Harrah's Entertainment Reports Fourth-Quarter, Full-Year Results; Caesars Acquisition, Strong Demand Spur Operating Gains

Property Earnings Before Interest, Taxes, Depreciation andAmortization (Property EBITDA) rose 85.1 percent in the 2005 fourthquarter to a record $534.5 million from Property EBITDA of $288.7million in the year-earlier period. Fourth-quarter Adjusted EarningsPer Share (EPS) from continuing operations were 66 cents in the fourthquarter, up 11.9 percent from 59 cents in the 2004 fourth quarter.

Property EBITDA and Adjusted EPS are not Generally AcceptedAccounting Principles (GAAP) measurements but are commonly used in thegaming industry as measures of performance and as a basis forvaluation of gaming companies. In addition, analysts' per-shareearnings estimates for gaming companies are comparable to Adjusted EPSfrom continuing operations.

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

In addition to its strong operating results, Harrah's also wroteoff certain intangible assets at certain South Central Region casinos:

-- Harrah's wrote off $88.7 million of intangible assets at its Biloxi, Mississippi, property, since that property was damaged extensively by Hurricane Katrina. This pre-tax write-off is included in "Write-downs, reserves and recoveries."

-- Harrah's wrote off $56.1 million (pre-tax) of goodwill and recorded a $19.2 million recovery due to the termination of a contractual liability at its Lake Charles, Louisiana, property, also reported in "Write-downs, reserves and recoveries."

-- Harrah's wrote off $49.9 million of goodwill related to its Louisiana Downs property. This pre-tax write-off is reported in "Writedowns, reserves and recoveries."

-- Harrah's wrote off $78.6 million, after tax, of intangible assets related to its Gulfport, Mississippi, property. Harrah's has agreed to sell its Gulfport property; consequently, this charge is included in "Discontinued operations."

The recognition of these fourth-quarter impairment charges wasdetermined after consideration of the appropriate accounting guidanceand a review of the status of the impacted properties. The companycontinues to work closely with its insurance carriers and claimsadjusters to ascertain the full amount of the insurance proceeds dueto Harrah's as a result of the damages to fixed assets and coveredlosses it suffered. To the extent that such proceeds received infuture periods ultimately exceed the net book value of the damagedassets and deferred costs, the company will report a gain for thoserecoveries.

As a result of these charges, 2005 fourth-quarter income fromoperations was $111.5 million, compared with $165.0 million in theyear-earlier period. The fourth-quarter net loss was $142.2 million,compared with net income of $76.9 million in the 2004 fourth quarter.The loss per share for the 2005 fourth quarter was 78 cents, comparedwith diluted earnings per share of 68 cents in the year-ago quarter.

In two important gauges of customer loyalty -- same-store salesgrowth and cross-market play -- Harrah's posted strong gains.Fourth-quarter same-store sales at legacy Harrah's properties rose12.3 percent from the year-ago quarter, while cross-market playincreased 23.3 percent; the comparisons exclude properties closed inthe period due to hurricane damages.

"Our ability to deliver such dynamic increases in these keyperformance metrics is a testament not only to the efficacy of astrategy focused on offering unparalleled geographic diversificationand superior customer service, but also on the dedication andprofessionalism of the thousands of employees responsible forexecuting that strategy," said Gary Loveman, chairman, president andchief executive officer of Harrah's Entertainment. "Thanks to theirefforts, we achieved solid revenue growth in most operating marketsand record fourth-quarter revenues in many of them.

"Effective marketing stimulated increased customer loyalty at theHarrah's and Horseshoe brands, resulting in both trip growth andhigher spending per trip across our portfolio of legacy properties,"Loveman said. "From a market perspective, our Las Vegas and AtlanticCity operations performed well throughout the quarter. We also sawpositive momentum building at our Northern Nevada and Horseshoeproperties.

"We began systems integration in the fourth quarter and expect tocomplete integration of Harrah's customer-relationship capabilities --our Total Rewards player-loyalty program and revenue- andyield-management systems -- into the Caesars properties in April2006," Loveman said. "Based upon our experience with other acquiredproperties, we anticipate these capabilities will enable the Caesarsfacilities to benefit from increased market share and visitation."

For the full year, revenues rose 56.3 percent to $7.1 billion from$4.5 billion in 2004. Property EBITDA increased to $1.9 billion, up59.7 percent from $1.2 billion in 2004. Adjusted EPS from ContinuingOperations were $3.44, compared with $3.04 in 2004.

Full-year income from operations was $979.7 million, up 23.8percent from $791.1 million in 2004. Net income in 2005 was $236.4million, compared with $367.7 million in 2004, while 2005 dilutedearnings per share were $1.57, compared with $3.26 a year earlier.Results for 2005 include the contribution of the Caesars businesssince the acquisition date of June 13, 2005. Data for 2004 includeresults of the Horseshoe properties subsequent to their July 1, 2004,acquisition.

Fourth-quarter highlights:

-- Pursuing an aggressive international growth strategy, Harrah's Entertainment signed agreements in November to develop three gaming resorts in the Caribbean and Europe:

-- In Spain, Harrah's signed an agreement with El Reino de Don Quijoite de La Mancha, S.A., to develop a Caesars-branded casino resort in a master-planned community at Ciudad Real, 118 miles south of Madrid. Preliminary plans for the resort include an 850-room luxury hotel, a 50,000-square-foot casino and a 3,000-seat Colosseum theater. The resort will be owned 60 percent by Harrah's and 40 percent by El Reino.

