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 November 10, 2014. |
99.2 | Prepared remarks, dated November 10, 2014. |
CAESARS ENTERTAINMENT CORPORATION | ||||
Date: | November 10, 2014 | By: | /S/ DONALD A. COLVIN | |
Donald A. Colvin | ||||
Executive Vice President and Chief Financial Officer |
Contact: | Gary Thompson - Media | Jennifer Chen - Investors | ||
Caesars Entertainment Corporation | Caesars Entertainment Corporation | |||
(702) 407-6529 | (702) 407-6407 |
• | Consolidated net revenue up 6.0% year-over-year driven by growth at CERP and CGP |
• | Consolidated results reflect strength in social and mobile games and sequential improvement in regional markets offset by several items such as out of service rooms and unfavorable hold at Caesars Palace |
• | CERP continued to invest in hospitality offerings and drive awareness around The LINQ and the High Roller |
• | CGP integrated the Total Rewards loyalty program into CIE's real-money online gaming platform and celebrated successful opening of Horseshoe Baltimore in August |
• | CEOC commenced formal discussions with several creditor groups as part of the company's efforts to improve the entity's financial condition |
Three Months Ended September 30, | Percent Favorable/ (Unfavorable) | Nine Months Ended September 30, | Percent Favorable/ (Unfavorable) | ||||||||||||||||||
(Dollars in millions, except per share data) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Casino revenues (1) | $ | 1,395.6 | $ | 1,391.5 | 0.3 | % | $ | 4,046.5 | $ | 4,178.7 | (3.2 | )% | |||||||||
Net revenues (1) | 2,212.4 | 2,087.4 | 6.0 | % | 6,385.2 | 6,216.0 | 2.7 | % | |||||||||||||
Loss from operations (1) | (327.8 | ) | (524.0 | ) | 37.4 | % | (50.3 | ) | (248.5 | ) | 79.8 | % | |||||||||
Loss from continuing operations, net of income taxes (1) | (931.7 | ) | (699.2 | ) | (33.3 | )% | (1,618.3 | ) | (1,077.5 | ) | (50.2 | )% | |||||||||
Loss from discontinued operations, net of income taxes | (48.4 | ) | (62.6 | ) | 22.7 | % | (177.4 | ) | (110.3 | ) | (60.8 | )% | |||||||||
Net loss attributable to Caesars | (908.1 | ) | (761.4 | ) | (19.3 | )% | (1,761.0 | ) | (1,191.3 | ) | (47.8 | )% | |||||||||
Basic and diluted loss per share | (6.29 | ) | (6.03 | ) | (4.3 | )% | (12.41 | ) | (9.47 | ) | (31.0 | )% | |||||||||
Property EBITDA (2) | 444.7 | 510.0 | (12.8 | )% | 1,330.3 | 1,490.1 | (10.7 | )% | |||||||||||||
Adjusted EBITDA (3) | 442.5 | 508.0 | (12.9 | )% | 1,320.8 | 1,448.2 | (8.8 | )% |
(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), Harrah's Tunica casino (closed in June 2014), Showboat casino (closed in August 2014) and the subsidiaries that held the Company's land concession in Macau (sold in November 2013) because all of these are presented as discontinued operations. |
(2) | 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. |
(3) | 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. |
Three Months Ended September 30, | Percent Favorable/ (Unfavorable) | Nine Months Ended September 30, | Percent Favorable/ (Unfavorable) | ||||||||||||||||||
(Dollars in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
CEOC adjusted | $ | 1,253.3 | $ | 1,519.3 | (17.5 | )% | $ | 3,939.1 | $ | 4,528.5 | (13.0 | )% | |||||||||
CERP | 535.7 | 507.2 | 5.6 | % | 1,565.8 | 1,516.0 | 3.3 | % | |||||||||||||
CGP LLC | 485.8 | 80.0 | * | 1,064.6 | 222.3 | * | |||||||||||||||
Parent | 15.9 | 17.7 | (10.2 | )% | 51.1 | 52.1 | (1.9 | )% | |||||||||||||
Other | (78.3 | ) | (36.8 | ) | (112.8 | )% | (235.4 | ) | (102.9 | ) | (128.8 | )% | |||||||||
Total | $ | 2,212.4 | $ | 2,087.4 | 6.0 | % | $ | 6,385.2 | $ | 6,216.0 | 2.7 | % |
