Delaware | 001-10410 | 62-1411755 | ||
(State of Incorporation) | (Commission File Number) | (IRS Employer | ||
Identification Number) | ||||
One Caesars Palace Drive | ||||
Las Vegas, Nevada 89109 | ||||
(Address of principal executive offices) (Zip Code) |
99.1 | Text of press release, dated May 7, 2014. |
99.2 | Prepared remarks, dated May 7, 2014. |
CAESARS ENTERTAINMENT CORPORATION | ||||
Date: | May 7, 2014 | By: | /S/ ERIC HESSION | |
Eric Hession | ||||
Senior Vice President and Treasurer |
Contact: | Gary Thompson - Media | Jennifer Chen - Investors | ||
Caesars Entertainment Corporation | Caesars Entertainment Corporation | |||
(702) 407-6529 | (702) 407-6407 |
• | Realized broad-based strength in hospitality revenue streams in Las Vegas with strong group business in Q1 |
• | Opened the High Roller at The LINQ to the public at the end of March and have since welcomed thousands of riders |
• | Received preliminary approval to develop our first internationally branded casino-integrated resort in South Korea |
• | Raised approximately $136 million in cash at CEC via a public equity offering that closed in April |
• | Closed on the previously announced sale of three CEOC-owned Las Vegas properties to Caesars Growth Partners |
• | Announced comprehensive financing plan designed to position CEOC for stock listing and significant deleveraging |
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | ||||||||||
(Dollars in millions, except per share data) | 2014 | 2013 | |||||||||
Casino revenues (1) | $ | 1,364.8 | $ | 1,493.1 | (8.6 | )% | |||||
Net revenues (1) | 2,101.3 | 2,141.1 | (1.9 | )% | |||||||
Income from operations (1) (2) | 71.3 | 142.8 | (50.1 | )% | |||||||
Loss from continuing operations, net of income taxes (1) | (366.9 | ) | (174.7 | ) | (110.0 | )% | |||||
Loss from discontinued operations, net of income taxes | (15.9 | ) | (42.0 | ) | 62.1 | % | |||||
Net loss attributable to Caesars | (386.4 | ) | (217.6 | ) | (77.6 | )% | |||||
Basic and diluted loss per share (3) | (2.82 | ) | (1.74 | ) | (62.1 | )% | |||||
Property EBITDA (4) | 413.1 | 487.4 | (15.2 | )% | |||||||
Adjusted EBITDA (5) | 423.1 | 469.7 | (9.9 | )% |
• | CERP results presented herein reflect intercompany lease income received for Octavius Tower for all periods presented, including periods prior to its acquisition by CERP in October 2013, and for the LINQ beginning with the first quarter 2014; |
• | CEOC results presented herein reflect the operating results of Planet Hollywood through the sale date in October 2013 and CGP LLC results include Planet Hollywood for all periods presented; |
• | Eliminating and consolidating entries are not presented in the tables; and |
• | CEC parent company operating results are not included. |
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | |||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||
Net revenues | $ | 794.0 | $ | 751.7 | 5.6 | % | ||||
Income from operations | 128.3 | 104.3 | 23.0 | % | ||||||
Property EBITDA (3) | 219.0 | 197.9 | 10.7 | % |
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | |||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||
Net revenues | $ | 315.3 | $ | 365.3 | (13.7 | )% | ||||
Loss from operations | (50.2 | ) | (3.2 | ) | * | |||||
Property EBITDA (3) | 9.6 | 51.2 | (81.3 | )% |
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | |||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||
Net revenues | $ | 699.2 | $ | 749.3 | (6.7 | )% | ||||
Income from operations | 27.1 | 101.3 | (73.2 | )% | ||||||
Property EBITDA (3) | 142.0 | 178.2 | (20.3 | )% |
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | |||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||
Net revenues | ||||||||||
Managed | $ | 74.7 | $ | 71.7 | 4.2 | % | ||||
International | 82.9 | 122.1 | (32.1 | )% | ||||||
Other | 135.2 | 81.0 | 66.9 | % | ||||||
Total net revenues | $ | 292.8 | $ | 274.8 | 6.6 | % | ||||
Income/(loss) from operations | ||||||||||
Managed | $ | 8.9 | $ | 4.6 | 93.5 | % | ||||
International | 16.0 | 22.7 | (29.5 | )% | ||||||
Other | (58.8 | ) | (86.9 | ) | 32.3 | % | ||||
Total loss from operations | $ | (33.9 | ) | $ | (59.6 | ) | 43.1 | % |
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | |||||||||||||||||
2014 | 2013 | |||||||||||||||||
(Dollars in millions) | CEOC Financial Information | LINQ/Octavius Accounting Impact(a) | CEOC Adjusted(b) | CEOC Financial Information | ||||||||||||||
Net revenues | $ | 1,442.8 | $ | 3.5 | $ | 1,439.3 | $ | 1,615.4 | (10.9 | )% | ||||||||
Income/(loss) from operations | (12.1 | ) | (6.7 | ) | (5.4 | ) | 134.8 | * | ||||||||||
Loss from continuing operations, net of income taxes | (474.9 | ) | (15.7 | ) | (459.2 | ) | (228.0 | ) | (101.4 | )% | ||||||||
Loss from discontinued operations, net of income taxes | (15.9 | ) | — | (15.9 | ) | (23.7 | ) | 32.9 | % | |||||||||
Net loss attributable to CEOC | (492.9 | ) | (15.7 | ) | (477.2 | ) | (254.2 | ) | (87.7 | )% | ||||||||
Property EBITDA (4) | 267.7 | 9.6 | 258.1 | 357.1 | (27.7 | )% | ||||||||||||
Adjusted EBITDA (5) | 259.4 | 9.6 | 249.8 | 332.6 | (24.9 | )% |
• | Harrah’s Atlantic City, Harrah’s Las Vegas, Harrah’s Laughlin, Flamingo Las Vegas, Paris Las Vegas, and Rio All-Suite Hotel and Casino (collectively, the former CMBS properties); |
• | Lease income received for Octavius Tower for all periods presented (paid by CEOC), including periods prior to its actual contribution to CERP in October 2013, and for the LINQ beginning with the first quarter 2014; |
• | Operating results from the LINQ, which was substantially open by March 31, 2014; |
• | Operating results from the High Roller observation wheel, which began operations at the end of the first quarter 2014; and |
• | Lease income of O’Sheas casino (paid by CEOC) beginning in 2014. |
