EX-99.1 3 a2108919zex-99_1.htm EX-99.1
QuickLinks -- Click here to rapidly navigate through this document


EXHIBIT 99.1

Contact:   Charles Atwood—Investors
Harrah's Entertainment, Inc.
(702) 407-6406		   Gary Thompson—Media
Harrah's Entertainment, Inc.
(702) 407-6529

 
 
Brad Belhouse—Investors
Harrah's Entertainment, Inc.
(702) 407-6367
 
 

        Release #HET 03-0369


Harrah's Entertainment Reports First-Quarter Results;
Record Revenues, Diluted Earnings Per Share Achieved

        LAS VEGAS, April 22, 2003—Harrah's Entertainment, Inc. (NYSE:HET) today reported record first-quarter revenues of $1.07 billion, up 9.8 percent from revenues of $974.7 million in the 2002 first quarter.

        Property Earnings Before Interest, Taxes, Depreciation and Amortization (Property EBITDA) rose 1.9 percent to a record $285.3 million from $279.9 million in the year-earlier quarter. First-quarter Adjusted Earnings Per Share matched the 2002 first quarter's record Adjusted EPS of 74 cents.

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

        First-quarter income from operations declined 3.5 percent to $191.2 million from $198.1 million in the 2002 first quarter. First-quarter income before the cumulative effect of a change in accounting principle was $81.1 million, compared with $85.2 million in the 2002 first quarter. Net income for the first quarter of 2003 was $81.1 million, compared with a net loss of $6.0 million after a charge for the change in accounting principle in the year-ago period. The company adopted the accounting provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, in the first quarter of 2002, and recorded an impairment charge of $91.2 million.

        First-quarter 2003 diluted earnings per share were 74 cents on 3.8 percent fewer shares outstanding, compared with diluted earnings per share before the cumulative effect of a change in accounting principle of 75 cents in the year-earlier quarter. In the 2002 first quarter, the company recorded a charge of 80 cents per diluted share due to the required change in accounting principle, which resulted in a net loss of 5 cents per diluted share.


Same-Store Sales Growth, Effective Management Offset Higher Gaming Taxes

        "The first-quarter's results clearly demonstrate that we not only have a robust growth strategy that allows this company to tolerate a variety of adverse circumstances, but that we also have the ability to manage our assets well," said Gary Loveman, Harrah's Entertainment's president and chief executive officer.

        "Despite slightly lower volume at some properties, economic malaise and reduced air travel, first-quarter system-wide same-store sales rose 2.5 percent, the 17th straight quarter of year-over-year same-store increases," Loveman said. "We have produced same-store sales growth and generated significant returns on targeted capital investments in challenging times, which have included the imposition of higher gaming taxes in certain states. The impact of the higher tax rates in this year's first quarter was $14.3 million.


        "Our ability to manage our business effectively in the current environment makes us even more excited about the future contributions we expect from Total Rewards 2, the enhanced customer-loyalty program we plan to introduce June 17," Loveman said.

        "Total Rewards 2 will allow customers to "bank' reward credits, giving players more valuable reasons to consolidate their play at our properties," he said. "We expect this to boost volume and help drive continued revenue gains from cross-market and tracked play, which increased significantly during the quarter.

        "The nationwide rollout of our proprietary coinless wagering capability over the next year will further improve the customer experience and should contribute to even greater consolidation of play at our casinos," Loveman said. "We also expect that the openings of the new hotel at the Atlantic City Showboat and a revitalized Louisiana Downs racetrack with 900 slots later this spring will enhance future results."

        Among first-quarter highlights:

    •
    Harrah's moved up 54 notches on the FORTUNE 500, earning recognition as one of the "50 That Climbed" in FORTUNE magazine's April 14, 2003, edition. The company also advanced 33 places on FORBES magazine's list of America's 500 Top Companies.

    •
    Harrah's was named a finalist in two categories for the first annual The American Business Awards program to be broadcast from New York on April 30, 2003. A group of nationwide business professionals selected Harrah's Chief Marketing Officer Richard Mirman and the Harrah's marketing team among the five finalists in the Best Marketing Officer and Best Marketing Organization categories, respectively. The American Business Awards recognize companies for outstanding leadership, innovation, perseverance, creativity, teamwork and integrity.