Three Months Ended September 30, | Percent Favorable/ (Unfavorable) | Nine Months Ended September 30, | Percent Favorable/ (Unfavorable) | ||||||||||||||||||
(Dollars in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
CEOC adjusted | $ | (304.3 | ) | $ | (601.7 | ) | 49.4 | % | $ | (158.8 | ) | $ | (412.1 | ) | 61.5 | % | |||||
CERP | (49.3 | ) | 72.5 | (168.0 | )% | 78.7 | 188.9 | (58.3 | )% | ||||||||||||
CGP LLC | 80.7 | 21.6 | * | 50.6 | (6.1 | ) | * | ||||||||||||||
Parent | (9.7 | ) | 0.2 | * | (12.5 | ) | (4.5 | ) | (177.8 | )% | |||||||||||
Other | (45.2 | ) | (16.6 | ) | (172.3 | )% | (8.3 | ) | (14.7 | ) | 43.5 | % | |||||||||
Total | $ | (327.8 | ) | $ | (524.0 | ) | 37.4 | % | $ | (50.3 | ) | $ | (248.5 | ) | 79.8 | % |
Three Months Ended September 30, | Percent Favorable/ (Unfavorable) | Nine Months Ended September 30, | Percent Favorable/ (Unfavorable) | ||||||||||||||||||
(Dollars in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
CEOC adjusted | $ | 231.8 | $ | 354.5 | (34.6 | )% | $ | 711.4 | $ | 1,026.3 | (30.7 | )% | |||||||||
CERP | 130.4 | 132.9 | (1.9 | )% | 403.4 | 426.1 | (5.3 | )% | |||||||||||||
CGP LLC | 81.2 | 75.7 | 7.3 | % | 259.0 | 239.2 | 8.3 | % | |||||||||||||
Other | 1.3 | (53.1 | ) | 102.4 | % | (43.5 | ) | (201.5 | ) | 78.4 | % | ||||||||||
Total | $ | 444.7 | $ | 510.0 | (12.8 | )% | $ | 1,330.3 | $ | 1,490.1 | (10.7 | )% |
Three Months Ended September 30, | Percent Favorable/ (Unfavorable) | Nine Months Ended September 30, | Percent Favorable/ (Unfavorable) | ||||||||||||||||||
(Dollars in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
CEOC adjusted | $ | 232.2 | $ | 352.1 | (34.1 | )% | $ | 717.2 | $ | 997.3 | (28.1 | )% | |||||||||
CERP | 122.6 | 123.8 | (1.0 | )% | 363.7 | 398.4 | (8.7 | )% | |||||||||||||
CGP LLC | 105.4 | 78.7 | 33.9 | % | 312.8 | 254.0 | 23.1 | % | |||||||||||||
Other | (17.7 | ) | (46.6 | ) | 62.0 | % | (72.9 | ) | (201.5 | ) | 63.8 | % | |||||||||
Total | $ | 442.5 | $ | 508.0 | (12.9 | )% | $ | 1,320.8 | $ | 1,448.2 | (8.8 | )% |
* | Not meaningful |
(a) | As consolidated, and adjusted, see Basis of Presentation |
(b) | As reported, see Basis of Presentation |
September 30, 2014 | |||||||||||||||
(In millions) | CEOC | CERP | CGP LLC | Parent | |||||||||||
Cash and cash equivalents | $ | 1,479.9 | $ | 200.8 | $ | 989.2 | $ | 512.5 | |||||||
Revolver capacity | 106.1 | 269.5 | 150.0 | — | |||||||||||
Revolver capacity drawn or committed to letters of credit | (98.3 | ) | (75.0 | ) | (0.1 | ) | — | ||||||||
Total Liquidity | $ | 1,487.7 | $ | 395.3 | $ | 1,139.1 | $ | 512.5 |
• | the impact of the Company's substantial indebtedness and the restrictions in the Company's debt agreements, and the outcome of discussions with CEOC’s creditors regarding CEOC's capital structure; |
• | litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation, including but not limited to, the assertion and outcome of litigation or other claims that have been or 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; |
• | 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. |
(In millions, except per share data) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | |||||||||||||||
Casino | $ | 1,395.6 | $ | 1,391.5 | $ | 4,046.5 | $ | 4,178.7 | |||||||
Food and beverage | 394.3 | 367.3 | 1,143.8 | 1,103.5 | |||||||||||
Rooms | 301.3 | 302.5 | 915.0 | 887.5 | |||||||||||
Management fees | 16.0 | 14.5 | 44.4 | 42.3 | |||||||||||
Other | 337.6 | 220.2 | 892.3 | 628.3 | |||||||||||
Reimbursable management costs | 62.6 | 72.7 | 196.8 | 203.2 | |||||||||||
Less: casino promotional allowances | (295.0 | ) | (281.3 | ) | (853.6 | ) | (827.5 | ) | |||||||
