EX-99.1 2 exhibit991-proformafinanci.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

CAESARS ENTERTAINMENT CORPORATION
UNAUDITED CONSOLIDATED CONDENSED PRO FORMA FINANCIAL STATEMENTS


The following unaudited consolidated condensed pro forma financial statements of Caesars Entertainment Corporation and its consolidated entities (collectively, “Caesars Entertainment,” “CEC,” “we,” or “our”) are included herein:
•
Unaudited consolidated condensed pro forma balance sheet as of June 30, 2016;
•
Unaudited consolidated condensed pro forma statement of operations for the six months ended June 30, 2016;
•
Unaudited consolidated condensed pro forma statement of operations for the years ended December 31, 2015, 2014, and 2013; and
•
Notes to unaudited consolidated condensed pro forma financial statements.
The following unaudited consolidated condensed pro forma financial statements (“pro forma financial statements”) are based upon the historical consolidated financial statements of Caesars Entertainment, adjusted to reflect the sale of the Caesars Interactive Entertainment, LLC (“CIE”) social and mobile games business (the “SMG Business”).
The pro forma financial statements of Caesars Entertainment should be read in conjunction with the historical consolidated financial statements of Caesars Entertainment and the related notes included in our 2015 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016 as filed with the Securities and Exchange Commission.
CEC prepared the unaudited consolidated condensed interim financial statements included herein on the same basis as the annual audited CEC consolidated financial statements and included all adjustments, consisting of normal and recurring adjustments, that are considered necessary to present fairly the financial position and results of operations for the unaudited periods. The summary financial information as of and for the six months ended June 30, 2016, is not necessarily indicative of the results that may be obtained for a full year for CEC subsequent to the sale of the SMG Business.
The unaudited consolidated condensed pro forma balance sheet (“pro forma balance sheet”) reflects the sale of the SMG Business assuming the sale had occurred on June 30, 2016, while the unaudited consolidated condensed pro forma statements of operations (“pro forma statements of operations”) give effect to the sale assuming it had occurred on January 1, 2013. The pro forma adjustments are based on the best available information, including certain assumptions that Caesars Entertainment management believes are reasonable. Management believes that such adjustments are appropriate and directly attributable to the sale of the SMG Business. Actual results could differ materially from the pro forma presentation included herein.
The pro forma financial statements are provided for illustrative purposes only and are not indicative of the operating results or financial position that would have occurred had the sale of the SMG Business occurred on June 30, 2016 for the pro forma balance sheet, or on January 1, 2013 for the pro forma statements of operations. Readers should not rely on the pro forma financial statements as being indicative of the historical operating results that Caesars Entertainment would have achieved if the sale of the SMG Business had occurred on such dates or any future operating results or financial position that it will experience after the sale of the SMG Business.


1



CAESARS ENTERTAINMENT CORPORATION
UNAUDITED CONSOLIDATED CONDENSED PRO FORMA BALANCE SHEET
June 30, 2016



(in millions)
Historical CEC Consolidated
 
Pro Forma Adjustments (1)
 
Pro Forma CEC Consolidated
Assets
 
 
 
 
 
Current assets
 
 
 
 
 
Cash and cash equivalents
$
1,525

 
$
125

 
$
1,650

Restricted cash
56

 
3,048

 
3,104

Receivables, net
200

 
(70
)
 
130

Due from affiliates
25

 
—

 
25

Prepayments and other current assets
126

 
(6
)
 
120

Inventories
16

 
—

 
16

Total current assets
1,948

 
3,097

 
5,045

Property and equipment, net
7,511

 
(18
)
 
7,493

Goodwill
1,696

 
(88
)
 
1,608

Intangible assets other than goodwill
500

 
(35
)
 
465

Restricted cash
5

 
—

 
5

Deferred income taxes
20

 
(20
)
 
—

Deferred charges and other assets
437

 
25

 
462

Total assets
$
12,117

 
$
2,961

 
$
15,078

Liabilities and Stockholders’ Equity/(Deficit)
 
 
 
 
 
Current liabilities
 
 
 
 
 
Accounts payable
$
165

 
$
(13
)
 
$
152

Due to affiliates
17

 
(6
)
 
11

Accrued expenses and other current liabilities
631

 
244

 
875

Accrued restructuring and support expenses
3,170

 
—

 
3,170

Interest payable
127

 
—

 
127

Current portion of long-term debt
71

 
—

 
71

Total current liabilities
4,181

 
225

 
4,406

Long-term debt
6,763

 
—

 
6,763

Deferred income taxes
1,004

 
(2
)
 
1,002

Deferred credits and other liabilities
265

 
(125
)
 
140

Total liabilities
12,213

 
98

 
12,311

Stockholders’ equity/(deficit)
 
 
 
 


Caesars stockholders’ equity/(deficit)
(1,394
)
 
2,897

 
1,503

Noncontrolling interests
1,298

 
(34
)
 
1,264

Total stockholders’ equity/(deficit)
(96
)
 
2,863

 
2,767

Total liabilities and stockholders’ equity/(deficit)
$
12,117

 
$
2,961

 
$
15,078

____________________
(1) 
See Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements for a description of the pro forma adjustments included in this column.