        "High demand for casino-entertainment options and limited supply bode well for our company, which has proven its ability to produce sustainable growth in both good and bad economic climates," Loveman said. "Our same-store growth strategy, combined with our geographic diversification and prudent capital investments that have delivered the highest returns among big-cap casino operators, have generated consistent revenue and earnings increases. And our financial strength affords us the ability to pursue opportunities in both existing and new jurisdictions in this country and abroad."

        Beginning with this release, Harrah's will report results from four geographic regions—Western, Eastern, North Central and South Central—to reflect the growth of the company and provide more detailed information to investors. Previously, the company reported results from the Western, Eastern and Central regions. A supplemental table attached to this release provides a four-region breakdown of quarterly revenues, income from operations and Property EBITDA for the past five years.

2



Western Region Posts Record Results

West Results
(in millions)

 
   2003
First
Quarter
   2002
First
Quarter
   Percent
Increase
(Decrease)
  
Northern Nevada              
  Total revenues   104.2   95.0   9.7 %
  Income from operations   12.0   7.1   69.0 %
  Property EBITDA   21.4   16.2   32.1 %
Southern Nevada              
  Total revenues   228.2   205.1   11.3 %
  Income from operations   44.9   35.1   27.9 %
  Property EBITDA   63.6   55.0   15.6 %
Total Western Region              
  Total revenues   332.4   300.1   10.8 %
  Income from operations   56.9   42.2   34.8 %
  Property EBITDA   85.0   71.2   19.4 %

        Harrah's Western Region reported record first-quarter revenues, income from operations and Property EBITDA, aided by mild winter weather that kept travel disruptions to a minimum.

        The company's Lake Tahoe casinos posted first-quarter records, benefiting from a rebound in revenues from both tracked and retail play, new visitor accommodations in the market and cost savings related to the Harveys Casino Resorts acquisition. Revenues at the company's Lake Tahoe properties rose 9.3 percent from the 2002 first quarter, which was impacted by the aftermath of the September 11, 2001, attacks, while income from operations rose 76.0 percent and Property EBITDA was up 36.3 percent.

        First-quarter revenues at Harrah's Reno rose 10.5 percent to the highest level in almost 20 years. Reno's income from operations increased 32.3 percent and Property EBITDA climbed 16.8 percent.

        Harrah's Las Vegas set first-quarter records, with revenues up 9.9 percent, income from operations 29.9 percent higher and Property EBITDA rising 15.9 percent from the 2002 first quarter. The Rio All-Suite Hotel & Casino posted a 13.9 percent gain in revenues, while income from operations rose 37.1 percent and Property EBITDA was up 20.0 percent to a record.

        Harrah's Laughlin revenues rose 6.0 percent to a first-quarter record, but income from operations was 2.7 percent lower and Property EBITDA was even with the year-ago quarter.

        "The resurgence of our Northern Nevada casinos and the gains at Harrah's Las Vegas and the Rio show the value of our strategy to drive same-store sales growth without significant new capital investment," said Tim Wilmott, Harrah's Chief Operating Officer.

3



Eastern Region Also Posts Record Results

East Results
(in millions)

 
   2003
First
Quarter
   2002
First
Quarter
   Percent
Increase
(Decrease)
  
Harrah's Atlantic City              
  Total revenues   102.2   93.4   9.4 %
  Income from operations   29.9   27.8   7.6 %
  Property EBITDA   38.4   34.7   10.7 %
Showboat Atlantic City              
  Total revenues   76.2   78.6   -3.1 %
  Income from operations   13.7   13.6   0.7 %
  Property EBITDA   20.0   22.2   -9.9 %
Total Eastern Region              
  Total revenues   178.4   172.0   3.7 %
  Income from operations   43.6   41.4   5.3 %
  Property EBITDA   58.4   56.9   2.6 %

        Harrah's two Atlantic City properties outperformed that market in the first quarter, combining for revenue, income from operations and Property EBITDA records despite severe winter storms that hit the region in February.