Net revenues | 2,212.4 | 2,087.4 | 6,385.2 | 6,216.0 | |||||||||||
Operating expenses | |||||||||||||||
Direct | |||||||||||||||
Casino | 833.9 | 760.0 | 2,412.5 | 2,329.6 | |||||||||||
Food and beverage | 183.4 | 163.5 | 516.0 | 488.3 | |||||||||||
Rooms | 81.9 | 74.2 | 241.6 | 225.0 | |||||||||||
Property, general, administrative, and other | 605.6 | 511.3 | 1,680.5 | 1,490.0 | |||||||||||
Reimbursable management costs | 62.6 | 72.7 | 196.8 | 203.2 | |||||||||||
Depreciation and amortization | 131.9 | 124.9 | 371.1 | 410.4 | |||||||||||
Write-downs, reserves, and project opening costs, net of recoveries | 19.2 | 0.5 | 95.1 | 44.7 | |||||||||||
Impairment of intangible and tangible assets | 498.6 | 818.6 | 548.8 | 945.9 | |||||||||||
Loss on interests in non-consolidated affiliates | 6.6 | 4.0 | 9.4 | 20.4 | |||||||||||
Corporate expense | 73.9 | 37.0 | 192.5 | 114.3 | |||||||||||
Acquisition and integration costs | 8.8 | 3.2 | 71.0 | 69.6 | |||||||||||
Amortization of intangible assets | 33.8 | 41.5 | 100.2 | 123.1 | |||||||||||
Total operating expenses | 2,540.2 | 2,611.4 | 6,435.5 | 6,464.5 | |||||||||||
Income/(loss) from operations | (327.8 | ) | (524.0 | ) | (50.3 | ) | (248.5 | ) | |||||||
Interest expense | (708.3 | ) | (562.9 | ) | (1,954.1 | ) | (1,677.4 | ) | |||||||
Gain/(loss) on early extinguishment of debt | (66.5 | ) | 13.0 | (95.2 | ) | 17.5 | |||||||||
Gain/(loss) on partial sale of subsidiary | — | — | (3.1 | ) | 44.1 | ||||||||||
Other income, including interest income | 1.0 | 0.5 | 5.1 | 8.9 | |||||||||||
Loss from continuing operations before income taxes | (1,101.6 | ) | (1,073.4 | ) | (2,097.6 | ) | (1,855.4 | ) | |||||||
Income tax benefit | 169.9 | 374.2 | 479.3 | 777.9 | |||||||||||
Loss from continuing operations, net of income taxes | (931.7 | ) | (699.2 | ) | (1,618.3 | ) | (1,077.5 | ) | |||||||
Discontinued operations | |||||||||||||||
Loss from discontinued operations | (46.1 | ) | (98.7 | ) | (188.4 | ) | (151.5 | ) | |||||||
Income tax benefit | (2.3 | ) | 36.1 | 11.0 | 41.2 | ||||||||||
Loss from discontinued operations, net of income taxes | (48.4 | ) | (62.6 | ) | (177.4 | ) | (110.3 | ) | |||||||
Net loss | (980.1 | ) | (761.8 | ) | (1,795.7 | ) | (1,187.8 | ) | |||||||
Net (income)/loss attributable to noncontrolling interests | 72.0 | 0.4 | 34.7 | (3.5 | ) | ||||||||||
Net loss attributable to Caesars | $ | (908.1 | ) | $ | (761.4 | ) | $ | (1,761.0 | ) | $ | (1,191.3 | ) | |||
Loss per share - basic and diluted | |||||||||||||||
Loss per share from continuing operations | $ | (5.96 | ) | $ | (5.54 | ) | $ | (11.16 | ) | $ | (8.60 | ) | |||
Loss per share from discontinued operations | (0.33 | ) | (0.49 | ) | (1.25 | ) | (0.87 | ) | |||||||
Net loss per share | $ | (6.29 | ) | $ | (6.03 | ) | $ | (12.41 | ) | $ | (9.47 | ) |
September 30, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 3,182.4 | $ | 2,771.2 | |||
Restricted cash | 61.5 | 87.5 | |||||
Other current assets | 917.9 | 911.6 | |||||
Total current assets | 4,161.8 | 3,770.3 | |||||
Property and equipment, net | 13,484.8 | 13,237.9 | |||||
Goodwill and other intangible assets | 5,996.1 | 6,551.0 | |||||
Restricted cash | 42.5 | 336.8 | |||||
Assets held for sale | 2.9 | 11.9 | |||||
Other long-term assets | 803.4 | 781.0 | |||||
Total assets | $ | 24,491.5 | $ | 24,688.9 | |||
Liabilities and Stockholders’ Deficit | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 140.6 | $ | 197.1 | |||
Other current liabilities | 2,657.9 | 2,333.7 | |||||
Total current liabilities | 2,798.5 | 2,530.8 | |||||
Long-term debt | 22,888.9 | 20,918.4 | |||||
