SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10410
A. Full title of the plan and address of the plan, if different
from that of the issuer named below:
Harrah's Entertainment, Inc.
Savings and Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Harrah's Entertainment, Inc.
One Harrah's Court
Las Vegas, Nevada 89119
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of Harrah's Entertainment, Inc.
Savings and Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits, with fund information, of HARRAH'S ENTERTAINMENT, INC. SAVINGS AND
RETIREMENT PLAN (the "Plan") as of December 31, 2000 and 1999, and the related
statements of changes in net assets available for benefits, with fund
information, for each of the three years ended December 31, 2000. These
financial statements and the supplemental schedule referred to below are the
responsibility of the plan administrator. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits, with fund
information, of the Plan as of December 31, 2000 and 1999, and the changes in
net assets available for benefits, with fund information, for each of the three
years ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 2000 (Exhibit I) is presented for
purposes of additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedule and fund information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Arthur Andersen LLP
Memphis, Tennessee,
June 21, 2001.
HARRAH'S ENTERTAINMENT, INC.
SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 2000
Fund Information
----------------------------------------------------------------------------------------------
Participant Directed Funds
----------------------------------------------------------------------------------------------
Company Small Cap Fidelity S&P 500 Long-Term Small Cap
Stock Fund Value Fund Magellan Fund Index Fund Bond Fund Growth Fund
---------- ----------- ------------- ---------- ---------- -----------
ASSETS
Investments (Notes 1, 2 and 3)
Harrah's common stock $ 120,795,047 $ -- $ -- $ -- $ -- $ --
Registered investment companies -- 25,950,090 83,192,135 9,663,205 23,325,937
Common/collective trust funds -- -- -- 129,890,322 -- --
Short-term investment fund -- -- -- -- -- --
Receivables
Due from participants -- -- -- -- -- --
Investment receivables 140,237 -- -- -- -- --
Interest and dividends 25,657 -- -- -- 54,339 --
Other 6,748 -- -- 2,004 -- 8
Cash 4,899,712 -- -- -- -- --
------------- ------------- ------------- ------------- ----------- -------------
Total assets 125,867,401 25,950,090 83,192,135 129,892,326 9,717,544 23,325,945
------------- ------------- ------------- ------------- ----------- -------------
LIABILITIES
Accrued expenses -- (41,429) (263,685) -- (6,587) --
------------- ------------- ------------- ------------- ----------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 125,867,401 $ 25,908,661 $ 82,928,450 $ 129,892,326 $ 9,710,957 $ 23,325,945
============= ============= ============= ============= =========== =============
Fund Information
--------------------------------------------------------------------
Non-
Participant
Directed
Participant Directed Funds Fund
----------------------------------------------- ----
Intermediate Money Market Executive
Bond Fund Fund Life Fund ESOP Fund Loan Fund Total
--------- ---- --------- --------- --------- -----
(Note 4)
ASSETS
Investments (Notes 1, 2 and 3)
Harrah's common stock $ -- $ -- $ -- $ -- $ -- $ 120,795,047
Registered investment companies -- -- -- -- -- 142,131,367
Common/collective trust funds 49,143,625 -- -- -- -- 179,033,947
Short-term investment fund -- 561,409 -- -- -- 561,409
Receivables
Due from participants -- -- -- -- 38,058,417 38,058,417
Investment receivables -- 54,520,398 -- -- -- 54,660,635
Interest and dividends -- 300,142 -- -- -- 380,138
Other 68,382 52,617 -- -- -- 129,759
Cash -- 604,690 -- -- -- 5,504,402
------------- ------------- ------- ---------- ------------- -------------
Total assets 49,212,007 56,039,256 -- -- 38,058,417 541,255,121
------------- ------------- ------- ---------- ------------- -------------
LIABILITIES
Accrued expenses -- -- -- -- -- (311,701)
------------- ------------- ------- ---------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 49,212,007 $ 56,039,256 $ -- $ -- $ 38,058,417 $ 540,943,420
============= ============= ======= ========== ============= =============
The accompanying Notes to Financial Statements are an integral part of this
statement.
HARRAH'S ENTERTAINMENT, INC.
SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1999
Fund Information
----------------------------------------------------------------------------------------------
Participant Directed Funds
---------------------------------------------------------------------------------------------
Company Aggressive Fidelity S&P 500 Long-Term Income
Stock Fund Stock Fund Magellan Fund Index Fund Bond Fund Fund
---------- ---------- ------------- ------------ ---------- ----
ASSETS
Investments (Notes 1, 2 and 3)
Harrah's common stock $ 133,962,963 $ -- $ -- $ -- $ -- $ --
Registered investment companies -- 24,979,796 60,110,101 -- 9,254,070 53,114,212
Common/collective trust fund -- -- -- 139,621,583 -- --
Short-term investment fund 4,460,672 46,413 (5,002) 87,435 13,514 47,786
Receivables
Due from participants 29 1,015 619 1,547 29 --
Interest and dividends 24,252 345 (37) 650 56,049 355
Due (to) from other funds (106,201) 23,550 285,787 90,357 51,945 (49,599)
Other 1,303,710 -- -- -- -- --
Cash 112,495 42,805 (4,613) 80,638 12,463 44,072
------------- -------------- ------------- ------------- ------------- -------------
Total assets 139,757,920 25,093,924 60,386,855 139,882,210 9,388,070 53,156,826
------------- -------------- ------------- ------------- ------------- -------------
LIABILITIES
Accrued expenses (339,193) (16,915) (94,482) (282,631) (29,383) (68,023)
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 139,418,727 $ 25,077,009 $ 60,292,373 $ 139,599,579 $ 9,358,687 $ 53,088,803
============= ============= ============= ============= ============= =============
Fund Information
--------------------------------------------------------------
Non-
Participant
Directed
Participant Directed Funds Fund
-------------------------------- -------
Treasury Executive
Fund Life Fund ESOP Fund Loan Fund Total
---- ---------- ----------- --------- -----
(Note 4)
ASSETS
Investments (Notes 1, 2 and 3)
Harrah's common stock $ -- $ -- $ 10,810,347 $ -- $ 144,773,310
Registered investment companies -- -- -- -- 147,458,179
Common/collective trust fund -- -- -- -- 139,621,583
Short-term investment fund 45,098,842 1,186,522 172,930 5,578 51,114,690
Receivables
Due from participants -- -- -- 31,524,864 31,528,103
Interest and dividends 207,616 -- 941 42 290,213
Due (to) from other funds (289,306) -- -- (6,533) --
Other -- -- 58,890 -- 1,362,600
Cash 23,292 -- 2,058 5,145 318,355
------------- ------------- ------------- ------------- -------------
Total assets 45,040,444 1,186,522 11,045,166 31,529,096 516,467,033
------------- ------------- ------------- ------------- -------------
LIABILITIES
Accrued expenses (127,091) -- (627) -- (958,345)
------------- ------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 44,913,353 $ 1,186,522 $ 11,044,539 $ 31,529,096 $ 515,508,688
============= ============= ============= ============= =============
The accompanying Notes to Financial Statements are an integral part of this
statement.
HARRAH'S ENTERTAINMENT, INC.
SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2000
Fund Information
-------------------------------------------------------------------------------
Participant Directed Funds
-------------------------------------------------------------------------------
Company Small Cap Fidelity S&P 500 Long-Term
Stock Fund Value Fund Magellan Fund Index Fund Bond Fund
---------- ---------- ------------- ---------- ---------
NET INVESTMENT INCOME
Interest $ 955,631 $ 153,098 $ 501,971 $ 574,385 $ 38,760
Dividends -- -- 3,158,994 -- 574,885
------------- ------------- ------------- ------------- -------------
955,631 153,098 3,660,965 574,385 613,645
------------- ------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Aggregate proceeds 61,556,756 7,431,448 14,735,185 30,569,230 7,657,724
Aggregate cost (66,629,363) (7,249,907) (12,400,727) (31,060,606) (7,640,402)
------------- ------------- ------------- ------------- -------------
Net realized gain (loss) (5,072,607) 181,541 2,334,458 (491,376) 17,322
------------- ------------- ------------- ------------- -------------
UNREALIZED NET APPRECIATION
(DEPRECIATION) OF INVESTMENTS 81,193 564,184 2,212,739 (17,646,857) 263,364