        The expansion that included the first full quarter's contributions from 500 additional slot machines benefited Harrah's Atlantic City, which posted record results. Its revenues rose 9.4 percent, income from operations increased 7.6 percent and Property EBITDA was up 10.7 percent. At the Showboat, revenues declined 3.1 percent, income from operations rose 0.7 percent and Property EBITDA was down 9.9 percent. The Showboat is scheduled to open its new 544-room hotel expansion during the second quarter and a casino expansion later in 2003.

        "We have achieved an excellent return on the investment we made to position Harrah's Atlantic City for the increased numbers of visitors expected in that market this summer," Wilmott said. "Both Harrah's properties outperformed the Atlantic City market, which saw a 4.1 percent decline in gaming revenues during the quarter. We are optimistic about the expansion at the Showboat that opens later this quarter."

4



Weather, Increased Gaming Taxes, Competition Impact North Central Region

North Central Results
(in millions)

 
   2003
First
Quarter
   2002
First
Quarter
   Percent
Increase
(Decrease)
  
Illinois/Indiana              
  Total revenues   178.5   184.7   -3.4 %
  Income from operations   35.1   53.2   -34.0 %
  Property EBITDA   44.2   61.7   -28.4 %
Iowa              
  Total revenues   58.7   60.9   -3.6 %
  Income from operations   8.4   8.7   -3.4 %
  Property EBITDA   12.9   13.4   -3.7 %
Missouri              
  Total revenues   109.5   118.4   -7.5 %
  Income from operations   21.7   30.4   -28.6 %
  Property EBITDA   30.3   38.1   -20.5 %
Total North Central              
  Total revenues   346.7   364.0   -4.8 %
  Income from operations   65.2   92.3   -29.4 %
  Property EBITDA   87.4   113.2   -22.8 %

        The company's North Central Region, which includes casinos in Illinois, Indiana, Iowa and Missouri, was impacted by higher state gaming taxes than in the year-ago quarter, severe winter storms and aggressive competition.

        Harrah's East Chicago, Joliet and Metropolis saw combined revenues decline 3.4 percent, income from operations fall 34.0 percent and Property EBITDA decrease 28.4 percent. Higher state gaming taxes impacted the company's ability to market for growth, reduced operating margins and exacerbated the competitive nature of the markets.

        "This year's second quarter marks the anniversary of the majority of the impact from higher gaming taxes," said Wilmott. "In addition, the competitive environment appears to be moderating, as evidenced by improving margins in some markets."

        A higher tax rate at the Bluffs Run casino is the primary reason the company's two Iowa properties combined posted lower first-quarter results. February snowstorms also impacted the Iowa market. Revenues were down 3.6 percent, income from operations fell 3.4 percent and Property EBITDA declined 3.7 percent.

        Combined revenues at Harrah's St. Louis and North Kansas City properties fell 7.5 percent, income from operations was down 28.6 percent and Property EBITDA was off 20.5 percent due primarily to competitive pressures.

5


New Orleans Boosts South Central Region's Results

South Central Results
(in millions)

 
   2003
First
Quarter
   2002
First
Quarter
   Percent
Increase
(Decrease)
  
Louisiana              
  Total revenues   159.9   89.3   79.1 %
  Income from operations   27.2   19.6   38.8 %
  Property EBITDA   38.0   26.8   41.8 %
Mississippi              
  Total revenues   29.6   30.1   -1.7 %
  Income from operations   3.6   3.4   5.9 %
  Property EBITDA   6.1   5.9   3.4 %
Total South Central              
  Total revenues   189.5   119.4   58.7 %
  Income from operations   30.8   23.0   33.9 %
  Property EBITDA   44.1   32.7   34.9 %

        Full ownership of Harrah's New Orleans caused the South Central Region, comprised of the company's Louisiana and Mississippi properties, to post higher first-quarter revenues, income from operations and Property EBITDA. New Orleans results have been consolidated into the company's financial statements since Harrah's acquisition of an additional stake in JCC Holding Company on June 7, 2002, that raised Harrah's interest to 63 percent. Harrah's acquired the remaining 37 percent on December 10, 2002.

        Prior to the June 7 transaction, Harrah's financial statements reflected only management fees and income from non-consolidated affiliates from the New Orleans casino. The casino contributed $73.0 million in revenues, $15.2 million of income from operations and $18.0 million in Property EBITDA to the company's first-quarter 2003 results.