Other long-term liabilities | 2,518.5 | 3,143.5 | |||||
Total liabilities | 28,205.9 | 26,592.7 | |||||
Total Caesars stockholders’ deficit | (4,012.2 | ) | (3,122.0 | ) | |||
Noncontrolling interests | 297.8 | 1,218.2 | |||||
Total deficit | (3,714.4 | ) | (1,903.8 | ) | |||
Total liabilities and stockholders' deficit | $ | 24,491.5 | $ | 24,688.9 |
Three Months Ended September 30, 2014 | Three Months Ended September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||
(In millions) | CEOC(i) | CERP(j) | CGP LLC(k) | Other(l) | CEC | CEOC(i) | CERP(j) | Predecessor(k) | Other(l) | CEC | |||||||||||||||||||||||||||||||
Net income/(loss) attributable to company | $ | (875.1 | ) | $ | (141.9 | ) | $ | 61.2 | $ | 47.7 | $ | (908.1 | ) | $ | (1,066.1 | ) | $ | 23.6 | $ | 50.5 | $ | 230.6 | $ | (761.4 | ) | ||||||||||||||||
Net income/(loss) attributable to noncontrolling interests | (0.4 | ) | — | (5.1 | ) | (66.5 | ) | (72.0 | ) | (2.1 | ) | — | (3.7 | ) | 5.4 | (0.4 | ) | ||||||||||||||||||||||||
Net income/(loss) | (875.5 | ) | (141.9 | ) | 56.1 | (18.8 | ) | (980.1 | ) | (1,068.2 | ) | 23.6 | 46.8 | 236.0 | (761.8 | ) | |||||||||||||||||||||||||
Net (income)/loss from discontinued operations | 48.0 | — | 14.6 | (14.2 | ) | 48.4 | 99.4 | — | — | (36.8 | ) | 62.6 | |||||||||||||||||||||||||||||
Net (income)/loss from continuing operations | (827.5 | ) | (141.9 | ) | 70.7 | (33.0 | ) | (931.7 | ) | (968.8 | ) | 23.6 | 46.8 | 199.2 | (699.2 | ) | |||||||||||||||||||||||||
Income tax (benefit)/provision | (168.6 | ) | (6.2 | ) | 22.1 | (17.2 | ) | (169.9 | ) | (173.3 | ) | 12.9 | 22.3 | (236.1 | ) | (374.2 | ) | ||||||||||||||||||||||||
Income/(loss) from continuing operations before income taxes | (996.1 | ) | (148.1 | ) | 92.8 | (50.2 | ) | (1,101.6 | ) | (1,142.1 | ) | 36.5 | 69.1 | (36.9 | ) | (1,073.4 | ) | ||||||||||||||||||||||||
Other (income)/loss, including interest income | (12.6 | ) | — | (19.0 | ) | 30.6 | (1.0 | ) | 0.3 | — | (45.0 | ) | 44.2 | (0.5 | ) | ||||||||||||||||||||||||||
(Gain)/loss on early extinguishments of debt(a) | 113.5 | — | — | (47.0 | ) | 66.5 | 0.3 | (13.4 | ) | 0.3 | (0.2 | ) | (13.0 | ) | |||||||||||||||||||||||||||
Interest expense | 583.9 | 98.8 | 44.2 | (18.6 | ) | 708.3 | 539.8 | 49.4 | 21.6 | (47.9 | ) | 562.9 | |||||||||||||||||||||||||||||
Income/(loss) from operations | (311.3 | ) | (49.3 | ) | 118.0 | (85.2 | ) | (327.8 | ) | (601.7 | ) | 72.5 | 46.0 | (40.8 | ) | (524.0 | ) | ||||||||||||||||||||||||
Depreciation and amortization | 76.7 | 35.5 | 37.8 | (18.1 | ) | 131.9 | 96.2 | 36.8 | 24.6 | (32.7 | ) | 124.9 | |||||||||||||||||||||||||||||
Amortization of intangible assets | 11.3 | 12.4 | — | 10.1 | 33.8 | 22.5 | 14.8 | — | 4.2 | 41.5 | |||||||||||||||||||||||||||||||
Impairment of intangible and tangible assets(b) | 388.3 | 117.8 | 63.5 | (71.0 | ) | 498.6 | 795.9 | 5.5 | — | 17.2 | 818.6 | ||||||||||||||||||||||||||||||
Write-downs, reserves, and project opening costs, net of recoveries(c) | 2.8 | 4.7 | 12.3 | (0.6 | ) | 19.2 | 11.5 | (8.0 | ) | 4.8 | (7.8 | ) | 0.5 | ||||||||||||||||||||||||||||
Acquisition and integration costs(d) | 4.1 | 0.1 | 5.5 | (0.9 | ) | 8.8 | 3.1 | — | 0.3 | (0.2 | ) | 3.2 | |||||||||||||||||||||||||||||
(Income)/loss on interests in non-consolidated affiliates | 6.5 | — | — | 0.1 | 6.6 | 4.3 | (0.3 | ) | — | — | 4.0 | ||||||||||||||||||||||||||||||
Corporate expense | 54.7 | 9.2 | — | 10.0 | 73.9 | 18.6 | 11.6 | — | 6.8 | 37.0 | |||||||||||||||||||||||||||||||