CONTRIBUTIONS
Participants 7,911,295 3,273,806 10,714,373 11,837,951 985,044
Company 4,894,689 1,913,566 5,658,746 6,833,206 541,934
------------- ------------- ------------- ------------- -------------
12,805,984 5,187,372 16,373,119 18,671,157 1,526,978
OTHER
Distributions to participants and beneficiaries (11,358,258) (4,305,818) (8,988,842) (16,582,046) (1,261,742)
Transfers between funds (16,223,658) (603,431) (576,170) (2,055,332) (779,705)
Transfers in (Note 1) 5,684,204 -- 8,088,692 8,404,511 --
Administrative expenses (423,815) (345,294) (468,884) (581,695) (27,592)
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS (13,551,326) 831,652 22,636,077 (9,707,253) 352,270
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 139,418,727 25,077,009 60,292,373 139,599,579 9,358,687
------------- ------------- ------------- ------------- -------------
End of year $ 125,867,401 $ 25,908,661 $ 82,928,450 $ 129,892,326 $ 9,710,957
============= ============= ============= ============= =============
Fund Information
--------------------------------------------------------------------------------
Non-
Participant
Directed
Participant Directed Funds Fund
--------------------------------------------------------------- ----
Small Cap Intermediate Money Market Executive
Growth Fund Bond Fund Fund Life Fund ESOP Fund
----------- --------- ---- --------- ---------
(Note 4)
NET INVESTMENT INCOME
Interest $ 102,443 $ 203,138 $ 3,273,453 $ -- $ 10,916
Dividends 1,355,823 -- -- -- --
------------- ------------- ------------- ------------- -------------
1,458,266 203,138 3,273,453 -- 10,916
------------- ------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Aggregate proceeds 4,285,050 18,428,333 -- -- 723,011
Aggregate cost (4,898,837) (17,981,109) -- -- (810,151)
------------- ------------- ------------- ------------- -------------
Net realized gain (loss) (613,787) 447,224 -- -- (87,140)
------------- ------------- ------------- ------------- -------------
UNREALIZED NET APPRECIATION
(DEPRECIATION) OF INVESTMENTS (6,414,555) 3,884,671 -- -- (77,680)
CONTRIBUTIONS
Participants 3,117,054 2,589,074 4,345,715 -- --
Company 1,388,829 1,663,569 2,166,551 -- --
------------- ------------- ------------- ------------- -------------
4,505,883 4,252,643 6,512,266 -- --
OTHER
Distributions to participants and beneficiaries (1,214,495) (7,761,163) (8,096,646) -- (697,143)
Transfers between funds 25,614,225 (7,155,587) 5,675,520 (1,186,522) (10,190,400)
Transfers in (Note 1) -- 2,502,569 3,918,168 -- 670
Administrative expenses (9,592) (250,291) (156,858) -- (3,762)
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 23,325,945 (3,876,796) 11,125,903 (1,186,522) (11,044,539)
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year -- 53,088,803 44,913,353 1,186,522 11,044,539
------------- ------------- ------------- ------------- -------------
End of year $ 23,325,945 $ 49,212,007 $ 56,039,256 $ -- $ --
============= ============= ============= ============= =============
-----------
Loan Fund Total
--------- -----
NET INVESTMENT INCOME
Interest $ 2,456,232 $ 8,270,027
Dividends -- 5,089,702
------------- -------------
2,456,232 13,359,729
------------- -------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Aggregate proceeds -- 145,386,737
Aggregate cost -- (148,671,102)
------------- -------------
Net realized gain (loss) -- (3,284,365)
------------- -------------
UNREALIZED NET APPRECIATION
(DEPRECIATION) OF INVESTMENTS (16,979) (17,149,920)
CONTRIBUTIONS
Participants -- 44,774,312
Company -- 25,061,090
------------- -------------
-- 69,835,402
OTHER
Distributions to participants and beneficiaries (3,390,992) (63,657,145)
Transfers between funds 7,481,060 --
Transfers in (Note 1) -- 28,598,814
Administrative expenses -- (2,267,783)
------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 6,529,321 25,434,732
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 31,529,096 515,508,688
------------- -------------
End of year $ 38,058,417 $ 540,943,420
============= =============
The accompanying Notes to Financial Statements are an integral part of this
statement.
HARRAH'S ENTERTAINMENT, INC.
SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1999
Fund Information
---------------------------------------------------------------------------------------------
Participant Directed Funds
----------------------------------------------------------------------------------------------
Company Aggressive Fidelity S&P 500 Long-Term Income
Stock Fund Stock Fund Magellan Fund Index Fund Bond Fund Fund
---------- ----------- ------------- ---------- ---------- ----
NET INVESTMENT INCOME
Interest $ 253,085 $ 1,734 $ -- $ 5,794 $ 748 $ 3,364
Dividends -- -- 2,575,080 -- 782,473 --
------------- ------------- ------------- ------------- ------------- -------------
253,085 1,734 2,575,080 5,794 783,221 3,364
------------- ------------- ------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Aggregate proceeds 43,554,454 9,618,481 6,411,693 31,337,208 7,555,878 15,809,950
Aggregate cost (29,588,097) (10,795,847) (6,422,081) (24,793,602) (7,872,301) (14,938,247)
------------- ------------- ------------- ------------- ------------- -------------
Net realized gain (loss) 13,966,357 (1,177,366) (10,388) 6,543,606 (316,423) 871,703
------------- ------------- ------------- ------------- ------------- -------------
UNREALIZED NET APPRECIATION
(DEPRECIATION) OF INVESTMENTS 49,890,302 2,183,227 3,382,383 16,031,981 (1,191,763) (558,986)
------------- ------------- ------------- ------------- ------------- -------------
CONTRIBUTIONS
Participants 7,501,449 3,460,816 3,609,238 8,700,499 985,708 2,404,899
Company 4,098,762 1,849,344 1,273,850 4,351,579 480,416 1,352,561
------------- ------------- ------------- ------------- ------------- -------------
11,600,211 5,310,160 4,883,088 13,052,078 1,466,124 3,757,460
OTHER
Distributions to participants and
beneficiaries (13,570,704) (3,302,744) (3,014,324) (14,092,045) (1,488,001) (7,308,810)
Transfers between funds (24,246,626) (4,187,486) 22,002,780 (3,161,677) (2,272,766) (5,370,840)
Transfers in, net of forfeitures 6,969 9,399 30,597,758 20,895,655 2,777 2,903,204
Administrative expenses (704,328) (229,965) (124,004) (684,316) (72,357) (375,058)
------------- ------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 37,195,266 (1,393,041) 60,292,373 38,591,076 (3,089,188) (6,077,963)
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 102,223,461 26,470,050 -- 101,008,503 12,447,875 59,166,766
------------- ------------- ------------- ------------- ------------- -------------
End of year $ 139,418,727 $ 25,077,009 $ 60,292,373 $ 139,599,579 $ 9,358,687 $ 53,088,803
============= ============= ============= ============= ============= =============
Fund Information
---------------------------------------------------------------
Non-
Participant
Directed
Participant Directed Funds Fund
---------------------------- ----
Treasury Executive
Fund Life Fund ESOP Fund Loan Fund Total
---- --------- --------- --------- -----
(Note 4)
NET INVESTMENT INCOME
Interest $ 1,414,262 $ 47,822 $ 9,084 $ 2,040,024 $ 3,775,917
Dividends 350,580 -- -- -- 3,708,133
------------- ------------- ------------- ------------- -------------
1,764,842 47,822 9,084 2,040,024 7,484,050
------------- ------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Aggregate proceeds -- -- 938,136 -- 115,225,800
Aggregate cost -- -- (706,527) -- (95,116,702)
------------- ------------- ------------- ------------- -------------
Net realized gain (loss) -- -- 231,609 -- 20,109,098
------------- ------------- ------------- ------------- -------------
UNREALIZED NET APPRECIATION
(DEPRECIATION) OF INVESTMENTS -- -- 4,436,964 -- 74,174,108
------------- ------------- ------------- ------------- -------------
CONTRIBUTIONS
Participants 4,436,103 -- -- -- 31,098,712
Company 1,230,944 -- -- -- 14,637,456
------------- ------------- ------------- ------------- -------------
5,667,047 -- -- -- 45,736,168
OTHER
Distributions to participants and
beneficiaries (6,179,377) -- (851,568) (2,722,861) (52,530,434)
Transfers between funds 13,371,611 (3,576) (22,956) 3,891,536 --
Transfers in, net of forfeitures 5,491,597 -- -- 4,130,375 64,037,734
Administrative expenses (173,185) -- (3,818) -- (2,367,031)
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 19,942,535 44,246 3,799,315 7,339,074 156,643,693
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 24,970,818 1,142,276 7,245,224 24,190,022 358,864,995
------------- ------------- ------------- ------------- -------------
End of year $ 44,913,353 $ 1,186,522 $ 11,044,539 $ 31,529,096 $ 515,508,688
============= ============= ============= ============= =============
The accompanying Notes to Financial Statements are an integral part of this
statement.
HARRAH'S ENTERTAINMENT, INC.
SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
Fund Information
----------------------------------------------------------------------------------------------
Participant Directed Funds
----------------------------------------------------------------------------------------------
Company Aggressive S&P 500 Long-Term Income Treasury
Stock Fund Stock Fund Index Fund Bond Fund Fund Fund
---------- ---------- ---------- --------- ---- ----
NET INVESTMENT INCOME
Interest $ 381,604 $ 28,962 $ 76,561 $ 8,941 $ 50,915 $ 1,317,409
Dividends -- -- -- 908,197 -- --
------------- ------------- ------------- ------------- ------------- -----------
381,604 28,962 76,561 917,138 50,915 1,317,409
------------- ------------- ------------- ------------- ------------- -----------
REALIZED GAIN (LOSS) ON INVESTMENTS
Aggregate proceeds 44,270,937 7,727,937 22,152,418 4,212,306 11,894,665 --
Aggregate cost (40,392,408) (8,343,747) (19,993,398) (4,137,390) (11,554,323) --
------------- ------------- ------------- ------------- ------------- -----------
Net realized gain (loss) 3,878,529 (615,810) 2,159,020 74,916 340,342 --
------------- ------------- ------------- ------------- ------------- -----------
UNREALIZED NET APPRECIATION
(DEPRECIATION) OF INVESTMENTS (19,357,722) (1,308,361) 19,475,071 (50,483) 3,640,419 --
------------- ------------- ------------- ------------- ------------- -----------
CONTRIBUTIONS
Participants 8,097,933 3,865,866 5,947,595 811,161 2,338,054 1,403,677
Company 5,644,661 2,590,264 4,000,484 557,723 1,683,595 876,483
------------- ------------- ------------- ------------- ------------- -----------
13,742,594 6,456,130 9,948,079 1,368,884 4,021,649 2,280,160
OTHER
Distributions to participants and
beneficiaries (9,687,407) (3,048,048) (8,159,430) (1,149,397) (6,519,340) (4,541,794)
Transfers between funds (8,390,528) (2,545,639) 1,751,526 2,947,497 4,492,737 3,970,947
Administrative expenses (755,850) (355,971) (494,524) (51,994) (460,513) (110,636)
------------- ------------- ------------- ------------- ------------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS (20,188,780) (1,388,737) 24,756,303 4,056,561 5,566,209 2,916,086
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 122,412,241 27,858,787 76,252,200 8,391,314 53,600,557 22,054,732
------------- ------------- ------------- ------------- ------------- -----------
End of year $ 102,223,461 $ 26,470,050 $ 101,008,503 $ 12,447,875 $ 59,166,766 $24,970,818
============= ============= ============= ============= ============= ===========
Fund Information
--------------------
Non-
Participant
Participant Directed
Directed Funds Fund
-------------------- ----
Executive
Life Fund ESOP Fund Loan Fund Total
--------- --------- --------- -----
(Note 4)
NET INVESTMENT INCOME
Interest $ 1,089,215 $ 58,078 $ 1,441,977 $ 4,453,662
Dividends -- -- -- 908,197
------------- ------------- ------------- -------------
1,089,215 58,078 1,441,977 5,361,859
------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Aggregate proceeds -- -- -- 90,258,263
Aggregate cost -- -- -- (84,421,266)
------------- ------------- ------------- -------------
Net realized gain (loss) -- -- -- 5,836,997
------------- ------------- ------------- -------------
UNREALIZED NET APPRECIATION
(DEPRECIATION) OF INVESTMENTS 395,825 (1,387,327) -- 1,407,422
------------- ------------- ------------- -------------
CONTRIBUTIONS
Participants -- -- -- 22,464,286
Company -- 25 -- 15,353,235
------------- ------------- ------------- -------------
-- 25 -- 37,817,521
OTHER
Distributions to participants and
beneficiaries (269,206) (712,278) (2,229,587) (36,316,487)
Transfers between funds (5,732,680) (17,936) 3,524,076 --
Administrative expenses -- (3,423) -- (2,232,911)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS (4,516,846) (2,062,861) 2,736,466 11,874,401
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year 5,659,122 9,308,085 21,453,556 346,990,594
------------- ------------- ------------- -------------
End of year $ 1,142,276 $ 7,245,224 $ 24,190,022 $ 358,864,995
============= ============= ============= =============
The accompanying Notes to Financial Statements are an integral part of this
statement.
HARRAH'S ENTERTAINMENT, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN
The following description of the Harrah's Entertainment, Inc. Savings and
Retirement Plan (the "Plan," formerly The Promus Companies Incorporated Savings
and Retirement Plan) is provided for general information purposes only.
Reference should be made to the Plan Document for a more complete description of
the Plan's provisions.