        Combined revenues at the Harrah's Shreveport and Harrah's Lake Charles properties in Louisiana fell 7.2 percent, income from operations decreased 35.1 percent and Property EBITDA declined 23.9 percent from the year-ago quarter due to additional competition in Lake Charles and higher gaming tax rates and, through the first two months of this year, a market-wide 2.1 percent revenue decline from the year-ago period in Shreveport.

        Harrah's Tunica and Vicksburg casinos' combined revenues declined 1.7 percent, while income from operations rose 5.9 percent and Property EBITDA was 3.4 percent higher than in the 2002 first quarter.

Managed Properties:

        Despite lower fee structures at three Native American casinos, first-quarter management-fee revenues were down only 2.5 percent from the year-ago period, as the addition of management fees from Harrah's Rincon helped offset the absence of management fees from Harrah's New Orleans.

Other Items:

        Corporate expense rose 13.3 percent in the 2003 first quarter over the prior year's first quarter due to the timing of certain expenses. Despite an increase in debt, interest expense decreased 4.1 percent for the first quarter compared to the prior year due to lower interest rates. The company repurchased 250,000 shares during the first quarter of 2003 at an average price of $32.48 per share and has bought back 5.5 million shares since the end of the 2002 first quarter.

6

        The company's effective income tax rate for the first quarter increased from the 2002 first-quarter rate due to higher state income taxes. Operating results for the company's Central City, Colorado, casino have been reclassified to reflect its results as a discontinued operation due to a sale agreement. The sale of this property is expected to be completed during second quarter of 2003.

        Harrah's Entertainment will host a conference call Tuesday, April 22, 2003, at 9:00 a.m. Eastern Daylight Time to review its 2003 first-quarter results.

        Those interested in participating in the call should dial 1-888-399-2695, or 1-706-679-7646 for international callers, approximately 10 minutes before the call start time. A taped replay of the conference call can be accessed at 1-800-642-1687, or 1-706-645-9291 for international callers, beginning at 1 p.m. EDT Tuesday, April 22. The replay will be available through 11:59 p.m. EDT on Tuesday, April 29. The passcode number for the replay is 9672635.

        Interested parties wanting to listen to the live conference call on the Internet may do so on the company's web site—www.harrahs.com—in the Investor Relations section behind the "About Us" tab.

        Founded 65 years ago, Harrah's Entertainment, Inc. operates 26 casinos in the United States, primarily under the Harrah's brand name. Harrah's Entertainment is focused on building loyalty and value with its target customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership.

        This release includes "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contains words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue" or "pursue," or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings and future financial results. We have based these forward-looking statements on our current expectations and projections about future events.

        We caution the reader that forward-looking statements involve risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission:

    •
    the effect of economic, credit and capital market conditions on the economy in general, and on gaming and hotel companies in particular;

    •
    construction factors, including delays, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters and building permit issues;

    •
    the effects of environmental and structural building conditions relating to the company's properties;

    •
    our ability to timely and cost effectively integrate into our operations the companies that we acquire;

    •
    access to available and feasible financing;

    •
    changes in laws (including increased tax rates), regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies;

    •
    litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation;

7

    •
    ability of our customer-tracking and yield-management programs to continue to increase customer loyalty;

    •
    our ability to recoup costs of capital investments through higher revenues;

    •
    acts of war or terrorist incidents;

    •
    abnormal gaming holds, and

    •
    the effects of competition, including locations of competitors and operating and market competition.

        Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

8


HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED SUMMARY OF OPERATIONS
(UNAUDITED)

 
   First Quarter Ended
  
 
   March 31,
2003
   March 31,
2002*
  
 
   (In thousands, except per share amounts)
  
Revenues   $ 1,068,335   $ 974,691  
Property operating expenses     783,081     694,832  
Depreciation and amortization     79,325     75,181  
   
 
 
  Operating profit     205,929     204,678  
Corporate expense     (12,104 )   (10,684 )
Equity in nonconsolidated affiliates     (62 )   5,745  
Amortization of intangible assets     (1,199 )   (1,382 )
Project opening costs and other items     (1,318 )   (289 )
   
 
 
