Discontinued Operations Discontinued Operations (Notes)

9 Months Ended

Sep. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Discontinued Operations

Sale of SMG Business

On September 23, 2016, CIE sold its SMG Business to Alpha Frontier Limited (“Alpha Frontier”) for cash consideration of $4.4 billion, subject to customary purchase price adjustments, pursuant to the Stock Purchase Agreement dated as of July 30, 2016 (the "Purchase Agreement"), which resulted in a pre-tax gain of approximately $4.2 billion. As a result, CAC incurred estimated current income tax expense of approximately $278 million on the gain. Under the terms of its operating agreement, CGP is required to distribute $278 million to CAC, which CAC will use to pay its tax obligation resulting from the sale of the SMG Business (see Note 16). Additionally, $264 million was deposited into an escrow account to fund potential indemnity claims of Alpha Frontier under the Purchase Agreement (the "Indemnity Escrow").

As discussed in Note 2, the majority of the proceeds from the sale of the SMG Business is restricted under the terms of the Purchase Agreement and the CIE Proceeds Agreement and is therefore classified as restricted cash on the Balance Sheet as of September 30, 2016. As a result of the sale, the results of operations and cash flows related to the SMG Business were classified as discontinued operations for the three and nine months endedSeptember 30, 2016, and the historical results have been recast as discontinued operations for the three and nine months endedSeptember 30, 2015. The related assets and liabilities have been recast as held for sale as of December 31, 2015.

In connection with the closing of the SMG Business sale (“Closing”), CIE completed the following transactions, which were funded from the proceeds of the sale:

• Repurchased all of the shares of CIE common stock held by Rock Gaming Interactive LLC, and its other minority investors (collectively, the "Minority Investors") in exchange for the right to receive cash payments representing the fair market value of the shares of CIE common stock at Closing.

• Accelerated the vesting of all of the outstanding options, restricted stock units and warrants of CIE (collectively, "CIE equity awards") and canceled all such CIE equity awards in exchange for the right to receive cash payments equal to the intrinsic value of such awards.

The total amount distributed to the Minority Investors and former holders of CIE equity awards in connection with Closing was approximately $1.1 billion, which is subject to any purchase price adjustments pursuant to the Purchase Agreement. As of September 30, 2016, CGP accrued approximately $88 million as an estimate of the additional amounts due to the Minority Investors and former holders of CIE equity awards for any purchase price adjustments and the release of proceeds held in the Indemnity Escrow. To the extent that there are further purchase price adjustments subsequent to September 30, 2016, the overall recorded gain on the transaction may be adjusted.

The CIE Proceeds to be delivered to the Minority Investors and former holders of CIE equity awards subsequent to any purchase price adjustments and the release of proceeds, if any, from the Indemnity Escrow at the end of the escrow period will be paid to such parties when such amounts are paid to CIE under the Purchase Agreement.

Assets and liabilities held for sale in the Balance Sheets are related to the SMG Business. Discontinued operations in 2015 also include properties owned by CEOC, which was deconsolidated effective January 15, 2015 (see Note 2).

Carrying Amount of Major Classes of Assets and Liabilities of Discontinued Operations
(In millions)	December 31, 2015
Cash and cash equivalents	$	112
Receivables, prepayments, and other current assets	64
Property and equipment, net	14
Goodwill and other intangible assets	133
Deferred taxes, deferred charges, and other long-term assets	41
Total assets held for sale	$	364
Accounts payable	$	17
Accrued expenses and other current liabilities	40
Deferred taxes, deferred credits, and other long-term liabilities	9
Total liabilities held for sale	$	66

Discontinued Operations
	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2016		2015		2016		2015
Net revenues
SMG Business	$	222	$	184	$	678	$	527
Operating expenses
SMG Business (1)	410		129		748		364
Other	—		—		—		7
Total operating expenses	410		129		748		371
Gain from discontinued operations
SMG Business	4,161		—		4,161		—
Pre-tax income/(loss) from discontinued operations
SMG Business	3,973		55		4,091		163
Other	—		—		—		(7		)
Total pre-tax income from discontinued operations	$	3,973	$	55	$	4,091	$	156
Income/(loss), net of income taxes
SMG Business	$	3,293	$	36	$	3,351	$	113
Other	—		—		—		(7		)
Total income from discontinued operations, net of income taxes	$	3,293	$	36	$	3,351	$	106

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⁽¹⁾  Operating expenses primarily consist of platform fees and property, general, administrative, and other.