Impact of consolidating The LINQ and Octavius Tower(e) | (1.2 | ) | — | — | 1.2 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Change in fair value of contingently issuable non-voting membership units | — | — | (56.4 | ) | 56.4 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Change in fair value of contingent consideration | — | — | 0.1 | (0.1 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Gain on sale of bonds | — | — | (99.4 | ) | 99.4 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
EBITDA attributable to discontinued operations | (0.1 | ) | — | (0.2 | ) | — | (0.3 | ) | 4.1 | — | — | 0.2 | 4.3 | ||||||||||||||||||||||||||||
Property EBITDA | $ | 231.8 | $ | 130.4 | $ | 81.2 | $ | 1.3 | $ | 444.7 | $ | 354.5 | $ | 132.9 | $ | 75.7 | $ | (53.1 | ) | $ | 510.0 | ||||||||||||||||||||
Corporate expense | (54.7 | ) | (9.2 | ) | — | (10.0 | ) | (73.9 | ) | (18.6 | ) | (11.6 | ) | — | (6.8 | ) | (37.0 | ) | |||||||||||||||||||||||
Stock-based compensation expense (f) | 10.7 | 0.3 | 22.6 | (0.4 | ) | 33.2 | 5.8 | 0.2 | 2.0 | 0.4 | 8.4 | ||||||||||||||||||||||||||||||
Adjustments to include 100% of Baluma S.A.'s adjusted EBITDA(g) | (2.0 | ) | — | — | — | (2.0 | ) | (0.7 | ) | — | — | — | (0.7 | ) | |||||||||||||||||||||||||||
Depreciation in corporate expense | 16.5 | — | — | — | 16.5 | 3.1 | — | — | 0.1 | 3.2 | |||||||||||||||||||||||||||||||
Other items(h) | 29.9 | 1.1 | 1.6 | (8.6 | ) | 24.0 | 8.0 | 2.3 | 1.0 | 12.8 | 24.1 | ||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 232.2 | $ | 122.6 | $ | 105.4 | $ | (17.7 | ) | $ | 442.5 | $ | 352.1 | $ | 123.8 | $ | 78.7 | $ | (46.6 | ) | $ | 508.0 |
Nine Months Ended September 30, 2014 | Nine Months Ended September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||
(In millions) | CEOC(i) | CERP(j) | CGP LLC(k) | Other(l) | CEC | CEOC(i) | CERP(j) | Predecessor(k) | Other(l) | CEC | |||||||||||||||||||||||||||||||
Net income/(loss) attributable to company | $ | (1,654.0 | ) | $ | (181.1 | ) | $ | 66.5 | $ | 7.6 | $ | (1,761.0 | ) | $ | (1,681.8 | ) | $ | 57.6 | $ | 121.1 | $ | 311.8 | $ | (1,191.3 | ) | ||||||||||||||||
Net income/(loss) attributable to noncontrolling interests | 2.8 | — | (14.5 | ) | (23.0 | ) | (34.7 | ) | 2.8 | — | (4.9 | ) | 5.6 | 3.5 | |||||||||||||||||||||||||||
Net income/(loss) | (1,651.2 | ) | (181.1 | ) | 52.0 | (15.4 | ) | (1,795.7 | ) | (1,679.0 | ) | 57.6 | 116.2 | 317.4 | (1,187.8 | ) | |||||||||||||||||||||||||
Net (income)/loss from discontinued operations | 149.0 | — | 15.6 | 12.8 | 177.4 | 124.9 | — | — | (14.6 | ) | 110.3 | ||||||||||||||||||||||||||||||
Net (income)/loss from continuing operations | (1,502.2 | ) | (181.1 | ) | 67.6 | (2.6 | ) | (1,618.3 | ) | (1,554.1 | ) | 57.6 | 116.2 | 302.8 | (1,077.5 | ) | |||||||||||||||||||||||||
Income tax (benefit)/provision | (424.0 | ) | (28.6 | ) | 31.9 | (58.6 | ) | (479.3 | ) | (449.2 | ) | 26.0 | 55.9 | (410.6 | ) | (777.9 | ) | ||||||||||||||||||||||||
Income/(loss) from continuing operations before income taxes | (1,926.2 | ) | (209.7 | ) | 99.5 | (61.2 | ) | (2,097.6 | ) | (2,003.3 | ) | 83.6 | 172.1 | (107.8 | ) | (1,855.4 | ) | ||||||||||||||||||||||||
Other (income)/loss, including interest income | (18.4 | ) | — | (120.1 | ) | 133.4 | (5.1 | ) | (7.4 | ) | (0.1 | ) | (128.6 | ) | 127.2 | (8.9 | ) | ||||||||||||||||||||||||
(Gain)/loss on partial sale of subsidiary | 3.1 | — | — | — | 3.1 | (44.1 | ) | — | — | — | (44.1 | ) | |||||||||||||||||||||||||||||
(Gain)/loss on early extinguishments of debt(a) | 113.5 | — | 23.8 | (42.1 | ) | 95.2 | 29.8 | (52.4 | ) | 0.5 | 4.6 | (17.5 | ) | ||||||||||||||||||||||||||||
Interest expense | 1,667.4 | 288.4 | 123.8 | (125.5 | ) | 1,954.1 | 1,612.9 | 157.8 | 56.2 | (149.5 | ) | 1,677.4 | |||||||||||||||||||||||||||||
