Organization

We conduct business through our wholly owned subsidiaries, Caesars Entertainment Operating Company, Inc. ("CEOC") and Caesars Entertainment Resort Properties ("CERP"), and their subsidiaries. We also consolidate Caesars Growth Partners, LLC ("CGP LLC"), which is a variable interest entity ("VIE") for which we have determined that we are the primary beneficiary (see Note 4, "Caesars Growth Partners"). As of March 31, 2014, we owned and operated or managed, through various subsidiaries and CGP LLC, 51 casinos in 13 U.S. states and 5 countries. Of the 51 casinos, 39 are in the United States and primarily consist of land-based and riverboat or dockside casinos. Our 12 international casinos are land-based casinos, most of which are located in England.

Caesars Interactive Entertainment, Inc. ("CIE"), a majority owned subsidiary of CGP LLC, operates an online gaming business providing for certain real money games in Nevada, New Jersey, and the United Kingdom; "play for fun" offerings in other jurisdictions; and social games on Facebook and other social media websites and mobile application platforms, such as Slotomania. CIE also owns the WSOP tournaments and brand, and licenses trademarks for a variety of products and businesses related to this brand.

We view each casino property as an operating segment and aggregate such casino properties into one reportable segment.

Liquidity Considerations

We are a highly leveraged company and a significant amount of our liquidity needs are for debt service, including significant interest payments. As of March 31, 2014, we had $23,583.7 million face value of outstanding indebtedness and our current debt service obligation for the remaining nine months of 2014 is $1,981.6 million, consisting of $187.7 million in principal maturities and $1,793.9 million in required interest payments. Our debt service obligation for 2015 is $3,254.6 million, consisting of $1,210.7 million in principal maturities and $2,043.9 million in required interest payments.

Following the U.S. recession of late 2007 through 2009, we have observed that gaming activity has remained well below the pre-recession levels. In addition, new competition in certain regional markets has negatively affected “same store” volumes, while overall slot volume trends continue to weaken in most markets. These factors have negatively affected our results of operations, and may continue to negatively affect our results of operations in the future. During periods of economic weakness and in the face of continued weak consumer spending on gaming, our revenues may decrease while many of our costs remain fixed and some costs even increase, resulting in decreased earnings. As a result, we have experienced substantial net losses since 2010, as well as operating losses in 2013, resulting in a net stockholders’ deficit of $3,502.2 million as of March 31, 2014. Further, we expect to experience operating and net losses for the remainder of 2014 and the foreseeable future.

Our cash and cash equivalents, excluding restricted cash, totaled $2,483.4 million as of March 31, 2014 compared with $2,771.2 million as of December 31, 2013. Cash and cash equivalents as of March 31, 2014, includes $972.6 million held by CGP LLC, which is not available for our use to fund operations or satisfy our obligations. We experienced negative operating cash flows of $93.8 million for the three months ended March 31, 2014 and $109.4 million for the year ended December 31, 2013, and we expect to experience negative operating cash flows for the remainder of 2014 and the foreseeable future.

In addition to cash flows from operations, available sources of cash include amounts available under CEOC's current revolving credit facility. As of March 31, 2014, the facility provided for $106.1 million, of which $9.8 million remained as available borrowing capacity. In addition, the CERP revolving credit facility provided for $269.5 million, all of which remained as available borrowing capacity at March 31, 2014.

As described more fully in Note 5, "Property Transaction with CGP LLC and Related Financing," in the first quarter of 2014 we announced that CGP LLC will acquire certain assets from CEOC for $2,000.0 million in cash, minus assumed debt and closing adjustments. The net cash proceeds impact the calculation of the senior secured leverage ratio ("SSLR") covenant on a pro forma basis in the three months ended March 31, 2014 as the SSLR calculations give effect to the cash to be received and the reduction to LTM Adjusted EBITDA - Pro Forma - CEOC Restricted for the properties sold. In addition, the SSLR calculation going forward will be impacted to the extent the proceeds reduce first lien debt or increase CEOC cash.

From time to time, depending upon market, pricing, and other conditions, and on our cash balances and liquidity, we may seek to acquire or exchange notes or other indebtedness of the Company’s subsidiaries through open market purchases, privately negotiated transactions, tender offers, redemption, exchange offers or otherwise, upon such terms and at such prices as we may determine (or as may be provided for in the indentures governing the notes), for cash or other consideration, including our common stock. In addition, we have considered and will continue to evaluate potential transactions to reduce net debt, such as debt for debt exchanges, debt for equity exchanges and other transactions.

We do not expect that our cash flow from operations will be sufficient to repay our indebtedness in the long-term and we will have to ultimately seek a restructuring, amendment or refinancing of our debt, or if necessary, pursue additional debt or equity offerings.

Our ability to refinance or restructure our debt, or to issue additional debt or equity, will depend upon, among other things:

•The condition of the capital markets at the time, which is beyond our control,

•Our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control; and

•Our continued compliance with the terms and covenants in our credit facilities, indentures and loan agreements that govern our debt.