-- Subject to completion of definitive documentation, Harrah's plans to operate a Caesars-branded resort hotel and casino as part of Baha Mar, a 1,000-acre mixed-use project with Baha Mar Resorts and Starwood Hotels & Resorts Worldwide, Inc., in Nassau, The Bahamas.

-- In Nova Gorica, Slovenia, Harrah's signed a memorandum of understanding to develop a luxury hotel and casino as part of a proposed 50-50 joint venture with HIT Group, Slovenia's premier casino operator. Located on the border with Italy, the resort would be Slovenia's first full-amenity casino resort. This project is subject to completion of definitive documentation.

-- In November, Harrah's announced plans for a $550 million upgrade and expansion of Harrah's Atlantic City. The project encompasses a 964-room hotel tower and a 172,000-square-foot retail and entertainment complex, which will include a Red Door spa, an ultra-lounge nightclub, an indoor pool, a new Diamond Lounge, new retail stores, a 650-seat buffet and a 500-seat coffee shop. The existing buffet will be converted into new gaming space, adding 400 slot machines and 20 table games. The entertainment and retail center is expected to open by the end of 2006, while the new hotel tower is scheduled to open in the second quarter of 2008.

-- Harrah's closed on its $370 million acquisition of the Imperial Palace Hotel & Casino in December, strategically positioning the company for future growth on the Las Vegas Strip. The Imperial Palace occupies an 18.5-acre parcel directly between Harrah's Las Vegas and the Flamingo.

-- Harrah's signed a definitive agreement in December to sell the remaining assets of Grand Casino Gulfport. The transaction is expected to close by the end of the first quarter of 2006, subject to receipt of regulatory approvals. Harrah's intends to pursue the development of a resort casino at the former location of the Grand Casino Biloxi.

-- In November, Harrah's signed a definitive agreement to sell the Flamingo Laughlin hotel-casino and an undeveloped land parcel in Atlantic City for $170 million in cash. Assuming regulatory approvals are received, Harrah's expects the transaction to close in mid-2006.

"Our international development strategy is to extend the Caesarsbrand -- widely viewed globally as the most recognizedgaming-entertainment brand -- to high-growth-potential markets aroundthe world that offer stable political and regulatory environments,"Loveman said. "Our international plans are an extension of ourdomestic development strategy, which also focuses on expansion instable jurisdictions."

2005 highlights:

-- Harrah's Entertainment completed its $9.3 billion acquisition of Caesars Entertainment, Inc. in June, cementing the company's position as the largest provider of casino entertainment in the world.

-- Harrah's sold Harrah's Tunica and Harrah's East Chicago to an affiliate of Colony Capital, LLC, in April 2005. The properties were sold in connection with the Harrah's-Caesars merger agreement. Colony also acquired the Atlantic City Hilton and Bally's Tunica from Caesars as part of the transaction.

-- Harrah's named three new members -- William Barron Hilton, Stephen F. Bollenbach and Charles L. Atwood -- to its Board of Directors. Hilton, co-chairman of Hilton Hotels Corp., and Bollenbach, co-chairman and chief executive officer of Hilton Hotels, joined the Harrah's board in June following the completion of Harrah's merger with Caesars Entertainment. Both had previously been members of the Caesars board. Atwood, Harrah's chief financial officer, was appointed to the Harrah's board in July.

-- Harrah's Entertainment led Casino Player's Best of Gaming Awards for the sixth consecutive year, capturing a record 869 awards, including 375 first-place finishes, in the magazine's annual poll of gaming customers from across the country. The company's 2005 performance was boosted by the addition of 18 Caesars Entertainment casinos, which received a total of 141 awards, including 62 first-place honors.

-- The Rio hosted the 36th annual World Series of Poker from June 2 to July 15. The event was the largest poker tournament in history, with more than 32,000 paid tournament registrations and a gross prize pool of more than $106 million -- more than double the size of the 2004 World Series of Poker.

-- The company was forced to close three Gulf Coast casinos on August 30 due to the approach of Hurricane Katrina. Grand Casino Gulfport and Grand Casino Biloxi were destroyed by the storm; Harrah's New Orleans, which also sustained damage, could not reopen until February 2006. In September 2005, Harrah's Lake Charles suffered extensive damage from Hurricane Rita. The property's 263-room hotel re-opened in February 2006, but the gaming facilities, which were severely damaged, are not expected to re-open in the foreseeable future. The company is exploring alternatives that include a possible exit from the Lake Charles market.

In the following tables, Harrah's Entertainment, Inc. retains itsreporting format from previous periods while incorporating propertiesacquired in 2005 as separate line items in each region.

