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EXHIBIT 99(1)
Harrah's Entertainment Anticipates Fourth-Quarter Loss Due To Write-offs
Related To New Orleans Casino And National Airlines;
Harsh Winter Weather, Low Hold At Rio Further Impact Operating Income
LAS VEGAS, January 18, 2001 - Harrah's Entertainment, Inc. (NYSE:HET),
said today it expects to report a net loss of $1.36 to $1.40 per diluted share
for the fourth quarter of 2000.
The company said the net loss is due primarily to certain restructuring
and other special charges that were recorded in the quarter:
o Reserves of approximately $220 million related to the previously
announced bankruptcy reorganization of JCC Holding Company, which is
approximately 43 percent owned by Harrah's Entertainment. The impact
of the reserves on the fourth-quarter results is estimated to be
approximately $1.25 per share after tax.
o Reserves of approximately $39 million related to the previously
announced bankruptcy reorganization of National Airlines, which is
approximately 48 percent owned by Harrah's Entertainment, in
addition to its share of fourth-quarter operating losses, which
approximate $2 million. The impact of these losses on Harrah's
Entertainment's fourth-quarter earnings per share is estimated to be
23 cents after tax.
o Losses and reserves of approximately $16 million, or 9 cents per
share after tax, related to other write-offs and reserves, net of
recoveries; project opening costs, and incremental depreciation
related to assets to be removed from service in 2001.
Harrah's operating results also were impacted by the:
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o Lower than normal hold percentage at the Rio. The hold percentage
was low in October and November, but December's hold percentage was
above normal. The impact on the quarter as a whole was an estimated
4 cents per share after tax.
o Weather-related disruptions affected results at Eastern and Central
Region casinos, reducing per-share earnings by an estimated 7 cents
after taxes. Harsh winter weather throughout the Central Region
affected patronage during the key Christmas to New Year's holiday
period.
o Losses arising from mark-to-market adjustment of insurance contracts
held by the company amounted to approximately $5 million, or an
estimated 3 cents per share after tax.
Fourth-quarter diluted earnings per share, adjusted for the impact of the
items discussed above, is expected to range from 31 to 35 cents.
"Due to the expected reduction of losses associated with Harrah's New
Orleans, which assumes a successful reorganization of JCC Holding by March 31,
and the expected reduction of losses related to National Airlines, we believe
the strong performances of our core Harrah's brand properties should enable
Harrah's Entertainment to meet or exceed analysts' current consensus estimates
for year 2001 earnings per share," said Phil Satre, Chairman and Chief Executive
Officer.
"The year 2000 was disappointing for us," he said. "Stellar operating
results at most of our properties were offset by issues in New Orleans, National
Airlines and the Rio. But I believe we are about to put those issues behind us.
"We are looking at a very stable competitive supply situation in most
markets for 2001," Satre said. "Demand appears to be firm and our consumer
marketing-based
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strategy is firing on all cylinders. I believe Harrah's has an excellent
opportunity to grow revenues and earnings organically by capitalizing on our
geographic distribution, brand strategy, Total Rewards player-loyalty program,
information technology capabilities and emphasis on customer service. We also
are making carefully targeted capital investments at some of our existing
locations where we can see the opportunity for appropriate returns.
"We believe we are ahead of competing casino operators in using our
investment in technology to build strong customer relationships. Aside from
weather problems, the fourth-quarter performances at key Harrah's brand
properties provide a compelling example of the power of Total Rewards in
convincing customers to consolidate their casino play at our properties," he
said.
"The year 2001 will be the first year Total Rewards is integrated into all
of our properties, and we expect it will help drive continued same-store sales
growth."
Harrah's Entertainment will host a conference call on Friday, January 19,
2001, at 9:00 a.m. Eastern Standard Time to discuss the fourth-quarter results,
as well as general trends in the company's overall business. Those interested in
participating in the conference call should dial 877-282-0743, or 703-871-3073
for international callers, about 10 minutes before the call start time. A taped
replay of the conference call can be accessed at 888-266-2081, or 703-925-2533
for international callers, beginning at 2:00 p.m. Eastern Standard Time on
January 19, 2001. The replay will be available through January 26, 2001. The pin
number for the replay is 4923069.
The conference call will also be available live or archived at our web
site - WWW.HARRAHS.COM - in the "Investor Relations" section behind the "About
Us" tab.
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Founded more than 60 years ago, Harrah's Entertainment, Inc. is the most
recognized and respected name in the casino-entertainment industry, operating 21
casinos in the United States under the Harrah's, Showboat, Rio and Players brand
names. With a combined database of more than 19 million players, Harrah's
Entertainment is focused on building loyalty and value with its target customers
through a unique combination of great service, excellent products, unsurpassed
distribution, operational excellence and technology leadership.
This release includes "forward-looking statements" intended to qualify for
the safe harbor from liability established by the Private Securities Litigation
Reform Act of 1995. These forward-looking statements generally can be identified
by phrases such as the company "believes," "expects," "anticipates," "foresees,"
"forecasts," "estimates" or other words or phrases of similar import. Similarly,
such statements herein that describe the company's business strategy, outlook,
objectives, plans, intentions or goals are also forward-looking statements. All
such forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those in
forward-looking statements. Such risks and uncertainties include, but are not
limited to, economic, bank, equity and debt-market condition, changes in laws or
regulations, third-party relations and approvals, decisions of courts,
regulators and governmental bodies, factors affecting leverage, including
interest rates, abnormal gaming holds, and effects of competition.
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