Income/(loss) from operations | (160.6 | ) | 78.7 | 127.0 | (95.4 | ) | (50.3 | ) | (412.1 | ) | 188.9 | 100.2 | (125.5 | ) | (248.5 | ) | |||||||||||||||||||||||||
Depreciation and amortization | 231.9 | 116.2 | 98.8 | (75.8 | ) | 371.1 | 316.4 | 118.5 | 73.8 | (98.3 | ) | 410.4 | |||||||||||||||||||||||||||||
Amortization of intangible assets | 39.0 | 37.3 | — | 23.9 | 100.2 | 67.6 | 44.3 | — | 11.2 | 123.1 | |||||||||||||||||||||||||||||||
Impairment of intangible and tangible assets(b) | 418.1 | 117.6 | 63.5 | (50.4 | ) | 548.8 | 898.8 | 29.9 | — | 17.2 | 945.9 | ||||||||||||||||||||||||||||||
Write-downs, reserves, and project opening costs, net of recoveries(c) | 61.9 | 10.4 | 34.3 | (11.5 | ) | 95.1 | 38.6 | 10.7 | 15.8 | (20.4 | ) | 44.7 | |||||||||||||||||||||||||||||
Acquisition and integration costs(d) | 17.3 | 0.3 | 11.5 | 41.9 | 71.0 | 20.5 | — | 0.5 | 48.6 | 69.6 | |||||||||||||||||||||||||||||||
(Income)/loss on interests in non-consolidated affiliates | 9.4 | — | — | — | 9.4 | 23.0 | (3.0 | ) | — | 0.4 | 20.4 | ||||||||||||||||||||||||||||||
Corporate expense | 133.4 | 42.9 | — | 16.2 | 192.5 | 62.8 | 36.8 | — | 14.7 | 114.3 | |||||||||||||||||||||||||||||||
Impact of consolidating The LINQ and Octavius Tower(e) | (33.0 | ) | — | — | 33.0 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Change in fair value of contingently issuable non-voting membership units | — | — | (7.9 | ) | 7.9 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Change in fair value of contingent consideration | — | — | 32.7 | (32.7 | ) | — | — | — | 48.9 | (48.9 | ) | — | |||||||||||||||||||||||||||||
Gain on sale of bonds | — | — | (99.4 | ) | 99.4 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
EBITDA attributable to discontinued operations | (6.0 | ) | — | (1.5 | ) | — | (7.5 | ) | 10.7 | — | — | (0.5 | ) | 10.2 | |||||||||||||||||||||||||||
Property EBITDA | $ | 711.4 | $ | 403.4 | $ | 259.0 | $ | (43.5 | ) | $ | 1,330.3 | $ | 1,026.3 | $ | 426.1 | $ | 239.2 | $ | (201.5 | ) | $ | 1,490.1 | |||||||||||||||||||
Corporate expense | (133.4 | ) | (42.9 | ) | — | (16.2 | ) | (192.5 | ) | (62.8 | ) | (36.8 | ) | — | (14.7 | ) | (114.3 | ) | |||||||||||||||||||||||
Stock-based compensation expense (f) | 32.9 | 1.3 | 49.0 | — | 83.2 | 15.7 | 0.5 | 12.5 | (10.6 | ) | 18.1 | ||||||||||||||||||||||||||||||
Adjustments to include 100% of Baluma S.A.'s adjusted EBITDA(g) | 21.4 | — | — | — | 21.4 | (0.8 | ) | — | — | 0.1 | (0.7 | ) | |||||||||||||||||||||||||||||
Depreciation in corporate expense | 38.7 | — | — | — | 38.7 | 9.7 | — | — | — | 9.7 | |||||||||||||||||||||||||||||||
Other items(h) | 46.2 | 1.9 | 4.8 | (13.2 | ) | 39.7 | 9.2 | 8.6 | 2.3 | 25.2 | 45.3 | ||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 717.2 | $ | 363.7 | $ | 312.8 | $ | (72.9 | ) | $ | 1,320.8 | $ | 997.3 | $ | 398.4 | $ | 254.0 | $ | (201.5 | ) | $ | 1,448.2 |
(a) | 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. |
(b) | Amounts represent non-cash charges to impair intangible and tangible assets primarily resulting from changes in the business outlook in light of competitive conditions. |
(c) | Amounts primarily 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 EBITDA of The LINQ and Octavius Tower as consolidated in CEOC. Because The LINQ and Octavius Tower are not legally owned by CEOC the related EBITDA impact is removed from Property EBITDA and Adjusted EBITDA measures. |
(f) | Amounts represent stock-based compensation expense related to shares, stock options, and restricted stock granted to the Company's employees. |
(g) | 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. |