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | |||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||
Net revenues | $ | 492.0 | $ | 482.3 | 2.0 | % | ||||
Income from operations | 60.0 | 44.1 | 36.1 | % | ||||||
Net loss | (6.9 | ) | (8.5 | ) | 18.8 | % | ||||
Property EBITDA (4) | 127.2 | 129.5 | (1.8 | )% | ||||||
Adjusted EBITDA (5) | 113.2 | 118.1 | (4.1 | )% |
Consolidated | Predecessor | Percent Favorable/ (Unfavorable) | ||||||||
Three Months Ended March 31, | ||||||||||
(Dollars in millions) | 2014 | 2013 | ||||||||
Interactive Entertainment net revenues | $ | 124.2 | $ | 68.1 | 82.4 | % | ||||
Casino Properties and Developments net revenue | 102.1 | 83.0 | 23.0 | % | ||||||
Total net revenues | 226.3 | 151.1 | 49.8 | % | ||||||
Loss from operations | (61.8 | ) | (24.2 | ) | 155.4 | % | ||||
Property EBITDA (4) | 36.6 | 39.4 | (7.1 | )% | ||||||
Adjusted EBITDA (5) | 55.6 | 42.2 | 31.8 | % |
(1) | Casino revenues, net revenues, income from operations, and loss from continuing operations, net of income taxes for all periods presented in the table above exclude the results of Alea Leeds casino (closed in March 2013), Golden Nugget casino (closed in February 2014) and the subsidiaries that held the Company's land concession in Macau because all of these are presented as discontinued operations. |
(2) | Income from operations for Caesars includes intangible and tangible asset impairment charges of $100.8 million and $20.0 million, for the three months ended March 31, 2014 and 2013, respectively. Income from operations for CEOC includes intangible and tangible asset impairment charges of $101.1 million and $20.0 million, for the three months ended March 31, 2014 and 2013, respectively. |
(3) | Basic and diluted loss per share for Caesars for the periods shown includes loss per share from discontinued operations, net of income taxes, of $0.12 per share and $0.33 per share in the three months ended March 31, 2014 and 2013, respectively. |
(4) | Property EBITDA is a non-GAAP financial measure that is defined and reconciled to its most comparable GAAP measure later in this release. Property EBITDA is included because the Company's management uses Property EBITDA to measure performance and allocate resources, and believes that Property EBITDA provides investors with additional information consistent with that used by management. |
(5) | Adjusted EBITDA is a non-GAAP financial measure that is defined and reconciled to its most comparable GAAP measure later in this release. Adjusted EBITDA is included because management believes that Adjusted EBITDA provides investors with additional information that allows a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the Company. Adjusted EBITDA does not include the Pro Forma effect of adjustments related to properties, yet-to-be-realized cost savings from the Company's profitability improvement programs, discontinued operations and LTM Adjusted EBITDA-Pro Forma of CEOC's unrestricted subsidiaries. Adjustments also include 100% of Baluma S.A. (Conrad Punta del Este) adjusted EBITDA as permitted under the indentures governing CEOC's existing notes and the credit agreement governing CEOC's senior secured credit facilities. |
March 31, 2014 | |||||||||||||||
(In millions) | CEOC | CERP | CGP LLC | Parent | |||||||||||
Cash, cash equivalents, and short term investments (1) | $ | 1,175.0 | $ | 161.2 | $ | 972.6 | $ | 174.6 | |||||||
Revolver Capacity | 106.1 | 269.5 | — | — | |||||||||||
Less: Revolver capacity committed to letters of credit | (96.3 | ) | — | — | — | ||||||||||
Total Liquidity | $ | 1,184.8 | $ | 430.7 | $ | 972.6 | $ | 174.6 |
(1) | Excludes restricted cash and $1.8 million of cash reported in CEOC as a result of the LINQ/Octavius accounting described above. |
• | the ability to satisfy the conditions to the closing with respect to the sale of Harrah's New Orleans, including receipt of required regulatory approvals; |
• | the previously disclosed sale of Harrah's New Orleans to Caesars Growth Partners may not be consummated on the terms contemplated or at all; |
• | the impact of the Company's substantial indebtedness and the restrictions in the Company's debt agreements; |
• | the new CEOC first lien term loan and amendment to the CEOC credit agreement and related Caesars Entertainment guarantee of the CEOC credit agreement may not be consummated on the terms contemplated or at all and other access to available and reasonable financing on a timely basis, including the ability of the Company to refinance its indebtedness on acceptable terms; |
• | the assertion and outcome of litigation or other claims that may be brought against the Company by certain creditors, some of whom have notified the Company of their objection to various transactions undertaken by the Company in 2013 and 2014; |
• | the effects of local and national economic, credit, and capital market conditions on the economy, in general, and on the gaming industry, in particular; |
• | the ability to realize the expense reductions from cost savings programs, including the program to increase its working capital and excess cash by $500 million; |
• | changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions, disciplines, and fines of courts, regulators, and governmental bodies; |
• | the ability of the Company's customer-tracking, customer loyalty, and yield-management programs to continue to increase customer loyalty and same-store or hotel sales; |
• | the effects of competition, including locations of competitors, competition for new licenses and operating and market competition; |
• | the ability to recoup costs of capital investments through higher revenues; |
• | abnormal gaming holds (“gaming hold” is the amount of money that is retained by the casino from wagers by customers); |