Income from operations     191,246     198,068  
Interest expense, net of interest capitalized     (58,874 )   (61,382 )
Other (expense) income, including interest income     685     1,922  
   
 
 
Income before income taxes and minority interests     133,057     138,608  
Provision for income taxes     (49,101 )   (49,407 )
Minority interests     (3,160 )   (4,177 )
   
 
 
Income from continuing operations     80,796     85,024  
Discontinued operations, net of tax     284     137  
   
 
 
Income before cumulative effect of change in accounting principle     81,080     85,161  
Cumulative effect of change in accounting principle, net of tax benefit of $2,831     —     (91,169 )
   
 
 
    Net income (loss)   $ 81,080   $ (6,008 )
   
 
 
Earnings (loss) per share—basic              
  Income from continuing operations   $ 0.75   $ 0.76  
  Discontinued operations, net of tax     —     —  
  Cumulative effect of change in accounting principle, net of tax benefit of $2,831     —     (0.81 )
   
 
 
    Net income (loss)   $ 0.75   $ (0.05 )
   
 
 
Earnings (loss) per share—diluted              
  Income from continuing operations   $ 0.74   $ 0.75  
  Discontinued operations, net of tax     —     —  
  Cumulative effect of change in accounting principle, net of tax benefit of $2,831     —     (0.80 )
   
 
 
    Net income (loss)   $ 0.74   $ (0.05 )
   
 
 
Weighted average common shares outstanding     108,489     111,885  
   
 
 
Weighted average common and common equivalent shares outstanding     110,066     114,380  
   
 
 
*See
note (a) on Supplemental Operating Information.

9


HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL OPERATING INFORMATION
(UNAUDITED)

 
   First Quarter Ended
  
 
   March 31,
2003
   March 31,
2002
  
 
   (In thousands)
  
Revenues (a)              
Western Region   $ 332,389   $ 300,078  
Eastern Region     178,449     172,027  
North Central Region     346,671     363,955  
South Central Region     189,480     119,368  
Managed     17,112     17,542  
Other     4,234     1,721  
   
 
 
  Total Revenues   $ 1,068,335   $ 974,691  
   
 
 
Income from operations (a)              
Western Region   $ 56,855   $ 42,174  
Eastern Region     43,632     41,409  
North Central Region     65,239     92,273  
South Central Region     30,792     23,012  
Managed     14,767     20,868  
Other     (7,935 )   (10,984 )
Corporate expense     (12,104 )   (10,684 )
   
 
 
  Total Income from Operations   $ 191,246   $ 198,068  
   
 
 
Property EBITDA (a) (b)              
Western Region   $ 84,973   $ 71,211  
Eastern Region     58,391     56,933  
North Central Region     87,366     113,184  
South Central Region     44,122     32,692  
Managed     14,787     14,529  
Other     (4,385 )   (8,690 )
   
 
 
  Total Property EBITDA   $ 285,254   $ 279,859  
   
 
 
Project opening and other items (a)              
  Project opening costs   $ (467 ) $ (817 )
  Writedowns, reserves and recoveries     (851 )   528  
   
 
 
    Total   $ (1,318 ) $ (289 )
   
 
 
(a)
In fourth quarter 2002, Harveys Colorado was classified as an asset held-for-sale. Therefore, its prior year's results have been reclassed from Income from Continuing Operations to Discontinued Operations.

(b)
Property EBITDA (earnings before interest, taxes, depreciation and amortization) consists of Income from operations before depreciation and amortization, write-downs, reserves and recoveries, project opening costs, corporate expense, equity in (income)/losses of nonconsolidated affiliates, venture restructuring costs and amortization of intangible assets. Property EBITDA is a supplemental financial measure used by management, as well as industry analysts, to evaluate our operations. However, Property EBITDA should not be construed as an alternative to Income from operations (as an indicator of our operating performance) or to Cash flows from operating activities (as a measure of liquidity) as determined in accordance with generally accepted accounting principles. All companies do not calculate EBITDA in the same manner. As a result, Property EBITDA as presented by our Company may not be comparable to similarly titled measures presented by other companies.

