harrah's entertainment jh bofa91906

Jonathan Halkyard

Chief Financial Officer and Treasurer

Harrah’s Entertainment, Inc.Confidential and Proprietary

2006

Safe Harbor StatementThis presentation includes “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,”“estimate,” “continue” or “pursue,” or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, new projects, strategies, future performance, the outcomes of contingencies and future financial results of Harrah’s. These forward-looking statements are based on current expectations and projections about future events.

Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, the actual performance of Harrah’s may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission (including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein): the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming and hotel industries in particular; construction factors, including delays, increased costs for labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters and building permit issues; the effects of environmental and structural building conditions relating to our properties; access to available and reasonable financing on a timely basis; the ability to timely and cost-effectively integrate Caesars into our operations; changes in laws, including increased tax rates, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies; litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation; the ability of our customer-tracking, customer loyalty and yield-management programs to continue to increase customer loyalty and same store sales or hotel sales; our ability to recoup costs of capital investments through higher revenues; acts of war or terrorist incidents or natural disasters; abnormal gaming holds; and the effects of competition, including locations of competitors and operating and market competition.

Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Harrah’s disclaims any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date stated, or if no date is stated, as of the date of this press release.


2006

Company OverviewLargest provider of branded casino entertainment

4 million square feet of casino space

40,000 hotel rooms

85,000 employees

40 million Total Rewards members


2006

Industry’s Broadest Footprint


2006

A Portfolio of Winning Brands


2006

Financial Strength

Only investment-grade gaming company

Borrows at industry’s most competitive rates

Nearly $1.2 billion of capacity under revolver

Revenues of nearly $9.0 billion on a pro-forma basis in 2005


2006

Diversity Of Cash Flow Provides Stability, Funds Growth

Region # Properties % EBITDALas Vegas 7 35%Atlantic City 5 26%LA/MS 5 9%Illinois/Indiana 4 11%Iowa/MO 4 9%Managed / Intl / Other 12 10%TOTAL 37 100%Represents 2005 EBITDA percentage contributions.


2006

#1 or #2 in every market in which we compete

Atlantic CityChicagolandMississippiS. Illinois/IndianaShreveport/ Bossier CityNew OrleansReno/TahoeCouncil Bluffs

Las VegasSt. LouisKansas CityLaughlin

HET gained share in nearly all of its markets in 2005


2006

HET Core Strategy

Brand Loyalty

Decision ScienceCapabilities

Drive same-store growth, cross-market play throughsuperior marketing and technological capabilities


2006

Evidence of HET’s organic growth engine

Cross-market play

CAGR: 18.2%

749 881 1,0631,256

1,4561,711

2,008

0

500

1,000

1,500

2,000

2,500

2000 2001 2002 2003 2004 2005 2006*

10.2%

4.9%

8.9%

6.5%

1.5%

5.7%7.5%

-3%

2%

7%

12%

2000 2001 2002 2003 2004 2005 Thru1H06*

Same-store sales growth

Annualized based on 1H06 growth rate. *Includes same store results of the Caesars properties in the second quarter 2006.


2006

Caesars Acquisition Update

Total Rewards integration completed in early 2Q06.

Achieved $116 million in year 1 synergies 45% ahead of $80 million target.

Expect $200 million in year 2 synergies for a two year synergy total of more than $300 million.


2006

Total Rewards: implications for 4 Caesars LV properties

60%

15%

21%

5%

HET

Tour & Travel

FIT

Convention

Total Rewards /Connection Card 20%

30%

39%

11%

CZR

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


2006

2%-2%9%

9%2%7%

19%10%12%

Local(< 70 miles)

Regional(70 – 300 miles)

National(300+ miles)

VIP

AEP

Retail

Loyalty strategy reflected in 2Q strength

Second-quarter rated customer trip growth


2006

EBITDA Growth by Region 2Q06

Region EBITDA Growth %Las Vegas 17%Atlantic City 7%LA/MS* 13%Illinois/Indiana -5%Iowa/MO 12%Other Nevada 16%

Includes acquired CZR property EBITDA growth from the prior comparable period.*Excludes Grand Gulfport, Grand Biloxi and Harrah’s Lake Charles.


2006

LV Strip EBITDA Growth 2Q0617%

-11%

-15%

-10%

-5%

0%

5%

10%

15%

20%

HET PEERS

Peer group includes: MGM, LVS, AZR, BYD


2006

Growth Opportunities


2006

Controllable growth pipeline

Organic

Caesars synergiesTotal Rewards Revenue managementStrategic Sourcing

LV Master PlanAC Center Boardwalk New OrleansCouncil Bluffs HammondHarrah’s AC

Reinvestment

El Reino, SpainHarrah’s ChesterBaha MarEyeing select markets in Asia, Europe

New Development


2006

Strong Track Record of ROIC

Harrah’s committed to high ROIC projects above current WACC of 9.00%

Las Vegas and Atlantic City will adhere to these high-return standards.

Harrah’s has invested over $550 million of capital in expansion projects over the last 3 years with a cumulative EBITDA return of 17%.


2006

18,000 Total GuestRooms

Prime Center StripLand Bank

160 Acres fromHarrah’s to Bally’s /

Paris

80 Acres at CPLV, 90 Acres at Rio

1.25 miles of StripFrontage

110+ Acres of Undevloped

Land

Current Harrah’s Footprint in Las Vegas


2006

Harrah’s Atlantic City


2006

Horseshoe Hammond


2006

El Reino – Ciudad Real, Spain• 50,000 sq. ft. casino

• 850 hotel rooms

• 3,000 seat Colosseum theater

• Conference center

• 30,000 sq. ft. spa

• Multiple restaurants, bars

• Retail shops


2006

Harrah’s Chester Casino and Racetrack


2006

Baha Mar – Nassau, Bahamas


2006

Strong business, management team and pipeline.

LCI would give Harrah’s immediate presence in growing gaming market.

Call option on gaming liberalization – marketing, advertising, and new casino development.

Broadens HET footprint in Europe with proven UK business.

Proposed London Clubs Acquisition


2006

Positioned for long-term growth

Stable, diversified cash flow from operations

Landmark brands

Strong financial position

Leader in each market of operation

Proven strategy to generate organic growth

Pipeline of re-investment opportunities

Opportunities for new development


2006

This presentation and all trademarks appearing in this presentation are the sole and exclusive property of Harrah's License Company, LLC for use by its related companies (collectively,

"Harrah's"). This presentation and its contents is confidential and proprietary to Harrah's and may not be used or reproduced in whole or in part without Harrah's express prior written authorization.

Trademarks not owned by Harrah's that appear in this presentation are the property of the respective owners.

© 2006, Harrah's License Company, LLC.

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