See accompanying Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements.


2



CAESARS ENTERTAINMENT CORPORATION
UNAUDITED CONSOLIDATED CONDENSED PRO FORMA STATEMENTS OF OPERATIONS
Six Months Ended June 30, 2016



(in millions, except per share data)
Historical CEC Consolidated
 
Pro Forma Adjustments (1)
 
Pro Forma CEC Consolidated
Revenues
 
 
 
 
 
Casino
$
1,075

 
$
—

 
$
1,075

Food and beverage
410

 
—

 
410

Rooms
464

 
—

 
464

Interactive entertainment
476

 
(456
)
 
20

Other revenue
245

 
—

 
245

Less: casino promotional allowances
(272
)
 
—

 
(272
)
Net revenues
2,398

 
(456
)
 
1,942

Operating expenses
 
 
 
 
 
Direct
 
 
 
 
 
Casino
564

 
—

 
564

Food and beverage
193

 
—

 
193

Rooms
122

 
—

 
122

Platform fees
132

 
(132
)
 
—

Property, general, administrative, and other
716

 
(209
)
 
507

Depreciation and amortization
228

 
(14
)
 
214

Corporate expense
82

 
—

 
82

Other operating costs
43

 
(1
)
 
42

Total operating expenses
2,080

 
(356
)
 
1,724

Income from operations
318

 
(100
)
 
218

Interest expense
(301
)
 
—

 
(301
)
Deconsolidation and restructuring of CEOC and other
(2,263
)
 
—

 
(2,263
)
Loss from continuing operations, before income taxes
(2,246
)
 
(100
)
 
(2,346
)
Income tax provision
(71
)
 
61

 
(10
)
Net loss
(2,317
)
 
(39
)
 
(2,356
)
Net income attributable to noncontrolling interests
(68
)
 
5

 
(63
)
Net loss attributable to Caesars
$
(2,385
)
 
$
(34
)
 
$
(2,419
)
 
 
 
 
 
 
Loss per share
 
 
 
 


Net loss per share
$
(16.39
)
 

 
$
(16.62
)
Weighted-average common shares outstanding
146

 
 
 
146

____________________
(1) 
See Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements for a description of the pro forma adjustments included in this column.

See accompanying Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements.

3



CAESARS ENTERTAINMENT CORPORATION
UNAUDITED CONSOLIDATED CONDENSED PRO FORMA STATEMENTS OF OPERATIONS
Year Ended December 31, 2015



(in millions, except per share data)
Historical CEC Consolidated
 
Pro Forma Adjustments (1)
 
Pro Forma CEC Consolidated
Revenues
 
 
 
 
 
Casino
$
2,257

 
$
—

 
$
2,257

Food and beverage
840

 
—

 
840

Rooms
878

 
—

 
878

Interactive entertainment
764

 
(726
)
 
38

Other revenue
468

 
—

 
468

Reimbursed management costs
10

 
—

 
10

Less: casino promotional allowances
(563
)
 
—

 
(563
)
Net revenues
4,654

 
(726
)
 
3,928

Operating expenses
 
 
 
 
 
Direct
 
 
 
 
 
Casino
1,194

 
—

 
1,194

Food and beverage
399

 
—

 
399

Rooms
227

 
—

 
227

Platform fees
212

 
(212
)
 
—

Property, general, administrative, and other
1,309

 
(271
)
 
1,038

Reimbursable management costs
10

 
—

 
10

Depreciation and amortization
401

 
(29
)
 
372

Impairment of tangible and other intangible assets
1

 
—

 
1

Corporate expense
176

 
—

 
176

Other operating costs
152

 
—

 
152

Total operating expenses
4,081

 
(512
)
 
3,569

Income from operations
573

 
(214
)
 
359

Interest expense
(684
)
 
1

 
(683
)
Deconsolidation and restructuring of CEOC and other
6,115

 
—

 
6,115

Income from continuing operations, before income taxes
6,004

 
(213
)
 
5,791

Income tax benefit
55

 
67

 
122

Income from continuing operations, net of income taxes
6,059

 
(146
)
 