THE PLAN
The Plan was established by Harrah's effective February 6, 1990, to include
eligible employees of Harrah's and its affiliates (the "Company") for the
primary purpose of allowing these employees to accumulate capital for their
retirement. Participants can contribute either pre-tax payroll dollars (i.e.,
temporary deferral of federal and/or state income taxes) or after-tax dollars to
the Plan, as provided for under Sections 401(k) and 401(m) of the Internal
Revenue Code ("IRC"). The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
On January 1, 1999, Showboat Marina Casino Partnership ("SMCP") became a
participating employer and SMCP employees became eligible to participate in the
Plan. The account balances of SMCP's employees transferred from the Showboat,
Inc. Retirement and Savings Plan to the Plan on January 1, 1999, in the amount
of $3 million. On July 1, 1999, the Showboat Atlantic City employees became
eligible to participate in the Plan. The account balances of the Showboat
Atlantic City's employees were transferred from the Showboat, Inc. Retirement
and Savings Plan to the Plan on July 1, 1999, in the amount of $64 million.
On January 1, 2000, Rio Suite Hotel and Casino became a participating employer
and Rio employees became eligible to participate in the Plan. The account
balances of the Rio employees were transferred from the Rio 401(k) plan to this
Plan on February 28, 2000, in the amount of $36.3 million.
On March 23, 2000, Players International, Inc. ("Players") became a
participating employer and Players employees became eligible to participate in
the Plan. The Players International and Subsidiaries 401(k) Plan was
subsequently terminated. Players participants could elect to receive their
account balances or roll their balances into another qualified plan.
PLAN INVESTMENT FUNDS
By election of a participant, his or her account balance (comprised of
contributions, Company matching funds and accumulated earnings) can be invested
in 1% increments in one or in a combination of up to eight separate funds
(collectively, the "Funds") of the Plan as follows:
I. Company Stock Fund - invested in Harrah's common stock which provides a
return based on the change in market value of Harrah's common stock,
including any dividends declared thereon;
II. Small Cap Growth Fund - invested in the Delaware Trend Fund, a mutual fund
comprised primarily of a mix of common stocks of small and emerging growth
companies, which seeks long-term capital appreciation;
-2-
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (CONTINUED)
III. Small Cap Value Fund (formerly the Aggressive Stock Fund) - invested in
the SSGA Small Cap Matrix Fund, a mutual fund comprised primarily of a mix
of common stocks of emerging and other growth-oriented companies,
including securities convertible to common stocks;
IV. Fidelity Magellan Fund - invested in the Fidelity Magellan Fund, a
publicly-traded mutual fund comprised primarily of common stocks and
convertible securities of large companies based both in the U.S. and
overseas, which seeks capital appreciation;
V. S&P 500 Index Fund - invested in the State Street Bank & Trust S&P 500
Index Fund, an S&P 500 Indexed common/collective trust fund, which
provides a return based on the performance of the stocks included within
the S&P 500 Index Fund, including dividends thereon;
VI. Long-Term Bond Fund - invested in the Vanguard Investment Grade Bond
Portfolio, a mutual fund with investments in a diversified mix of
long-term investment grade bonds;
VII. Intermediate Bond Fund (formerly the Income Fund) - invested in the SSGA
Intermediate Bond Fund, a mutual fund comprised primarily of high quality
intermediate-term government, corporate, mortgage-backed and asset-backed
securities; or
VIII. Money Market Fund (formerly the Treasury Fund) - invested in a commingled
fund managed by State Street Global Advisors, which provides investments
in high-quality money market securities and other short-term debt
instruments.
The Plan also included two other special purpose funds, as follows:
I. Executive Life Fund - segregated the assets and participants' equity
accounts related to the investment in Executive Life Insurance Company's
guaranteed investment contract. See Note 4 - Executive Life Investment for
further details.
II. ESOP Fund - accounted for special contributions by Harrah's of its common
stock or cash equivalents to eligible employees. The ESOP Fund was
established within the Plan to serve as a means to monitor the accounts
and records of the participants. Participants were not allowed to make
contributions to their ESOP account and distributions could be made only
after a participant terminated employment. Effective December 1, 2000, the
ESOP Fund was merged into the Company Stock Fund.
Occasionally, the Funds hold cash on a temporary basis pending investment or
withdrawals. Cash balances are invested in temporary investments.
PLAN ADMINISTRATION
During 1999 and 2000, the general administration of the Plan was the
responsibility of its trustees ("Trustees"), who were appointed by the Human
Resources Committee of the Harrah's Board of Directors. Effective September 1,
2000, State Street Bank and Trust Company became the Plan trustee ("State
Street"), replacing the Trustees. As a result of the appointment of State
Street, the Trustees resigned. As the trustee, State Street performs the duties
and exercises the authority set forth in the Plan and Trust Agreement.