Caesars Acquisition Bolsters Strong Legacy Property Results InWest Region
West Results
(in millions)

2005 2004 Percent 2005 2004 Percent
Fourth Fourth Increase Full Full Increase
Quarter Quarter (Decrease) Year Year (Decrease)
------- ------- ---------- --------- --------- ----------
Harrah's Northern
Nevada
Total
revenues $106.8 $ 99.8 7.0% $ 456.6 $ 452.4 0.9%
Income from
operations 8.9 3.4 161.8% 67.1 60.0 11.8%
Property
EBITDA 19.8 15.2 30.3% 106.4 103.1 3.2%
Harrah's Southern
Nevada
Total
revenues 283.7 265.5 6.9% 1,128.0 1,062.5 6.2%
Income from
operations 63.2 58.4 8.2% 283.0 246.0 15.0%
Property
EBITDA 91.1 75.5 20.7% 366.4 316.1 15.9%
Harrah's West
Total
revenues 390.5 365.3 6.9% 1,584.6 1,514.9 4.6%
Income from
operations 72.1 61.8 16.7% 350.1 306.0 14.4%
Property
EBITDA 110.9 90.7 22.3% 472.8 419.2 12.8%
Acquired
properties (a)
Total
revenues 468.6 - N/A 981.1 - N/A
Income from
operations 89.5 - N/A 194.4 - N/A
Property
EBITDA 124.2 - N/A 266.5 - N/A
Total West
Region
Total
revenues $859.1 $365.3 135.2% $2,565.7 $1,514.9 69.4%
Income from
operations 161.6 61.8 161.5% 544.5 306.0 77.9%
Property
EBITDA 235.1 90.7 159.2% 739.3 419.2 76.4%

(a) Acquired properties include Caesars Palace, Bally's/Paris,
Flamingo Las Vegas and Imperial Palace. 2005 full-year results
include results from Caesars properties from June 13, 2005. 2005
fourth-quarter results include results from Imperial Palace from
December 22, 2005.

Harrah's three legacy properties in Southern Nevada each reportedrecord results. Revenues rose 6.9 percent and Property EBITDAincreased 20.7 percent from the 2004 fourth quarter. Strongcross-market visitation throughout the 2005 fourth quarter bolsteredresults.

Effective marketing helped Northern Nevada revenues rise 7.0percent and Property EBITDA increase 30.3 percent to record levels,continuing the positive momentum achieved in the 2005 third quarter.

West Region gains were also enhanced by the addition of Caesars'four Nevada properties -- Caesars Palace, Bally's Las Vegas, Paris LasVegas and the Flamingo Las Vegas. These properties combined posted an8.7 percent gain in total revenues and a 6.4 percent increase inProperty EBITDA compared with what Caesars reported in the 2004 fourthquarter as a separate company.

"We expect our revenue-management and customer-loyaltycapabilities will continue to help stimulate gains at both the legacyHarrah's properties and the acquired facilities in the West Region,"said Tim Wilmott, Harrah's chief operating officer.

East Region Continues Solid Performance
East Results
(in millions)
2005 2004 Percent 2005 2004 Percent
Fourth Fourth Increase Full Full Increase
Quarter Quarter (Decrease) Year Year (Decrease)
-------- -------- ---------- --------- ------- ----------
Harrah's Atlantic
City
Total
revenues $110.3 $96.0 14.9% $449.9 $423.3 6.3%
Income from
operations 26.4 18.1 45.9% 121.4 109.4 11.0%
Property
EBITDA 36.7 28.1 30.6% 162.7 148.0 9.9%
Showboat Atlantic
City
Total
revenues 93.9 82.0 14.5% 384.7 357.6 7.6%
Income from
operations 21.2 15.5 36.8% 94.1 90.4 4.1%
Property
EBITDA 29.2 24.1 21.2% 137.1 123.5 11.0%
Harrah's East
Total
revenues 204.2 178.0 14.7% 834.6 780.9 6.9%
Income from
operations 47.6 33.6 41.7% 215.5 199.8 7.9%
Property
EBITDA 65.9 52.2 26.2% 299.8 271.5 10.4%
Acquired
properties
(b)
Total
revenues 277.2 - N/A 651.1 - N/A
Income from
operations 49.9 - N/A 140.0 - N/A
Property
EBITDA 72.6 - N/A 193.5 - N/A
Total East
Region
Total
revenues $481.4 $178.0 170.4% $1,485.7 $780.9 90.3%
Income from
operations 97.5 33.6 190.2% 355.5 199.8 77.9%
Property
EBITDA 138.5 52.2 165.3% 493.3 271.5 81.7%

(b) Acquired properties include Caesars Atlantic City and Bally's
Atlantic City. 2005 full-year results include results from Caesars
properties from June 13, 2005.

Aggressive marketing helped the Harrah's and Showboat propertiesin Atlantic City post strong fourth-quarter results, with combinedrevenues rising 14.7 percent from the 2004 fourth quarter and PropertyEBITDA increasing 26.2 percent to a record level. Year-ago resultswere impacted by an October 2004 strike that affected all of thecompany's Atlantic City operations.

Results in the East Region included contributions from CaesarsAtlantic City and Bally's Atlantic City, acquired on June 13, 2005.Their combined revenues were 15.5 percent higher and EBITDA was 42.4percent higher than what Caesars reported in the 2004 fourth quarter.

"Site work is under way on the $550 million expansion of Harrah'sAtlantic City that will open in stages, beginning with a newentertainment and retail center that will be ready around the end ofthe year," said Wilmott.