• | the ability to timely and cost-effectively integrate companies that the Company acquires into its operations; |
• | the potential difficulties in employee retention and recruitment as a result of the Company's substantial indebtedness, the ongoing downturn in the U.S. regional gaming industry, or any other factor; |
• | construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, and building permit issues; |
• | litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation; |
• | severe weather conditions or natural disasters, including losses therefrom, including losses in revenues and damage to property, and the impact of severe weather conditions on the Company's ability to attract customers to certain of its facilities, such as the amount of losses and disruption to us as a result of Hurricane Sandy in late October 2012; |
• | acts of war or terrorist incidents or uprisings, including losses therefrom, including losses in revenues and damage to property, |
• | the effects of environmental and structural building conditions relating to the Company's properties; |
• | access to insurance on reasonable terms for the Company's assets; and |
• | the impact, if any, of unfunded pension benefits under multi-employer pension plans. |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Revenues | |||||||
Casino | $ | 1,364.8 | $ | 1,493.1 | |||
Food and beverage | 385.0 | 379.8 | |||||
Rooms | 318.8 | 288.2 | |||||
Management fees | 13.7 | 10.7 | |||||
Other | 255.2 | 203.2 | |||||
Reimbursable management costs | 62.4 | 59.7 | |||||
Less: casino promotional allowances | (298.6 | ) | (293.6 | ) | |||
Net revenues | 2,101.3 | 2,141.1 | |||||
Operating expenses | |||||||
Direct | |||||||
Casino (a) | 825.6 | 833.1 | |||||
Food and beverage (a) | 161.2 | 165.1 | |||||
Rooms (a) | 82.5 | 73.3 | |||||
Property, general, administrative, and other (a) | 556.1 | 520.5 | |||||
Reimbursable management costs | 62.4 | 59.7 | |||||
Depreciation and amortization | 122.8 | 161.6 | |||||
Write-downs, reserves, and project opening costs, net of recoveries | 24.0 | 20.7 | |||||
Impairment of intangible and tangible assets | 100.8 | 20.0 | |||||
Loss/(income) on interests in non-consolidated affiliates | (3.8 | ) | 2.6 | ||||
Corporate expense | 50.4 | 36.1 | |||||
Acquisition and integration costs | 15.0 | 64.2 | |||||
Amortization of intangible assets | 33.0 | 41.4 | |||||
Total operating expenses | 2,030.0 | 1,998.3 | |||||
Income from operations | 71.3 | 142.8 | |||||
Interest expense | (592.3 | ) | (574.7 | ) | |||
Loss on early extinguishments of debt | (0.7 | ) | (36.7 | ) | |||
Other income, including interest income | 0.3 | 3.7 | |||||
Loss from continuing operations before income taxes | (521.4 | ) | (464.9 | ) | |||
Income tax benefit | 154.5 | 290.2 | |||||
Loss from continuing operations, net of income taxes | (366.9 | ) | (174.7 | ) | |||
Discontinued operations | |||||||
Loss from discontinued operations | (15.9 | ) | (44.8 | ) | |||
Income tax benefit | — | 2.8 | |||||
Loss from discontinued operations, net of income taxes | (15.9 | ) | (42.0 | ) | |||
Net loss | (382.8 | ) | (216.7 | ) | |||
Less: net income attributable to noncontrolling interests | (3.6 | ) | (0.9 | ) | |||
Net loss attributable to Caesars | $ | (386.4 | ) | $ | (217.6 | ) | |
Loss per share - basic and diluted | |||||||
Loss per share from continuing operations | $ | (2.70 | ) | $ | (1.41 | ) | |
Income/(loss) per share from discontinued operations | (0.12 | ) | (0.33 | ) | |||
Net loss per share | $ | (2.82 | ) | $ | (1.74 | ) |
March 31, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 2,483.4 | $ | 2,771.2 | |||
Restricted cash | 64.6 | 87.5 | |||||
Other current assets | 858.8 | 911.6 | |||||
Total current assets | 3,406.8 | 3,770.3 | |||||
Property and equipment, net | 13,347.9 | 13,237.9 | |||||
Goodwill and other intangible assets | 6,539.4 | 6,551.0 | |||||
Restricted cash | 265.3 | 336.8 | |||||
Assets held for sale | 4.0 | 11.9 | |||||
Other long-term assets | 813.3 | 781.0 | |||||
$ | 24,376.7 | $ | 24,688.9 | ||||
Liabilities and Stockholders’ Deficit | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 197.2 | $ | 197.1 | |||
Other current liabilities | 2,643.6 | 2,333.7 | |||||
Total current liabilities | 2,840.8 | 2,530.8 | |||||
Long-term debt | 20,994.3 | 20,918.4 | |||||
Other long-term liabilities | 2,818.4 | 3,143.5 | |||||
26,653.5 | 26,592.7 | ||||||
Total Caesars stockholders’ deficit | (3,502.2 | ) | (3,122.0 | ) | |||
Noncontrolling interests | 1,225.4 | 1,218.2 | |||||
Total deficit | (2,276.8 | ) | (1,903.8 | ) | |||
$ | 24,376.7 | $ | 24,688.9 |
Three Months Ended March 31, 2014 | |||||||||||||||||||||||
(In millions) | Las Vegas | Atlantic Coast | Other U.S. | Managed, Int'l and Other | Discontinued Operations | Total | |||||||||||||||||
Net loss attributable to Caesars | $ | (386.4 | ) | ||||||||||||||||||||
Net income attributable to noncontrolling interests | 3.6 | ||||||||||||||||||||||
Net loss | (382.8 | ) | |||||||||||||||||||||
Loss from discontinued operations, net of income taxes | 15.9 | ||||||||||||||||||||||
Loss from continuing operations, net of income taxes | (366.9 | ) | |||||||||||||||||||||
Benefit for income taxes | (154.5 | ) | |||||||||||||||||||||
Loss from continuing operations before income taxes | (521.4 | ) | |||||||||||||||||||||
Other income, including interest income | (0.3 | ) | |||||||||||||||||||||
Gain on partial sale of subsidiary | — | ||||||||||||||||||||||
Loss on early extinguishments of debt | 0.7 | ||||||||||||||||||||||
Interest expense | 592.3 | ||||||||||||||||||||||
Income/(loss) from operations | $ | 128.3 | $ | (50.2 | ) | $ | 27.1 | $ | (33.9 | ) | 71.3 | ||||||||||||
Depreciation and amortization | 65.7 | 14.1 | 39.1 | 3.9 | 122.8 | ||||||||||||||||||