(h) | 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, 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, and non-cash equity in earnings of non-consolidated affiliates (net of distributions). Additionally, in the current period CEOC includes $12.4 million of dividends from HIE Holdings. |
(i) | Amounts include the results and adjustments of CEOC on a consolidated basis without the exclusion of CEOC's unrestricted subsidiaries, and therefore, are different than the calculations used to determine compliance with debt covenants under the credit facility. |
(j) | Amounts include the results and adjustments of CERP on a stand-alone basis. |
(k) | Amounts include the results and adjustments attributable to CGP LLC and Predecessor Growth Partners ("Predecessor") on a consolidated or combined, stand-alone basis. The financial information for the three and nine months ended September 30, 2013 does not reflect the impacts of the Formation Transaction, including the recording of non-controlling interest or the determination of taxes in accordance with the limited liability company structure of CGP LLC. Instead, the financial information, referred to as "Predecessor", presents the combination of the assets and entities that were purchased by or contributed to CGP LLC for the periods presented as that financial information was initially recorded in the underlying accounting records of Caesars Entertainment. The financial statement information of CGP LLC presented below have been prepared consistent with CGP LLC's presentation of its results presented on a stand-alone basis. As the properties were acquired from CEOC, CGP LLC has treated these acquisitions as a reorganization of entities under common control; accordingly all properties results are reported as if acquired as of the earliest period presented. |
(l) | Amounts include consolidating adjustments, eliminating adjustments and other adjustments to reconcile to consolidated CEC Property EBITDA and Adjusted EBITDA. |
Twelve Months Ended September 30, 2014 | |||||||
(In millions) | CEOC | CERP | |||||
Net income/(loss) attributable to company | $ | (3,030.6 | ) | $ | (876.9 | ) | |
Interest Expense | 2,199.7 | 376.5 | |||||
Interest Income | (14.7 | ) | — | ||||
Benefit for income taxes | (500.2 | ) | (438.1 | ) | |||
Depreciation and amortization | 326.5 | 154.6 | |||||
Depreciation in corporate expenses | 41.8 | — | |||||
Amortization of intangible assets | 59.9 | 52.1 | |||||
Discontinued operations | 23.3 | — | |||||
EBITDA | (894.3 | ) | (731.8 | ) | |||
Write-downs, reserves, and project opening costs, net of recoveries (a) | 114.7 | 15.1 | |||||
Acquisition and integration costs (b) | 10.2 | 0.3 | |||||
Loss on early extinguishment of debt (c) | 115.8 | 37.1 | |||||
Net income attributable to noncontrolling interests | 4.4 | — | |||||
Impairment of tangible and intangible assets (d) | 1,328.1 | 1,133.6 | |||||
Stock-based compensation expense (e) | 52.4 | 1.7 | |||||
Adjustments to include 100% of Baluma S.A.'s adjusted EBITDA (f) | 31.2 | — | |||||
Discontinued operations write-downs, reserves, and project opening costs, net of recoveries and impairments | 208.6 | — | |||||
Impact of consolidating The LINQ and Octavius Tower (g) | (37.2 | ) | — | ||||
Other items (h) | 59.1 | 2.6 | |||||
Adjusted EBITDA | 993.0 | 458.6 | |||||
Pro Forma adjustments related to properties (i) | 0.2 | 0.1 | |||||
Pro Forma adjustment for estimated cost savings yet-to-be-realized (j) | 94.8 | 14.0 | |||||
Pro forma quarterly add back for Caesars Linq LLC (k) | — | 60.7 | |||||
LTM Adjusted EBITDA-Pro Forma | 1,088.0 | $ | 533.4 | ||||