-3-
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (CONTINUED)
Effective September 1, 2000, Harrah's Operating Company Memphis, Inc. ("HOC")
became administrator of the Plan ("Plan Administrator"). The Plan Administrator
has delegated certain of its authority to Citistreet for purposes of day-to-day
administration. Citistreet provides recordkeeping, accounting, daily trading,
custodial, and investment management services.
EMPLOYEE ELIGIBILITY, VESTING AND TERMINATION
Employees of the Company become eligible to join the Plan after 90 days of
service. Eligibility for Company matching contributions begins on the first
entry date (January 1 or July 1) following completion of 12 months of service.
Effective January 1, 2000, participants vest in Company matching contributions
over five calendar years of credited service as follows:
Years of Vested
Credited Service Percentage
---------------- ----------
One 20%
Two 40%
Three 60%
Four 80%
Five 100%
An employee's active participation in the Plan ceases upon separation of service
at which time his or her vested account balance can either be withdrawn or
remain in the Plan according to the Plan Document.
PLAN EXPENSES
As sponsor of the Plan, Harrah's, through its wholly-owned subsidiary, HOC,
initially pays many of the costs associated with the operation of the Plan.
These costs include salaries for employees who perform other administrative
services solely for the Plan, rent, various service charges and other direct
costs of operation. The Plan reimbursed HOC for these costs in the amounts of
approximately $580,000, $387,000 and $790,000 for 2000, 1999 and 1998,
respectively. Such costs are included in administrative expenses in the
accompanying statements of changes in net assets available for benefits.
PARTICIPANTS' CONTRIBUTIONS AND WITHDRAWALS
Participants can elect to make basic contributions ranging from two to six
percent of their eligible earnings, as defined. These contributions are then
matched by the Company. If a participant is making basic pre-tax contributions
of six percent of his or her earnings to the Plan, the participant could elect
to make supplemental contributions of up to an additional ten percent of which
up to ten percent and one percent can be pre-tax dollars for non-highly and
highly compensated employees, respectively. The Company will match the first six
percent of all participants' contributions.
Participants' contributions, vested matching Company contributions and related
income may be withdrawn by giving notice to the Plan Administrator, which may
include a telephone or electronic communication, subject to Plan and Internal
Revenue Service rules. In-service withdrawals of pre-tax contributions are
subject to hardship rules if the withdrawal occurs before age 59 1/2.
-4-
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (CONTINUED)
Withdrawal of basic after-tax and matching contributions will not prohibit
participants from making further contributions; however, if these contributions
or any other funds are withdrawn, the Company will not match subsequent
contributions for six months. Supplemental after-tax contributions and any
earnings thereon may be withdrawn without this penalty. If a participant ceases
to make contributions to the Plan, the participant's equity may remain constant,
except for allocation of earnings, gains and losses on the Plan's investments.
ALLOCATION OF FORFEITURES AND NET PLAN INCOME
As required by the Plan, forfeited amounts attributed to non-vested Company
matching contributions of terminated employees who did not receive a
distribution of their vested account balance will be held for a period of
five years. Employees who return to service within that period will be
credited, subject to further vesting, at the date of rehire with the
unallocated equity amount. The total amount of potential forfeitures of
terminated non-vested participants at December 31, 2000 and 1999 was
approximately $2.0 million and $0.8 million, respectively. Beginning in
September 1999, forfeitures were used to reduce the Company's matching
contributions. During 2000 and 1999, the Company used approximately $0.7
million and $4.2 million, respectively, of forfeitures to reduce Company
matching contributions. Prior to September 1999, forfeitures were reallocated
to the remaining participants.
Net Plan income (i.e. unrealized appreciation/depreciation of investments,
dividend and interest income, and realized gains or losses on the sale of
investments) is allocated daily to active participants based upon the
individual's prior daily equity balance. For purposes of calculating the
realized gains or losses on the sale investments, the Plan uses the revalued
cost (i.e. the fair value of the assets at the beginning of the current plan
year).
LOANS
Loans may be made to participants by giving notice to the Plan Administrator,
which may include a telephone or electronic communication. All loans, other than
those used to acquire or construct the principal residence of the participant,
shall be repaid within five years. The minimum amount that may be borrowed is
$500. The balance of loans outstanding under the Plan to a participant may not
exceed $50,000 (which maximum is subject to reduction if another loan is
outstanding) or one-half of the vested balance of the participant's account,
whichever is less. Loans bear interest at a rate set by the Plan Administrator,
and are secured by the account balance of the participant equal to the
outstanding loan amount. Principal and interest paid by a participant are
credited to the participant's account. At December 31, 2000, these loans had
interest rates of 7.5 percent.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
-5-
NOTE 2 - VALUATION OF INVESTMENTS
Investments in securities, common/collective trust funds and registered
investment companies are stated at market values on the last business day of the
plan year.