Amortization of intangible assets | 15.4 | 0.3 | 8.1 | 9.2 | 33.0 | ||||||||||||||||||
Impairment of intangible and tangible assets | — | 32.4 | 68.0 | 0.4 | 100.8 | ||||||||||||||||||
Write-downs, reserves, and project opening costs, net of recoveries | 9.6 | 13.0 | (0.1 | ) | 1.5 | 24.0 | |||||||||||||||||
Acquisition and integration costs | — | — | — | 15.0 | 15.0 | ||||||||||||||||||
Income on interests in non-consolidated affiliates | — | — | (0.2 | ) | (3.6 | ) | (3.8 | ) | |||||||||||||||
Corporate expense | — | — | — | 50.4 | 50.4 | ||||||||||||||||||
EBITDA attributable to discontinued operations | $ | (0.4 | ) | (0.4 | ) | ||||||||||||||||||
Property EBITDA | $ | 219.0 | $ | 9.6 | $ | 142.0 | $ | 42.9 | $ | (0.4 | ) | $ | 413.1 |
Three Months Ended March 31, 2013 | |||||||||||||||||||||||
(In millions) | Las Vegas | Atlantic Coast | Other U.S. | Managed, Int'l and Other | Discontinued Operations | Total | |||||||||||||||||
Net loss attributable to Caesars | $ | (217.6 | ) | ||||||||||||||||||||
Net income attributable to noncontrolling interests | 0.9 | ||||||||||||||||||||||
Net loss | (216.7 | ) | |||||||||||||||||||||
Loss from discontinued operations, net of income taxes | 42.0 | ||||||||||||||||||||||
Loss from continuing operations, net of income taxes | (174.7 | ) | |||||||||||||||||||||
Income tax benefit | (290.2 | ) | |||||||||||||||||||||
Loss from continuing operations before income taxes | (464.9 | ) | |||||||||||||||||||||
Other income, including interest income | (3.7 | ) | |||||||||||||||||||||
Loss on early extinguishments of debt | 36.7 | ||||||||||||||||||||||
Interest expense | 574.7 | ||||||||||||||||||||||
Income/(loss) from operations | $ | 104.3 | $ | (3.2 | ) | $ | 101.3 | $ | (59.6 | ) | 142.8 | ||||||||||||
Depreciation and amortization | 61.5 | 42.4 | 47.4 | 10.3 | 161.6 | ||||||||||||||||||
Amortization of intangible assets | 19.0 | 4.0 | 9.3 | 9.1 | 41.4 | ||||||||||||||||||
Impairment of intangible and tangible assets | — | — | 20.0 | — | 20.0 | ||||||||||||||||||
Write-downs, reserves, and project opening costs, net of recoveries | 13.6 | 8.0 | 0.4 | (1.3 | ) | 20.7 | |||||||||||||||||
Acquisition and integration costs | — | — | — | 64.2 | 64.2 | ||||||||||||||||||
(Income)/loss on interests in non-consolidated affiliates | (0.5 | ) | — | (0.2 | ) | 3.3 | 2.6 | ||||||||||||||||
Corporate expense | — | — | — | 36.1 | 36.1 | ||||||||||||||||||
EBITDA attributable to discontinued operations | $ | (2.0 | ) | (2.0 | ) | ||||||||||||||||||
Property EBITDA | $ | 197.9 | $ | 51.2 | $ | 178.2 | $ | 62.1 | $ | (2.0 | ) | $ | 487.4 |
(1) | (2) | (3) | |||||||||||||
(In millions) | Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | Year Ended December 31, 2013 | (1)-(2)+(3) LTM | |||||||||||
Net loss attributable to Caesars | $ | (386.4 | ) | $ | (217.6 | ) | $ | (2,948.2 | ) | $ | (3,117.0 | ) | |||
Interest expense | 592.3 | 574.7 | 2,252.4 | 2,270.0 | |||||||||||
Interest income | (2.5 | ) | (3.2 | ) | (16.5 | ) | (15.8 | ) | |||||||
Income tax benefit | (154.5 | ) | (290.2 | ) | (1,549.7 | ) | (1,414.0 | ) | |||||||
Depreciation and amortization | 122.8 | 161.6 | 564.8 | 526.0 | |||||||||||
Depreciation in corporate expense | 7.7 | 3.3 | 12.8 | 17.2 | |||||||||||
Amortization of intangible assets | 33.0 | 41.4 | 164.5 | 156.1 | |||||||||||
Discontinued operations (a) (b) | 0.7 | (2.5 | ) | 2.8 | 6.0 | ||||||||||
EBITDA | 213.1 | 267.5 | (1,517.1 | ) | (1,571.5 | ) | |||||||||
Write-downs, reserves, and project opening costs, net of recoveries (c) | 24.0 | 20.7 | 103.9 | 107.2 | |||||||||||
Acquisition and integration costs (d) | 15.0 | 64.2 | 81.3 | 32.1 | |||||||||||
Loss/(gain) on early extinguishments of debt (e) | 0.7 | 36.7 | 29.8 | (6.2 | ) | ||||||||||
Net income/(loss) attributable to non-controlling interests(f) | 3.6 | 0.9 | 8.4 | 11.1 | |||||||||||
Impairment of intangible and tangible assets (g) | 100.8 | 20.0 | 3,018.9 | 3,099.7 | |||||||||||
Non-cash expense for stock compensation benefits (h) | 26.4 | 3.6 | 53.9 | 76.7 | |||||||||||
Adjustments to include 100% of Baluma S.A.'s adjusted EBITDA(i) | 21.1 | — | 9.0 | 30.1 | |||||||||||
Discontinued operations write-downs, reserves, and project opening costs, net of recoveries and Impairments (j) | 14.9 | 42.5 | 27.9 | 0.3 | |||||||||||
Other items (k) | 3.5 | 13.6 | 38.5 | 28.4 | |||||||||||
Adjusted EBITDA | $ | 423.1 | $ | 469.7 | $ | 1,854.5 | 1,807.9 | ||||||||
Pro Forma adjustments related to properties (l) | 11.5 | ||||||||||||||
Pro Forma adjustment for estimated cost savings yet-to-be-realized (m) | 190.7 | ||||||||||||||
Adjusted EBITDA | $ | 2,010.1 |
(a) | Amounts include a provision for income taxes related to discontinued operations of $0.0 million and $0.2 million for the three months ended March 31, 2014 and for the year ended December 31, 2013, respectively, and an income tax benefit of $2.8 million for the three months ended March 31, 2013. |
(b) | Amounts include depreciation and amortization related to discontinued operations of $0.0 million, $0.3 million and $0.6 million for the three months ended March 31, 2014 and 2013, and for the year ended December 31, 2013, respectively. Amounts also include interest expense related to discontinued operations of $0.7 million, $0.0 million and $2.0 million for the three months ended March 31, 2014 and 2013, and for the year ended December 31, 2013, respectively. |
(c) | Amounts represent pre-opening costs incurred in connection with new property openings and expansion projects at existing properties, as well as any non-cash write-offs of abandoned development projects. |
(d) | Amounts include certain costs associated with acquisition and development activities and reorganization activities which are infrequently occurring costs. |