North Central Revenues Rise
North Central Results
(in millions)
2005 2004 Percent
Fourth Fourth Increase
Quarter Quarter (Decrease)
----------- --------- -----------
Illinois/Indiana
Total revenues $197.4 $187.2 5.4%
Income from operations 29.1 33.0 -11.8%
Property EBITDA 37.1 40.0 -7.3%
Iowa
Total revenues 60.3 64.6 -6.7%
Income from operations 10.5 13.8 -23.9%
Property EBITDA 17.4 19.8 -12.1%
Missouri
Total revenues 125.8 119.7 5.1%
Income from operations 16.0 20.7 -22.7%
Property EBITDA 30.4 34.0 -10.6%
Harrah's North Central
Total revenues 383.5 371.5 3.2%
Income from operations 55.6 67.5 -17.6%
Property EBITDA 84.9 93.8 -9.5%
Caesars Indiana (c)
Total revenues 79.3 - N/A
Income from operations 9.7 - N/A
Property EBITDA 17.9 - N/A
Total North Central
Total revenues $462.8 $371.5 24.6%
Income from operations 65.3 67.5 -3.3%
Property EBITDA 102.8 93.8 9.6%


North Central Results
(in millions)
2005 2004 Percent
Full Full Increase
Year Year (Decrease)
----------- ----------- -----------
Illinois/Indiana
Total revenues $ 825.4 $ 587.8 40.4%
Income from operations 148.4 103.0 44.1%
Property EBITDA 180.9 126.2 43.3%
Iowa
Total revenues 248.9 254.0 -2.0%
Income from operations 46.1 68.1 -32.3%
Property EBITDA 72.1 75.7 -4.8%
Missouri
Total revenues 486.0 458.1 6.1%
Income from operations 73.0 78.2 -6.6%
Property EBITDA 124.8 123.1 1.4%
Harrah's North Central
Total revenues 1,560.3 1,299.9 20.0%
Income from operations 267.5 249.3 7.3%
Property EBITDA 377.8 325.0 16.2%
Caesars Indiana (c)
Total revenues 174.1 - N/A
Income from operations 28.6 - N/A
Property EBITDA 43.0 - N/A
Total North Central
Total revenues $1,734.4 $1,299.9 33.4%
Income from operations 296.1 249.3 18.8%
Property EBITDA 420.8 325.0 29.5%

(c) 2005 full-year results include results from Caesars Indiana from
June 13, 2005

Combined revenues at Harrah's properties in Illinois, Indiana,Iowa and Missouri rose 3.2 percent in the fourth quarter, whilecombined Property EBITDA declined 9.5 percent from the year-earlierperiod.

"The fourth-quarter decrease in Harrah's Property EBITDAyear-over-year was related to additional costs incurred due to highdirect-mail and promotional expenses," Wilmott said.

Missouri results were lower due to competitive factors in thosemarkets. Iowa results declined due to construction disruption at theBluffs Run property.

North Central Region results in the quarter included contributionsfrom Caesars Indiana, whose revenues rose 3.0 percent and PropertyEBITDA declined 5.8 percent in the fourth quarter of 2004, when it waspart of Caesars Entertainment.

"In March, we expect to open the $86.6 million expansion of BluffsRun, which will be re-branded as a Horseshoe property and introducetable games to the only land-based casino in the Omaha market,"Wilmott said.

Hurricanes, Intangible Asset Write-Offs Impact South CentralResults
South Central Results
(in millions)
2005 2004 Percent 2005 2004 Percent
Fourth Fourth Increase Full Full Increase
Quarter Quarter (Decrease) Year Year (Decrease)
-------- -------- ---------- --------- ------- ----------
Louisiana
Total
revenues $ 90.7 $198.9 -54.4% $ 700.2 $762.5 -8.2%
Income from
operations (93.0) 21.3 N/M (39.8) 97.3 N/M
Property
EBITDA 23.3 35.0 -33.4% 137.7 148.6 -7.3%
Mississippi
Total
revenues 65.2 55.3 17.9% 246.4 113.4 117.3%
Income from
operations 15.4 11.2 37.5% 59.6 25.8 131.0%
Property
EBITDA 19.3 15.8 22.2% 76.1 33.4 127.8%
Harrah's South
Central
Total
revenues 155.9 254.2 -38.7% 946.6 875.9 8.1%
Income from
operations (77.6) 32.5 N/M 19.8 123.1 -83.9
Property
EBITDA 42.6 50.8 -16.1% 213.8 182.0 17.5%
Acquired
properties
(d)
Total
revenues 80.1 - N/A 221.7 - N/A
Income from
operations (74.1) - N/A (48.0) - N/A
Property
EBITDA 18.4 - N/A 53.9 - N/A
Total South
Central
Total
revenues $ 236.0 $254.2 -7.2% $1,168.3 $875.9 33.4%
Income from
operations (151.7) 32.5 N/M (28.2) 123.1 N/M
Property
EBITDA 61.0 50.8 20.1% 267.7 182.0 47.1%

(d) Acquired properties include Grand Casino Tunica, Sheraton Tunica
and Grand Casino Biloxi from June 13, 2005.

Fourth-quarter results in the South Central region, which includethe Louisiana and Mississippi properties, were severely affected bythe hurricane-related closures of four properties and write-offs ofintangible assets. As a result, combined revenues for legacy Harrah'sproperties declined 38.7 percent and Property EBITDA was down 16.1percent from the 2004 fourth quarter.

Harrah's New Orleans, which had been closed since August 30, 2005,reopened on February 17, 2006. Harrah's Lake Charles reopened itshotel in February 2006, but the company is considering its options,including a possible exit from this market.

The financial results for the South Central Region includewrite-offs of intangible assets, reported in Write-downs, reserves andrecoveries, totaling $194.7 million associated with the Grand CasinoBiloxi, Harrah's Lake Charles and Harrah's Louisiana Downs properties.The write-downs of these assets followed the completion by the companyof its annual impairment review of non-amortizing intangible assets,which is performed during the fourth quarter. The Biloxi and LakeCharles properties were heavily damaged by hurricanes.

