Gary Loveman




Chairman, Chief Executive Officer and President
Safe Harbor Statement
This presentation includes quot;forward-looking statementsquot; intended to qualify for the safe har...
At the foot of a steep growth curve through acquisition…

                                                     1999


    ...
At the foot of a steep growth curve overseas…




                Harrah’s Entertainment, Inc.
                Confidentia...
At the foot of a steep growth curve in Las Vegas…




                  Harrah’s Entertainment, Inc.
                  Con...
At the foot of a steep growth curve in Atlantic City…




                    Harrah’s Entertainment, Inc.
               ...
Company Overview
Largest provider of branded casino entertainment
4 million square feet of casino space
40,000 hotel rooms...
Industry’s Broadest Footprint




          Harrah’s Entertainment, Inc.
          Confidential and Proprietary
          ...
A Portfolio of Winning Brands




           Harrah’s Entertainment, Inc.
           Confidential and Proprietary
        ...
Financial Strength
Only investment-grade gaming company
Borrows at industry’s most competitive rates
Nearly $2 billion of ...
Diversity Of Cash Flow Provides Stability, Funds Growth

 Region                                    # Properties   % EBITD...
#1 or #2 in every market in which we compete


Atlantic City                                       Las Vegas
Chicagoland  ...
HET Core Strategy
Drive same-store growth, cross-market play through
 superior marketing and technological capabilities


...
Evidence of HET’s organic growth engine

               Cross-market play                                                 ...
Loyalty strategy reflected in 3Q resilience
                  Third-quarter rated customer trip growth

              Nati...
Total Rewards: implications for 4 Caesars LV properties
                              5%                      11%   100%
 ...
Horseshoe – Merger Success
                                                                                            EPS...
Growth opportunity



      Harrah’s Entertainment, Inc.
      Confidential and Proprietary
                 2005
Controllable growth pipeline

                                                     New
   Organic    Reinvestment
        ...
El Reino – Ciudad Real, Spain
                                          • 50,000 sq. ft. casino
                          ...
Harrah’s Chester Casino and Racetrack




               Harrah’s Entertainment, Inc.
               Confidential and Prop...
Baha Mar – Nassau, Bahamas




          Harrah’s Entertainment, Inc.
          Confidential and Proprietary
             ...
Baha Mar – Nassau, Bahamas




          Harrah’s Entertainment, Inc.
          Confidential and Proprietary
             ...
Prime Center Strip
                               Land Bank

                               18,000 Total Guest
           ...
An attractive value




      Harrah’s Entertainment, Inc.
      Confidential and Proprietary
                 2005
Valuation Comparison
    Forward EV/EBITDA Multiple




                                 10.5x
                           ...
Consistent Value Creation
                HET ROIC vs. WACC comparison
10%




                                           ...
Despite successful growth record, HET prospects discounted
  Current Firm Value = NOPAT / WACC                            ...
HET focused on shareholder value
                                                                                         ...
Positioned for long-term growth

Stable, diversified cash flow from operations
Consistent value creation
Strong position i...
This presentation and all trademarks appearing in this presentation are the sole and exclusive
    property of Harrah's Li...
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harrah's entertainment Citi_EMT_Conf_1_9_06

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harrah's entertainment Citi_EMT_Conf_1_9_06

