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Harrah's Releases Financial Report, Posts Record Revenues

Purchase of Caesars and Imperial Palace Highlights Banner Year

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Harrah's Entertainment, Inc. reported revenues of $2.1 billion for the fourth quarter of 2005, which is a whopping 76 percent increase from the same quarter in 2004.

For the entire year of 2005, Harrah's revenues rose 56 percent to $7.1 billion. In 2004, its revenues were $4.5 billion.

Harrah's broke a record in the business category of property income before interest, taxes, depreciation, and amortization have been subtracted (property EBITDA) by earning $534.5 million, which was up from $288.7 million in the fourth quarter of 2004.

According to Harrah's, property EBITDA is not a generally accepted accounting principle, but is commonly used in the gaming industry as a measure of performance and evaluating the worth of the company.

Harrah's wrote off $273.3 million that was related to expenses the company endured when Hurricanes Katrina and Rita hit the Gulf Coast this fall.

Because of the disaster, Harrah's actually lost $142.2 million on its operations side. In the same quarter of 2004, the company made $76.9 million. For all of 2005, its operation income was $111.5 million, compared to $165 million in 2004.

Harrah's achieved several milestones in 2005. In June, it completed its purchase of Caesars Entertainment for $9.3 billion. It also bought the Imperial Palace on the Las Vegas Strip for $370 million.

The World Series of Poker, held at the Rio, generated a prize pool of $106 million, which was more than double of what it was in 2004 when Harrah's first took over the tournament. More than 32,000 tournament registrations were collected in all the events.

Hurricanes Rita and Katrina played havoc with the company. Katrina destroyed Grand Casino Gulfport and Grand Casino Biloxi and Harrah's in New Orleans would be closed until mid-February.

The company entered an agreement to sell the remaining assets of Grand Casino Gulfport in December and plans on developing a resort casino where Grand Casino Biloxi once stood.

Hurricane Rita damaged Harrah's Lake Charles so badly that its casino still remains closed and is not expected to reopen anytime soon. The company's hotel reopened in February, and Harrah's is exploring strategies in that market, and may withdraw from that area altogether.