HARRAHS ENTERTAINMENT INC, 10-Q, 2000-05-12

HARRAHS ENTERTAINMENT INC
10-Q, 2000-05-12
MISCELLANEOUS AMUSEMENT & RECREATION

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM 10-Q

(MARK ONE)

<TABLE>
<C> <S>
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>

FOR THE TRANSITION PERIOD FROM ______________ TO ______________

COMMISSION FILE NO. 1-10410

------------------------

HARRAH'S ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE I.R.S. NO. 62-1411755
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>

5100 W. SAHARA AVENUE, SUITE 200
LAS VEGAS, NEVADA 89146
(Current address of principal executive offices)

(702) 579-2300
(Registrant's telephone number, including area code)

------------------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

At March 31, 2000, there were outstanding 122,224,970 shares of the
Company's Common Stock.

Page 1 of 28

Exhibit Index Page 29

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<PAGE>
PART I--FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited Consolidated Condensed Financial Statements of
Harrah's Entertainment, Inc., a Delaware corporation, have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do not include all
information and notes necessary for complete financial statements in conformity
with generally accepted accounting principles. The results for the periods
indicated are unaudited, but reflect all adjustments (consisting only of normal
recurring adjustments), which management considers necessary for a fair
presentation of operating results. Results of operations for interim periods are
not necessarily indicative of a full year of operations. See Note 2 to these
Consolidated Condensed Financial Statements regarding the completion of our
acquisition of Players International, Inc. on March 22, 2000. These Consolidated
Condensed Financial Statements should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in our 1999 Annual
Report to Stockholders.

2
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31, DEC. 31,
2000 1999
(IN THOUSANDS, EXCEPT SHARE AMOUNTS) ---------- ----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 222,826 $ 233,581
Receivables, less allowance for doubtful accounts of
$44,958 and $44,086..................................... 113,092 121,186
Deferred income taxes..................................... 33,610 33,208
Prepayments and other..................................... 75,860 68,028
Inventories............................................... 28,577 30,666
---------- ----------
Total current assets.................................... 473,965 486,669
---------- ----------
Land, buildings, riverboats and equipment................... 4,468,413 3,983,754
Less: accumulated depreciation.............................. (995,014) (922,524)
---------- ----------
3,473,399 3,061,230
Goodwill, net of amortization of $58,053 and $54,346
(Note 2).................................................. 674,493 505,217
Investments in and advances to nonconsolidated affiliates... 95,118 168,511
Deferred costs, trademarks and other........................ 364,347 545,220
---------- ----------
$5,081,322 $4,766,847
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.......................................... $ 68,880 $ 81,200
Accrued expenses.......................................... 344,832 287,494
Short-term debt........................................... 65,000 --
Current portion of long-term debt......................... 2,975 2,877
---------- ----------
Total current liabilities............................... 481,687 371,571
Long-term debt.............................................. 2,755,718 2,540,268
Deferred credits and other.................................. 139,446 120,827
Deferred income taxes....................................... 219,609 228,955
---------- ----------
3,596,460 3,261,621
---------- ----------
Minority interests.......................................... 20,337 18,949
---------- ----------
Commitments and contingencies (Notes 4, 6, 7 and 8)
Stockholders' equity
Common stock, $0.10 par value, authorized 360,000,000
shares, outstanding 122,224,970 and 124,379,760 shares
(net of 12,928,454 and 9,286,772 shares held in
treasury)............................................... 12,222 12,438
Capital surplus........................................... 1,007,580 987,322
Retained earnings......................................... 466,055 512,539
Accumulated other comprehensive income.................... (36) (493)
Deferred compensation related to restricted stock......... (21,296) (25,529)
---------- ----------
1,464,525 1,486,277
---------- ----------
$5,081,322 $4,766,847
========== ==========
</TABLE>

See accompanying Notes to Consolidated Condensed Financial Statements.

3
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(UNAUDITED)

<TABLE>
<CAPTION>
FIRST QUARTER ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) --------- ---------
<S> <C> <C>
Revenues
Casino.................................................... $633,757 $565,959
Food and beverage......................................... 110,268 103,153
Rooms..................................................... 64,194 62,636
Management fees........................................... 17,221 16,720
Other..................................................... 33,561 30,251
Less: casino promotional allowances....................... (75,387) (67,051)
-------- --------
Total revenues...................................... 783,614 711,668
-------- --------
Operating expenses
Direct
Casino.................................................. 334,433 301,526
Food and beverage....................................... 53,872 56,794
Rooms................................................... 16,675 17,081
Depreciation of buildings, riverboats and equipment....... 49,653 48,044
Development costs......................................... 2,159 761
Write-downs and reserves.................................. 13 123
Project opening costs..................................... 292 352
Other..................................................... 185,367 152,620
-------- --------
Total operating expenses............................ 642,464 577,301
-------- --------
Operating profit.................................. 141,150 134,367
Corporate expense......................................... (11,021) (7,931)
Headquarters relocation and reorganization costs.......... (1,796) (3,070)
Equity in losses of nonconsolidated affiliates............ (23,696) (6,668)
Venture restructuring costs............................... -- 397
Amortization of goodwill and trademarks................... (4,537) (4,612)
-------- --------
Income from operations...................................... 100,100 112,483
Interest expense, net of interest capitalized............... (50,459) (50,895)
Other income, including interest income..................... 3,616 2,166
-------- --------
Income before income taxes and minority interests........... 53,257 63,754
Provision for income taxes.................................. (18,646) (24,638)
Minority interests.......................................... (3,863) (1,771)
-------- --------
Income before extraordinary losses.......................... 30,748 37,345
Extraordinary losses, net of income tax benefit of $1,764... -- (3,248)
-------- --------
Net income.................................................. $ 30,748 $ 34,097
======== ========
Earnings per share-basic
Income before extraordinary losses........................ $ 0.25 $ 0.30
Extraordinary losses, net................................... -- (0.03)
-------- --------
Net income.............................................. $ 0.25 $ 0.27
======== ========
Earnings per share-diluted
Income before extraordinary losses........................ $ 0.25 $ 0.30
Extraordinary losses, net................................. -- (0.03)
-------- --------
Net income.............................................. $ 0.25 $ 0.27
======== ========
Average common shares outstanding........................... 121,643 125,502
======== ========
Average common and common equivalent shares outstanding..... 123,281 126,773
======== ========
</TABLE>

See accompanying Notes to Consolidated Condensed Financial Statements.

4
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HARRAH'S ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

<TABLE>
<CAPTION>
FIRST QUARTER ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
(IN THOUSANDS) --------- ---------
<S> <C> <C>
Cash flows from operating activities
Net income................................................ $ 30,748 $ 34,097
Adjustments to reconcile net income to cash
flows from operating activities
Extraordinary losses, before income taxes............. -- 5,012
Depreciation and amortization......................... 56,811 53,843
Other noncash items................................... 1,782 7,098
Minority interests' share of income................... 3,863 1,771
Equity in losses of nonconsolidated affiliates........ 23,696 6,667
Net losses from asset sales........................... 336 2
Net change in long-term accounts...................... 33,945 22,266
Net change in working capital accounts................ (10,316) 12,955
--------- ---------
Cash flows provided by operating activities....... 140,865 143,711
--------- ---------
Cash flows from investing activities
Payment for purchase of acquisitions, net of cash
acquired................................................ (244,001) 22,025
Land, buildings, riverboats and equipment additions....... (76,735) (85,496)
Increase in construction payables......................... 689 4,985
Investments in and advances to nonconsolidated
affiliates.............................................. (31,446) (9,077)
Proceeds from sale of Star City management contract....... 131,475 --
Proceeds from other asset sales........................... 24,619 2,614
Purchase of minority interest in subsidiary............... -- (26,000)
Other..................................................... (1,307) 11,048
--------- ---------
Cash flows used in investing activities........... (196,706) (79,901)
--------- ---------
Cash flows from financing activities
Net short-term borrowings................................. 65,000 --
Net borrowings (repayments) under Bank Facility........... 61,000 (383,567)
Early retirement of debt.................................. -- (157,072)
Scheduled debt retirements................................ (717) (2,067)
Purchases of treasury stock............................... (77,724) (3,180)
Minority interests' distributions, net of contributions... (2,473) (1,432)
Proceeds from issuance of senior notes, net of discount
and issue costs of $5,980............................... -- 494,020
Premium paid on early extinguishment of debt.............. -- (2,739)
--------- ---------
Cash flows provided by (used in) financing
activities...................................... 45,086 (56,037)
--------- ---------
Net increase in cash and cash equivalents................... (10,755) 7,773
Cash and cash equivalents, beginning of period.............. 233,581 158,995
--------- ---------
Cash and cash equivalents, end of period.................... $ 222,826 $ 166,768
========= =========
</TABLE>

See accompanying Notes to Consolidated Condensed Financial Statements.

5
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HARRAH'S ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

<TABLE>
<CAPTION>
FIRST QUARTER ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
(IN THOUSANDS) --------- ---------
<S> <C> <C>
Net income.................................................. $30,748 $34,097
------- -------
Other comprehensive income
Foreign currency translation adjustments, net of tax
provision (benefit) of $56 and $(458)................... 90 (747)
Realization of foreign currency adjustments, net of tax
provision of $148....................................... 191 --
Unrealized gains on available-for-sale securities, net of
tax provision of $108 and $637.......................... 176 1,040
------- -------
Other comprehensive income............................ 457 293
------- -------
Comprehensive income........................................ $31,205 $34,390
======= =======
</TABLE>

6
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2000

(UNAUDITED)

NOTE 1--BASIS OF PRESENTATION AND ORGANIZATION

Harrah's Entertainment, Inc. ("Harrah's Entertainment", the "Company", "we",
"our" or "us", and including our subsidiaries where the context requires), a
Delaware corporation, is one of America's leading casino companies. Our casino
entertainment facilities, operating under the Harrah's, Rio, Showboat and
Players brand names, include casino hotels in Reno, Lake Tahoe, Las Vegas and
Laughlin, Nevada; two casino hotel properties in Atlantic City, New Jersey; and
riverboat and dockside casinos in Joliet and Metropolis, Illinois; East Chicago,
Indiana; Shreveport and Lake Charles, Louisiana; Tunica and Vicksburg,
Mississippi; and North Kansas City and St. Louis, Missouri. We also manage the
land based casino in New Orleans, Louisiana, and casinos on Indian lands near
Phoenix, Arizona; Cherokee, North Carolina; and Topeka, Kansas. We discontinued
management of the Star City casino in Sydney, Australia, during first quarter
2000.

NOTE 2--PLAYERS ACQUISITION

On March 22, 2000, we completed our acquisition of Players International,
Inc. ("Players"). Players operates a dockside riverboat casino on the Ohio River
in Metropolis, Illinois; two cruising riverboat casinos in Lake Charles,
Louisiana; two dockside riverboat casinos in Maryland Heights, Missouri, a
suburb of St. Louis; and a horse racetrack in Paducah, Kentucky. Players and the
Company jointly operate a landside hotel and entertainment facility at the
Maryland Heights property.

The Lake Charles and Metropolis casino operations will be converted to the
Harrah's brand name after capital improvements are completed. We are in the
process of consolidating the operations of the Players facility in Maryland
Heights with the adjacent Harrah's operation and expect to complete this
consolidation in second quarter 2000.

We paid approximately $293 million in cash and assumed $150 million in
Players' 10 7/8% Senior Notes due 2005, (the "Players' Notes"). The acquisition
was funded by our Bank Facility (see Note 4) and is being accounted for as a
purchase. The purchase price is being allocated to the underlying assets and
liabilities based upon their estimated fair values at the date of acquisition.
We are determining the estimated fair values based on independent appraisals,
discounted cash flows, quoted market prices and estimates made by management.
The allocation of the purchase price will be completed within one year from the
date of the acquisition. To the extent that the purchase price exceeds the fair
value of the net identifiable tangible assets acquired, such excess will be
allocated to goodwill and amortized over 40 years. Until we complete the
purchase price allocation our financial statements will include estimated
goodwill amortization expense.

