XML 48 R8.htm IDEA: XBRL DOCUMENT v2.4.1.9
Basis of Presentation and Consolidation Basis of Presentation and Consolidation (Notes)
3 Months Ended
Mar. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
Basis of Presentation and Consolidation
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements of CEC 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 2015 fiscal year.
Certain prior year amounts have been reclassified to conform to the current year’s presentation. The financial information for the three months ended March 31, 2014 reflects the results of operations and cash flows of the Harrah’s Tunica and Showboat Atlantic City casinos as discontinued operations consistent with the current period presentation. See Note 7, “Discontinued Operations.”
Caesars Growth Partners, LLC
Consolidation of CGP LLC as a Variable Interest Entity
Because the equity holders in CGP LLC receive returns disproportionate to their voting interests and substantially all the activities of CGP LLC are related to Caesars, CGP LLC has been determined to be a VIE. Caesars Acquisition Company (“CAC”) is the sole voting member of CGP LLC - neither CAC nor CGP LLC guarantees any of Caesars’ debt. The creditors or beneficial holders of CGP LLC have no recourse to the general credit of Caesars Entertainment. Caesars Entertainment has certain obligations to CGP LLC through the management and services agreements. We have determined that Caesars Entertainment is the primary beneficiary of CGP LLC and is required to consolidate them.
CGP LLC generated net revenues of $567 million and $226 million for the three months ended March 31, 2015 and 2014, respectively. Net loss attributable to Caesars related to CGP LLC was $2 million for the three months ended March 31, 2015 compared with net income of $1 million for the three months ended March 31, 2014.
Contingently Issuable Non-Voting Membership Units
CGP LLC is obligated to issue additional non-voting membership units to Caesars Entertainment in 2016 to the extent that the earnings from CIE’s social and mobile games business exceeds a specified threshold amount in 2015. CGP LLC recorded a liability representing the fair value of the additional contingently issuable non-voting membership units of $228 million and $347 million as of March 31, 2015 and December 31, 2014, respectively. Such liability is eliminated in our consolidation of CGP LLC.
Caesars Enterprise Services, LLC
Activities of Joint Venture
Caesars Enterprise Services, LLC (“CES”) is a services joint venture by and among CEOC, CERP, and Caesars Growth Properties Holdings, LLC (“CGPH” and, together with CERP and CEOC, the “Members” and each a “Member”) that manages certain enterprise assets and the other assets it owns, licenses or controls, and employs certain of the corresponding employees and other employees who previously provided services to CEOC, CERP and CGPH, their affiliates and their respective properties and systems under each property’s corresponding property management agreement. Corporate expenses that are not allocated to the properties directly are allocated by CES to CEOC, CERP, and CGPH according to their allocation percentages, subject to annual review. Operating expenses are allocated to each Member with respect to their respective properties serviced by CES in accordance with historical allocation methodologies, subject to annual revisions and certain prefunding requirements.
Consolidation of CES
A steering committee acts in the role of a board of managers for CES with each Member entitled to appoint one representative to the steering committee. Each Member, through its representative, is entitled to a single vote on the steering committee, accordingly, the voting power of the Members does not equate to their ownership percentages. We have determined that because CEC consolidates two of the Members (CERP and CGPH), CEC is deemed to have a controlling financial interest in CES through our ownership of that interest.
CES is a "pass-through" entity that serves as an agent on behalf of its Members at a cost-basis, and is contractually required to fully allocate its costs. CES is designed to have no net income; therefore, any such net income or loss is immaterial and will be subject to allocation in the subsequent period.
As described in Note 4, effective January 15, 2015, CEOC is no longer a consolidated subsidiary. Therefore, CEOC’s ownership interest in CES is accounted for as noncontrolling interest.