Grand Casino Biloxi, acquired in the Caesars transaction, wasclosed throughout the fourth quarter. An agreement has been reached tosell the site of the former Grand Casino Gulfport, so the financialresults for this property have been reclassified to Discontinuedoperations and are therefore not included in the South CentralRegion's results.

Managed Properties and Other Items

Fourth-quarter gross management fees rose 15.9 percent due largelyto expansions at two properties managed for Indian tribes.

Corporate expense increased 44.1 percent from the 2004 fourthquarter due to the addition of Caesars' corporate expenses and thecosts of transforming Harrah's corporate centers to manage thecombined company. Corporate expense for the 2005 fourth quarterequaled 1.3 percent of revenues, compared with 1.6 percent in theyear-ago quarter.

The amortization of intangible assets includes the estimatedamortization of certain intangible assets acquired in the Caesarstransaction. The amortization is based on estimates of the value ofthese assets per the preliminary purchase-price allocation. Thefourth-quarter expense of $10.5 million is net of $9.1 million toreflect the reduction in the third-quarter estimate of amortizationexpense following the refinement of the purchase-price allocation. Thepurchase-price allocation process is still under way and subject tofurther adjustment until the company completes its review andfinalizes this information in the first half of 2006.

Interest expense was more than double the 2004 fourth-quarteramount due to additional debt related to the Caesars acquisition. Thecompany recorded $19.1 million in costs during the quarter related tothe integration of the Caesars.

Despite recording a pre-tax loss from continuing operations, thecompany recorded an income-tax provision for the 2005 fourth quarterdue to the impact on the provision calculation of certain of theintangible assets impairment charges for which the company will notreceive a tax deduction. The fourth-quarter tax provision is partiallyoffset by tax credits that will be received due to payment of payrollto employees impacted by Hurricanes Katrina and Rita. The annual taxrate for 2005 was 46.4 percent. Excluding the impact of thesepermanent items from the tax-rate calculation, the effective tax ratesfor fourth quarter and full year 2005 were 31.6 percent and 36.6percent, respectively. The 2004 fourth-quarter tax rate was 33.8percent and the full-year rate 36.7 percent.

Discontinued operations for the fourth quarter of 2005 include thefinancial results of the Grand Casino Gulfport, the Reno Hilton andthe Flamingo Laughlin, all of which were acquired in the Caesarstransaction and have been classified as assets held for sale. Harrah'scompleted the sale of a Nova Scotia hotel in the fourth quarter of2005. Discontinued operations for the 2004 fourth quarter included theoperating results of Harrah's East Chicago and Harrah's Tunica, whichwere sold in April 2005.

Weighted average shares outstanding for fourth quarter were 182.8million shares, compared with 113.7 million in the 2004 fourthquarter. For 2005, weighted average shares outstanding were 150.2million, compared with 112.9 million in 2004. The increases are dueprimarily to the 67.9 million shares issued in June 2005 in connectionwith the Caesars acquisition.

Conference Call Details

Harrah's Entertainment will host a conference call Wednesday,February 22, 2006, at 9:00 a.m. Eastern Standard Time to review its2005 fourth-quarter and full-year results. Those interested inparticipating in the call should dial 888-399-2695, or 706-679-7646for international callers, approximately 10 minutes before the callstart time.

A taped replay of the conference call can be accessed at800-642-1687, or 706-645-9291 for international callers, beginning at10:00 a.m. EST Wednesday, February 22. The replay will be availablethrough 11:59 p.m. EST on Wednesday, March 1. The passcode number forthe replay is 4209247.

Interested parties wanting to listen to the live conference callon the Internet may do so on the company's web site -- www.harrahs.com-- in the Investor Relations section under the Investor News tab.

Harrah's Entertainment, Inc. is the world's largest provider ofbranded casino entertainment. Since its beginning in Reno, Nevada 68years ago, Harrah's has grown through development of new properties,expansions and acquisitions. Harrah's Entertainment is focused onbuilding loyalty and value with its customers through a uniquecombination of great service, excellent products, unsurpasseddistribution, operational excellence and technology leadership.

More information about Harrah's is available at its Web site --www.harrahs.com.

This release includes "forward-looking statements" intended toqualify for the safe harbor from liability established by the PrivateSecurities Litigation Reform Act of 1995. You can identify thesestatements by the fact that they do not relate strictly to historicalor current facts. These statements contain words such as "may,""will," "project," "might," "expect," "believe," "anticipate,""intend," "could," "would," "estimate," "continue" or "pursue," or thenegative or other variations thereof or comparable terminology. Inparticular, they include statements relating to, among other things,future actions, strategies, future performance and future financialresults of Harrah's. These forward-looking statements are based oncurrent expectations and projections about future events.