With the assumption of the Players' Notes, we are required to abide by
covenants that, among other things, restrict the payment of dividends or the
ability to make other restricted payments, as defined, to HOC and Harrah's
Entertainment. These restricted payments include intercompany loans, advances or
other upstream payments to HOC or Harrah's Entertainment. These restrictions
should not impair our ability to conduct our business through our subsidiaries
or to pursue our development plans.

7
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HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2000

(UNAUDITED)

NOTE 3--STOCKHOLDERS' EQUITY

In addition to its common stock, Harrah's Entertainment has the following
classes of stock authorized but unissued:

Preferred stock, $100 par value, 150,000 shares authorized
Special stock, $1.125 par value, 5,000,000 shares authorized--
Series A Special Stock, 2,000,000 shares designated

In July 1999, our Board of Directors authorized the repurchase in open
market and other transactions of up to 10 million shares of the Company's common
stock. We expect to acquire our shares from time to time at prevailing market
prices through the December 31, 2000, expiration of the approved plan. At March
31, 2000, we had repurchased 9.1 million shares under the provisions of this
plan.

In April 2000, our Board of Directors authorized the repurchase of an
additional 12.5 million shares of our common stock in the open market and other
transactions as market conditions warrant. This plan will expire on December 31,
2001.

NOTE 4--LONG-TERM DEBT

REVOLVING CREDIT FACILITIES

Subsequent to first quarter 2000, our revolving credit and letter of credit
facilities (collectively, the "Bank Facility") were amended to expand our
borrowing capacity from $1.6 billion to $1.9 billion. The five-year $1.3 billion
revolving credit and letter of credit facility maturing in 2004 was expanded to
$1.525 billion, and the $300 million revolving credit facility, which is
renewable annually at the borrower's and lenders' options, was expanded to $375
million. The amended Bank Facility provides the Company with increased financial
flexibility without changing any of the other terms of the agreement. After
considering the additional $300.0 million in borrowing capacity available to us
as a result of this amendment, we had $674.0 million in capacity at March 31,
2000.

Currently, the Bank Facility bears interest based upon 80 basis points over
LIBOR for current borrowings under the five-year facility and 85 basis points
over LIBOR for the 364-day facility. In addition, there is a facility fee for
borrowed and unborrowed amounts which is currently 20 basis points on the
five-year facility and 15 basis points on the 364-day facility. The interest
rate and facility fee are based on our current debt ratings and leverage ratio
and may change as our debt ratings and leverage ratio change.

SHORT-TERM BORROWING AGREEMENTS

In a program designed for short-term borrowings at lower interest rates than
the rates paid under our Bank Facility, we have entered into uncommitted line of
credit agreements with two lenders whereby we can borrow up to $65 million for
periods of ninety days or less. At March 31, 2000, we had borrowed $65 million
under these agreements. These agreements have no impact on our Bank Facility and
do not decrease our borrowing capacity under those agreements.

8
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HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2000

(UNAUDITED)

NOTE 4--LONG-TERM DEBT (CONTINUED)
INTEREST RATE AGREEMENTS

To manage the relative mix of our debt between fixed and variable rate
instruments, we have entered into interest rate swap agreements to modify the
interest characteristics of our outstanding debt without an exchange of the
underlying principal amount.

During first quarter 2000, three interest rate swap agreements expired and
were not replaced with new swap agreements. We have three interest rate swap
agreements remaining which effectively convert a total of $150 million in
variable rate debt to a fixed rate. All of these swaps will expire in second
quarter 2000. Pursuant to the terms of these swaps we receive variable payments
tied to LIBOR in exchange for our payments at a fixed interest rate. The fixed
rates to be paid by us and variable rates to be received by us are summarized in
the following table:

<TABLE>
<CAPTION>
SWAP RATE RECEIVED
SWAP RATE PAID (VARIABLE) AT SWAP
NOTIONAL AMOUNT (FIXED) MARCH 31, 2000 MATURITY
- --------------- -------------- ------------------ ---------
<S> <C> <C> <C>
$50 million 6.651% 6.100% May 2000
$50 million 5.788% 6.119% June 2000
$50 million 5.785% 6.119% June 2000
</TABLE>

The differences to be paid or received under the terms of the interest rate
swap agreements are accrued as interest rates change and recognized as an
adjustment to interest expense for the related debt. Changes in the variable
interest rates to be paid or received pursuant to the terms of our interest rate
agreements will have a corresponding effect on our future cash flows. These
agreements contain a credit risk that the counterparties may be unable to meet
the terms of the agreements. We minimize that risk by evaluating the
creditworthiness of our counterparties, which are limited to major banks and
financial institutions, and do not anticipate nonperformance by the
counterparties.

NOTE 5--SUPPLEMENTAL CASH FLOW DISCLOSURES

CASH PAID FOR INTEREST AND TAXES

The following table reconciles our interest expense, net of interest
capitalized, per the Consolidated Condensed Statements of Income, to cash paid
for interest:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
(IN THOUSANDS) --------- ---------
<S> <C> <C>
Interest expense, net of amount capitalized................. $50,459 $50,895
Adjustments to reconcile to cash paid for interest:
Net change in accruals.................................... (10,410) (14,181)
Amortization of deferred finance charges.................. (920) (2,385)
Net amortization of discounts and premiums................ (14) 591
------- -------
Cash paid for interest, net of amount capitalized........... $39,115 $34,920
======= =======
Cash payments of income taxes, net of refunds............... $ (861) $ (54)
======= =======
</TABLE>

9
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2000

(UNAUDITED)

NOTE 6--COMMITMENTS AND CONTINGENT LIABILITIES

NEW ORLEANS CASINO

The Company has an approximate 43% beneficial ownership interest in JCC
Holding Company and its subsidiary, Jazz Casino Company, LLC ("JCC"). JCC owns
and operates an exclusive land-based casino in New Orleans, Louisiana (the
"Casino"), which is managed by a subsidiary of the Company. The Company has (i)
guaranteed a $100.0 million annual payment obligation of JCC owed to the State
of Louisiana gaming board (the "State Obligation"), (ii) guaranteed
$166.5 million of a $236.5 million JCC bank credit facility, (iii) made
$23.9 million, as of March 31, 2000, in subordinated loans to JCC to finance
construction and completion of the Casino, and (iv) agreed to purchase, on
certain conditions, certain shares of JCC Holding Company stock owned by former
co-investors in the pre-bankruptcy predecessor of JCC for $13.5 million.

Initially, the Company guaranteed the State Obligation for the period from
October 28, 1999 to October 28, 2000 (the "Initial State Guarantee"). The
Initial State Guarantee was replaced with a new guarantee (the "Current State
Guarantee"), pursuant to which the Company has guaranteed the State Obligation
for the period from April 1, 2000 to March 31, 2001. JCC is required to make
daily payments of approximately $273,973 to satisfy the State Obligation. The
Current State Guarantee obligation is reduced to the extent JCC makes such daily
payments. Payments made to the State by the Company pursuant to the Initial
State Guarantee and the Current State Guarantee are secured by a first priority
collateral security interest in JCC's assets.

Subject to the satisfaction of certain cash flow tests and other conditions
each year, the Company is required to provide a new guarantee to the State for
each of the 12-month periods ending March 31, 2002, 2003 and 2004. For the
period ending March 31, 2002, the requirement to provide a new guarantee is
conditioned upon, among other things, JCC producing net cash flow of at least
$15 million for the 12-month period ending November 30, 2000. Based on results
to date, it appears unlikely that JCC will satisfy this cash flow test. In the
event that JCC does not in fact satisfy this cash flow test, the Company will
not be required to guarantee the State Obligation for the 12-month period ending
March 31, 2002. If in such event the Company elects not to voluntarily guarantee
the State Obligation and JCC cannot find a substitute guarantor, JCC could lose
its State gaming license.

Commencing February 28, 2000, JCC ceased making its daily payment in respect
of the State Obligation. On February 29, 2000, the State made a demand to the
Company pursuant to the Initial State Guarantee and the Company began making the
daily payment to the State on that date. The Company paid $9.6 million to the
State pursuant to the Initial State Guarantee. The Company's remaining
obligations pursuant to the Initial State Guarantee expired when the Company
provided the Current State Guarantee. The Company's obligations pursuant to the
Current State Guarantee for the 12-month period ending March 31, 2001 are
limited to $100 million. The Company commenced making payments in respect of the
State Obligation pursuant to the Current State Guarantee on April 1, 2000, which
payments totaled $11.0 million as of May 10, 2000.

10
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2000

(UNAUDITED)

NOTE 6--COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
31, 2001, to defer the collection from JCC of amounts paid pursuant to the
Initial State Guarantee and Current State Guarantee to the extent that such
payments do not exceed $40 million in the aggregate.

Separately, the Company and certain Company affiliates have agreed, until
August 1, 2000, to defer the collection of certain fees, lease payments and
reimbursable costs arising from existing agreements with JCC. Such deferred
collections totaled approximately $10.5 as of March 31, 2000. In addition, JCC
has exercised its right, pursuant to agreements entered into at the time of its
emergence from bankruptcy in October 1998, to defer the payment of certain
management fees, credit support fees, guarantee obligations, and interest on
subordinated debt due to the Company. Such deferred payments totaled
approximately $5.7 as of March 31, 2000.

CONTRACTUAL COMMITMENTS

We continue to pursue additional casino development opportunities that may
require, individually and in the aggregate, significant commitments of capital,
up-front payments to third parties, guarantees by the Company of third party
debt and development completion guarantees. Excluding guarantees and commitments
for the New Orleans casino discussed above, as of March 31, 2000, we had
guaranteed third party loans and leases of $85.4 million, which are secured by
certain assets, and had commitments of $312.4 million for construction-related
and other obligations.

During second quarter 1999, we performed under our guarantee of the Upper
Skagit Tribe's development financing and purchased their receivable from the
lender for $11.4 million. Under the terms of our agreement with the Tribe, they
have agreed to fund the retirement of this debt. The Tribe is attempting to
secure new financing; however, there is no assurance that their efforts will be
successful and that the receivable will be collected.

The agreements under which we manage casinos on Indian lands contain
provisions required by law which provide that a minimum monthly payment be made
to the tribe. That obligation has priority over scheduled payments of borrowings
for development costs. In the event that insufficient cash flow is generated by
the operations to fund this payment, we must pay the shortfall to the tribe.
Such advances, if any, would be repaid to us in future periods in which
operations generate cash flow in excess of the required minimum payment. These
commitments will terminate upon the occurrence of certain defined events,
including termination of the management contract. As of March 31, 2000, the
aggregate monthly commitment pursuant to these contracts, which extend for
periods of up to 57 months from March 31, 2000, was $1.1 million.

SEVERANCE AGREEMENTS

As of March 31, 2000, we have severance agreements with 39 of our senior
executives, which provide for payments to the executives in the event of their
termination after a change in control, as defined. These agreements provide,
among other things, for a compensation payment of 1.5 to 3.0 times the
executive's average annual compensation, as defined, as well as for accelerated
payment or accelerated vesting of any compensation or awards payable to the
executive under any of our incentive plans. The estimated amount, computed as of
March 31, 2000, that would be payable under the

11
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2000

(UNAUDITED)

NOTE 6--COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
agreements to these executives based on earnings and stock options aggregated
approximately $46.6 million.

TAX SHARING AGREEMENTS

In connection with the 1995 spin-off of certain hotel operations (the "PHC
Spin-off") to Promus Hotel Corporation ("PHC"), we entered into a Tax Sharing
Agreement with PHC wherein each company is obligated for those taxes associated
with their respective businesses. Additionally, we are obligated for all taxes
for periods prior to the PHC Spin-off date which are not specifically related to
PHC operations and/or PHC hotel locations. Our obligations under this agreement
are not expected to have a material adverse effect on our consolidated financial
position or results of operations.

SELF-INSURANCE

We are self-insured for various levels of general liability, workers'
compensation and employee medical coverage. We also have stop loss coverage to
protect against unexpected claims. Insurance claims and reserves include
accruals of estimated settlements for known claims, as well as accruals of
actuarial estimates of incurred but not reported claims.