The Plan provides for investments in various investment securities which are
exposed to various risks, such as interest rate, credit and overall market
volatility risks. Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the value of investment
securities will occur in the near term and such changes could materially affect
the amounts reported in the Statements of Net Assets Available for Benefits.
NOTE 3 - INVESTMENTS
The fair market values of individual investments that represent 5% or more of
the Plan's total net assets as of December 31, 2000 and 1999, were as follows:
2000 1999
------------ ------------
Harrah's Entertainment, Inc. Common Stock $120,795,047 $144,773,310
Fidelity Magellan Fund 83,192,135 60,110,101
State Street Bank & Trust S&P 500 Index Fund 129,890,322 139,621,583
SSGA Intermediate Bond Fund Series A 49,143,625 53,114,212
SSB Yield Enhanced Short-Term Investment Fund - 45,073,587
Loans to Participants 38,058,417 31,524,864
NOTE 4 - EXECUTIVE LIFE INVESTMENT
On May 1, 1991, the Plan was amended to provide that approximately $12.9 million
attributable to a guaranteed investment contract issued by Executive Life
Insurance Company ("Executive Life") and held in the Plan's Income Investment
Fund would be frozen until such time as the contract was finally paid out. The
Company agreed to pay to the Plan any deficiency between the $12.9 million and
any amounts finally paid under the contract. The Company also agreed to make
interest free loans to the Plan, which were to be repaid out of any amounts
received under the contract, so that persons who leave or who had already left
the Company's employment may withdraw the vested portion of the Executive Life
guaranteed investment contract, as well as other vested funds. The contract was
restructured in September 1993, and the Plan began receiving payments on the
contract. The restructured contract matured on September 3, 1998, and $9.2
million was received by the Plan in September 1998. Of this amount, $8.7 million
represented principal and $0.5 million represented interest earnings. The
principal was allocated to participant accounts to unfreeze the investment and
was used to repay the balance of advances from Harrah's. During 2000,
participants invested their Executive Life Investment accounts in the other
available funds of the Plan.
NOTE 5 - PLAN QUALIFICATION
The Plan is intended to satisfy the tax qualification requirements under
Section 401(a) of the IRC; therefore, the trust funds of the Plan are
intended to be exempt from federal income taxes under Section 501(a). A
favorable determination letter regarding the Plan's status, dated November
19, 1992, has been received from the Internal Revenue Service. The Plan has
been amended since receiving the determination letter; however, the Plan
Administrator and the Plan's legal counsel believe that the Plan is designed
and is currently being operated in compliance with the applicable
requirements of the IRC.
-6-
NOTE 6 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
NOTE 7 - RECONCILIATION TO FORM 5500
At December 31, 2000, there was $408,790 of benefit payments approved and
processed for payment which has not been paid. This amount is reflected in the
Plan's Form 5500, but not reflected in the accompanying financial statements in
accordance with accounting principles generally accepted in the United States.
EXHIBIT I
HARRAH'S ENTERTAINMENT, INC.
SAVINGS AND RETIREMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 2000
MARKET VALUE
------------
HARRAH'S ENTERTAINMENT, INC. COMMON STOCK
Company Stock Fund* $120,795,047
Holding Account 561,409
------------
121,356,456
REGISTERED INVESTMENT COMPANIES
Fidelity Magellan Fund 83,192,135
SSGA Small Cap Matrix Fund Series A 25,950,090
Vanguard Investment Grade Bond Portfolio 9,663,205
Delaware Trend Fund 23,325,937
------------
142,131,367
COMMON/COLLECTIVE TRUST FUNDS
SSGA Intermediate Bond Fund Series A 49,143,625
State Street Bank & Trust S&P 500 Index Fund 129,890,322
------------
179,033,947
LOANS TO PARTICIPANTS, 7.5% 38,058,417
-------------
TOTAL INVESTMENTS $480,580,187
============
* Represents a party-in-interest transaction.
Pursuant to the requirements of the Securities Exchange Act of 1934,
Harrah's Operating Company Memphis, Inc., as plan administrator, has
duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
By: /s/ ELAINE LO
-------------------------------
Elaine Lo
Vice President
Compensation, Benefits & Administration