Under CEOC's Credit Facilities, we are required to satisfy and maintain specified financial ratios. Specifically, our credit facilities require CEOC to maintain an SSLR of no more than 4.75 to 1.0, which is the ratio of CEOC's senior first priority secured debt to LTM Adjusted EBITDA - Pro Forma - CEOC Restricted. This ratio excludes up to $3,700.0 million of CEOC first priority senior secured notes and up to $350.0 million aggregate principal amount of consolidated debt of subsidiaries that are not wholly-owned. This ratio also reduces the amount of senior first priority secured debt by the amount of unrestricted CEOC cash on hand, which was $2,937.3 million as of March 31, 2014 after giving effect to the first and second closings of the transaction described in Note 5, "Property Transaction with CGP LLC and Related Financing." As of March 31, 2014, the CEOC SSLR was 3.73 to 1.0, after giving effect to the first and second closings of the transaction described in Note 5, "Property Transaction with CGP LLC and Related Financing." The first closing was completed on May 5, 2014, and included proceeds to CEOC of $1,340.0 million, minus assumed debt and other closing adjustments, for the sale of the Nevada Properties (as defined herein).

While we were in compliance with the terms and conditions of all of our loan agreements, including CEOC’s Credit Facilities and indentures as of March 31, 2014, in order to comply with the quarterly SSLR covenant under the CEOC Credit Facility in the future, we will need to achieve a certain amount of LTM Adjusted EBITDA - Pro-Forma - CEOC Restricted and/or reduced levels of total senior secured net debt (total senior secured debt less unrestricted cash). The factors that could impact the foregoing include (a) changes in gaming trips, spend per trip and hotel metrics, which we believe are correlated to consumer spending and confidence generally and spending by consumers for gaming and other entertainment activities, (b) our ability to effect cost savings initiatives, (c) our ability to complete asset sales, including the transaction described more fully in Note 5, (d) issuing additional second lien or unsecured debt, or project financing, (e) reducing net debt through open market purchases, privately negotiated transactions, redemptions, tender offers or exchanges, (f) equity issuances, (g) reductions in capital expenditures spending, or (h) a combination thereof.

In addition, under certain circumstances, the CEOC Credit Facilities allow us to apply cash contributions received by CEOC from CEC as an increase to LTM Adjusted EBITDA - Pro Forma - CEOC Restricted, if CEOC is unable to meet its SSLR, in order to cure any breach.

Based upon our current operating forecast, the expected closing of the CEOC-CGP LLC Property Transaction described above and in Note 5, "Property Transaction with CGP LLC and Related Financing", and our ability to achieve one or more of the other factors noted above, including our ability to cure a breach of the SSLR, in certain circumstances, with cash contributions from CEC, we believe that we will have sufficient liquidity to fund our operations and meet our debt service obligations and that we will continue to be in compliance with the CEOC SSLR during the next twelve months.

See Note 8, "Debt," for details on our debt outstanding and restrictive covenants related to certain of our borrowings. This detail includes, among other things, a table presenting details of our individual borrowings outstanding as of March 31, 2014 and December 31, 2013, as well as discussion of recent changes in our debt outstanding, and any changes in the terms of existing debt subsequent to December 31, 2013.

On May 6, 2014, we announced a number of material transactions that, if completed, are expected to have a material impact on our liquidity, debt covenants and compliance (by modifying the financial maintenance covenant to increase the leverage ratio level and excluding the new incremental term loans from the definition of "Senior Secured Leverage Ratio" for purposes of such covenant), debt maturities, parent guarantees of our securities, and the CEOC-CGP LLC Property Transaction (described in Note 5). These transactions include the following:


•	Amendment to the definitive agreement governing the CEOC-CGP LLC Property Transaction;


•	Incurrence by Caesars Growth Properties Holdings, LLC of $700.0 million of term loans to partially fund the first closing of the CEOC-CGP LLC Property Transaction;


•	Sale of CEOC common stock, triggering the automatic release of CEC guarantee of CEOC’s outstanding secured and unsecured notes;


•	Announcement of tender offers to reacquire all of our scheduled 2015 debt maturities; and


•	Certain bank transactions that would, if completed as expected, modify the existing covenants and other key terms included in the CEOC Credit Facilities.

For more information on the above-referenced transactions and the impact that these transactions would have if completed as expected, see Note 19, "Subsequent Events."

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of the Company have been prepared under the rules and regulations of the Securities and Exchange Commission ("SEC") applicable for interim periods and, therefore, do not include all information and footnotes necessary for complete financial statements in conformity with accounting principles generally accepted in the United States ("GAAP"). The results for the interim periods reflect all adjustments (consisting primarily of normal recurring adjustments) that management considers necessary for a fair presentation of financial position, results of operations, and cash flows. The results of operations for our interim periods are not necessarily indicative of the results of operations that may be achieved for the entire 2014 fiscal year.

The financial information for the three months ended March 31, 2013 is derived from our consolidated condensed financial statements and footnotes included in the Quarterly Report on Form 10-Q ("Form 10-Q") for the three months ended March 31, 2013, and has been revised to reflect the results of operations and cash flows of the Golden Nugget casino as discontinued operations. See Note 3, "Acquisitions, Investments, Dispositions and Divestitures."

Certain prior period amounts have been reclassified to conform to the current period's presentation. This Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013, ("2013 10-K").