed, international and other results include income from our
 managed properties, results of our international properties and
 certain marketing and administrative expenses, including development
 costs, and income from our nonconsolidated subsidiaries.

Managed/Other revenues rose 41.4 percent due to the addition of the London Club results for part of the 2006 fourth quarter and revenue gains at managed Native American properties. The Property EBITDA loss widened due to higher development costs and master-plan expenses related to Las Vegas, Atlantic City and Biloxi. Income from operations for the 2006 fourth quarter included a $30 million charge related to an adverse court ruling, which Harrah's plans to appeal.

Other Items

Fourth-quarter corporate expenses rose to $41.4 million from $27.0 million in the 2005 fourth quarter due primarily to the addition of stock-based compensation expense.

The amortization of intangible assets increased from the 2005 fourth quarter, due to the inclusion in the prior year of an adjustment to reflect the reduction in the third-quarter estimate of amortization expense following the refinement of the Caesars purchase-price allocation.

Interest expense increased 10.7 percent year-over-year due primarily to higher interest rates and increased debt levels associated with the acquisition of London Clubs International and the land purchased in Las Vegas.

The effective tax rate for the full-year 2006 was 36.1 percent, compared with 41.7 percent in 2005. The 2006 effective tax rates reflect the impact of certain income-tax benefits identified as the company completed its 2005 tax returns and the adjustment to tax reserves due to issues in tax periods that have now been settled. Excluding the impact of these benefits from the tax-rate calculation, the effective tax rates for 2006 would have been 38.6 percent.

Discontinued Operations for the 2006 fourth quarter include the financial results of Harrah's Lake Charles through its sale in November 2006, and 2005 results were restated to reflect the results of Harrah's Lake Charles in Discontinued Operations. Discontinued Operations for the 2005 fourth quarter also included the operating results of Reno Hilton, Flamingo Laughlin and the Grand Gulfport for the period of time they were owned by the company.

Weighted average common and common equivalent shares outstanding for the fourth quarter were 188.7 million shares, compared with 182.8 million in the 2005 fourth quarter.