10


HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)

Calculation of adjusted earnings per share

 
   First Quarter Ended
  
 
   March 31,
2003
   March 31,
2002
  
 
   (In thousands, except per share amounts)
  
Income before taxes and minority interests   $ 133,057   $ 138,608  
Add/(deduct):              
  Project opening costs and other items     1,318     289  
  Settlement of litigation     —     (931 )
   
 
 
Adjusted income before taxes and minority interests     134,375     137,966  
Provision for income taxes     (49,599 )   (49,134 )
Minority interests     (3,160 )   (4,177 )
   
 
 
Adjusted income before discontinued operations and cumulative effect of change in accounting principle     81,616     84,655  
Discontinued operations, net of tax     284     137  
   
 
 
Adjusted income before cumulative effect of change in accounting principle   $ 81,900   $ 84,792  
   
 
 
Diluted earnings per share before cumulative effect of change in accounting principle as adjusted   $ 0.74   $ 0.74  
   
 
 
Weighted average common and common equivalent shares outstanding     110,066     114,380  
   
 
 

11


HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED SUMMARY OF OPERATIONS
(UNAUDITED)

Reconciliation of Property EBITDA to Income from operations

First Quarter Ended March 31, 2003

 
   Western
Region
   Eastern
Region
   North
Central
Region
   South
Central
Region
   Managed
and
Other
   Total
  
 
    
    
   (In thousands)

    
    
  
Revenues   $ 332,389   $ 178,449   $ 346,671   $ 189,480   $ 21,346   $ 1,068,335  
Operating Expenses     (247,416 )   (120,058 )   (259,305 )   (145,358 )   (10,944 )   (783,081 )
   
 
 
 
 
 
 
Property EBITDA     84,973     58,391     87,366     44,122     10,402     285,254  
Depreciation and amortization     (28,004 )   (14,685 )   (20,579 )   (12,406 )   (3,651 )   (79,325 )
   
 
 
 
 
 
 
Operating Profit     56,969     43,706     66,787     31,716     6,751     205,929  
Amortization of intangible assets     (181 )   —     (1,018 )   —     —     (1,199 )
Equity in losses of nonconsolidated affiliates     —     —     —     (143 )   81     (62 )
Project opening costs and other items     67     (74 )   (530 )   (781 )   —     (1,318 )
Corporate Expense     —     —     —     —     (12,104 )   (12,104 )
   
 
 
 
 
 
 
  Income from Operations   $ 56,855   $ 43,632   $ 65,239   $ 30,792   $ (5,272 ) $ 191,246  
   
 
 
 
 
 
 

First Quarter Ended March 31, 2002
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues   $ 300,078   $ 172,027   $ 363,955   $ 119,368   $ 19,263   $ 974,691  
Operating Expenses     (228,867 )   (115,094 )   (250,771 )   (86,676 )   (13,424 )   (694,832 )
   
 
 
 
 
 
 
Property EBITDA     71,211     56,933     113,184     32,692     5,839     279,859  
Depreciation and amortization     (28,761 )   (15,524 )   (18,637 )   (9,111 )   (3,148 )   (75,181 )
   
 
 
 
 
 
 
Operating Profit     42,450     41,409     94,547     23,581     2,691     204,678  
Amortization of intangible assets     (181 )   —     (1,201 )   —     —     (1,382 )
Equity in losses of nonconsolidated affiliates     —     —     —     (129 )   5,874     5,745  
Project opening costs and other items     (95 )   —     (1,073 )   (440 )   1,319     (289 )
Corporate Expense     —     —     —     —     (10,684 )   (10,684 )
   
 
 
 
 
 
 
  Income from Operations   $ 42,174   $ 41,409   $ 92,273   $ 23,012   $ (800 ) $ 198,068  
   
 
 
 
 
 
 

12


HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED SUMMARY OF OPERATIONS
(UNAUDITED)

 
   First Quarter Ended March 31,
  
 
   2002
   2001
   2000
   1999
   1998
  
Revenues                      
  Western Region   300,078   285,529   271,984   279,583   144,195  
  Eastern Region   172,027   165,887   169,867   162,513   77,667  
  North Central Region   363,955   287,221   219,600   159,697   100,309  
  South Central Region   119,368   110,508   69,145   61,608   62,782  
  Managed   17,542   16,085   19,493   16,662   10,272  
  Other   1,721   1,946   1,881   567   963  
   