(e) | Amounts represent the difference between the fair value of consideration paid and the book value, net of deferred financing costs, of debt retired through debt extinguishment transactions, which are capital structure-related, rather than operational-type costs. |
(f) | Amounts represent minority owners’ share of income/(loss) from the Company's majority-owned consolidated subsidiaries, which is a non-cash item as it excludes any cash distributions. Cash distributions to minority owners are included in the "other items" line item. |
(g) | Amounts represent non-cash charges to impair intangible and tangible assets primarily resulting from changes in the business outlook in light of competitive conditions. |
(h) | Amounts represent non-cash stock-based compensation expense related to stock options and restricted stock granted to the Company's employees. |
(i) | Amounts represent adjustments to include 100% of Baluma S.A. (Conrad Punta del Este) adjusted EBITDA as permitted under the indentures governing CEOC's existing notes and the credit agreement governing CEOC's senior secured credit facilities. |
(j) | Amounts include reserves and impairments related to the closure of Golden Nugget in February 2014 and Alea Leeds in March 2013 and the sale of the Company's investment in a land concession in Macau, which was completed in November 2013, all of which are included in loss from discontinued operations. |
(k) | Amounts represent add-backs and deductions from EBITDA, whether permitted and/or required under the indentures governing CEOC’s existing notes and the credit agreement governing CEOC’s senior secured credit facilities, included in arriving at LTM Adjusted EBITDA-Pro Forma but not separately identified. Such add-backs and deductions include litigation awards and settlements, severance and relocation costs, sign-on and retention bonuses, permit remediation costs, gains and losses from disposals of assets, costs incurred in connection with implementing the Company's efficiency and cost-saving programs, business optimization expenses, the Company's insurance policy deductibles incurred as a result of catastrophic events such as floods and hurricanes, one time sales tax assessments and accruals, project start-up costs, non-cash equity in earnings of non-consolidated affiliates (net of distributions), and adjustments to include controlling interests' portion of Baluma S.A. adjusted EBITDA. |
(l) | Amounts represent the estimated annualized impact of operating results related to newly completed construction projects, combined with the estimated annualized EBITDA impact associated with properties acquired during the period. |
(m) | Amount represents adjustments to reflect the impact of annualized run-rate cost savings and anticipated future cost savings to be realized from the Company's announced Project Renewal and other profitability improvement and cost-savings programs. |
Three Months Ended March 31, | ||||||||
(In millions) | 2014 | 2013 | ||||||
Net loss attributable to CEOC | $ | (492.9 | ) | $ | (254.2 | ) | ||
Net income attributable to non-controlling interests | 2.1 | 2.5 | ||||||
Net loss | (490.8 | ) | (251.7 | ) | ||||
Loss from discontinued operations, net of income taxes | 15.9 | 23.7 | ||||||
Net loss from continuing operations, net of income taxes | (474.9 | ) | (228.0 | ) | ||||
Income tax benefit | (72.2 | ) | (210.3 | ) | ||||
Loss from continuing operations before income taxes | (547.1 | ) | (438.3 | ) | ||||
Other income, including interest income | (0.9 | ) | (2.4 | ) | ||||
Loss on early extinguishments of debt | 0.1 | 29.5 | ||||||
Interest expense | 535.8 | 546.0 | ||||||
Income/(loss) from operations | (12.1 | ) | 134.8 | |||||
Depreciation and amortization | 91.3 | 127.1 | ||||||
Amortization of intangible assets | 15.3 | 23.0 | ||||||
Impairment of intangible and tangible assets | 101.1 | 20.0 | ||||||
Write-downs, reserves, and project opening costs, net of recoveries | 12.2 | 7.3 | ||||||
Acquisition and integration costs | 14.6 | 11.8 | ||||||
(Income)/loss on interests in non-consolidated affiliates | (3.5 | ) | 3.0 | |||||
Corporate expense | 49.2 | 32.1 | ||||||
Other adjustment for LINQ/ Octavius accounting impact | (9.6 | ) | — | |||||
EBITDA attributable to discontinued operations | (0.4 | ) | (2.0 | ) | ||||
Property EBITDA | $ | 258.1 | $ | 357.1 |
(1) | (2) | (3) | |||||||||||||
(In millions) | Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | Year Ended December 31, 2013 | (1)-(2)+(3) LTM | |||||||||||
Net loss | $ | (492.9 | ) | $ | (254.2 | ) | $ | (2,988.6 | ) | (3,227.3 | ) | ||||
Interest expense | 535.8 | 546.0 | 2,145.7 | 2,135.5 | |||||||||||
Interest income | (3.1 | ) | (3.5 | ) | (17.9 | ) | (17.5 | ) | |||||||
Income tax benefit | (72.2 | ) | (210.3 | ) | (581.9 | ) | (443.8 | ) | |||||||
Depreciation and amortization | 91.3 | 127.1 | 435.0 | 399.2 | |||||||||||
Depreciation in corporate expense | 7.7 | 3.3 | 12.8 | 17.2 | |||||||||||
Amortization of intangible assets | 15.3 | 23.0 | 90.1 | 82.4 | |||||||||||
Discontinued operations(a)(b) | 0.7 | — | 5.3 | 6.0 | |||||||||||
EBITDA | 82.6 | 231.4 | (899.5 | ) | (1,048.3 | ) | |||||||||
Write-downs, reserves, and project opening costs, net of recoveries(c) | 12.2 | 7.3 | 91.4 | 96.3 | |||||||||||
Acquisition and integration costs(d) | 14.6 | 11.8 | 13.4 | 16.2 | |||||||||||
Loss on early extinguishment of debt(e) | 0.1 | 29.5 | 32.1 | 2.7 | |||||||||||
Net income/(loss) attributable to non-controlling interests(f) | 2.1 | (2.5 | ) | (4.4 | ) | 0.2 | |||||||||
Impairment of tangible and intangible assets(g) | 101.1 | 20.0 | 1,975.6 | 2,056.7 | |||||||||||
Non-cash expense for stock compensation benefits(h) | 7.9 | 2.5 | 34.4 | 39.8 | |||||||||||