5,913

Loss from discontinued operations, net of income taxes
(7
)
 
—

 
(7
)
Net income
6,052

 
(146
)
 
5,906

Net income attributable to noncontrolling interests
(132
)
 
20

 
(112
)
Net income attributable to Caesars
$
5,920

 
$
(126
)
 
$
5,794

 
 
 
 
 
 
Earnings/(loss) per share - basic and diluted
 
 
 
 
 
Basic earnings per share from continuing operations
$
40.92

 

 
$
40.05

Diluted earnings per share from continuing operations
$
40.30

 
 
 
$
39.45

 
 
 
 
 
 
Weighted-average common shares outstanding - basic
145

 
 
 
145

Weighted-average common shares outstanding - diluted
147

 
 
 
147

____________________
(1) 
See Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements for a description of the pro forma adjustments included in this column.

See accompanying Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements.

4



CAESARS ENTERTAINMENT CORPORATION
UNAUDITED CONSOLIDATED CONDENSED PRO FORMA STATEMENTS OF OPERATIONS
Year Ended December 31, 2014


(in millions, except per share data)
Historical CEC Consolidated
 
Pro Forma Adjustments (1)
 
Pro Forma CEC Consolidated
Revenues
 
 
 
 
 
Casino
$
5,394

 
$
—

 
$
5,394

Food and beverage
1,522

 
—

 
1,522

Rooms
1,207

 
—

 
1,207

Interactive entertainment
585

 
(549
)
 
36

Other revenue
703

 
—

 
703

Reimbursed management costs
243

 
—

 
243

Less: casino promotional allowances
(1,138
)
 
—

 
(1,138
)
Net revenues
8,516

 
(549
)
 
7,967

Operating expenses
 
 
 
 
 
Direct
 
 
 
 
 
Casino
3,253

 
—

 
3,253

Food and beverage
694

 
—

 
694

Rooms
315

 
—

 
315

Platform fees
166

 
(166
)
 
—

Property, general, administrative, and other
2,149

 
(241
)
 
1,908

Reimbursable management costs
243

 
—

 
243

Depreciation and amortization
636

 
(28
)
 
608

Impairment of goodwill
695

 
—

 
695

Impairment of tangible and other intangible assets
299

 
—

 
299

Corporate expense
282

 
—

 
282

Other operating costs
236

 
(33
)
 
203

Total operating expenses
8,968

 
(468
)
 
8,500

Loss from operations
(452
)
 
(81
)
 
(533
)
Interest expense
(2,670
)
 
1

 
(2,669
)
Deconsolidation and restructuring of CEOC and other
(95
)
 
—

 
(95
)
Loss from continuing operations, before income taxes
(3,217
)
 
(80
)
 
(3,297
)
Income tax benefit
543

 
52

 
595

Loss from continuing operations, net of income taxes
(2,674
)
 
(28
)
 
(2,702
)
Loss from discontinued operations, net of income taxes
(192
)
 
—

 
(192
)
Net loss
(2,866
)
 
(28
)
 
(2,894
)
Net loss attributable to noncontrolling interests
83

 
(4
)
 
79

Net loss attributable to Caesars
$
(2,783
)
 
$
(32
)
 
$
(2,815
)
 
 
 
 
 
 
Loss per share
 
 
 
 
 
Loss per share from continuing operations
$
(18.18
)
 
 
 
$
(18.41
)
Weighted-average common shares outstanding
142

 
 
 
142

____________________
(1) 
See Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements for a description of the pro forma adjustments included in this column.

See accompanying Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements.

5



CAESARS ENTERTAINMENT CORPORATION
UNAUDITED CONSOLIDATED CONDENSED PRO FORMA STATEMENTS OF OPERATIONS
Year Ended December 31, 2013


(in millions, except per share data)
Historical CEC Consolidated
 
Pro Forma Adjustments (1)
 
Pro Forma CEC Consolidated
Revenues
 
 
 
 
 
Casino
$
5,527

 
$
—

 
$
5,527

Food and beverage
1,451

 
—

 
1,451

Rooms
1,167

 
—

 
1,167

Interactive entertainment
315

 
(303
)
 
12

Other revenue
601

 
—

 
601

Reimbursed management costs
266

 
—

 
266

Less: casino promotional allowances
(1,107
)
 
—

 
(1,107
)
Net revenues
8,220

 
(303
)
 
7,917

Operating expenses
 
 
 
 
 
Direct
 
 
 
 
 
Casino
3,112

 
—

 
3,112

Food and beverage
639

 
—

 
639

Rooms
296

 
—

 
296

Platform fees
94

 
(94
)
 
