Acquisitions, Investments, Dispositions and Divestitures

Acquisitions

Buffalo Studios, LLC and Bubbler Media

In December 2012, Caesars Interactive Entertainment, Inc. ("CIE") purchased substantially all of the net assets of Buffalo Studios, LLC ("Buffalo"), a social and mobile games developer and owner of Bingo Blitz, for consideration of $45.2 million plus an earnout payment with an acquisition date fair value estimated at $5.6 million. During the first quarter 2013, the estimated fair value of the earnout was increased to $58.0 million, with a charge to acquisition and integration costs of $52.4 million. The estimated fair value of the earnout was reduced to $54.5 million during the second quarter 2013, resulting in a $3.5 million reduction in the earnout accrual, recorded in acquisition and integration costs. As of September 30, 2013, the estimated fair value of the earnout remains $54.5 million.

The preliminary purchase price allocations include total assets, liabilities and net assets acquired of Buffalo of $52.9 million, $7.7 million and $45.2 million, respectively.

In September 2012, CIE purchased the assets of Bubbler Media ("Bubbler") a social and mobile games developer based in Belarus, for consideration of approximately $7.5 million. The final purchase price allocation for Bubbler included net assets acquired of $7.5 million.

The purchase prices of Buffalo and Bubbler were allocated based on estimated fair values of the assets acquired and liabilities assumed, with the excess of the purchase price over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill. The Company has not yet finalized its purchase price allocation for the Buffalo transaction and is in the process of performing final reviews of the values assigned to assets acquired and liabilities assumed.

Dispositions

Conrad Punta del Este Resort and Casino

In November 2012, we signed a definitive agreement with Enjoy S.A. (“Enjoy”) to form a strategic relationship in Latin America and completed the transaction in May 2013. Under the terms of the agreement, Enjoy acquired 45% of Baluma S.A., our subsidiary that owns and operates the Conrad Punta del Este Resort and Casino in Uruguay (the “Conrad”), in exchange for total consideration of $139.5 million. After customary deductions for expenses associated with the closing, we received $50.4 million in cash, net of $29.7 million of cash deconsolidated, a 4.5% equity stake in Enjoy, and a deferred cash payment of $31.9 million due by January 2014, which is included in other current assets as of September 30, 2013. The shares of Enjoy that we acquired are classified as available-for-sale securities. These securities are adjusted to their market value at every reporting period, with unrealized gains or losses recorded as a component of other comprehensive income. During the three and nine months ended September 30, 2013, these market value adjustments resulted in unrealized losses of $0.7 million and $3.6 million, respectively.

In connection with the transaction, Enjoy assumed control of the Baluma S.A. board and primary responsibility for management of the Conrad. Upon completion of the transaction, we deconsolidated Baluma S.A. from our financial statements and began accounting for Baluma S.A. as an investment in non-consolidated affiliates utilizing the equity method of accounting.

Alea Leeds

On March 4, 2013, we permanently closed our Alea Leeds casino in England. As a result of the closure, during the quarter ended March 31, 2013, we recorded charges of $5.7 million related to the write-down of tangible and intangible assets, net of currency translation adjustment, and $15.8 million related to exit costs, comprised of non-cancellable contract costs of $15.1 million, employment related costs of $0.5 million and other costs in the amount of $0.2 million. During the three and nine months ended September 30, 2013, the Company paid $0.5 million and $1.5 million of exit-related costs, respectively, accreted interest expense of $0.5 million and $1.0 million, respectively, and recognized increases in the liability of $1.0 million and $1.2 million, respectively, due mainly to the impact of currency translation adjustments. As of September 30, 2013, $16.5 million remains accrued. We have presented the operations of Alea Leeds casino as discontinued operations in the Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2013 and 2012. See “Discontinued Operations” below.

Harrah's St. Louis

On November 2, 2012, the Company sold its Harrah's St. Louis casino and recorded a pre-tax gain of $9.3 million on the sale. As a result of working capital adjustments in connection with such sale, the Company recorded reductions to the originally recorded pre-tax gain of $0.7 million in the first quarter of 2013. We have presented the results of Harrah's Maryland Heights, LLC, previous owner of the Harrah's St. Louis casino, as discontinued operations in our Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2012. See “Discontinued Operations” below.

Macau Land Concession

During the second quarter of 2012, we determined that it was more likely than not that we would divest of our investment in a land concession in Macau prior to the end of the remaining 35-year term of the concession (the “Macau Land Concession”). As a result, we performed an impairment assessment on the Macau Land Concession and recorded an impairment charge of $101.0 million.