 
 
 
 
 
    Total Revenues   974,691   867,176   751,970   680,630   396,188  
   
 
 
 
 
 
Income From Operations                      
  Western Region   42,174   34,940   22,245   43,274   16,929  
  Eastern Region   41,409   37,288   38,137   36,089   17,119  
  North Central Region   92,273   70,887   53,734   24,932   20,103  
  South Central Region   23,012   14,953   12,029   12,931   12,062  
  Managed   20,868   9,750   3,788   14,180   8,506  
  Other   (10,984 ) (9,516 ) (18,812 ) (10,992 ) (9,719 )
  Corporate Expense   (10,684 ) (13,776 ) (11,021 ) (7,931 ) (6,650 )
   
 
 
 
 
 
    Total Income from operations   198,068   144,526   100,100   112,483   58,350  
   
 
 
 
 
 
Property EBITDA                      
  Western Region   71,211   62,342   45,632   65,538   30,435  
  Eastern Region   56,933   50,413   49,765   47,518   22,413  
  North Central Region   113,184   87,741   66,525   37,294   28,963  
  South Central Region   32,692   25,118   16,882   16,159   16,865  
  Managed   14,529   13,606   17,420   14,452   8,850  
  Other   (8,690 ) (3,864 ) (4,198 ) 111   (5,432 )
   
 
 
 
 
 
    Total Property EBITDA   279,859   235,356   192,026   181,072   102,094  
   
 
 
 
 
 
 
   Second Quarter Ended June 30,
  
 
   2002
   2001
   2000
   1999
   1998
  
Revenues                      
  Western Region   319,150   283,341   270,611   276,894   156,981  
  Eastern Region   193,923   183,799   184,330   178,237   114,441  
  North Central Region   358,744   279,101   265,141   178,085   102,567  
  South Central Region   133,586   109,367   100,367   63,143   62,327  
  Managed   17,192   15,967   19,328   18,211   22,258  
  Other   (1,201 ) 1,870   1,837   568   815  
   
 
 
 
 
 
    Total Revenues   1,021,394   873,445   841,614   715,138   459,389  
   
 
 
 
 
 
Income From Operations                      
  Western Region   54,359   30,965   23,655   42,364   22,958  
  Eastern Region   55,647   48,557   49,317   45,354   27,680  
  North Central Region   79,169   64,765   64,811   36,348   18,787  
  South Central Region   20,951   14,674   15,802   13,227   11,639  
  Managed   15,169   10,510   5,678   15,344   19,738  
  Other   (10,969 ) (14,107 ) (8,353 ) (15,641 ) (20,295 )
  Corporate Expense   (11,997 ) (13,632 ) (14,572 ) (13,492 ) (8,936 )
   
 
 
 
 
 
    Total Income from operations   202,329   141,732   136,338   123,504   71,571  
   
 
 
 
 
 
Property EBITDA                      
  Western Region   83,060   58,435   50,467   67,526   36,572  
  Eastern Region   71,878   62,452   61,245   57,059   34,474  
  North Central Region   98,641   83,039   79,688   48,436   27,738  
  South Central Region   31,189   24,747   24,015   15,388   16,256  
  Managed   15,364   12,463   17,495   15,665   20,264  
  Other   (5,069 ) (6,392 ) (1,133 ) (6,734 ) (8,124 )
   
 
 
 
 
 
    Total Property EBITDA   295,063   234,744   231,777   197,340   127,180  
   
 
 
 
 
 

13


HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED SUMMARY OF OPERATIONS
(UNAUDITED)

 
   Third Quarter Ended September 30,
  
 
   2002
   2001
   2000
   1999
   1998
  
Revenues                      
  Western Region   341,965   321,899   304,779   300,417   179,791  
  Eastern Region   225,599   202,611   205,978   198,565   186,019  
  North Central Region   356,898   330,237   276,319   193,873   109,176  
  South Central Region   181,561   123,959   104,864   66,049   63,255  
  Managed   16,592   18,701   19,909   21,671   16,417  
  Other   1,748   2,085   2,343   537   688  
   
 
 
 
 
 
    Total Revenues   1,124,363   999,492   914,192   781,112   555,346  
   
 
 