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	Harrah's reports Q4 results 27 Feb 2007 <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, Nevada -- (PRESS RELEASE) -- Harrah's Entertainment, Inc. (NYSE:HET) today reported the following financial results for the 2006 fourth quarter: COMPANY WIDE RESULTS (in millions, except per share amounts) 2006 2005 Percent Fourth Fourth Increase Quarter Quarter (Decrease) --------- --------- ---------- Revenues $2,430.6 $2,095.1 16.0% Property EBITDA 562.8 533.1 5.6% Adjusted EPS from Continuing Operations $ 0.45 $ 0.77 -41.6% 2006 2005 Percent Full Full Increase Year Year (Decrease) ---------- --------- ---------- Revenues $9,673.9 $7,010.0 38.0% Property EBITDA 2,610.3 1,927.2 35.4% Adjusted EPS from Continuing Operations $ 3.34 $ 3.55 -5.9% Property EBITDA and Adjusted EPS from Continuing Operations are not Generally Accepted Accounting Principles (GAAP) measurements but are commonly used in the gaming industry as measures of performance and as bases 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 from Continuing Operations to GAAP EPS and Property EBITDA to income from operations are attached to this release. On a GAAP basis, fourth-quarter income from operations was $229.7 million, an increase of 47.4 percent from the year-ago quarter. Income from continuing operations was $39.4 million, compared with a loss of $24.5 million posted in the 2005 fourth quarter. Diluted EPS from continuing operations were 21 cents, compared with a loss per share of 13 cents in the year-ago quarter. The 2006 and 2005 fourth-quarter results were impacted by $20.7 million and $138.6 million, respectively, in charges to recognize the impairment of certain intangible assets. Fourth-quarter same-store sales at properties that Harrah's has operated for more than 12 months rose 6.8 percent from the year-ago quarter. The comparison excludes properties closed in the prior year period due to hurricane damage sustained in the third quarter of 2005. For full-year 2006, revenues rose 38.0 percent to $9.7 billion from $7.0 billion in 2005. Property EBITDA increased to $2.6 billion, up 35.4 percent from $1.9 billion in 2005. Adjusted EPS from Continuing Operations were $3.34, compared with $3.55 in 2005. Full-year income from operations was $1.6 billion, up 51.3 percent from $1.0 billion in 2005. Income from continuing operations in 2006 was $523.9 million, compared with $316.3 million in 2005, while 2006 diluted earnings per share from continuing operations were $2.79, compared with $2.10 a year earlier. Results for 2005 include the contribution of the Caesars business subsequent to the acquisition date of June 13, 2005. Fourth-Quarter Highlights Harrah's entered into a definitive agreement with affiliates of Texas Pacific Group (TPG) and Apollo Management, L.P. (Apollo) to acquire the company in an all-cash transaction. Under terms of the agreement, Harrah's stockholders will receive $90 in cash for each outstanding Harrah's share. On February 8, 2007, Harrah's filed a preliminary proxy statement with the Securities and Exchange Commission that provides details regarding the pending sale of the company. In December 2006, Harrah's completed the acquisition of London Clubs, which operates seven casinos in the United Kingdom, two in Egypt and one in South Africa, and has four others under development in the UK. On October 2, Harrah's announced a definitive agreement to acquire the Barbary Coast, giving the company control of three of the four corners of Las Vegas Boulevard and Flamingo Road. Coupled with previously completed land-purchase agreements, the Barbary Coast transaction will give Harrah's control of about 350 acres at or near the center of the Las Vegas Strip. "During the 2006 fourth quarter, continued robust visitation in the Las Vegas Region, due in large part to completion of the integration of our Total Rewards customer-loyalty program into the Caesars legacy properties, drove revenues to a record level," said Gary Loveman, Harrah's Entertainment chairman, president and chief executive officer. "Development costs and narrower margins in Atlantic City than in the 2005 fourth quarter impacted overall Property EBITDA and, combined with higher interest expenses, affected per-share results." Regional Results Summaries of results by region follow below. Results for 2005 include the operations of the Caesars Entertainment, Inc. properties, subsequent to their acquisition on June 13, 2005. LAS VEGAS REGION (in millions) 2006 2005 Percent 2006 2005 Percent Fourth Fourth Increase Full Full Increase Quarter Quarter (Decrease) Year Year (Decrease) Total Revenues $825.8 $715.0 15.5% $3,267.2 $1,950.0 67.5% Income from operations 192.3 145.6 32.1% 828.2 441.1 87.8% Property EBITDA 246.5 205.7 19.8% 1,042.9 586.9 77.7% Las Vegas Region properties include Harrah's Las Vegas, Rio, Bally's Las Vegas, Paris, Flamingo Las Vegas, Caesars Palace and Imperial Palace. Increased visitation and continued growth in cross-market and cross-property play contributed to a 15.5 percent gain in fourth-quarter revenues and a 19.8 percent increase in Property EBITDA in the Las Vegas Region. The 2006 results include the Imperial Palace, which was acquired near the end of 2005. ATLANTIC CITY REGION (in millions) 2006 2005 Percent 2006 2005 Percent Fourth Fourth Increase Full Full Increase Quarter Quarter (Decrease) Year Year (Decrease) Total Revenues $500.0 $481.4 3.9% $2,071.4 $1,485.7 39.4% Income from operations 64.3 96.6 -33.4% 420.5 353.6 18.9% Property EBITDA 123.9 138.5 -10.5% 620.9 493.2 25.9% Atlantic City Region properties include Harrah's Atlantic City, Showboat Atlantic City, Caesars Atlantic City, Bally's Atlantic City and Harrah's Chester. Atlantic City Region revenues rose 3.9 percent due to the strong performance at Harrah's