NOTE 7--LITIGATION

We are involved in various inquiries, administrative proceedings and
litigation relating to contracts, sales of property and other matters arising in
the normal course of business. While any proceeding or litigation has an element
of uncertainty, we believe that the final outcome of these matters will not have
a material adverse effect upon our consolidated financial position or our
results of operations.

12
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2000

(UNAUDITED)

NOTE 8--NONCONSOLIDATED AFFILIATES

Summarized balance sheet and income statement information of nonconsolidated
affiliates as of March 31, 2000 and December 31, 1999, and for the first
quarters ended March 31, 2000 and 1999 is included in the following tables.

<TABLE>
<CAPTION>
MARCH 31, DEC. 31,
2000 1999
(IN THOUSANDS) --------- --------
<S> <C> <C>
Combined Summarized Balance Sheet Information
Current assets............................................ $ 63,330 $ 73,560
Land, buildings and equipment, net........................ 401,502 570,204
Other assets.............................................. 123,091 130,889
-------- --------
Total assets............................................ 587,923 774,653
-------- --------
Current liabilities....................................... 113,446 100,336
Long-term debt............................................ 465,977 437,756
-------- --------
Total liabilities....................................... 579,423 538,092
-------- --------
Net assets............................................ $ 8,500 $236,561
======== ========
</TABLE>

<TABLE>
<CAPTION>
FIRST QUARTER ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
(IN THOUSANDS) --------- ---------
<S> <C> <C>
Combined Summarized
Statements of Operations
Revenues................................................ $113,150 $ 88,583
======== ========
Operating loss.......................................... $(42,457) $ (3,419)
======== ========
Net loss................................................ $(53,179) $(14,290)
======== ========
</TABLE>

Our share of nonconsolidated affiliates' combined net operating results are
reflected in the accompanying Consolidated Condensed Statements of Income as
Equity in losses of nonconsolidated affiliates.

Our investments in and advances to nonconsolidated affiliates are reflected
in the accompanying Consolidated Condensed Balance Sheets as follows:

<TABLE>
<CAPTION>
MARCH 31, DEC. 31,
2000 1999
(IN THOUSANDS) --------- --------
<S> <C> <C>
Investments in and advances to nonconsolidated affiliates
Accounted for under the equity method..................... $89,151 $167,828
Accounted for at historical cost.......................... 5,000 --
Equity securities available-for-sale and recorded at
market value............................................ 967 683
------- --------
$95,118 $168,511
======= ========
</TABLE>

13
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2000

(UNAUDITED)

NOTE 8--NONCONSOLIDATED AFFILIATES (CONTINUED)
With the acquisition of Players in March 2000, we increased our ownership
interest in the St. Louis shoreside facilities joint venture to 100% and began
consolidating that operation with our St. Louis operations upon the closing of
the acquisition.

In accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", we adjust the carrying value of certain marketable equity
securities to include unrealized gains and losses. A corresponding adjustment is
recorded in our stockholders' equity and deferred income tax accounts.

NOTE 9--SUMMARIZED FINANCIAL INFORMATION

Harrah's Operating Company, Inc. ("HOC") is a wholly-owned subsidiary and
the principal asset of Harrah's Entertainment. HOC is the issuer of certain debt
securities which have been guaranteed by Harrah's Entertainment. Due to the
comparability of HOC's consolidated financial information with that of Harrah's
Entertainment, complete separate financial statements and other disclosures
regarding HOC have not been presented. Management has determined that such
information is not material to holders of HOC's debt securities. Summarized
financial information of HOC as of March 31, 2000, and

14
<PAGE>
HARRAH'S ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2000

(UNAUDITED)

NOTE 9--SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
December 31, 1999, and for the first quarters ended March 31, 2000 and 1999,
prepared on the same basis as Harrah's Entertainment, was as follows:

<TABLE>
<CAPTION>
MARCH 31, DEC. 31,
2000 1999
(IN THOUSANDS) ---------- ----------
<S> <C> <C>
Current assets.............................................. $ 465,856 $ 481,437
Land, buildings, riverboats and equipment, net.............. 3,473,399 3,061,230
Goodwill.................................................... 674,493 505,217
Other assets................................................ 459,383 713,649
---------- ----------
5,073,131 4,761,533
---------- ----------
Current liabilities......................................... 456,533 353,534
Long-term debt.............................................. 2,755,718 2,540,268
Other liabilities........................................... 363,334 349,782
Minority interests.......................................... 20,337 18,949
---------- ----------
3,595,922 3,262,533
---------- ----------
Net assets.............................................. $1,477,209 $1,499,000
========== ==========
</TABLE>

<TABLE>
<CAPTION>
FIRST QUARTER ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
(IN THOUSANDS) --------- ---------
<S> <C> <C>
Revenues.................................................... $783,530 $711,585
======== ========
Income from operations...................................... $100,086 $112,412
======== ========
Income before extraordinary losses.......................... $ 30,739 $ 37,300
======== ========
Net income.................................................. $ 30,739 $ 34,052
======== ========
</TABLE>

Certain of our debt guarantees contain covenants which, among other things,
place limitations on HOC's ability to pay dividends and make other restricted
payments, as defined, to Harrah's Entertainment. The amount of HOC's restricted
net assets, as defined, computed in accordance with the most restrictive of
these covenants regarding restricted payments, was approximately $1.47 billion
at March 31, 2000.

15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial position and
operating results of Harrah's Entertainment, Inc., (referred to in this
discussion, together with its consolidated subsidiaries where appropriate, as
"Harrah's Entertainment", "Company", "we", "our" and "us") for first quarter
2000 and 1999, updates, and should be read in conjunction with, Management's
Discussion and Analysis of Financial Position and Results of Operations
presented in our 1999 Annual Report.

We are the leading consumer marketing company in the gaming industry,
operating casinos in more markets than any other casino company. We seek to
differentiate ourselves through a unique strategy aimed at building loyalty to
our brands from our guests. To accomplish this objective, we focus on continued
investment and emphasis on marketing, technology and database programs, a
commitment to service and a broadened national appeal. We begin our review with
a discussion of two first quarter 2000 transactions that position our Company to
continue its progress toward achieving our strategic objectives.

PLAYERS ACQUISITION

The Lake Charles and Metropolis casino operations will be converted to the
Harrah's brand name after capital improvement projects are completed. We are in
the process of consolidating the operations of the Players facility in Maryland
Heights with the adjacent Harrah's operation and expect to complete this
consolidation in second quarter 2000.

We paid approximately $293 million in cash and assumed $150 million in
Players' 10 7/8% Senior Notes due 2005, (the "Players' Notes"). The acquisition
was funded by our Bank Facility (see Debt & Liquidity section) and is being
accounted for as a purchase. The purchase price is being allocated to the
underlying assets and liabilities based upon their estimated fair values at the
date of acquisition. We are determining the estimated fair values based on
independent appraisals, discounted cash flows, quoted market prices and
estimates made by management. The allocation of the purchase price will be
completed within one year from the date of the acquisition. To the extent that
the purchase price exceeds the fair value of the net identifiable tangible
assets acquired, such excess will be allocated to goodwill and amortized over 40
years. Until we complete the purchase price allocation, our financial statements
will include estimated goodwill amortization expense.

RINCON DEVELOPMENT

During first quarter 2000, we signed a definitive agreement with the Rincon
San Luiseno Band of Mission Indians to build and manage a $110 million casino
and hotel on Rincon tribal land 25 miles north of San Diego. This location
provides convenient access to metropolitan San Diego, La Jolla, Del Mar,
Escondido and Orange County, California.

The Tribe expects to begin operations of a temporary casino in fourth
quarter 2000. We have committed to provide up to $14.6 million to finance this
development and to provide the Tribe technical service related to the
development and operation of the temporary casino, but we will not manage the
temporary facility. The permanent facility, the cost of which is to be funded by
a third-party loan that we expect to guarantee, is expected to open in fourth
quarter 2001. We will manage the

16
<PAGE>
permanent facility for a fee. The operation of the temporary casino and the
permanent casino project are subject to various approvals, including approvals
of the National Indian Gaming Commission.

OPERATING RESULTS AND DEVELOPMENT PLANS

OVERALL

First quarter 2000 revenues increased 10.1% over first quarter 1999,
however, net income declined 9.8% from the same period last year. The primary
factors contributing to the decline in net income were low table games hold
percentage at the Rio Hotel & Casino ("Rio") in Las Vegas, Nevada, and our pro
rata share of operating losses at our 43 percent-owned Harrah's New Orleans
casino, which opened last October, and at our 48 percent-owned National
Airlines, Inc. ("NAI"), which began operations in May 1999.

First quarter gaming revenues at owned and managed properties, which were in
our system during first quarter 2000 and first quarter 1999, grew 11.7% over the
same period last year. Excluding properties acquired or opened since June 1998,
company-owned and managed properties generated same-store gaming revenue growth
of 15.6% over first quarter 1999.

Operating results for first quarter 2000 include ten days of operations for
the properties acquired in the Players acquisition, which were not material to
our overall operating results.

WESTERN REGION

<TABLE>
<CAPTION>
FIRST QUARTER PERCENTAGE
------------------- INCREASE/
2000 1999 (DECREASE)
(IN MILLIONS) -------- -------- ----------
<S> <C> <C> <C>
Casino revenues................................... $171.9 $177.0 (2.9)%
Total revenues.................................... 275.3 282.4 (2.5)%
Operating profit.................................. 23.7 44.9 (47.2)%
Operating margin.................................. 8.6% 15.9% (7.3)pts
</TABLE>

The declines in first quarter 2000 revenues and operating income from the
same period last year were primarily due to well-below-average table games hold
percentage at the Rio, where first quarter revenues were 11.9% below first
quarter 1999 and an operating loss of $1.3 million was reported compared to
operating income of $22.2 million for the same period last year. In addition to
the revenue shortfalls, operating margin at the Rio declined due to the
increased marketing and promotional costs incurred by the property in an effort
to maintain its competitive position in the market following the opening of
several competitors over the last 18 months. First quarter revenues at our
southern Nevada Harrah's properties increased 7.2%, operating income increased
9.8% and operating margin increased 0.4 points over the same period last year.
Revenues at our northern Nevada properties were basically flat compared to first
quarter 1999, due primarily to renovation disruptions at Harrah's Lake Tahoe,
however, operating income was 11.7% higher than during the same period last year
due to successful marketing programs and cost savings efforts at Harrah's Reno.

Subsequent to first quarter, Rio opened its new showroom complex which
includes a 1,500 seat, state-of-the-art theater with balcony; a three-level
lobby with hospitality center; and a theater promenade with approximately 10,000
square feet of retail space. The showroom complex is located adjacent to the
Pavilion, Rio's 110,000 square foot entertainment/convention complex, which
opened in March 1999. The showroom complex is expected to cost approximately $35
million, of which $30.2 million had been spent through March 31, 2000.

During first quarter 2000, we completed the sale for cash of the Showboat
Las Vegas property, which was acquired in our June 1998 acquisition of Showboat,
Inc. No gain or loss resulted from the sale of this nonstrategic asset.

17
<PAGE>
EASTERN REGION

<TABLE>
<CAPTION>
FIRST QUARTER PERCENTAGE
------------------- INCREASE/
2000 1999 (DECREASE)
(IN MILLIONS) -------- -------- ----------
<S> <C> <C> <C>
Casino revenues................................... $174.3 $167.9 3.8%
Total revenues.................................... 185.4 179.0 3.6%
Operating profit.................................. 38.1 36.1 5.5%
Operating margin.................................. 20.6% 20.2% 0.4pts
</TABLE>

Harrah's Atlantic City's revenues increased 8.3% in first quarter 2000 and
operating profit increased 30.3% over the same period last year. While Showboat
Atlantic City's revenues were basically flat compared to first quarter 1999,
operating income declined 19.5% due to increased marketing and promotional costs
incurred in an effort to maintain the property's competitive position in the
market. We believe that the above-market growth achieved by Harrah's Atlantic
City is due to the successful execution by the property of strategic marketing
programs utilizing the available technological tools offered by our WINet
customer database and Total Rewards program. Showboat Atlantic City is scheduled
to be fully integrated into the WINet and Total Rewards program later this year.