Adjusted EBITDA-Pro Forma of CEOC's unrestricted subsidiaries | (12.4 | ) | |||||
Adjusted EBITDA-Pro Forma of CEOC's discontinued operations(l) | 9.9 | ||||||
LTM Adjusted EBITDA-ProForma - CEOC Restricted | 1,085.5 | ||||||
LTM Adjusted EBITDA-ProForma - CEOC Property Sales (m) | (108.9 | ) | |||||
LTM Adjusted EBITDA-ProForma - Management Fees (n) | 7.2 | ||||||
LTM Adjusted EBITDA-ProForma - CEOC Adjusted for Property Sales and Management Fees | $ | 983.8 |
(a) | Amounts primarily 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 include certain costs associated with acquisition and development activities and reorganization activities, which are infrequently occurring costs. |
(c) | 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. |
(d) | Amounts represent non-cash charges to impair intangible and tangible assets primarily resulting from changes in the business outlook in light of competitive conditions. |
(e) | Amounts represent stock-based compensation expense related to shares, stock options, and restricted stock granted to the Company's employees. |
(f) | 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. |
(g) | Amounts represent the EBITDA of The LINQ and Octavius Tower as consolidated in CEOC. Because The LINQ and Octavius Tower are not legally owned by CEOC, the related EBITDA impact is removed from the Adjusted EBITDA measure. |
(h) | 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, and non-cash equity in earnings of non-consolidated affiliates (net of distributions). |
(i) | 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. |
(j) | 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. These amounts do not include the cost savings programs announced in this press release, as those measures were not finalized at September 30, 2014. |
(k) | In accordance with the CERP Financing, EBITDA of the Linq for each fiscal quarter, through the fourth quarter of 2014, will be deemed to be equal to the greater of (i) $24.75 million or (ii) actual EBITDA. |
(l) | Per CEOC's senior secured credit facilities, EBITDA related to the Company's discontinued operations are deducted from LTM Adjusted EBITDA - Pro Forma. Amount represents a loss of $9.9 million in discontinued operations for the last twelve months ended September 30, 2014. |
(m) | Per CEOC's senior secured credit facilities, EBITDA related to the Company's divested properties is deducted from LTM Adjusted EBITDA - Pro Forma. Amount represents $108.9 million in Adjusted EBITDA related to CEOC's sale of four properties (The Cromwell, Bally's Las Vegas, The LINQ Hotel & Casino (formerly The Quad Resort & Casino), and Harrah's New Orleans) to CGP LLC in May 2014, following the sale of Planet Hollywood Resort & Casino to CGP LLC in October 2013 (the "Property Sales") for the last twelve months ended September 30, 2014. |
(n) | Per CEOC's senior secured facilities, management fees related to the Company's divested properties are added to LTM Adjusted EBITDA-Pro Forma. Amount represents $7.2 million in management fees CEOC will receive from properties included in the Property Sales. |
• | the impact of the Company's substantial indebtedness and the restrictions in the Company's debt agreements, and the outcome of discussions with CEOC’s creditors regarding CEOC's capital structure; |
• | litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation, including but not limited to, the assertion and outcome of litigation or other claims that have been or 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; |
• | 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. |
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