Atlantic City. Property EBITDA declined 10.5 percent due to the expansion of a competing casino and promotional activities in the market. Harrah's Chester operated at a loss in the fourth quarter as the property prepared for the January 22, 2007, opening of a 2,750-slot casino. LOUISIANA/MISSISSIPPI REGION (in millions) 2006 2005 Percent 2006 2005 Percent Fourth Fourth Increase Full Full Increase Quarter Quarter (Decrease) Year Year (Decrease) Total Revenues $365.0 $ 236.4 54.4% $1,384.3 $1,067.3 29.7% Income from operations 31.7 (107.4) 129.5% 233.4 21.1 N/M Property EBITDA 65.7 59.6 10.2% 330.8 252.2 31.2% Louisiana/Mississippi Region properties include Harrah's New Orleans, Horseshoe Bossier City, Louisiana Downs, Horseshoe Tunica, Grand Casino Tunica, Sheraton Tunica and Grand Casino Biloxi. Revenues for the Louisiana/Mississippi Region increased 54.4 percent and Property EBITDA was up 10.2 percent from the 2005 fourth quarter, when Harrah's New Orleans and Grand Casino Biloxi were closed due to hurricane damage. Lower volume and increased promotional activity in the Tunica market affected Property EBITDA in the 2006 fourth quarter. IOWA/MISSOURI REGION (in millions) 2006 2005 Percent 2006 2005 Percent Fourth Fourth Increase Full Full Increase Quarter Quarter (Decrease) Year Year (Decrease) Total Revenues $202.7 $186.1 8.9% $809.7 $734.9 10.2% Income from operations 32.9 26.5 24.2% 132.2 119.1 11.0% Property EBITDA 53.2 47.8 11.3% 215.5 196.9 9.4% Iowa/Missouri Region properties include Harrah's St. Louis, Harrah's Council Bluffs, Horseshoe Council Bluffs and Harrah's North Kansas City. A continued strong performance at Horseshoe Council Bluffs and an improved performance at Harrah's St. Louis buoyed results in the Iowa/Missouri Region, where revenues rose 8.9 percent and Property EBITDA was up 11.3 percent in the 2006 fourth quarter. ILLINOIS/INDIANA REGION (in millions) 2006 2005 Percent 2006 2005 Percent Fourth Fourth Increase Full Full Increase Quarter Quarter (Decrease) Year Year (Decrease) Total Revenues $312.9 $276.7 13.1% $1,239.5 $ 999.5 24.0% Income from operations 52.5 38.8 35.3% 225.2 177.1 27.2% Property EBITDA 68.9 55.0 25.3% 285.2 223.9 27.4% Illinois/Indiana Region properties include Horseshoe Hammond, Harrah's Joliet, Harrah's Metropolis and Caesars Indiana. Revenues rose 13.1 percent and Property EBITDA increased 25.3 percent in the Illinois/Indiana Region, as all properties posted improved fourth-quarter results. OTHER NEVADA (in millions) 2006 2005 Percent 2006 2005 Percent Fourth Fourth Increase Full Full Increase Quarter Quarter (Decrease) Year Year (Decrease) Total Revenues $146.0 $144.2 1.2% $640.8 $615.7 4.1% Income from operations 17.3 16.0 8.1% 107.7 103.3 4.3% Property EBITDA 30.8 29.5 4.4% 160.9 152.4 5.6% Other Nevada properties include Harrah's Reno, Harrah's Lake Tahoe, Harvey's Lake Tahoe, Bill's Casino and Harrah's Laughlin. Other Nevada revenues rose 1.2 percent and margins improved due primarily to a strong performance at Harrah's Laughlin. MANAGED/INTERNATIONAL/OTHER (in millions) 2006 2005 Percent 2006 2005 Percent Fourth Fourth Increase Full Full Increase Quarter Quarter (Decrease) Year Year (Decrease) Total Revenues 78.2 55.3 41.4% 261.0 156.9 66.3% Income from operations (106.6) (14.2) N/M (176.1) (33.6) N/M Property EBITDA (26.2) (3.0) N/M (45.9) 21.7 N/M Managed, international and other results include income from our managed properties, results of our international properties and certain marketing and administrative expenses, including development costs, and income from our nonconsolidated subsidiaries. Managed/Other revenues rose 41.4 percent due to the addition of the London Club results for part of the 2006 fourth quarter and revenue gains at managed Native American properties. The Property EBITDA loss widened due to higher development costs and master-plan expenses related to Las Vegas, Atlantic City and Biloxi. Income from operations for the 2006 fourth quarter included a $30 million charge related to an adverse court ruling, which Harrah's plans to appeal. Other Items Fourth-quarter corporate expenses rose to $41.4 million from $27.0 million in the 2005 fourth quarter due primarily to the addition of stock-based compensation expense. The amortization of intangible assets increased from the 2005 fourth quarter, due to the inclusion in the prior year of an adjustment to reflect the reduction in the third-quarter estimate of amortization expense following the refinement of the Caesars purchase-price allocation. Interest expense increased 10.7 percent year-over-year due primarily to higher interest rates and increased debt levels associated with the acquisition of London Clubs International and the land purchased in Las Vegas. The effective tax rate for the full-year 2006 was 36.1 percent, compared with 41.7 percent in 2005. The 2006 effective tax rates reflect the impact of certain income-tax benefits identified as the company completed its 2005 tax returns and the adjustment to tax reserves due to issues in tax periods that have now been settled. Excluding the impact of these benefits from the tax-rate calculation, the effective tax rates for 2006 would have been 38.6 percent. Discontinued Operations for the 2006 fourth quarter include the financial results of Harrah's Lake Charles through its sale in November 2006, and 2005 results were restated to reflect the results of Harrah's Lake Charles in Discontinued Operations. Discontinued Operations for the 2005 fourth quarter also included the operating results of Reno Hilton, Flamingo Laughlin and the Grand Gulfport for the period of time they were owned by the company. Weighted average common and common equivalent shares outstanding for the fourth quarter were 188.7 million shares, compared with 182.8 million in the 2005 fourth quarter.