In April 2000, we announced plans for a 450-room expansion at Harrah's
Atlantic City, increasing the hotel's capacity to more that 1,600 rooms. The
expansion is expected to cost approximately
$110 million and is scheduled to be completed in first quarter 2002. The
expansion is subject to regulatory approvals.

CENTRAL REGION

<TABLE>
<CAPTION>
FIRST QUARTER PERCENTAGE
------------------- INCREASE/
2000 1999 (DECREASE)
(IN MILLIONS) -------- -------- ----------
<S> <C> <C> <C>
Casino revenues................................... $287.6 $221.1 30.1%
Total revenues.................................... 301.5 233.0 29.4%
Operating profit.................................. 68.9 41.2 67.2%
Operating margin.................................. 22.9% 17.7% 5.2pts
</TABLE>

Chicagoland--Revenues increased 60.1% at Harrah's Joliet compared to first
quarter 1999 and operating profit increased 120.5% compared to the same period
last year. These results are attributable to the mid-1999 elimination of cruise
scheduling and ticketing and the fourth quarter opening of the new hotel at this
property. Harrah's East Chicago revenues increased 40.0% over first quarter
1999, and operating income increased 144.0%. We believe that these results were
driven by the March 1999 re-branding of this property to the Harrah's brand and
the successful execution of the Company's loyalty strategy in East Chicago.

Louisiana--Harrah's Shreveport's revenues were basically the same compared
to first quarter 1999, but operating profit declined due to costs of promotions
mounted to sustain business during construction activities. Construction began
in May 1999 on a 514-room hotel with almost 18,000 square feet of convention
center space. The new hotel and amenity expansion is expected to cost
$146.6 million, of which $41.6 million had been spent through March 31, 2000.
The expansion is scheduled to open in fourth quarter 2000.

Mississippi--Combined first quarter revenues by our Mississippi properties
increased 9.1% over first quarter 1999. Increases in operating profit at
Harrah's Tunica offset declines at Harrah's Vicksburg, for a net increase in
operating profit at our Mississippi properties of 15.5% over first quarter 1999.

18
<PAGE>
Missouri--First quarter revenues at our Missouri properties increased 14.7%
and operating profit increased 45.3% over the same period in 1999. Revenue
increases are primarily attributable to Harrah's St. Louis, where revenues were
35.4% higher than in first quarter last year. Harrah's St. Louis and Harrah's
North Kansas City increased operating profit 70.0% and 27.9%, respectively, over
the same period last year. The Missouri properties' revenues have benefited from
the elimination in third and fourth quarters of 1999 of restricted boarding
schedules, but operating profit was affected by higher admission taxes.

The St. Louis shoreside facilities were owned jointly with Players prior to
our March 22, 2000, acquisition of that company. Our pro rata share of the
operating losses of the joint venture through the date of the Players
acquisition was $2.4 million for first quarter 2000. These losses are included
in Equity in losses of nonconsolidated affiliates in the Consolidated Condensed
Statements of Income (see Other Factors Affecting Net Income). Subsequent to the
Players acquisition, results of the shoreside facilities, as well as for Players
St. Louis operations, are combined with Harrah's St. Louis' operating results.

In May 2000, we announced plans for facilities enhancements to Harrah's
North Kansas City, including approximately 28,000 square feet of additional
gaming space. The enhancements are expected to cost approximately $40.1 million
and are expected to be completed in second quarter 2001. The expansion is
subject to regulatory approvals.

MANAGED AND OTHER CASINOS

Increases in our managed and other results were led by the addition of fees
from Harrah's New Orleans, which opened in fourth quarter 1999. Management fees
from Indian-owned casinos declined slightly from first quarter last year due to
the impact on our management fee percentages of recent renewal and extension
agreements for two of these facilities.

See DEBT and LIQUIDITY section for further discussion of Harrah's guarantees
of debt related to Indian projects.

We ceased management of the Star City casino in Sydney, Australia, in
January 2000, upon the completion of the buy-out of our management contract by
another company. No material gain or loss was recognized on the sale of this
management contract.

OTHER FACTORS AFFECTING NET INCOME

<TABLE>
<CAPTION>
FIRST QUARTER PERCENTAGE
--------------------- INCREASE/
2000 1999 (DECREASE)
(IN MILLIONS) -------- -------- ----------
<S> <C> <C> <C>
(Income)/Expense
Development costs........................................... $ 2.2 $ 0.8 N/M
Project opening costs....................................... 0.3 0.4 (25.0)%
Corporate expense........................................... 11.0 7.9 39.2 %
Headquarters relocation expense............................. 1.8 3.1 (41.9)%
Equity in losses of nonconsolidated affiliates.............. 23.7 6.7 N/M
Write-downs, reserves and recoveries........................ -- 0.1 N/M
Venture restructuring costs................................. -- (0.4) N/M
Amortization of goodwill and trademarks..................... 4.5 4.6 (2.2)%
Interest expense, net....................................... 50.5 50.9 (0.8)%
Other income................................................ (3.6) (2.2) 63.6 %
Effective tax rate.......................................... 35.0% 38.6% (3.6)pts
Minority interests.......................................... $ 3.9 $ 1.8 N/M
Extraordinary losses, net of income taxes................... -- 3.2 N/M
</TABLE>

Development costs for first quarter 2000 increased from the same period last
year. However, development activities were limited in both periods due to the
limited number of new markets opening for development.

19
<PAGE>
Corporate expense increased 39.2% in first quarter 2000 from the prior year
level due to timing of certain expenses and increases in other costs. Costs
related to the relocation of the Company's headquarters to Las Vegas, Nevada,
declined 41.9% from first quarter 1999, as relocation activity began to subside.

The increase in Equity in losses of nonconsolidated affiliates reflects the
increase in losses from Harrah's New Orleans and NAI, both of which began
operations subsequent to first quarter 1999. Equity in losses of nonconsolidated
affiliates also includes our pro rata share of the losses from the St. Louis
shoreside facilities through the date of the Players acquisition.

Amortization of goodwill decreased slightly from the same period last year
due to the use of estimates for goodwill amortization during first quarter last
year. Goodwill based on the final purchase price allocations completed
subsequent to first quarter 1999 for Showboat and Rio was slightly less than
estimated amounts.

Interest expense decreased in first quarter 2000 from 1999, primarily due to
replacement of the debt assumed in connection with the acquisitions of Rio and
East Chicago with lower-rate borrowings from our Bank Facility.

Other income increased in first quarter 2000 due to higher income earned on
the cash surrender value of company owned life insurance policies.

The effective tax rates for both periods are higher than the federal
statutory rate primarily due to state income taxes.

Minority interests reflects joint venture partners' share of income which
increased in 2000 from the prior year as a result of higher earnings from those
ventures.

The extraordinary losses reported in 1999 were due to the early
extinguishment(s) of debt and include premiums paid to the holders of the debt
retired and the write-off of related unamortized deferred finance charges. (See
Debt and Liquidity--Extinguishment of Debt.)

CAPITAL SPENDING AND DEVELOPMENT

In addition to the specific development and expansion projects discussed in
the Operating Results and Development Plans section, we perform on-going
refurbishment and maintenance at our casino entertainment facilities in order to
maintain the Company's quality standards. We also continue to pursue development
and acquisition opportunities for additional casino entertainment facilities
that meet our strategic and return on investment criteria. Prior to the receipt
of necessary regulatory approvals, the costs of pursuing development projects
are expensed as incurred. Construction-related costs incurred after the receipt
of necessary approvals are capitalized and depreciated over the estimated useful
life of the resulting asset. Project opening costs are expensed as incurred.

Our planned development projects, if they go forward, will require,
individually and in the aggregate, significant capital commitments and, if
completed, may result in significant additional revenues. The commitment of
capital, the timing of completion and the commencement of operations of casino
entertainment development projects are contingent upon, among other things,
negotiation of final agreements and receipt of approvals from the appropriate
political and regulatory bodies. Cash needed to finance projects currently under
development as well as additional projects pursued is expected to be made
available from operating cash flows, bank borrowings (see Debt and Liquidity
section), joint venture partners, specific project financing, guarantees of
third party debt and, if necessary, additional debt and/or equity offerings. Our
capital spending for the first three months of 2000 totaled approximately $109.5
million. Estimated total capital expenditures for 2000 are expected to be
between $370 million and $470 million, excluding the acquisition of Players.

20
<PAGE>
DEBT AND LIQUIDITY

BANK FACILITY

SHORT-TERM BORROWINGS

INTEREST RATE AGREEMENTS

To manage the relative mix of our debt between fixed and variable rate
instruments, we entered into interest rate swap agreements to modify the
interest characteristics of our outstanding debt without an exchange of the
underlying principal amount. The differences to be paid or received under the
terms of our interest rate swap agreements are accrued as interest rates change
and recognized as an adjustment to interest expense for the related debt.
Changes in the variable interest rates to be paid or received pursuant to the
terms of our interest rate swap agreements will have a corresponding effect on
our future cash flows.

These agreements contain a credit risk that the counterparties may be unable
to meet the terms of the agreements. We minimize that risk by evaluating the
creditworthiness of our counterparties, which are limited to major banks and
financial institutions, and do not anticipate nonperformance by the
counterparties.

As of March 31, 2000, we were a party to three interest rate swaps for a
total notional amount of $150 million. All of these swaps will expire in second
quarter 2000, and we do not expect to enter into new swap agreements. For more
information regarding the Company's interest rate swap agreements as of March
31, 2000, please see Note 4 to the accompanying Consolidated Condensed Financial
Statements.

GUARANTEES OF THIRD PARTY DEBT AND OTHER COMMITMENTS

22
<PAGE>
loans to JCC to finance construction and completion of the Casino, and
(iv) agreed to purchase, on certain conditions, certain shares of JCC Holding
Company stock owned by former co-investors in the pre-bankruptcy predecessor of
JCC for $13.5 million.

Subject to certain conditions, which are presently being satisfied, JCC's
bank credit facility permits the Company to pay up to an aggregate of $40
million pursuant to the Initial State Guarantee and Current State Guarantee
without a default under that facility. The Company has agreed until March 31,
2001, to defer the collection from JCC of amounts paid pursuant to the Initial
State Guarantee and Current State Guarantee to the extent that such payments do
not exceed $40 million in the aggregate.

The agreements under which we manage casinos on Indian lands contain
provisions required by law which provide that a minimum monthly payment be made
to the tribe. That obligation has priority over scheduled repayments of
borrowings for development costs. In the event that insufficient cash flow is
generated by the operations to fund this payment, we must pay the shortfall to
the tribe. Such advances, if any, would be repaid to us in future periods in
which operations generate cash flow in excess of the required minimum payment.
These commitments will terminate upon the occurrence of certain defined events,
including termination of the management contract. Our aggregate monthly

23
<PAGE>
commitment pursuant to the contracts for the three Indian-owned facilities now
open, which extend for periods of up to 57 months from March 31, 2000, is $1.1
million.

We may guarantee all or part of the debt incurred by Indian tribes with
which we have entered a management contract to fund development of casinos on
the Indian lands. For all existing guarantees of Indian debt, we have obtained a
first lien on certain personal property (tangible and intangible) of the casino
enterprise. There can be no assurance, however, the value of such property would
satisfy our obligations in the event these guarantees were enforced.
Additionally, we have received limited waivers from the Indian tribes of their
sovereign immunity to allow us to pursue our rights under the contracts between
the parties and to enforce collection efforts as to any assets in which a
security interest is taken. The aggregate outstanding balance of such debt as of
March 31, 2000, was $69.8 million.