In the fourth quarter of 2012, the Company began discussions with interested investors regarding a sale of the subsidiaries that hold the Macau Land Concession. As a result of this plan of disposal, the assets and liabilities have been classified as held for sale in our Consolidated Condensed Balance Sheets at September 30, 2013 and December 31, 2012. See “Held for Sale” below. We have presented the operations of the business as discontinued operations in the Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2013 and 2012. See “Discontinued Operations” below. We have adjusted the book value of the Macau Land Concession each reporting period to the estimated sales price less cost to sell and, as a result, recorded an additional reduction to the book value of $21.0 million during the first quarter of 2013.

On August 6, 2013, the Company, along with certain of its wholly owned subsidiaries, entered into a share purchase agreement with Pearl Dynasty Investments Limited (“Pearl Dynasty”), pursuant to which Pearl Dynasty will purchase from the Company all of the equity interests of the subsidiaries that hold the Macau Land Concession for a purchase price of $438.0 million subject to customary closing conditions. During the third quarter of 2013, the Company increased the recorded book value by $15.2 million to reflect the final estimated fair value less cost to sell.

The Purchase Agreement required Pearl Dynasty to deposit certain amounts with the Company in connection with the transaction. Pearl Dynasty deposited $21.9 million on August 7, 2013, and an additional $43.8 million on August 8, 2013. The deposits were applied to the purchase price at closing of the transaction, which occurred on November 1, 2013. See Note 21, "Subsequent Events."

The Company expects to use the net proceeds from the sale, which were approximately $420.0 million, to fund CEOC capital expenditures or to repurchase certain outstanding debt obligations of CEOC.

See Note 21, "Subsequent Events."

Atlantic City Marketplace Parcels

In June 2013, we signed an agreement with the Casino Reinvestment Development Authority (“CRDA”) under which we have agreed to convey certain land parcels with an appraised value of $7.3 million to the CRDA (the “Marketplace Parcels”) on which the CRDA may construct a marketplace-style retail development project. The CRDA is a New Jersey state governmental agency responsible for directing the spending of casino reinvestment funds for the benefit of Atlantic City. Casino reinvestment funds (also known as investment alternative tax obligation deposits, or IAT) are paid to the CRDA on a monthly basis equal to 1.25% of monthly gross gaming revenues. In return for the Marketplace Parcels, we will receive a credit against future IAT payable to the CRDA in the amount of $7.3 million. Conveyance of the Marketplace Parcels is subject to, among other things, the CRDA’s determination that the Marketplace Parcels are suitable for their development project. During the third quarter 2013, the CRDA substantially completed their suitability tests. As a result of this plan of disposal, the Marketplace Parcels are classified as held for sale as of September 30, 2013. See "Held for Sale" below. The Marketplace Parcels were tested for recoverability during the third quarter 2013 as a result of their classification as held for sale. See Note 6, "Property and Equipment, net."

Held for Sale

Assets and liabilities classified as held for sale relate to the subsidiaries that hold our land concessions in Macau and the Marketplace Parcels in Atlantic City are as follows:



(In millions)	September 30, 2013		December 31, 2012
Assets
Cash and cash equivalents	$	4.9	$	4.7
Other current assets	0.5		0.4
Assets held for sale, current	$	5.4	$	5.1

Property and equipment, net	$	466.0	$	471.2
Assets held for sale, non-current	$	466.0	$	471.2

Liabilities
Accounts payable and accrued expenses	$	0.7	$	3.8
Liabilities held for sale, current	$	0.7	$	3.8

Deferred credits and other	$	2.5	$	0.2
Deferred income taxes	51.8		51.9
Liabilities held for sale, non-current	$	54.3	$	52.1

Discontinued Operations

Net revenues, pre-tax income/(loss) from operations, and income/(loss), net of income taxes presented as discontinued operations are as follows:



	Quarter Ended September 30,						Nine Months Ended September 30,
(In millions)	2013			2012			2013			2012
Net revenues
Harrah's St. Louis	$	—		$	60.8		$	—		$	189.3
Macau	0.7			1.0			2.5			2.6
Alea Leeds	—			1.6			0.7			4.3
Total net revenues	$	0.7		$	63.4		$	3.2		$	196.2

Pre-tax income/(loss) from operations
Harrah's St. Louis	$	—		$	4.6		$	(0.7	)	$	46.5
Macau	15.3			(2.8		)	(5.2		)	(112.4		)
Alea Leeds	(0.4		)	(1.0		)	(23.4		)	(3.5		)
Total pre-tax income/(loss) from discontinued operations	$	14.9		$	0.8		$	(29.3	)	$	(69.4	)

Income/(loss), net of income taxes
Harrah's St. Louis	$	(0.1	)	$	2.8		$	(0.5	)	$	28.5
Macau	12.3			(2.6		)	(5.6		)	(99.0		)
Alea Leeds	(0.4		)	(1.0		)	(23.4		)	(3.5		)
Total income/(loss) from discontinued operations, net of income taxes	$	11.8		$	(0.8	)	$	(29.5	)	$	(74.0	)