Investors are cautioned that forward-looking statements are notguarantees of future performance or results and involve risks anduncertainties that cannot be predicted or quantified and,consequently, the actual performance of Harrah's may differ materiallyfrom those expressed or implied by such forward-looking statements.Such risks and uncertainties include, but are not limited to, thefollowing factors as well as other factors described from time to timein our reports filed with the Securities and Exchange Commission(including the sections entitled "Risk Factors" and "Management'sDiscussion and Analysis of Financial Condition and Results ofOperations" contained therein); financial community and rating agencyperceptions of Harrah's; the effects of economic, credit and capitalmarket conditions on the economy in general, and on gaming and hotelcompanies in particular; construction factors, including delays,zoning issues, environmental restrictions, soil and water conditions,weather and other hazards, site access matters and building permitissues; the effects of environmental and structural buildingconditions relating to our properties; the ability to timely andcost-effectively integrate into Harrah's operations the companies thatit acquires, including with respect to its acquisition of Caesars;access to available and feasible financing on a timely basis; changesin laws (including increased tax rates), regulations or accountingstandards, third-party relations and approvals, and decisions ofcourts, regulators and governmental bodies; litigation outcomes andjudicial actions, including gaming legislative action, referenda andtaxation; the ability of our customer-tracking, customer loyalty andyield-management programs to continue to increase customer loyalty andsame store sales; our ability to recoup costs of capital investmentsthrough higher revenues; acts of war or terrorist incidents; abnormalgaming holds; and the effects of competition, including locations ofcompetitors and operating and market competition.

Any forward-looking statements are made pursuant to the PrivateSecurities Litigation Reform Act of 1995 and, as such, speak only asof the date made. Harrah's disclaims any obligation to update theforward-looking statements. You are cautioned not to place unduereliance on these forward-looking statements which speak only as ofthe date stated, or if no date is stated, as of the date of this pressrelease.


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

Fourth Quarter Year Ended
Ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(In millions, except per share
amounts) 2005 2004 2005 2004
--------- -------- -------------------

Revenues $ 2,094.7 $1,189.0 $ 7,111.0 $ 4,548.3
Property operating expenses (1,560.2) (900.3) (5,168.2) (3,331.5)
Depreciation and amortization (158.5) (89.1) (496.5) (327.2)
--------- -------- --------- ---------
Operating profit 376.0 199.6 1,446.3 889.6

Corporate expense (27.1) (18.8) (97.7) (66.8)
Caesars acquisition costs (19.1) (2.3) (55.0) (2.3)
Income/(losses) on interests in
nonconsolidated affiliates 0.6 (0.6) 1.2 (0.9)
Amortization of intangible
assets (10.5) (3.7) (49.9) (9.4)
Project opening costs (4.1) (1.7) (16.4) (9.5)
Write-downs, reserves and
recoveries (204.3) (7.5) (248.8) (9.6)
--------- -------- --------- ---------

Income from operations 111.5 165.0 979.7 791.1
Interest expense, net of
interest Capitalized (161.0) (76.3) (481.2) (271.8)
Losses on early extinguishments
of debt (1.1) - (3.3) -
Other income, including
interest income 4.0 4.1 8.0 9.5
--------- -------- --------- ---------

(Loss)/income before income
taxes and minority interests (46.6) 92.8 503.2 528.8
Provision for income taxes (20.8) (30.7) (227.8) (190.7)
Minority interests (3.0) (2.3) (11.9) (8.6)
--------- -------- --------- ---------
(Loss)/income from continuing
operations (70.4) 59.8 263.5 329.5
Discontinued operations, net of
tax (71.8) 17.1 (27.1) 38.2
--------- -------- --------- ---------
Net (loss)/income $ (142.2)$ 76.9 $ 236.4 $ 367.7
========= ======== --------- ---------

Earnings per share - basic
(Loss)/income from continuing
Operations $ (0.39)$ 0.54 $ 1.78 $ 2.97
Discontinued operations, net
of tax (0.39) 0.15 (0.18) 0.34
--------- -------- --------- ---------
Net (loss)/income $ (0.78)$ 0.69 $ 1.60 $ 3.31
========= ======== ========= =========

Earnings per share - diluted
(Loss)/income from continuing
Operations $ (0.39)$ 0.53 $ 1.75 $ 2.92
Discontinued operations, net
of tax (0.39) 0.15 (0.18) 0.34
--------- -------- --------- ---------
Net (loss)/income $ (0.78)$ 0.68 $ 1.57 $ 3.26
========= ======== ========= =========

Weighted average common shares
Outstanding 182.8 111.4 148.0 111.2
========= ======== ========= =========
Weighted average common and
common equivalent shares
outstanding 182.8 113.7 150.2 112.9
========= ======== ========= =========



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

Fourth Quarter Year Ended
Ended
------------------ -----------------
(In millions) Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
-------- -------- -------- --------
Revenues
West Region $ 859.1 $ 365.3 $2,565.7 $1,514.9
East Region 481.4 178.0 1,485.7 780.9
North Central Region 462.8 371.5 1,734.4 1,299.9
South Central Region 236.0 254.2 1,168.3 875.9
Managed 20.3 15.2 75.7 60.7
Other 35.1 4.8 81.2 16.0
-------- -------- -------- --------
Total revenues $2,094.7 $1,189.0 $7,111.0 $4,548.3
======== ======== ======== ========

Income/(loss) from operations
West Region $ 161.6 $ 61.8 $ 544.5 $ 306.0
East Region 97.5 33.6 355.5 199.8
North Central Region 65.3 67.5 296.1 249.3
South Central Region (151.7) 32.5 (28.2) 123.1
Managed 15.8 12.6 60.9 51.7
Other (30.8) (21.9) (96.4) (69.7)
Corporate expense (27.1) (18.8) (97.7) (66.8)
Caesars acquisition costs (19.1) (2.3) (55.0) (2.3)
-------- -------- -------- --------
Total income from operations $ 111.5 $ 165.0 $ 979.7 $ 791.1
======== ======== ======== ========