We have agreed to provide up to $10 million in loans to NAI, $5 million of
which had been advanced at March 31, 2000. In addition, we have provided letters
of credit on behalf of NAI totaling $17 million dollars. $12 million in letters
of credit serve as collateral to credit card processors in order to enable NAI
to receive proceeds from the credit card processors for advance ticket sales.
The remaining $5 million serves as collateral to enable NAI to secure space in
airport terminals. Subsequent to first quarter, we entered into an agreement
with another investor of NAI whereby that investor will reimburse to us fifty
percent of any amount that we might pay in response to demands on the letters of
credit.

EFFECTS OF CURRENT ECONOMIC AND POLITICAL CONDITIONS

COMPETITIVE PRESSURES

Due to the limited number of new markets opening for development, many
casino operators are investing in existing markets in an effort to attract new
customers, thereby increasing competition in those markets. With the exception
of the additional supply being added in Las Vegas, the amount of supply change
in the long-established gaming markets of Nevada and New Jersey has represented
a smaller percentage change than that experienced in some riverboat markets. In
riverboat markets, the additions to supply had a more noticeable impact, due to
the fact that competition was limited in the early stages of many of these
markets. As companies have completed expansion projects, supply has typically
grown at a faster pace than demand in some markets and competition has increased
significantly. Furthermore, several operators, including Harrah's, have
announced plans for additional developments or expansions in some markets. In
the Las Vegas market, four new "mega" facilities have opened since October 1998,
and others are planned and under development. The impact that the additional
supply will have on our operations cannot be determined at this time.

Although the short-term effect of these competitive developments on the
Company has been negative, we are not able to determine the long-term impact,
whether favorable or unfavorable, that these trends and events will have on our
current or future markets. We believe that the geographic diversity of our
operations; our focus on multi-market customer relationships; our service
training, measurements and rewards programs; and our continuing efforts to
establish our brands as premier brands have well-positioned us to face the
challenges present within the industry. In 1997, we introduced WINet, a
sophisticated nationwide customer database, and our Total Gold Card, a
nationwide reward and recognition card, both of which we believe provide
competitive advantages, particularly with players who visit more than one
market. During 1999, we implemented the next stage of our strategy with the
launch of the tiered customer loyalty card program - Total Diamond, Total
Platinum and Total Gold - to reward customers for choosing Harrah's
entertainment casinos. Subsequent to first quarter 2000, we launched our new
customer loyalty program - Total Rewards - which offers significant enhancements
to Total Gold and provides our customers with a simpler understanding of exactly
how to earn the cash, comps and other benefits they want. The Rio and Showboat
properties are expected to be integrated into the Total Rewards program during
2000.

24
<PAGE>
INDUSTRY CONSOLIDATION

As evidenced by the number of recent public announcements by casino
entertainment companies of plans to acquire or be acquired by other companies,
including our acquisitions of Showboat, Rio and Players, consolidation in the
gaming industry continues. We believe we are well-positioned to, and may from
time to time, pursue additional strategic acquisitions to further enhance our
distribution, strengthen our access to target customers and leverage our
technological and centralized services infrastructure.

POLITICAL UNCERTAINTIES

The casino entertainment industry is subject to political and regulatory
uncertainty. In 1996, the U.S. government formed a federal commission to study
gambling in the United States, including the casino gaming industry. The
commission issued its report in June 1999. In September 1999, the State of
California and approximately 60 Indian tribes executed Class III Gaming
Compacts, which other California tribes can join. The Compacts, when effective,
will allow each tribe to operate, on tribal trust lands, two casinos with up to
2,000 slot machines per tribe and unlimited house-banked card games. At this
time, the ultimate impacts that the National Gaming Impact Study Commission
report and the California Compacts may have on the industry or on our Company
are uncertain. From time to time, individual jurisdictions have also considered
legislation or referendums which could adversely impact our operations, and the
likelihood or outcome of similar legislation and referendums in the future is
difficult to predict.

The casino entertainment industry represents a significant source of tax
revenues to the various jurisdictions in which casinos operate. From time to
time, various state and federal legislators and officials have proposed changes
in tax laws, or in the administration of such laws, which would affect the
industry. It is not possible to determine with certainty the scope or likelihood
of possible future changes in tax laws or in the administration of such laws. If
adopted, such changes could have a material adverse effect on our financial
results.

INTERCOMPANY DIVIDEND RESTRICTIONS

Certain of our debt guarantees require us to abide by covenants which, among
other things, limit HOC's ability to pay dividends and make other restricted
payments, as defined, to Harrah's Entertainment. The amount of HOC's restricted
net assets, as defined, computed in accordance with these covenants regarding
restricted payments was approximately $1.47 billion at March 31, 2000. Harrah's
Entertainment's principal asset is the stock of HOC, a wholly-owned subsidiary
which holds, directly and through subsidiaries, the principal assets of our
businesses. Given this ownership structure, these restrictions should not impair
our ability to conduct our business through our subsidiaries or to pursue our
development plans.

PRIVATE SECURITIES LITIGATION REFORM ACT

The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed by the Company with the
Securities and Exchange Commission ("SEC") (as well as information included in
oral statements or other written statements made or to be made by the Company)
contains statements that are forward looking. These include statements relating
to the following activities,

25
<PAGE>
among others: (A) operations and expansions of existing properties, including
future performance, anticipated scope and opening dates of expansions;
(B) planned development of casinos and hotels that would be owned or managed by
the Company and the pursuit of strategic acquisitions; (C) planned capital
expenditures for 2000 and beyond; (D) the impact of the WINet, Total Gold Card
and Total Rewards Programs; and (E) any future impact of the Showboat or Players
acquisitions, the Rio merger or the Rincon development. These activities involve
important factors that could cause actual results to differ materially from
those expressed in any forward looking statements made by or on behalf of the
Company. These include, but are not limited to, the following factors as well as
other factors described from time to time in the Company's reports filed with
the SEC: construction factors, including zoning issues, environmental
restrictions, soil conditions, weather and other hazards, site access matters
and building permit issues; access to available and feasible financing;
regulatory, licensing and other government approvals, third party consents and
approvals, and relations with partners, owners and other third parties;
conditions of credit markets and other business and economic conditions,
including international and national economic problems; litigation, judicial
actions and political uncertainties, including gaming legislative action,
referenda, and taxation; and the effects of competition including locations of
competitors and operating and marketing 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.

26
<PAGE>
PART II--OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<S> <C>
*EX-4.1 Letter from Harrah's Entertainment, Inc. and Harrah's
Operating Company, Inc. to JCC Holding Company, dated
February 29, 2000, regarding Minimum Payment Guaranty.

*EX-4.2 Unconditional Minimum Payment Guaranty Agreement for Fiscal
Year ending March 31, 2001 by Harrah's Entertainment, Inc.
and Harrah's Operating Company, Inc. in favor of the State
of Louisiana by and through the Louisiana Gaming Control
Board, dated March 31, 2000.

*EX-10.1 Harrah's Entertainment, Inc.'s Restated Annual Management
Bonus Plan dated February 2000.

*EX-11 Computation of per share earnings.

*EX-27 Financial Data Schedule.

EX-99.1 Press Release dated March 22, 2000--Harrah's Entertainment
Completes Acquisition of Players International (Incorporated
by reference from the Company's Current Report on Form 8-K,
filed April 4, 2000, File No. 1-10410).

EX-99.2 Press Release dated April 13, 2000--Harrah's Estimates
First-Quarter Earnings at 24 to 26 Cents Per Share; Low Hold
Percentage at Rio Impacted Per-Share Earning by 9 Cents
(Incorporated by reference from the Company's Current Report
on Form 8-K, filed April 17, 2000, File No.1-10410).
</TABLE>

- ------------------------

* Filed herewith.

(b) A Form 8-K was filed by the Company on April 4, 2000, reporting the
completion of the acquisition of Players International, Inc. A Form 8-K was
filed by the Company on April 17, 2000, reporting the estimates of first-quarter
earnings.

27
<PAGE>
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

<TABLE>
<S> <C> <C>
HARRAH'S ENTERTAINMENT, INC.

May 12, 2000 BY: /s/ JUDY T. WORMSER
-----------------------------------------
Judy T. Wormser
VICE PRESIDENT AND CONTROLLER
(CHIEF ACCOUNTING OFFICER)
</TABLE>

28
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ------------------------------------------------------------ ----------
<S> <C> <C>
*EX-4.1 Letter from Harrah's Entertainment, Inc. and Harrah's
Operating Company, Inc. to JCC Holding Company, dated
February 29, 2000, regarding Minimum Payment Guaranty.
*EX-4.2 Unconditional Minimum Payment Guaranty Agreement for Fiscal
Year ending March 31, 2001 by Harrah's Entertainment, Inc.
and Harrah's Operating Company, Inc. in favor of the State
of Louisiana by and through the Louisiana Gaming Control
Board, dated March 31, 2000.
*EX-10.1 Harrah's Entertainment, Inc.'s Restated Annual Management
Bonus Plan dated February 2000.
*EX-11 Computation of per share earnings.
*EX-27 Financial Data Schedule.
EX-99.1 Press Release dated March 22, 2000--Harrah's Entertainment
Completes Acquisition of Players International (Incorporated
by reference from the Company's Current Report on Form 8-K,
filed April 4, 2000, File No.1-10410).
EX-99.2 Press Release dated April 13, 2000--Harrah's Estimates
First-Quarter Earnings at 24 to 26 Cents Per Share; Low Hold
Percentage at Rio Impacted Per-Share Earning by 9 Cents
(Incorporated by reference from the Company's Current Report
on Form 8-K, filed April 17, 2000, File No.1-10410).
</TABLE>

<PAGE>

Exhibit 4.1

February 29, 2000

Frederick W. Burford
JCC Holding Company
512 South Peters
New Orleans, Louisiana 70130

Re: Minimum Payment Guaranty

Dear Fred:

In connection with the matters described in your letter of
February 21 and 22, 2000, HET and HOCI are willing to make Daily Payments under
the Minimum Payment Guaranty Documents to the State up to a total amount of $40
million on the terms and conditions set forth in this letter as agreed to by JCC
Holding Company and Jazz Casino Company, LLC (collectively, "JCC") below.

HET and HOCI are willing to make Daily Payments up to a total
of $40 million without demanding repayment (or giving any notice in respect of
payment, nonpayment or collection) thereof prior to March 31, 2001; provided
that should HET and HOCI be required to make or make Daily Payments to the State
in an amount that exceeds $40 million, then HET and HOCI reserve all of their
rights under the existing contractual agreements to demand prompt reimbursement
for all Daily Payments in excess of $40 million prior to March 31, 2001.

In addition, HET and HOCI agree to defer until March 31, 2001
any interest payments owed on any Daily Payments made by the HET and HOCI up to
a total of $40 million in Daily Payments. However, should HET or HOCI be
required to make or make Daily Payments in excess of $40 million, then HET and
HOCI reserve all of their rights under the existing contractual agreements to
demand prompt repayment from JCC for all interest due on the Daily Payments in
excess of $40 million made by HET or HOCI in addition

<PAGE>

to the principal amounts in excess of $40 million as mentioned above.

Interest on the demand loan arising upon payment of Daily
Payments by HET or HOCI up to $40,000,000 shall bear interest at the non-default
interest rate referenced in Section 3 of the HET/JCC Agreement. Interest on any
demand loans arising upon any payment of Daily Payments by HET or HOCI in excess
of $40,000,000 shall bear interest at the rate referenced in Section 3 of the
HET/JCC Agreement, including at a default rate if any such demand loan is not
timely paid.

In connection with the foregoing, the undersigned hereby
agree, represent and warrant that:

1. They have obtained all necessary waivers, consents, and
approvals required to consummate the arrangements
described in this letter.

2. The entering into such arrangement will not create any
default or event of default under any material agreements
of HET and HOCI.

3. There are no other agreements or understandings by HET,
HOCI or their affiliates with respect to the subject
matter of this letter other than as set forth herein or
as contained in the existing documentation relating to
the New Orleans casino project.

4. HET and HOCI expressly reserve all of their rights under
the existing documentation with respect to the New
Orleans Casino project and nothing herein shall be
construed to modify or impair any of the rights or
obligations of any party thereto except as specifically
set forth in this letter.