—

Property, general, administrative, and other
1,943

 
(122
)
 
1,821

Reimbursable management costs
266

 
—

 
266

Depreciation and amortization
701

 
(17
)
 
684

Impairment of goodwill
104

 
—

 
104

Impairment of tangible and other intangible assets
2,727

 
—

 
2,727

Corporate expense
161

 
—

 
161

Other operating costs
203

 
(53
)
 
150

Total operating expenses
10,246

 
(286
)
 
9,960

Loss from operations
(2,026
)
 
(17
)
 
(2,043
)
Interest expense
(2,252
)
 
—

 
(2,252
)
Deconsolidation and restructuring of CEOC and other
28

 
—

 
28

Loss from continuing operations, before income taxes
(4,250
)
 
(17
)
 
(4,267
)
Income tax benefit
1,517

 
6

 
1,523

Loss from continuing operations, net of income taxes
(2,733
)
 
(11
)
 
(2,744
)
Loss from discontinued operations, net of income taxes
(207
)
 
—

 
(207
)
Net loss
(2,940
)
 
(11
)
 
(2,951
)
Net income attributable to noncontrolling interests
(8
)
 
(1
)
 
(9
)
Net loss attributable to Caesars
$
(2,948
)
 
$
(12
)
 
$
(2,960
)
 
 
 
 
 
 
Loss per share
 
 
 
 
 
Loss per share from continuing operations
$
(21.32
)
 
 
 
$
(21.41
)
Weighted-average common shares outstanding
129

 
 
 
129

____________________
(1) 
See Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements for a description of the pro forma adjustments included in this column.

See accompanying Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements.

6



CAESARS ENTERTAINMENT CORPORATION
NOTES TO UNAUDITED CONSOLIDATED CONDENSED PRO FORMA FINANCIAL STATEMENTS

Pro Forma Adjustments
The pro forma adjustments included in the pro forma financial statements are as follows:
(a)
The disposal of the SMG Business assets and liabilities at their carrying amounts included in CEC’s balance sheet as of June 30, 2016.
(b)
The removal of the SMG Business statement of operations included in CEC’s statements of operations for the six months ended June 30, 2016 and for the years ended December 31, 2015, 2014, and 2013.
(c)
Proceeds of $4.4 billion received from the sale of the SMG Business have been reflected as restricted cash, after deducting appropriate amounts representing the following disbursements from those cash proceeds: (i) transaction expenses that were paid within three business days following the sale of the SMG Business, (ii) amounts paid to CIE’s minority shareholders, including CIE management and Rock Gaming Interactive LLC, that are then payable and (iii) appropriate taxes, as discussed below.
(d)
Taxes represent the net income tax liability of (i) Caesars Acquisition Company (“CAC”) with respect to the sale of the SMG Business (including the pre-closing restructuring), after taking into account any available tax attributes of CAC, (ii) each equity holder of CIE that continues to be an equity holder of CIE following the sale of the SMG Business (other than CIE Growth, LLC) and does not otherwise receive cash proceeds in an amount sufficient to cover its tax liability in connection with the sale of the SMG Business (including the pre-closing restructuring), and (iii) CIE with respect to the sale (including the pre-closing restructuring). The aggregate tax liability is currently estimated to be $266 million, and has been included as a pro forma adjustment within accrued expenses and other current liabilities in the June 30, 2016 balance sheet. This presents a liability recorded by Caesars Growth Partners, LLC (“CGP”), which is a consolidated variable interest entity of CEC. Pursuant to the operating agreement of CGP, CGP pays certain expenses on behalf of CAC.
(e)
Transaction expenses of $58 million represent third party transaction costs, including investment banking and legal fees, incurred by CIE in connection with the sale of the SMG Business. These expenses were paid upon the closing of the sale using proceeds from the sale. See Note (c).
(f)
The tax impacts in the pro forma adjustments include a $25 million increase in deferred charges and other assets, the reversal of deferred tax assets of $2 million, and the reversal of deferred tax liabilities of $2 million, with an offset of these adjustments to stockholders’ equity/(deficit). These adjustments are the result of the remaining businesses of CIE converting to a limited liability company as of the effective date of the sale. 
(g)
Payables due to CIE’s shareholders in excess of amounts described in Note (c), which are scheduled to be paid in a future period, are reflected as an adjustment of $14 million to accrued expenses and other current liabilities, $64 million reflected as deferred credits and other liabilities, with an offset of $78 million to stockholders’ equity/(deficit).
(h)
Gain of $4.1 billion, net of taxes, recognized on the sale of the SMG Business reflected as an adjustment to stockholders’ equity/(deficit).







7