Adjustments to include 100% of Baluma S.A.'s adjusted EBITDA(i) | 21.1 | — | 9.0 | 30.1 | |||||||||||
Discontinued operations write-downs, reserves, and project opening costs, net of recoveries and Impairments(j) | 14.9 | 21.7 | 7.1 | 0.3 | |||||||||||
Other adjustment for LINQ/ Octavius accounting impact | (9.6 | ) | — | (5.6 | ) | (15.2 | ) | ||||||||
Other items(k) | 2.8 | 10.9 | 10.1 | 2.0 | |||||||||||
Adjusted EBITDA | $ | 249.8 | $ | 332.6 | $ | 1,263.6 | 1,180.8 | ||||||||
Pro forma adjustments related to properties(l) | 11.0 | ||||||||||||||
Pro forma adjustment for estimated cost savings yet to be realized(m) | 161.4 | ||||||||||||||
LTM Adjusted EBITDA-Pro Forma | 1,353.2 | ||||||||||||||
Adjusted EBITDA-Pro Forma of CEOC's unrestricted subsidiaries | (70.6 | ) | |||||||||||||
Adjusted EBITDA-Pro Forma of CEOC's discontinued operations(n) | (0.1 | ) | |||||||||||||
LTM Adjusted EBITDA-ProForma - CEOC Restricted | $ | 1,282.5 |
(a) | Amounts include a provision for income taxes related to discontinued operations of $0.0 million and $2.7 million for the three months ended March 31, 2014 and for the year ended December 31, 2013, respectively, and an income tax benefit of $0.3 million for the three months ended March 31, 2013. |
(b) | Amounts include depreciation and amortization related to discontinued operations of $0.0 million, $0.3 million and $0.6 million for the three months ended March 31, 2014 and 2013, and for the year ended December 31, 2013, respectively. Amounts also include interest expense related to discontinued operations of $0.7 million, $0.0 million and $2.0 million for the three months ended March 31, 2014 and 2013, and for the year ended December 31, 2013, respectively. |
(c) | Amounts represent pre-opening costs incurred in connection with new property openings and expansion projects at existing properties, as well as any non-cash write-offs of abandoned development projects. |
(d) | Amounts include certain costs associated with acquisition and development activities and reorganization activities. |
(e) | Amounts represent the difference between the fair value of consideration paid and the book value, net of deferred financing costs, of debt retired through debt extinguishment transactions, which are capital structure-related, rather than operational-type costs. |
(f) | Amounts represent minority owners’ share of income/(loss) from the Company's majority-owned consolidated subsidiaries, which is a non-cash item as it excludes any cash distributions. Cash distributions to minority owners are included in the "other items" line item. |
(g) | Amounts represent non-cash charges to impair intangible and tangible assets primarily resulting from changes in the business outlook in light of competitive conditions. |
(h) | Amounts represent non-cash stock-based compensation expense related to stock options and restricted stock granted to CEOC's employees. |
(i) | Amounts represent adjustments to include 100% of Baluma S.A. (Conrad Punta del Este) adjusted EBITDA as permitted under the indentures governing CEOC's existing notes and the credit agreement governing CEOC's senior secured credit facilities. |
(j) | Amounts include reserves and impairments related to the closure of Golden Nugget in February 2014 and Alea Leeds in March 2013 and the sale of the Company's investment in a land concession in Macau, which was completed in November 2013, all of which are included in loss from discontinued operations. |
(k) | Amounts represent add-backs and deductions from EBITDA, whether permitted and/or required under the indentures governing CEOC’s existing notes and the credit agreement governing CEOC’s senior secured credit facilities, included in arriving at LTM Adjusted EBITDA-Pro Forma but not separately identified. Such add-backs and deductions include litigation awards and settlements, severance and relocation costs, sign-on and retention bonuses, permit remediation costs, gains and losses from disposals of assets, costs incurred in connection with implementing the Company's efficiency and cost-saving programs, business optimization expenses, the Company's insurance policy deductibles incurred as a result of catastrophic events such as floods and hurricanes, one time sales tax assessments and accruals, project start-up costs, non-cash equity in earnings of non-consolidated affiliates (net of distributions), and adjustments to include controlling interests' portion of Baluma S.A. adjusted EBITDA. |
(l) | Amounts represent the estimated annualized impact of operating results related to newly completed construction projects, combined with the estimated annualized EBITDA impact associated with properties acquired during the period. |
(m) | Amount represents adjustments of CEOC to reflect the impact of annualized run-rate cost-savings and anticipated future cost savings to be realized from profitability improvement and cost savings programs. |
(n) | Per CEOC's senior secured credit facilities, EBITDA related to the Company's discontinued operations are deducted from LTM Adjusted EBITDA - Pro Forma. |
Three Months Ended March 31, | |||||||
(In millions) | 2014 | 2013 | |||||
Net loss | $ | (6.9 | ) | $ | (8.5 | ) | |
Income tax benefit | (23.8 | ) | (3.3 | ) | |||
Loss before income taxes | (30.7 | ) | (11.8 | ) | |||
Other income, including interest income | — | (0.1 | ) | ||||
Interest expense | 90.7 | 56.0 | |||||
Income from operations | 60.0 | 44.1 | |||||
Depreciation and amortization | 37.2 | 43.0 | |||||
Amortization of intangible assets | 12.4 | 14.7 | |||||
Impairment of intangible and tangible assets | (0.3 | ) | — | ||||
Write-downs, reserves, and project opening costs, net of recoveries | 3.6 | 14.4 | |||||
Income on interests in non-consolidated affiliates | — | (0.5 | ) | ||||
Corporate expense | 14.3 | 13.8 | |||||