Please feel free to call me to discuss any of the foregoing.

<PAGE>

Very truly yours,

HARRAH'S ENTERTAINMENT, INC.

By: /s/ Charles L. Atwood
-----------------------------------
Name: Charles L. Atwood
Title: Vice President & Treasurer

HARRAH'S OPERATING COMPANY, INC.

By: /s/ Charles L. Atwood
-----------------------------------
Name: Charles L. Atwood
Title: Vice President & Treasurer

<PAGE>

Exhibit 4.2

UNCONDITIONAL MINIMUM PAYMENT GUARANTY AGREEMENT
FOR FISCAL YEAR ENDING MARCH 31, 2001

THIS UNCONDITIONAL MINIMUM PAYMENT GUARANTY AGREEMENT for Fiscal Year
ending March 31, 2001 (the "Guaranty") is entered into as of March 31, 2000, by
HARRAH'S ENTERTAINMENT, INC., a Delaware corporation, and HARRAH'S OPERATING
COMPANY, INC., a Delaware corporation (each a "Guarantor" and collectively the
"Guarantors") in favor of the STATE OF LOUISIANA by and through the LOUISIANA
GAMING CONTROL BOARD (the "LGCB").

RECITALS

A. That certain Casino Operating Contract (the "COC") between Jazz
Casino Company, L.L.C., a Louisiana limited liability company (the "Company"),
and the LGCB, dated as of October 30, 1998, sets forth the conditions,
covenants, obligations, requirements and terms pursuant to which the Company has
the authority to conduct gaming operations at the Casino.

B. As used in this Guaranty, all capitalized terms used herein but not
defined herein shall be used herein as defined in the COC.

C. The Company has caused this Guaranty to be provided to the LGCB for
Fiscal Year ending March 31, 2001 (the "Covered

<PAGE>

Fiscal Year"), as required by the COC.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantors, the receipt and sufficiency of which are hereby
acknowledged, the Guarantors hereby solidarily make the following
representations and warranties to the LGCB, and hereby solidarily covenant and
agree for the benefit of the LGCB as follows:

1. Obligations Guaranteed and Method of Drawing.

1.1 The Guarantors hereby irrevocably, unconditionally, and in solido
with each other and with the Company, guarantee for the Covered Fiscal Year:

(a) the full, complete and timely payment and performance of all of the
Minimum Payment obligations of the Company to the LGCB under and in accordance
with the provisions of the COC; and

(b) the full, complete and timely payment to the LGCB of all of the
Daily Payments, Required Payments and Minimum Payment in accordance with the
provisions of the COC.

1.2 If there is any delay in timely paying to the LGCB any and/or all
of the Daily Payments, Required Payments and/or Minimum Payment as and when
required under the COC for the

2
<PAGE>

Covered Fiscal Year, the Guarantors shall also pay to the LGCB interest on such
payments due at the Default Interest Rate (as provided in Section 6.7 of the
COC) from the date each payment was due, until paid to the LGCB.

1.3 In no event shall the aggregate total of Daily Payments, Required
Payments and the Minimum Payment to the LGCB under this Guaranty for the Covered
Fiscal Year exceed ONE HUNDRED MILLION DOLLARS ($100,000,000.00), plus, and in
addition thereto, any interest and attorneys' fees applicable to the Guaranty
Obligation provided for in the COC or in this Guaranty.

1.4 If the LGCB has not been timely paid any one or more of the
required Daily Payments for the Covered Fiscal Year, then (a) the LGCB may make
drawings under this Guaranty by providing written notice to the Guarantors that
one or more of the required Daily Payments have not been timely paid and the
principal amount of such Daily Payments then due (the "Notice of Drawing"), and
(b) the Guarantors shall pay to the LGCB all required but unpaid Daily Payments,
plus interest at the Default Interest Rate, upon receipt of the Notice of
Drawing. Guarantors shall make payment by wire or other electronic transfer as
provided in the Notice of Drawing, on or before the time the Daily Payments are
due under Section 6.5 - "Daily Deposits" of the COC.

1.5 The Guarantors shall not be obligated to make any

3
<PAGE>

Daily Payments due for any day which is twenty (20) days or more prior to the
LGCB giving the Notice of Drawing; provided however, that any payments which are
suspended pursuant to Section 6.3(a) of the COC shall not be due and payable
until the period of the suspension has expired.

1.6 Once a Minimum Payment Default has occurred and a Notice of
Drawing has been provided to the Guarantors, the Guarantors shall be obligated
without any further notice by the LGCB to pay, and will pay, to the LGCB any
required Daily Payments for the Covered Fiscal Year on a daily basis for the
remainder of the Covered Fiscal Year (in which a Minimum Payment Default occurs)
to the extent such Daily Payments have not been timely paid.

1.7 In no event shall the Guarantors be liable to the LGCB under this
Guaranty for any amount in excess of the difference between the Minimum Payment
for the Covered Fiscal Year and the total of the Louisiana Gross Gaming Revenue
Share Payments which have been paid to the LGCB for said Fiscal Year or liable
for any Daily Payments due for and in any Fiscal Year following the Covered
Fiscal Year.

1.8 All of the obligations undertaken hereinabove by the Guarantors
in this Section 1 and any amounts which may be due under Section 6.2 are
hereinafter collectively referred to as the "Guaranty Obligation."

4
<PAGE>

5
<PAGE>

1.9 Notwithstanding the suspension, under the provisions of Section
6.3(a) of the COC, of the payment of any of the amounts included within the
Guaranty Obligation, it is agreed that the Guaranty Obligation covers all
payments which would have been due and payable during the Covered Fiscal Year
except for the fact that such payments were suspended pursuant to Section 6.3(a)
of the COC. Any such suspended payments shall be paid in the manner and within
the time provided in the COC, together with Late Payment Interest from the time
the suspended payments become due under the COC, and the Guarantors guarantee
the payment thereof, even after the expiration of the Covered Fiscal Year.

2. Guarantors' Additional Agreements.

2.1 The Guarantors, in solido with each other and the Company, agree
to perform and comply with their Guaranty Obligation, whether or not the Company
is liable therefor individually or jointly or in solido with others, and whether
or not recovery against the Company is or may become barred by any statute of
limitations or prescriptive or preemptive period or is or may become
unenforceable or discharged, whether in whole or in part, for any reason other
than payment thereof in full. The Guarantors agree that this Guaranty is a
guaranty of payment and not of collection, and that their obligation under this
Guaranty shall be primary, absolute and unconditional,

6
<PAGE>

irrespective of, and unaffected by:

(a) the absence of any action to enforce this Guaranty or any other
document or the waiver or consent by the LGCB with respect to any of the
provisions thereof;

(b) any release or discharge of the other Guarantor, the Company or any
other party of the Guaranty Obligation; or

(c) any other action or circumstances which might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor.

Each Guarantor shall be regarded, and shall be in the same position, as
principal debtor with respect to the Guaranty Obligation.

2.2 Each Guarantor expressly waives all rights it may have now or in
the future under any statute, or at common law, or at law or in equity, or
otherwise, to compel the LGCB to proceed in respect of the Guaranty Obligation
against the Company or any other party or against any security for the payment
of the Guaranty Obligation before proceeding against, or as a condition to
proceeding against, any Guarantor; and without limiting the above, each
Guarantor waives all pleas of division and discussion. Each Guarantor agrees
that any notice or directive given at any time to the LGCB which is inconsistent
with the

7
<PAGE>

waiver in the immediately preceding sentence shall be null and void and may be
ignored by the LGCB, and in addition, may not be pleaded or introduced as
evidence in any litigation relating to this Guaranty for the reason that such
pleading or introduction would be at variance with the written terms of this
Guaranty, unless the LGCB has specifically agreed otherwise in writing.

2.3 Each Guarantor acknowledges that it has received a copy of and is
familiar with the COC, which to the extent of the Guaranty Obligation is
incorporated herein by reference.

2.4 Except as expressly provided for in this Guaranty, in no event
shall the Guarantors, as a result of this Guaranty, incur, directly or
indirectly, any obligation, contingent or otherwise, under the COC ("incur"
meaning to create, incur, assume, guaranty or otherwise become liable for).

3. Alteration of the Guaranty Obligation.

3.1 No exercise or non-exercise of any right hereby given to the
LGCB, no dealing by the LGCB with the Guarantors or any other guarantor or any
other person, and no change, impairment or release of all or any portion of the
Company's COC obligations, or suspension of any right or remedy of the LGCB
against any person, including without limitation the Company or any other such
guarantor or other person, shall in any way affect any part of the Guaranty
Obligation or any security

8
<PAGE>

furnished by the Guarantors or give the Guarantors any recourse against the
LGCB.

3.2 This Guaranty is provided on the express condition that, should
the LGCB and the Company amend or modify the COC so as to increase the Guaranty
Obligation or adversely affect the Guarantors without the prior written
agreement of the Guarantors, any such amendment or modification entered into
without the prior written agreement of the Guarantors shall not increase the
Guaranty Obligation or adversely affect the Guarantors.

4. Waiver.

4.1 The Guarantors, in solido with each other, represent, warrant and
agree that, as of the date of this Guaranty, the Guaranty Obligation is not
subject to any recoupment, counterclaims, offsets or defenses against the LGCB
or the Company of any kind. The Guarantors further in solido with each other
agree that the Guaranty Obligation shall not be subject to any recoupment,
counterclaims, offsets or defenses against the LGCB or against the Company of
any kind which may arise in the future. Each Guarantor hereby expressly waives
and relinquishes all rights, defenses and remedies accorded by applicable law to
sureties or guarantors and agrees not to assert or take advantage of any such
rights, defenses or remedies, including without limitation:

9
<PAGE>

(a) any right to require the LGCB to proceed against the Company or any
other person or to proceed against or exhaust any security held by the LGCB at
any time or to pursue any other remedy in the power of the LGCB before
proceeding against either or both of the Guarantors, including but not limited
to any defense of failure to join or non-joinder of the Company or any other
person whatsoever in any litigation instituted by the LGCB against either or
both of the Guarantors;

(b) the defense of any statute of limitation, prescription and
preemption in any action hereunder or in any action for the collection of any of
the Guaranty Obligation;

(c) any defense that may arise by reason of the discharge in
bankruptcy, incapacity, lack of authority, death or disability of any other
person (including the Company) or the failure of the LGCB to file or enforce a
claim against the estate (in administration, bankruptcy or any other proceeding)
of any other person (including the Company);

(d) diligence, demand, presentment, protest and notice of any kind
other than notices expressly required in this Guaranty (whether for nonpayment
or protest or of acceptance, maturity, extension of time, change in nature or
form of the Company's obligations under the COC, acceptance of further security,
release of further security, composition or agreement arrived at

10
<PAGE>

as to the amount of, or the terms of, the Company's obligations under the COC,
notice of adverse change in the Company's financial condition or any other fact
which might materially increase the risk to the Guarantors), including without
limitation notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of the Company, the LGCB, any endorser or creditor of the Company or either
Guarantor or on the part of any other person under this or any other instrument
in connection with any obligation or evidence of indebtedness held by the LGCB
in connection with any of the obligations of the Company under the COC;

(e) any defense based upon an election of remedies by the LGCB which
destroys or otherwise impairs the subrogation rights of the Guarantors, the
right of the Guarantors to proceed against the Company for reimbursement, or
both, or any defense that the LGCB's claims against the Guarantors are barred or
diminished or premature to the extent that the LGCB has or may have remedies
available against the Company;

(f) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;

11
<PAGE>

(g) any duty on the part of the LGCB to disclose to the Guarantors any
facts the LGCB may now or hereafter know about the Company, regardless of
whether the LGCB has reason to believe that any such facts materially increase
the risk beyond that which the Guarantors intend to assume, or has reason to
believe that such facts are unknown to either Guarantor, or has a reasonable
opportunity to communicate such facts to either Guarantor, since each Guarantor
acknowledges that it is fully responsible for being and keeping informed of the
financial condition of the Company and of all circumstances bearing on the risk
of nonpayment of any of the obligations of the Company under the COC;

(h) waiver or estoppel or any alleged lack of reasonable or justifiable
reliance on the part of the LGCB as to the Guarantors' representations;

(i) lack, failure or insufficiency of consideration;

(j) subject to the notice requirements of Sections 1.4 and 1.5 hereof,
any alleged failure of the LGCB to mitigate injuries, losses or damages or any
plea that the LGCB has any duty to mitigate injuries, losses, or damages prior
to seeking recovery under this Guaranty; and

(k) any defense that the LGCB's claims hereunder are or may be barred
because any adequate remedy at law exists.