Property EBITDA (e)
West Region $ 235.1 $ 90.7 $ 739.3 $ 419.2
East Region 138.5 52.2 493.3 271.5
North Central Region 102.8 93.8 420.8 325.0
South Central Region 61.0 50.8 267.7 182.0
Managed 16.2 12.8 64.7 52.1
Other (19.1) (11.6) (43.0) (33.0)
-------- -------- -------- --------
Total Property EBITDA $ 534.5 $ 288.7 $1,942.8 $1,216.8
======== ======== ======== ========

Write-downs, reserves and recoveries
Impairment of goodwill and other
intangible assets $ 194.7 $ - $ 194.7 $ -
Hurricane expense 20.7 - 41.5 -
Cancellation of contractual
liability (19.2) - (19.2) -
Contribution to The Harrah's
Foundation - - 10.0 10.0
True-up of Bluffs Run prior
period's gaming tax accrual - - - (16.6)
Other 8.1 7.5 21.8 16.2
-------- -------- -------- --------
Total write-downs, reserves
and recoveries $ 204.3 $ 7.5 $ 248.8 $ 9.6
======== ======== ======== ========

(e) 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, Caesars
acquisition costs, income/(losses) on interests in nonconsolidated
affiliates 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.



HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
CALCULATION OF ADJUSTED EARNINGS PER SHARE (e)
(UNAUDITED)

Fourth Quarter Year Ended
Ended
----------------- -----------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(In millions, except per share
amounts) 2005 2004 2005 2004
-------- ------- ------- -------

(Loss)/income before income taxes
and minority interests $ (46.6) $ 92.8 $ 503.2 $ 528.8
Add/(deduct):
Write-downs, reserves and
recoveries 204.3 7.5 248.8 9.6
Caesars acquisition costs 19.1 2.3 55.0 2.3
Project opening costs 4.1 1.7 16.4 9.5
Losses on early extinguishments
of debt 1.1 - 3.3 -
-------- ------- ------- -------
Adjusted income before income taxes
and minority interests 182.0 104.3 826.7 550.2
Provision for income taxes (56.6) (34.5) (298.2) (198.5)
Minority interests (3.0) (2.3) (11.9) (8.6)
-------- ------- ------- -------

Adjusted income from continuing
operations 122.4 67.5 516.6 343.1
Discontinued operations, net of
tax (71.8) 17.1 (27.1) 38.2
Add/(deduct):
Gain on sale of discontinued
operations, net of tax (5.6) - (25.4) -
Valuation allowance provided for
unrealizable net operating loss
carry-forwards related to Harrah's
Tunica 2.2 (2.5) 3.0 (2.5)
Write-downs, reserves and
recoveries and project opening
costs of discontinued operations 78.6 0.1 78.7 1.3
-------- ------- ------- -------

Adjusted net income $ 125.8 $ 82.2 $ 545.8 $ 380.1
======== ======= ======= =======

Diluted adjusted earnings per share
from continuing operations $ 0.66 $ 0.59 $ 3.44 $ 3.04
======== ======= ======= =======
net income $ 0.68 $ 0.72 $ 3.63 $ 3.37
======== ======= ======= =======
Weighted average common and common
equivalent shares outstanding 185.0 113.7 150.2 112.9
======== ======= ======= =======

(e) Adjusted Earnings Per Share (EPS) is a supplemental financial
measure used by management, as well as industry analysts, to
evaluate our operations. However, Adjusted EPS should not be
construed as an alternative to Earnings Per Share as determined in
accordance with generally accepted accounting principles. Adjusted
EPS as presented by our Company may not be comparable to similarly
titled measures presented by other companies, as such measures may
not be calculated consistently.



HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS
(UNAUDITED)

(In millions)
Fourth Quarter Ended Dec. 31, 2005

West East North South Managed Total
Region Region Central Central and
Region Region Other

Revenues (f) $ 859.1 $ 481.4 $ 462.8 $ 236.0 $ 55.4 $ 2,094.7
Property operating
expenses (624.0) (342.9) (360.0) (175.0) (58.3) (1,560.2)
------- ------- ------- ------- ------ ---------
Property EBITDA 235.1 138.5 102.8 61.0 (2.9) 534.5
Depreciation and
amortization (63.7) (35.1) (31.2) (19.1) (9.4) (158.5)
------- ------- ------- ------- ------ ---------
Operating profit 171.4 103.4 71.6 41.9 (12.3) 376.0
Amortization of
intangible assets (0.1) (3.3) (4.4) (0.4) (2.3) (10.5)
Income on interests
in nonconsolidated
affiliates 0.6 0.6
Write-downs, reserves
and recoveries and
project opening costs (9.7) (2.6) (1.9) (193.2) (1.0) (208.4)
Corporate expense (27.1) (27.1)
Caesars acquisition
costs (19.1) (19.1)
------- ------- ------- ------- ------ ---------
Income from
operations $ 161.6 $ 97.5 $ 65.3 $(151.7)$(61.2)$ 111.5
======= ======= ======= ======= ====== =========


Fourth Quarter Ended Dec. 31, 2004

West East North South Managed Total
Region Region Central Central and
Region Region Other