Property EBITDA | $ | 127.2 | $ | 129.5 |
(1) | (2) | (3) | |||||||||||||
(In millions) | Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | Year Ended December 31, 2013 | (1)-(2)+(3) LTM | |||||||||||
Net loss | $ | (6.9 | ) | $ | (8.5 | ) | $ | (638.2 | ) | $ | (636.6 | ) | |||
Interest expense | 90.7 | 56.0 | 245.9 | 280.6 | |||||||||||
Interest income | — | — | (0.1 | ) | (0.1 | ) | |||||||||
Income tax benefit | (23.8 | ) | (3.3 | ) | (383.5 | ) | (404.0 | ) | |||||||
Depreciation and amortization | 37.2 | 43.0 | 156.9 | 151.1 | |||||||||||
Amortization of intangible assets | 12.4 | 14.7 | 59.1 | 56.8 | |||||||||||
EBITDA | 109.6 | 101.9 | (559.9 | ) | (552.2 | ) | |||||||||
Write-downs, reserves, and project opening costs, net of recoveries(a) | 3.6 | 14.4 | 15.4 | 4.6 | |||||||||||
Gains on early extinguishment of debt(b) | — | — | (15.3 | ) | (15.3 | ) | |||||||||
Impairment of tangible and intangible assets(c) | (0.3 | ) | — | 1,045.9 | 1,045.6 | ||||||||||
Non-cash expense for stock compensation benefits(d) | 0.2 | — | 0.9 | 1.1 | |||||||||||
Other items(e) | 0.1 | 1.8 | 6.3 | 4.6 | |||||||||||
Adjusted EBITDA | $ | 113.2 | $ | 118.1 | $ | 493.3 | 488.4 | ||||||||
Pro forma adjustments related to properties | 8.7 | ||||||||||||||
Pro forma adjustment for estimated cost savings yet to be realized(f) | 28.1 | ||||||||||||||
Pro forma quarterly add back for Caesars Linq LLC | 89.9 | ||||||||||||||
LTM Adjusted EBITDA-Pro Forma | $ | 615.1 |
(a) | Amounts represent pre-opening costs incurred in connection with new property openings and expansion projects at existing properties, as well as any non-cash write-offs of abandoned development projects. |
(b) | Amounts represent the difference between the fair value of consideration paid and the book value, net of deferred financing costs, of debt retired through debt extinguishment transactions, which are capital structure-related, rather than operational-type costs. |
(c) | Amounts represent non-cash charges to impair intangible and tangible assets primarily resulting from changes in the business outlook in light of competitive conditions. |
(d) | Amounts represent non-cash stock-based compensation expense related to stock options and restricted stock granted to CERP's employees. |
(e) | Amounts represent add-backs and deductions from EBITDA included in arriving at LTM Adjusted EBITDA-Pro Forma but not separately identified. Such add-backs and deductions include severance and relocation, permit remediation costs, gains and losses from disposals of assets, costs incurred in connection with implementing the Company's efficiency and cost-saving programs, and non-cash equity in earnings of non-consolidated affiliates (net of distributions). |
(f) | Amount represents adjustments to reflect the impact of annualized run-rate cost savings and anticipated future cost savings to be realized from profitability improvement and cost-savings programs. |
CGP LLC | Predecessor | ||||||
Three Months Ended March 31, | |||||||
(In millions) | 2014 | 2013 | |||||
Net income/(loss) attributable to CGP LLC and Predecessor | $ | (19.7 | ) | $ | 6.3 | ||
Net loss attributable to noncontrolling interests | (6.5 | ) | (1.8 | ) | |||
Net income/(loss), net of income taxes | (26.2 | ) | 4.5 | ||||
Income tax provision | 1.7 | 2.0 | |||||
Income/(loss) before income taxes | (24.5 | ) | 6.5 | ||||
Other income, including interest income | (49.8 | ) | (40.8 | ) | |||
Loss on early extinguishment of debt | 0.6 | — | |||||
Interest expense | 11.9 | 10.1 | |||||
Loss from operations | (61.8 | ) | (24.2 | ) | |||
Depreciation and amortization | 13.6 | 10.4 | |||||
Write-downs, reserves, and project opening costs, net of recoveries | 7.8 | 0.8 | |||||
Transaction costs | 0.2 | — | |||||
Change in fair value of contingently issuable non-voting membership units | 76.1 | — | |||||
Change in fair value of contingent consideration | 0.7 | 52.4 | |||||
Property EBITDA | $ | 36.6 | $ | 39.4 |
CGP LLC | Predecessor | ||||||
Three Months Ended March 31, | |||||||
(In millions) | 2014 | 2013 | |||||
Net income/(loss) attributable to CGP LLC and Predecessor | $ | (19.7 | ) | $ | 6.3 | ||
Net loss attributable to noncontrolling interests | (6.5 | ) | (1.8 | ) | |||
Interest income | (49.8 | ) | (40.6 | ) | |||
Interest expense | 11.9 | 10.1 | |||||
Income tax provision | 1.7 | 2.0 | |||||
Depreciation and amortization | 13.6 | 10.4 | |||||
EBITDA | (48.8 | ) | (13.6 | ) | |||
Write-downs, reserves, recoveries, and project opening costs (a) | 7.8 | 0.8 | |||||
Loss on early extinguishment of debt | 0.6 | — | |||||
Change in fair value of contingently issuable non-voting membership units | 76.1 | — | |||||
Change in fair value of contingent consideration | 0.7 | 52.4 | |||||
Non-cash expense for stock compensation benefits (b) | 18.3 | 2.5 | |||||
Other items (c) | 0.9 | 0.1 | |||||
Adjusted EBITDA | $ | 55.6 | $ | 42.2 |
(a) | Amounts primarily represent development costs related to the construction and planned casino operations of Horseshoe Baltimore. |
(b) | Amounts represent non-cash stock-based compensation expense related to stock options and restricted stock. |
(c) | Amounts represent add-backs and deductions to arrive at EBITDA and Adjusted EBITDA but not separately identified, such as lobbying expense and transaction costs. |
• | Caesars Entertainment Operating Company (CEOC), which consists of Caesars Palace in Las Vegas as well as a majority of Caesars regional properties; |
• | Caesars Entertainment Resort Properties (CERP), which includes six casino properties, predominately in Las Vegas, the LINQ and High Roller and the Octavius Tower at Caesars Palace; and |