12
<PAGE>

4.2 Following any default by either Guarantor under this Guaranty,
each Guarantor agrees to forbear from exercise of any rights of subrogation,
indemnity, or contribution against each other, the Company or any other person
who may be liable for satisfaction of the Guaranty Obligation until the Guaranty
Obligation has been fully satisfied as to the LGCB.

5. Bankruptcy.

5.1 In the event of the commencement of a bankruptcy case by or
against any Guarantor, each Guarantor agrees to waive the automatic stay under
the Bankruptcy Code and further agrees to the entry of an immediate order from
the Bankruptcy Court, on the LGCB's ex parte motion granting to the LGCB a
modification of the automatic stay (and/or recognition that the automatic stay
is not applicable) allowing it to fully enforce the provisions of this Guaranty,
the Guarantors hereby agreeing that in such case, "cause," as defined by the
Bankruptcy Code, would exist for the immediate entry by the Bankruptcy Court of
such an order modifying the automatic stay.

5.2 The Guaranty Obligation shall not be altered, limited or affected
by any proceeding, voluntary or involuntary, involving the bankruptcy,
reorganization, insolvency, receivership, liquidation or arrangement of the
Company, or by any defense which the Company may have by reason of any order,

13
<PAGE>

decree or decision of any court or administrative body resulting from any such
proceeding.

5.3 This Guaranty shall remain in full force and effect and continue
to be effective should any petition be filed by or against the Company or any
Guarantor for liquidation or reorganization, should the Company or any Guarantor
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Company's or any Guarantor's assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment of the Guaranty
Obligation, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount or must otherwise be restored or returned by the LGCB, whether
as a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guaranty Obligation
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

6. Interest, Costs and Attorneys' Fees.

6.1 If the Guarantors fail to timely pay all or any portion of the
Guaranty Obligation in accordance with the provisions of Section 1 of this
Guaranty, such amount shall bear interest as provided in Section 1.2 of this
Guaranty.

14
<PAGE>

6.2 If the LGCB refers this Guaranty to an attorney to enforce,
construe, or defend any provision hereof, or as a consequence of any default
hereunder by the Guarantors in connection with:

(a) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the LGCB, the Company, the Guarantors or any other
person) in any way relating to the enforcement of rights or remedies under this
Guaranty;

(b) any attempt to enforce any rights of the LGCB hereunder against the
Guarantors or any other person; or

then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in any way or respect arising
in connection with or relating to any of the events or actions described herein
shall be payable, on demand, by the Guarantors to the LGCB or the Guarantors
shall cause the Company to make such payment, and if not so paid, shall be a
part of the Guaranty Obligation. The reference to "attorneys' fees" in this
Section 6.2 and in all other places in this Guaranty shall also include, without
limitation, such reasonable amounts as may then be

15
<PAGE>

charged for legal services furnished by attorneys retained or employed by the
State or the LGCB. Such attorneys' fees, costs and expenses shall include,
without limitation, those incurred in connection with any bankruptcy,
reorganization, insolvency, receivership, liquidation, arrangement, lawsuits in
state or federal court, or other similar proceedings involving either Guarantor
which in any way affect the exercise by the LGCB of its rights and remedies
hereunder.

7. Cumulative Rights.

All rights, powers and remedies of the LGCB hereunder and under
any other written agreement now or at any time hereafter in force between the
LGCB and the Guarantors, including without limitation any other guaranty
executed by either Guarantor relating to any indebtedness of the Company, shall
be cumulative and not alternative, and such rights, powers and remedies shall be
in addition to all rights, powers and remedies given to the LGCB by law and
shall not be deemed in any way to extinguish or diminish the LGCB's rights and
remedies. This Guaranty is in addition to and independent of the guaranty of any
guarantor of any other obligations of the Company under the COC or other
indebtedness of the Company.

16
<PAGE>

8. Application of Payments and Recoveries.

After a Minimum Payment Default has occurred, as to any payments
received directly from a Guarantor, the LGCB shall apply such payments to
amounts due under the Guaranty Obligation. Any other payments or recoveries
received by the LGCB after a Minimum Payment Default shall be applied, as
directed by the LGCB at its sole option, (a) first, to amounts due for any
Additional Charges, and (b) second, to any Daily Payments, Required Payments, or
Minimum Payment due for any Fiscal Year other than the Fiscal Year in which the
Minimum Payment Default has occurred (collectively, the "Other Fiscal Year
Payments"). Only when such Additional Charges and all Other Fiscal Year Payments
are paid current will any payments or recoveries be applied to the Guaranty
Obligation under this Guaranty Agreement; provided, however, Daily Payments,
Required Payments or Minimum Payments paid by the Company during a Covered
Fiscal Year shall be applied to the Minimum Payment for that Covered Fiscal
Year.

9. Independent Obligations.

The Guaranty obligation is independent of the obligations of the
Company under the COC, and, in the event of any default hereunder, a separate
action or actions may be brought and prosecuted against either Guarantor,
whether or not the Company is joined therein or a separate action or actions are
brought

17
<PAGE>

against the Company. The LGCB's rights hereunder shall not be exhausted by its
exercise of any of its rights or remedies or by any such action or by any number
of successive actions unless and until all Guaranty Obligations have been
satisfied and fully performed.

10. Financial Statements.

The Guarantors hereby represent and warranty that the information
pertaining to the Guarantors set forth in their most recent filings with the
Securities and Exchange Commission is true and correct in all material respects,
and fairly presents the financial condition of the Guarantors as of the
respective dates indicated therein and for the periods covered thereby, and that
no material adverse change has occurred in the financial condition or prospects
of the Guarantors since the date of the latest information provided therein.

11. Notices.

Whenever the Guarantors or the LGCB shall desire to give or
serve any notice, demand, request or other communication with respect to this
Guaranty, each such notice shall be in writing and shall be effective only if
the same is delivered by personal service, overnight courier service, or mailed
by certified mail, postage prepaid, return receipt requested, addressed as
follows:

18
<PAGE>

(a) if to either Guarantor
(or both Guarantors):

HET and Harrah's Operating
c/o Harrah's Entertainment, Inc.
5100 West Sahara Ave.
Las Vegas, Nevada 89146
Attention: General Counsel

(b) if to the LGCB, as provided in the COC;

or at such other address as shall have been furnished in writing by any person
described above to the party required to give notice hereunder. Any such notice
shall be deemed to have been received upon delivery. Any of the Guarantors or
the LGCB may change its address by giving the others written notice of the new
address as herein provided.

12. Successors and Assigns.

This Guaranty shall inure to the benefit of the LGCB, its
successors and assigns, and shall bind the successors and assigns of each
Guarantor. Neither Guarantor may assign or transfer any of its rights,
obligations or interest hereunder without the prior written consent of the LGCB.

19
<PAGE>

13. Miscellaneous Provisions.

13.1 This Guaranty shall be governed, interpreted and enforced in
accordance with Louisiana law.

Each Guarantor hereby submits to the jurisdiction of the State and the
courts thereof and to the jurisdiction of the Nineteenth Judicial District Court
in and for East Baton Rouge Parish ("19th JDC") for purposes of any suit, action
or other proceeding arising out of or relating to this Guaranty and agrees not
to assert by way of motion as a defense or otherwise that such suit, action or
other proceeding is brought in an inconvenient forum or that the venue of such
suit, action or other proceeding is improper or that the subject matter thereof
may not be enforced in or by such court or assert that any suit or action filed
in the 19th JDC may be removed to the Federal Court, and each Guarantor agrees
that the 19th JDC shall have the exclusive jurisdiction for purposes of any
suit, action or other proceeding brought by either of them relating to or
arising out of this Guaranty.

If at any time during the Term, either Guarantor is not a resident of
the State and has not formally designated or does not continuously maintain an
agent for service of process in Louisiana or has not notified LGCB of the full
name and current street address in Louisiana of such agent for service of
process, such Guarantor hereby designates the Secretary of State

20
<PAGE>

of Louisiana as its agent for service of process in any suit, action or
proceeding involving the LGCB or the State or arising out of or relating to this
Guaranty, and such service shall be made as provided by Louisiana law for
service on an insurance company through the Secretary of State.

13.2 This Guaranty shall constitute the entire agreement of the
Guarantors with the LGCB with respect to the subject matter hereof, and no
representation, understanding, promise or condition concerning the subject
matter hereof shall be binding upon the LGCB or the Guarantors unless expressed
herein.

13.3 Should any term, covenant, condition or provision of this
Guaranty be determined to be illegal or unenforceable, it is the intent of the
parties that all other terms, covenants, conditions and provisions hereof shall
nevertheless remain in full force and effect.

13.4 Time is of the essence to this Guaranty and each of its
provisions.

13.5 When the context and construction so require, all words used in
the singular herein shall be deemed to include the plural, the masculine shall
include the feminine and neuter, and vice versa.

21
<PAGE>

13.6 The word "person" as used herein shall include any individual,
company, firm, association, partnership, limited liability company, joint
venture, corporation, trust or other legal entity of any kind whatsoever.

13.7 No provision of this Guaranty or right granted to the LGCB
hereunder can be waived in whole or in part, nor can either Guarantor be
released from the Guaranty Obligation, except by an express and specific writing
to that effect duly executed by an authorized officer of the LGCB. No provision
of this Guaranty may be amended without the prior written consent of the
Guarantors and the LGCB and the consent of any additional beneficiaries hereof,
if any, shall not be required.

13.8 The LGCB need not inquire into the power of the Guarantors or the
authority of their officers, shareholders or agents acting or purporting to act
on their behalf.

13.9 The headings of this Guaranty are inserted for convenience only
and shall have no effect upon the construction or interpretation thereof.

13.10 All of the representations, warranties, agreements, obligations
and covenants of each Guarantor are in solido with the other Guarantor. This
Guaranty shall be for the sole benefit of the State of Louisiana acting by and
through the LGCB, its successors and assigns. The provisions of this

22
<PAGE>

Guaranty shall not inure to the benefit of any other person, including, without
limitation, the Company.

13.11 This Guaranty shall be effective upon execution.

IN WITNESS HEREOF, the undersigned have executed this Guaranty as of
the 28th day of March, 2000.

GUARANTORS:

HARRAH'S ENTERTAINMENT, INC.

By: /s/ Stephen Brammell
---------------------------
Duly Authorized Officer

HARRAH'S OPERATING COMPANY, INC.

By: /s/ Stephen Brammell
----------------------------
Duly Authorized Officer

23
<PAGE>

Approved and consented to:

JAZZ CASINO COMPANY, L.L.C.

By: /s/ Frederick W. Burford
------------------------------
Duly Authorized Officer

Accepted and agreed to:

LOUISIANA GAMING CONTROL BOARD

By: /s/ Hillary J. Crain
-----------------------------
Name: Hillary J. Crain
Title: Chairman

<PAGE>

Exhibit 10.1

HARRAH'S ENTERTAINMENT, INC. RESTATED

ANNUAL MANAGEMENT BONUS PLAN (FEBRUARY 2000)

Introduction

As a member of management, you can have a major impact on the overall
performance of your property and of Harrah's Entertainment, Inc. (the
Company). The Harrah's Entertainment, Inc. Annual Management Bonus Plan
(Plan) is designed to reward you for meeting your personal performance
objectives in years when your Operating Unit meets its performance
objectives.