  1. 1. Gary Loveman Chairman, Chief Executive Officer and President
  2. 2. Safe Harbor Statement This presentation includes quot;forward-looking statementsquot; 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 contain words such as quot;may,quot; quot;will,quot; quot;project,quot; quot;might,quot; quot;expect,quot; quot;believe,quot; quot;anticipate,quot; quot;intend,quot; quot;could,quot; quot;would,quot; quot;estimate,quot; quot;continuequot; or quot;pursue,quot; or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, strategies, future performance, and future financial results of Harrah's Entertainment, Inc. These forward-looking statements are based on current expectations and projections about future events. Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, the actual performance or results of Harrah's 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 (including the sections entitled quot;Risk Factorsquot; and quot;Management's Discussion and Analysis of Financial Condition and Results of Operationsquot; contained therein): financial community and rating agency perceptions of Harrah's; the effects 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 our properties; the ability to timely and cost-effectively integrate into Harrah's operations the companies that it acquires, access to available and feasible financing on a timely basis; 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; the ability of our customer-tracking, customer loyalty and yield-management programs to continue to increase customer loyalty and same store sales; 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. Harrah's disclaims any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date stated, or if no date is stated, as of the date of this press release. Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  3. 3. At the foot of a steep growth curve through acquisition… 1999 2004 1998 2005 Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  4. 4. At the foot of a steep growth curve overseas… Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  5. 5. At the foot of a steep growth curve in Las Vegas… Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  6. 6. At the foot of a steep growth curve in Atlantic City… Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  7. 7. Company Overview Largest provider of branded casino entertainment 4 million square feet of casino space 40,000 hotel rooms 100,000 employees 40 million Total Rewards members Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  8. 8. Industry’s Broadest Footprint Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  9. 9. A Portfolio of Winning Brands Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  10. 10. Financial Strength Only investment-grade gaming company Borrows at industry’s most competitive rates Nearly $2 billion of capacity under revolver Revenues of $8.7 billion on a pro-forma basis in 2004 Highest dividend yield in the gaming industry 2.0% Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  11. 11. Diversity Of Cash Flow Provides Stability, Funds Growth Region # Properties % EBITDA Las Vegas 7 35% Atlantic City 5 26% LA/MS 5 9% Illinois/Indiana 4 11% Iowa/MO 4 9% Managed / Intl / Other 12 10% TOTAL 37 100% Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  12. 12. #1 or #2 in every market in which we compete Atlantic City Las Vegas Chicagoland St. Louis Mississippi Kansas City S. Illinois Laughlin Shreveport/ Bossier City New Orleans Reno/Tahoe Council Bluffs HET gained share in nearly all of its markets (thru 3Q05) Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  13. 13. HET Core Strategy Drive same-store growth, cross-market play through superior marketing and technological capabilities Brand Loyalty Decision Science Capabilities Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  14. 14. Evidence of HET’s organic growth engine Cross-market play Same-store sales growth CAGR: 18% 1,670 1,800 1,456 1,600 10% 1,256 7.5% 7.5% 1,400 6.5% 1,063 1,200 5.7% 881 4.9% 1,000 749 800 5% 600 1.5% 400 200 0% 0 2000 2001 2002 2003 2004 Thru 2000 2001 2002 2003 2004 2005* 3Q05 *2005 based on 16.7% growth in Cross Market Play to date. Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  15. 15. Loyalty strategy reflected in 3Q resilience Third-quarter rated customer trip growth National Regional Local (300+ miles) (70 – 300 miles) (< 70 miles) 11% 11% 16% VIP 3% 4% 10% AEP -1% 0% 4% Retail Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  16. 16. Total Rewards: implications for 4 Caesars LV properties 5% 11% 100% 21% Tour & Travel 90% 80% 39% 15% 70% FIT 60% 50% Convention 40% 30% 60% 30% 20% Total Rewards / 20% Connection Card 10% 0% HET CEI Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  17. 17. Horseshoe – Merger Success EPS Accretion Horseshoe Market Share 35% 30% $0.15 25% 20% $0.10 15% 10% $0.05 5% $0.00 0% Hammond Tunica Bossier City 3Q04 4Q04 1Q05 2Q05 3Q05 12 months ended June 2004 Last tw elve months $0.37 of Accretion Since Merger Closing Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  18. 18. Growth opportunity Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  19. 19. Controllable growth pipeline New Organic Reinvestment Development LV Master Plan El Reino, Spain Caesars synergies AC Center Harrah’s Chester Total Boardwalk Baha Mar Rewards New Orleans Eyeing select Revenue Metropolis markets in Asia, management Europe Council Bluffs Strategic Caesars Indiana Sourcing Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  20. 20. El Reino – Ciudad Real, Spain • 50,000 sq. ft. casino • 850 hotel rooms • 3,000 seat Colosseum theater • Conference center • 30,000 sq. ft. spa • Multiple restaurants, bars • Forum retail shops Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  21. 21. Harrah’s Chester Casino and Racetrack Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  22. 22. Baha Mar – Nassau, Bahamas Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  23. 23. Baha Mar – Nassau, Bahamas Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  24. 24. Prime Center Strip Land Bank 18,000 Total Guest Rooms 132.5 Acres from Harrah’s to Bally’s / Paris 80 Acres at CPLV, 63 Acres at Rio 1.25 miles of Strip Frontage Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  25. 25. An attractive value Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  26. 26. Valuation Comparison Forward EV/EBITDA Multiple 10.5x 9.5x 8.5x 7.5x 6.5x 5.5x Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 HET Peer Group Average * Peer Group includes: MGM, STN, BYD, PENN, AZR Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  27. 27. Consistent Value Creation HET ROIC vs. WACC comparison 10% ROIC 5% ` WACC 0% 2002 2003 2004 Thru 3Q05 Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  28. 28. Despite successful growth record, HET prospects discounted Current Firm Value = NOPAT / WACC EV (as Peer Avg future value = 57% of 12/29) Future Firm Value = EV – Current Value WYNN 6.6B 113% 2.9B Kerzner 26% 74% 13.2B LVS 39% 61% 6.3B Station 41% 59% 6.2B Boyd 42% 58% MGM Mirage 48% 52% 24.9B Harrah's 58% 42% 22.5B Penn 62% 38% 3.2B Ameristar 83% 17% 1.9B Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  29. 29. HET focused on shareholder value 25% 450% Per Annum 350% 250% 150% 50% -50% -150% Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 HET SP500 Harrah’s Entertainment, Inc. Confidential and Proprietary Source: Bloomberg 2005
  30. 30. Positioned for long-term growth Stable, diversified cash flow from operations Consistent value creation Strong position in each market of operation Strong development track record Modest value given growth prospects Balance-sheet capacity to handle large developments, reinvestment Continued focus on shareholder value creation Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
  31. 31. This presentation and all trademarks appearing in this presentation are the sole and exclusive property of Harrah's License Company, LLC for use by its related companies (collectively, quot;Harrah'squot;). This presentation and its contents is confidential and proprietary to Harrah's and may not be used or reproduced in whole or in part without Harrah's express prior written authorization. Trademarks not owned by Harrah's that appear in this presentation are the property of the respective owners. © 2005, Harrah's License Company, LLC. Harrah’s Entertainment, Inc. Confidential and Proprietary 2005
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