• | Caesars Growth Partners (CGP), a joint venture with Caesars Acquisition Company, which owns CIE, Planet Hollywood, The Quad, The Cromwell and Bally’s Las Vegas as well as a 41% interest in Horseshoe Baltimore. CGP is a consolidated variable interest structure in which Caesars Entertainment holds nonvoting units. |
• | CEOC launched a $1.75 billion incremental term loan and the associated refinancing of all 2015 maturities; |
• | Caesars Entertainment sold 5% of CEOC equity to a group of institutional investors, and agreed to pursue a listing of CEOC equity; |
• | CEOC launched a credit facility amendment; and |
• | CEOC completed the sale of three Las Vegas properties to Caesars Growth Partners. |
• | CEOC will have no material maturities until 2016; |
• | CEOC will have taken steps towards creating an equity currency that may be used in liability management or to aid in the reduction of debt; and |
• | CEOC will have added headroom under its maintenance covenant. |
• | The High Roller has received rave reviews from media outlets around the world and has welcomed thousands of riders a day in the early weeks of operation. |
• | Last month, the Academy of Country Music hosted its Party for a Cause celebration at The LINQ’s festival space, accommodating tens of thousands of visitors. Many of these guests later visited the High Roller and passed through the retail, dining and entertainment corridor. The space behind the High Roller has great potential to host events and attract more people to the center of the Strip. |
• | Next door, renovation work on The Quad, now owned by Growth Partners, has begun. As Mitch discussed earlier today, The Quad occupies an important position at the entrance to The LINQ. With the opening of The LINQ and High Roller, |
• | At The Cromwell, also now part of Growth Partners, the gaming floor opened in late April. On its first Saturday, the property generated more “coin in” than on any day since 2007 despite the fact the hotel, restaurants and other amenities have yet to open. The property will celebrate its grand opening in a few weeks and we look forward to unveiling the boutique, lifestyle hotel as well as Giada De Laurentiis’ eponymous restaurant and Drai’s rooftop pool and night club. Advance bookings are strong, and we are excited about the addition of this unique property to the Strip. |
2014 (Estimated Range) | |||||||
(in millions) | Low | High | |||||
CGP | $ | 445.0 | $ | 530.0 | |||
CEOC | 340.0 | 420.0 | |||||
CERP | 115.0 | 140.0 | |||||
CEC | 50.0 | 60.0 | |||||
Total | $ | 950.0 | $ | 1,150.0 |
• | the new CEOC first lien term loan and amendment to the CEOC credit agreement and related Caesars Entertainment guarantee of the CEOC credit agreement may not be consummated on the terms contemplated or at all and other access to available and reasonable financing on a timely basis |
• | the ability to satisfy the conditions to the closing with respect to the sale of Harrah’s New Orleans to Caesars Growth Partners, including receipt of required regulatory approvals; |
• | the sale of Harrah’s New Orleans to Caesars Growth Partners may not be consummated on the terms contemplated or at all; |
• | the assertion and outcome of litigation or other claims that may be brought against the Company by creditors of CEOC, some of whom have notified the Company of their objection to various transactions undertaken by the Company in 2013 and 2014; |
• | the impact of the Company's substantial indebtedness and the restrictions in the Company's debt agreements; |
• | access to available and reasonable financing on a timely basis, including the ability of the Company to refinance its indebtedness on acceptable terms; |
• | the effects of local and national economic, credit, and capital market conditions on the economy, in general, and on the gaming industry, in particular; |
• | the ability to realize the expense reductions from cost savings programs, including the program to increase its working capital and excess cash by $500 million; |
• | changes in the extensive governmental regulations to which the Company and its stockholders are subject, and changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions, disciplines, and fines of courts, regulators, and governmental bodies; |
• | the ability of the Company's customer-tracking, customer loyalty, and yield-management programs to continue to increase customer loyalty and same-store or hotel sales; |
• | the effects of competition, including locations of competitors and operating and market competition; |
• | the ability to recoup costs of capital investments through higher revenues; |
• | abnormal gaming holds (“gaming hold” is the amount of money that is retained by the casino from wagers by customers); |
• | the ability to timely and cost-effectively integrate companies that the Company acquires into its operations; |
• | the potential difficulties in employee retention and recruitment as a result of the Company's substantial indebtedness or any other factor; |
• | construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, and building permit issues; |
• | litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation; |
• | acts of war or terrorist incidents, severe weather conditions, uprisings or natural disasters, including losses therefrom, including losses in revenues and damage to property, and the impact of severe weather conditions on the Company's ability to attract customers to certain of its facilities, such as the amount of losses and disruption to the Company as a result of Hurricane Sandy in late October 2012; |
• | the effects of environmental and structural building conditions relating to the Company's properties; |
• | access to insurance on reasonable terms for the Company's assets; and |
• | the impact, if any, of unfunded pension benefits under multi-employer pension plans. |
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