Income from operations for Harrah’s Entertainment in the first quarter of 2009 was US$285.4 million, compared to US$401 million for the first quarter of 2008. During the 2009 first quarter, Harrah’s Operating Company, Inc, (HOC), a wholly owned subsidiary of Harrah’s Entertainment, announced offers to exchange new 10 percent second-priority senior secured notes due 2018 for outstanding debt with maturity dates ranging from 2010 to 2018. In addition, HOC asked holders of certain of the old notes to eliminate or waive substantially all restrictive covenants and certain events of default contained in those notes.

In conjunction with the HOC offer, Harrah’s BC, Inc., another wholly owned subsidiary of Harrah’s Entertainment, made a cash tender offer for certain notes of HOC due in 2015, 2016 and 2017. On April 15, 2009, the exchange offers and tender offers described above were closed, and about US$5.4 billion aggregate principal amount of old notes and interim bridge loans were exchanged for approximately US$3.6 billion face value of new notes.

As a result, HOC was able to reduce its overall debt by approximately US$1.8 billion principal amount and decrease its annual cash interest expense by US$73 million. HOC also received consent by a majority of holders of 10.75 percent Senior Notes due 2016 and 10.75 percent/11.5 percent Senior Toggle Notes due 2018 to eliminate or waive restrictive covenants and certain events of default contained in those notes.

Additionally, Harrah’s BC, Inc purchased approximately US$523 million principal amount of HOC's old notes, which, in conjunction with the HOC exchange and tender offers, reduced the consolidated debt of Harrah's Entertainment by approximately US$2.3 billion principal amount and consolidated cash interest expense by approximately US$104 million annually.

”Our first-quarter results continued to be impacted by the economic slump that has reduced consumer spending, but the improvement in our operating margins over those of the past few quarters indicates our expense-reduction efforts are paying off,” said Gary Loveman, Harrah’s chairman, president and chief executive officer. “The reduction of our overall debt and reduction of our interest expense resulting from exchange offers completed this month and at the end of last year were also important developments.” (E-04.28.09)

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