The Plan provides a method of developing uniform bonus calculation
procedures with specific objectives for each Operating Unit as well as
overall objectives for the company. This means that although there is
one plan, covering all properties, divisions, and corporate, your
specific bonus award is tied to your individual performance and your
Operating Unit's performance, and can also have a relationship to the
performance of the entire Company.

The purposes of the Plan are to reward you for superior work and
motivate you toward delivering better customer service and achieving
better business results, to tie your goals and interests into those of
the Company and its stockholders, and to attract and retain top
managers.

This document describes eligibility, personal performance objectives
that are directly tied to the performance planning and evaluation
process, Operating Unit performance objectives, assignment of bonus
points, the bonus pool, the payment of bonus awards and administrative
matters.

1. Personal Eligibility

1.1 To be eligible, you must be a full-time employee of an
Operating Unit in a salary grade 18 or above, with the Chief
Executive Officer having discretion to make exceptions
regarding the eligibility of positions within grades 18 and
19. An Operating Unit is a business unit identified for
participation in the Plan by the Chief Executive Officer.
Unless an exception is approved by the Chief Executive Officer
or his designee, you may not be a participant in any other
bonus plan of the Company or its subsidiaries. You must have
been employed in an eligible position before October 1 of the
Plan year, have at least a "Successful"

1
<PAGE>

performance rating, and be actively working at the time
bonuses are distributed to receive your bonus award. The
requirement to be actively working on the bonus payment date
may be waived by the Chief Executive Officer or his designee.
See also Section 9.1 below.

2. Prorations/Transfers

2.1 If an eligible employee is promoted during the year, pro-rata
bonus awards are calculated based on his or her earnings,
individual performance and grade in each position.

2.2 If, however, an employee is promoted into an eligible position
under this Plan or transferred from another bonus plan in the
Company to this Plan, the promotion or transfer must take
place before October 1 for the employee to be eligible for a
prorated payment under this Plan.

2.3 In cases of promotions and/or transfers between Operating
Units, pro-rata bonus awards for eligible participants are
calculated based on the employee's earnings, individual
performance, operating unit bonus points and grade in each
Operating Unit. The calculation of prorata bonus awards is
generally made following completion of the Plan year and the
calculation is determined in a manner determined by the
Compensation Department.

2.4 Notwithstanding the above, for transfers of a bonus eligible
employee after March 31 and before October 1 during any Plan
year, the bonus will be pro rated as provided above but will
not be less than the bonus that would have been earned if the
employee had stayed at the first Operating Unit. For transfers
during the last three months of a Plan year, the bonus will be
equal to the bonus that would have been earned if the employee
had stayed at the first Operating Unit.

2.5 The Chief Executive Officer will have authority to interpret
and make exceptions to the bonus provisions concerning
transferred and new employees.

3. Individual Performance Objectives

3.1 At the beginning of each year, your supervisor should develop
specific performance objectives for you to achieve. Your
supervisor may look to you for assistance in developing these
objectives. The objectives should be recorded on your
performance appraisal document under the appropriate
performance standard. One hundred bonus points or another

2
<PAGE>

measurement standard are then assigned by your supervisor to
these personal bonus objectives. Your objectives and bonus
points or another measurement standard will be approved and
retained by your supervisor. The objectives should be easy to
quantify and verify. Performance objectives can be modified
during the year if business conditions dictate.

If circumstances are such that specific personal objectives
are not developed for a particular year, then the job
performance expected by your supervisor or by your Operating
Unit's senior manager, as determined by them, will be your
target objectives.

4. Operating Unit Performance Objectives

4.1 Operating Unit bonus objectives are established for each Plan
year. These may consist of a combination of measurements
related to the objectives of the Company and each of its
Operating Units on items such as operating income, pre-tax
earnings, earnings per share, return on sales and/or customer
satisfaction ratings. The objectives may change annually to
support the business mission of the Company. The objectives
are assigned target points or another standard of measurement
(referred to as points in this Plan).

4.2 The objectives and assigned target points for each Operating
Unit are recommended by the Chief Executive Officer to the
Human Resources Committee for approval. Total target points
for each Operating Unit is 100. Additional stretch points may
be awarded according to specific parameters that may be set
each year.

5. Meeting Operating Unit Objectives Assignment of Bonus Points

5.1 After the end of each Plan year, earned bonus points will be
assigned to each Operating Unit based upon achievement of Plan
objectives. The Operating Unit bonus points may be combined or
tied with the points earned by the Company. The final point
total will be used to create the Operating Unit's bonus pool.

6. Meeting Operating Unit Objectives - The Bonus Pool

6.1 A bonus pool for each Operating Unit will be established
according to the unit's bonus point total as follows: The
bonus pool is calculated by multiplying all eligible
participants' eligible earnings by the appropriate bonus
percentage as shown on the applicable Bonus Matrix. The
appropriate bonus percentage is determined by both the
participants'

3
<PAGE>

salary grades and bonus points earned by the Operating Unit.

6.2 An Operating Unit's total bonus pool is calculated by summing
all appropriate bonus percentages of the Operating Unit's
eligible participants.

6.3 The Chief Executive Officer shall have discretion to approve
and modify the bonus matrices for employees in grades 18
through 29. The Human Resources Committee will approve the
matrices for grades 30 and above.

7. Meeting Individual Objectives

7.1 After the end of the Plan year, your supervisor will determine
your individual performance against your objectives. This
assessment determines how many of your personal 100 assigned
objective points have been met.

7.2 The supervisor will then recommend a bonus award for you and
other eligible employees reporting to him or her, in relation
to the individual performance bonus points earned. The
supervisor must keep in mind that the total bonus pool for the
Operating Unit must not be exceeded. When an Operating Unit's
performance rises above the "100" point target, the available
bonus dollars contributed to the pool will increase; this is
called "stretch bonus."

7.3 When an Operating Unit is in stretch, individual awards should
not automatically rise above the "100" point line. Only those
eligible participants whose performance contributed to the
achievement of stretch bonus should be considered for stretch
awards. Calculation is up to the discretion of your supervisor
and the Operating Unit's senior managers.

7.4 When Operating Unit performance falls short of objectives, the
Bonus Pool will be accordingly reduced. Individual awards
should be scaled back to reflect the available pool dollars.

8. Approval and Payment of Annual Bonus Plan Awards

8.1 Each supervisor will submit bonus award recommendations to the
Compensation Department with two levels of approval (unless
the next level of supervision is a Corporate Senior Vice
President or a Division President; in these cases, no further
approvals are required). The Compensation Department will
accumulate overall bonus recommendations and submit them for
appropriate approvals.

4
<PAGE>

8.2 The Chief Executive Officer reviews and approves bonus
recommendations and recommends Operating Unit bonus points to
the Human Resources Committee. The Human Resources Committee
approves total bonus points achieved for performance against
Operating Unit objectives and the individual bonus awards of
management members of the Board of Directors.

8.3 Bonus awards are generally distributed to employees by March
15 of the year following the Plan year dependent on the
eligibility of both the Operating Unit and the employee.
Approved bonus awards may be distributed earlier with the
approval of the Chief Executive Officer.

8.4 The Chief Executive Officer shall have discretion to resolve
and approve exceptions and adjustments to objectives and bonus
points and other bonus plan issues that have their source or
basis at operating properties, which decisions will also roll
up to Division bonus calculations. The Human Resources
Committee may establish guidelines for these exceptions.

8.5 Exceptions that impact the bonus points of Corporate require
the approval of the Human Resources Committee as to their
impact on Corporate bonuses.

9. Miscellaneous

9.1 For grades 30 and above, the Human Resources Committee may
approve a discretionary pro-rata bonus if active employment
was terminated during the Plan year by death, disability,
retirement (age 55 with 10 or more years of service), or in
other special circumstances. For grades below 30, the Chief
Executive Officer or his designee may give this approval.

9.2 Employees who have been on Leave of Absence are eligible to
participate in the Plan if their Operating Unit qualifies.
Employees who are on Leave of Absence at the time of bonus
payments are eligible to receive their award, if any, when
they return to active employment. If they do not return to
active employment within one year after the bonus payment
date, their payment is forfeited.

9.3 The eligible earnings used in bonus calculations is base
salary paid to the employee without regard to deferrals and
excludes imputed income and previous bonuses. It also excludes
PTO sellback.

5
<PAGE>

9.4 Eligibility for this Plan does not provide anyone a right to
continued employment.

10. Administrative Matters

10.1 The Plan is completely discretionary. No legal rights or
obligations are created by the Plan. Accordingly, the Company
may terminate the Plan or amend its provisions at any time,
and no interest is created that can be assigned, encumbered,
or transferred by an employee. No rights in any specific funds
or assets will exist by reason of this Plan.

10.2 The Compensation Department administers the Plan and has full
power to adopt and enforce administrative rules and procedures
to make administrative interpretations.

10.3 The Human Resources Committee has full power to decide
substantive issues, to make amendments to the Plan and to
terminate the Plan. The Human Resources Committee may adjust
any objectives or bonus points if it determines such
adjustment is necessary or appropriate. The Chief Executive
Officer also has certain discretion in this regard as
previously described in this Plan.

10.4 Administrative amendments that do not involve significant
additional expense and that do not increase an officer's bonus
may be approved by the Company's Senior Vice President for
Human Resources. Amendments and decisions can be made as to
individuals or groups and there is no guarantee of uniform
application.

10.5 No member of the Compensation Department or the Human
Resources Committee, nor any other person, including any
officer or employee, involved in administering this Plan or
making decisions concerning bonuses will have any personal
liability to any employee or to any other person by reason of
any decisions or actions taken under this Plan.

10.6 Bonuses payable under this Plan will be paid by the
appropriate Company subsidiary that employs the eligible
employee. The Company may cause bonus liability to be
allocated among divisions or subsidiaries as it deems
appropriate in regard to transferred employees.

<PAGE>
Exhibit 11

HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF PER SHARE EARNINGS

<TABLE>
<CAPTION>
First Quarter Ended
March 31, March 31,
2000 1999
------------- -------------
<S> <C> <C>
Income before extraordinary losses $ 30,748,000 $ 37,345,000
Extraordinary losses, net -- (3,248,000)
------------- -------------
Net income $ 30,748,000 $ 34,097,000
============= =============
BASIC EARNINGS PER SHARE
Weighted average number of common shares outstanding 121,642,638 125,502,420
============= =============
BASIC EARNINGS PER COMMON SHARE
Income before extraordinary losses $ 0.25 $ 0.30
Extraordinary losses, net -- (0.03)
------------- -------------
Net income $ 0.25 $ 0.27
============= =============
DILUTED EARNINGS PER SHARE
Weighted average number of common shares outstanding 121,642,638 125,502,420
Additional shares based on average market price for
period applicable to:
Restricted stock 398,614 432,360
Stock options 1,239,903 838,107
------------- -------------
Average number of common and
common equivalent shares outstanding 123,281,155 126,772,887
============= =============

DILUTED EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARES
Income before extraordinary losses $ 0.25 $ 0.30
Extraordinary losses, net -- (0.03)
------------- -------------
Net income $ 0.25 $ 0.27
============= =============
</TABLE>

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 222,826
<SECURITIES> 0
<RECEIVABLES> 158,050
<ALLOWANCES> 44,958
<INVENTORY> 28,577
<CURRENT-ASSETS> 473,965
<PP&E> 4,468,413
<DEPRECIATION> 995,014
<TOTAL-ASSETS> 5,081,322
<CURRENT-LIABILITIES> 481,687
<BONDS> 2,755,718
0
0
<COMMON> 12,222
<OTHER-SE> 1,452,303
<TOTAL-LIABILITY-AND-EQUITY> 5,081,322
<SALES> 0
<TOTAL-REVENUES> 783,614
<CGS> 0
<TOTAL-COSTS> 642,464
<OTHER-EXPENSES> 41,050
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,459
<INCOME-PRETAX> 53,257
<INCOME-TAX> 18,646
<INCOME-CONTINUING> 30,748
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,748
<EPS-BASIC> 0.25
<EPS-DILUTED> 0.25

</TABLE>