 
 
 
Income From Operations                      
  Western Region   63,674   23,235   46,017   55,927   37,792  
  Eastern Region   74,133   58,020   62,815   57,460   51,591  
  North Central Region   74,684   68,966   63,738   42,802   17,304  
  South Central Region   23,771   18,770   15,669   12,107   10,734  
  Managed   13,512   16,038   10,605   19,481   13,900  
  Other   (5,246 ) (12,886 ) (10,858 ) (19,962 ) (12,676 )
  Corporate Expense   (16,434 ) (12,376 ) (11,883 ) (11,894 ) (9,443 )
   
 
 
 
 
 
    Total Income from operations   228,094   159,767   176,103   155,921   109,202  
   
 
 
 
 
 
Property EBITDA                      
  Western Region   93,072   57,862   74,126   82,430   51,040  
  Eastern Region   90,088   71,477   75,647   69,508   61,754  
  North Central Region   94,740   98,781   81,749   55,836   27,934  
  South Central Region   36,231   29,372   24,231   16,269   14,711  
  Managed   15,117   15,382   18,198   18,928   4,542  
  Other   (357 ) (5,161 ) (6,119 ) (4,639 ) (3,212 )
   
 
 
 
 
 
    Total Property EBITDA   328,891   267,713   267,832   238,332   156,769  
   
 
 
 
 
 
 
   Fourth Quarter Ended December 31,
  
 
   2002
   2001
   2000
   1999
   1998
  
Revenues                      
  Western Region   304,332   293,476   282,286   279,580   150,765  
  Eastern Region   186,035   171,738   163,295   163,438   161,634  
  North Central Region   330,756   352,833   261,137   192,600   111,688  
  South Central Region   172,675   114,379   96,261   59,107   56,328  
  Managed   17,373   16,390   16,877   21,019   15,954  
  Other   4,774   860   2,164   1,501   600  
   
 
 
 
 
 
    Total Revenues   1,015,945   949,676   822,020   717,245   496,969  
   
 
 
 
 
 
Income From Operations                      
  Western Region   33,723   27,350   26,456   34,760   16,804  
  Eastern Region   45,754   38,803   32,064   34,884   32,771  
  North Central Region   60,865   74,316   51,519   40,241   11,738  
  South Central Region   23,334   13,252   8,073   7,794   6,390  
  Managed   14,419   15,243   (217,084 ) 16,853   12,014  
  Other   (9,034 ) (22,045 ) (17,835 ) (35,972 ) (18,133 )
  Corporate Expense   (17,511 ) (12,962 ) (12,996 ) (9,431 ) (12,861 )
   
 
 
 
 
 
    Total Income from operations   151,550   133,957   (129,803 ) 89,129   48,723  
   
 
 
 
 
 
Property EBITDA                      
  Western Region   66,287   59,152   55,922   54,896   29,899  
  Eastern Region   60,043   53,144   44,215   45,365   44,402  
  North Central Region   80,813   98,320   74,376   52,573   18,537  
  South Central Region   28,820   23,762   15,877   12,623   11,558  
  Managed   14,958   14,364   14,147   17,989   24,657  
  Other   (4,810 ) (6,527 ) (9,658 ) (7,259 ) (2,451 )
   
 
 
 
 
 
    Total Property EBITDA   246,111   242,215   194,879   176,187   126,602  
   
 
 
 
 
 

14



QuickLinks

Harrah's Entertainment Reports First-Quarter Results; Record Revenues, Diluted Earnings Per Share Achieved
Same-Store Sales Growth, Effective Management Offset Higher Gaming Taxes
Western Region Posts Record Results
Eastern Region Also Posts Record Results
Weather, Increased Gaming Taxes, Competition Impact North Central Region
New Orleans Boosts South Central Region's Results
HARRAH'S ENTERTAINMENT, INC. CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL OPERATING INFORMATION (UNAUDITED)
HARRAH'S ENTERTAINMENT, INC. SUPPLEMENTAL INFORMATION (UNAUDITED)
HARRAH'S ENTERTAINMENT, INC. CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
HARRAH'S ENTERTAINMENT, INC. CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
HARRAH'S ENTERTAINMENT, INC. CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)