EXHIBIT 12
HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF RATIOS
(IN THOUSANDS EXCEPT RATIO AMOUNTS)
1995 1994 1993 1992 1991
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RETURN ON REVENUES-CONTINUING
Income from continuing
operations.................. $ 78,810 $ 49,984 $ 74,867 $ 49,577 $ 34,499
Revenues...................... 1,550,076 1,339,406 1,020,645 894,384 863,385
Return...................... 5.1% 3.7% 7.3% 5.5% 4.0%
RETURN ON AVERAGE INVESTED
CAPITAL
Income from continuing
operations.................. $ 78,810 $ 49,984 $ 74,867 $ 49,577 $ 34,499
Add: Interest expense after
tax......................... 56,650 46,993 43,848 46,543 55,301
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$ 135,460 $ 96,977 $ 118,715 $ 96,120 $ 89,800
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Average invested capital...... $1,377,354 $1,229,524 $1,060,641 $ 909,011 $861,653
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Return...................... 9.8% 7.9% 11.2% 10.6% 10.4%
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RETURN ON AVERAGE EQUITY
Income before extraordinary
items and cumulative effect
of change in accounting
policy...................... $ 78,846 $ 86,303 $ 91,793 $ 51,418 $ 30,011
Average equity................ 618,778 606,009 474,733 395,212 289,361
Return...................... 12.7% 14.2% 19.3% 13.0% 10.4%
CURRENT RATIO
Current assets................ $ 188,836 $ 171,835 $ 139,842 $ 114,670 $ 91,289
Current liabilities........... 201,566 295,083 188,258 122,935 178,433
Ratio....................... 0.9 0.6 0.7 0.9 0.5
RATIO OF BOOK EQUITY TO DEBT
Book equity as of
December 31................. $ 585,549 $ 623,427 $ 536,037 $ 427,930 $365,494
Total debt.................... 755,743 919,727 841,964 881,325 887,468
Ratio....................... 0.8 0.7 0.6 0.5 0.4
RATIO OF MARKET EQUITY TO DEBT
Market equity as of
December 31................. $2,489,840 $3,161,681 $4,678,304 $1,867,828 $743,369
Total debt.................... 755,743 919,727 841,964 881,325 887,468
Ratio....................... 3.3 3.4 5.6 2.1 0.8
EXHIBIT 12 (CONTINUED)
HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF RATIOS
(IN THOUSANDS EXCEPT RATIO AMOUNTS)
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- --------
RATIO OF EBITDA TO INTEREST PAID
Income from continuing
operations.................. $ 78,810 $ 49,984 $ 74,867 $ 49,577 $ 34,499
Add/(less):
Income tax provision........ 60,677 75,391 59,394 35,479 24,566
Interest expense............ 94,416 78,322 73,080 77,571 92,169
Interest expense of
nonconsolidated affiliates (20,526) (1,959) - - -
Depreciation and
amortization.............. 95,388 86,644 70,207 63,826 67,233
Deferred finance charge
amortization.............. (3,626) (2,844) (3,261) (4,661) (5,330)
Amortization of debt
discounts and premiums.... (53) (176) (172) (194) (252)
Net losses of and
distributions from
nonconsolidated affiliates 51,182 12,398 (37) 167 118
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Earnings before interest,
taxes, depreciation and
amortization................ $ 356,268 $ 297,760 $ 274,078 $ 221,765 $213,003
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Interest expense.............. $ 94,416 $ 78,322 $ 73,080 $ 77,571 $ 92,169
Add/(less):
Interest expense of
nonconsolidated affiliates (20,526) (1,959) - - -
Deferred finance charge
amortization.............. (3,626) (2,844) (3,261) (4,661) (5,330)
Amortization of debt
discounts and premiums.... (53) (176) (172) (194) (252)
Capitalized interest........ 3,636 3,764 3,107 2,297 1,558
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Interest paid............... $ 73,847 $ 77,107 $ 72,754 $ 75,013 $ 88,145
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Ratio of EBITDA to interest
paid........................ 4.8 3.9 3.8 3.0 2.4
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EXHIBIT 12 (CONTINUED)
HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF RATIOS
(IN THOUSANDS EXCEPT RATIO AMOUNTS)
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- --------
RATIO OF DEBT TO EBITDA
Total debt.................... $ 755,743 $ 728,529 $ 666,161 $ 662,915 $655,174
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Income from continuing
operations.................. $ 78,810 $ 49,984 $ 74,867 $ 49,577 $ 34,499
Add/(less):
Income tax provision........ 60,677 75,391 59,394 35,479 24,566
Interest expense............ 94,416 78,322 73,040 77,571 92,169
Interest expense of
nonconsolidated affiliates (20,526) (1,959) - - -
Depreciation and
amortization.............. 95,388 86,644 70,207 63,826 67,233
Deferred finance charge
amortization.............. (3,626) (2,844) (3,261) (4,661) (5,330)
Amortization of debt
discounts and premiums.... (53) (176) (172) (194) (252)
Net losses of and
distributions from
nonconsolidated affiliates 51,182 12,398 (37) 167 118
---------- ---------- ---------- ---------- --------
Earnings before interest,
taxes, depreciation and
amortization................ $ 356,268 $ 297,760 $ 274,078 $ 221,765 $213,003
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Ratio of total debt to
EBITDA...................... 2.1 2.4 2.4 3.0 3.1
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EXHIBIT 12 (CONTINUED)
HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF RATIOS
(IN THOUSANDS EXCEPT RATIO AMOUNTS)
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- --------
RATIO OF EARNINGS TO FIXED
CHARGES(a)
Income from continuing
operations.................. $ 78,810 $ 49,984 $ 74,867 $ 49,577 $ 34,499
Add:
Provision for income
taxes..................... 60,677 75,391 59,394 35,479 24,566
Interest expense............ 94,416 78,322 73,080 77,571 92,169
Interest included in rental
expense................... 6,738 5,244 7,207 3,648 3,801
Amortization of capitalized
interest.................. 580 628 892 311 1,655
(Income) or loss from equity
investments............... - - (89) 167 -
Adjustment to include 100%
of nonconsolidated
majority-owned
subsidiary(b)............. (54,019) (9,397) - - -
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Earnings as defined........... $ 187,202 $ 200,172 $ 215,351 $ 166,753 $156,690
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Fixed charges:
Interest expense............ $ 94,416 $ 78,322 $ 73,080 $ 77,571 $ 92,169
Capitalized interest........ 3,636 3,764 3,107 2,297 1,558
Interest included in rental
expense................... 6,738 5,244 7,207 3,648 3,801
Adjustment to include 100%
of nonconsolidated
majority-owned
subsidiary(b)............. 37,408 15,110 - - -
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Total fixed charges......... $ 142,198 $ 102,440 $ 83,394 $ 83,516 $ 97,528
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Ratio of earnings to fixed
charges................... 1.3 2.0 2.6 2.0 1.6
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- ------------
(a) As discussed in Note 12 to the Consolidated Financial Statements in the 1995
Harrah's Entertainment Annual Report, the Company has guaranteed certain
third party loans in connection with its casino development activities.
The above ratio computation excludes $6.8 million of estimated fixed charges
for 1995 associated with these guarantees.
(b) Prior to November 1995, the Company owned a majority interest in Harrah's
Jazz Company. However, voting control was shared equally among three
partners. As a result, Harrah's Jazz was not consolidated into the Company's
financial statements. As required by Item 503(d)(2), the Company's ratio of
earnings to fixed charges ratio computation has been adjusted to include
Harrah's Jazz financial results as if this entity were consolidated.