Revenues (f) $ 365.3 $ 178.0 $ 371.5 $ 254.2 $ 20.0 $ 1,189.0
Property operating
expenses (274.6) (125.8) (277.7) (203.4) (18.8) (900.3)
------- ------- ------- ------- ------ ---------
Property EBITDA 90.7 52.2 93.8 50.8 1.2 288.7
Depreciation and
amortization (27.1) (18.1) (23.5) (15.6) (4.8) (89.1)
------- ------- ------- ------- ------ ---------
Operating profit 63.6 34.1 70.3 35.2 (3.6) 199.6
Amortization of
intangible assets (0.1) - (1.3) (1.7) (0.6) (3.7)
Losses on interests
in nonconsolidated
affiliates - - - - (0.6) (0.6)
Write-downs, reserves
and recoveries and
project opening costs (1.7) (0.5) (1.5) (1.0) (4.5) (9.2)
Corporate expense - - - - (18.8) (18.8)
Caesars acquisition
costs - - - - (2.3) (2.3)
------- ------- ------- ------- ------ ---------
Income from
operations $ 61.8 $ 33.6 $ 67.5 $ 32.5 $(30.4)$ 165.0
======= ======= ======= ======= ====== =========

(f) Total Income from operations as reported on this schedule
corresponds with the amounts reported for the respective periods
on our CONSOLIDATED SUMMARY OF OPERATIONS. See our CONSOLIDATED
SUMMARY OF OPERATIONS for the additional income and expenses
recorded in the determination of Net income and Earnings per share
for the periods presented.



HARRAH'S ENTERTAINMENT, INC.
SUPPLEMENTAL INFORMATION
RECONCILIATION OF PROPERTY EBITDA TO INCOME FROM OPERATIONS
(UNAUDITED)

(In millions)
Year Ended Dec. 31, 2005
West East North
Region Region Central
Region

Revenues (g) $ 2,565.7 $1,485.7 $ 1,734.4
Property operating expenses (1,826.4) (992.4) (1,313.6)
---------- -------- ---------
Property EBITDA 739.3 493.3 420.8
Depreciation and
amortization (177.5) (109.1) (106.4)
---------- -------- ---------
Operating profit 561.8 384.2 314.4
Amortization of intangible
assets (7.6) (14.9) (10.9)
Income on interests in
nonconsolidated affiliates
Write-downs, reserves and recoveries
and project opening costs (9.7) (13.8) (7.4)
Corporate expense
Caesars acquisition costs
--------------------------------------
Income from operations $ 544.5 $ 355.5 $ 296.1
========== ======== =========


Year Ended Dec. 31, 2004
West East North
Region Region Central
Region

Revenues (g) $ 1,514.9 $ 780.9 $ 1,299.9
Property operating expenses (1,095.7) (509.4) (974.9)
---------- -------- ---------
Property EBITDA 419.2 271.5 325.0
Depreciation and
amortization (106.0) (70.0) (83.2)
---------- -------- ---------
Operating profit 313.2 201.5 241.8
Amortization of
intangible assets (0.7) - (4.7)
Losses on interests in
nonconsolidated affiliates - - -
Write-downs, reserves and
recoveries and project opening
costs (6.5) (1.7) 12.2
Corporate expense - - -
Caesars acquisition costs - - -
---------- -------- ---------
Income from operations $ 306.0 $ 199.8 $ 249.3
========== ======== =========


(In millions)
Year Ended Dec. 31, 2005
South Managed Total
Central and
Region Other

Revenues (g) $ 1,168.3 $ 156.9 $ 7,111.0
Property operating expenses (900.6) (135.2) (5,168.2)
--------- ------- ----------
Property EBITDA 267.7 21.7 1,942.8
Depreciation and
amortization (72.0) (31.5) (496.5)
--------- ------- ----------
Operating profit 195.7 (9.8) 1,446.3
Amortization of intangible
assets (7.5) (9.0) (49.9)
Income on interests in
nonconsolidated affiliates 1.2 1.2
Write-downs, reserves and
recoveries and project opening
costs (216.4) (17.9) (265.2)
Corporate expense (97.7) (97.7)
Caesars acquisition costs (55.0) (55.0)
------------- ------- ----------
Income from operations $ (28.2) $(188.2) $ 979.7
========= ======= ==========


Year Ended Dec. 31, 2004
South Managed Total
Central and
Region Other

Revenues (g) $ 875.9 $ 76.7 $ 4,548.3
Property operating expenses (693.9) (57.6) (3,331.5)
--------- ------- ----------
Property EBITDA 182.0 19.1 1,216.8
Depreciation and
amortization (50.6) (17.4) (327.2)
--------- ------- ----------
Operating profit 131.4 1.7 889.6
Amortization of
intangible assets (2.7) (1.3) (9.4)
Losses on interests in
nonconsolidated affiliates - (0.9) (0.9)
Write-downs, reserves and
recoveries and project opening
costs (5.6) (17.5) (19.1)
Corporate expense - (66.8) (66.8)
Caesars acquisition costs - (2.3) (2.3)
--------- ------- ----------
Income from operations $ 123.1 $ (87.1) $ 791.1
========= ======= ==========

(g) Total Income from operations as reported on this schedule
corresponds with the amounts reported for the respective periods
on our CONSOLIDATED SUMMARY OF OPERATIONS. See our CONSOLIDATED
SUMMARY OF OPERATIONS for the additional income and expenses
recorded in the determination of Net income and Earnings per share
for the periods presented.