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) |
CAESARS ENTERTAINMENT CORPORATION | ||||
Date: | February 21, 2019 | By: | /S/ KEITH A. CAUSEY | |
Keith A. Causey | ||||
Senior Vice President and Chief Accounting Officer |
Contact: | Media | Investors | ||
Stephen Cohen | Steven Rubis | |||
(347) 489-6602 | (702) 407-6462 |
• | Fourth quarter net revenues increased 11.3%, or $214 million, from $1.90 billion to $2.12 billion, primarily due to inclusion of the results of Centaur Holdings, LLC (“Centaur”), which was acquired during the third quarter, and an additional five days of results of CEOC, LLC (“CEOC”), which emerged from bankruptcy on October 6, 2017. |
• | Fourth quarter net income decreased 90.1%, or $1.81 billion, from $2.00 billion to $198 million, primarily as a result of a large nonrecurring tax benefit recognized in the fourth quarter of 2017 relating to U.S. tax reform and CEOC’s emergence from bankruptcy. |
• | Enterprise-wide fourth quarter net revenues increased 7.4%, or $145 million, from $1.97 billion to $2.12 billion. |
• | Enterprise-wide fourth quarter adjusted EBITDAR increased 12.1%, or $61 million, from $506 million to $567 million. |
• | Enterprise-wide fourth quarter adjusted EBITDAR margin increased 110 basis points to 26.8%. |
• | Enterprise-wide Las Vegas fourth quarter net revenues increased 7.8%, or $69 million, from $880 million to $949 million. Enterprise-wide Las Vegas fourth quarter adjusted EBITDAR increased 18.2%, or $54 million, from $297 million to $351 million, while Enterprise-wide Las Vegas fourth quarter adjusted EBITDAR margin increased 320 basis points to 37.0%. |
• | Full year net revenues increased 72.4%, or $3.52 billion, from $4.87 billion to $8.39 billion due to the inclusion of the results of CEOC and Centaur. |
• | Full year net income improved $671 million, from a loss of $368 million to income of $303 million. |
• | Enterprise-wide full year net revenues increased 2.7%, or $224 million, from $8.17 billion to $8.39 billion. Enterprise-wide full year hold adjusted net revenues increased 2.6%, or $215 million, from $8.20 billion to $8.42 billion. |
• | Enterprise-wide full year adjusted EBITDAR increased 4.6%, or $102 million, from $2.21 billion to $2.31 billion. Enterprise-wide full year hold adjusted EBITDAR increased 4.1%, or $92 million, from $2.24 billion to $2.33 billion. |
• | Enterprise-wide full year adjusted EBITDAR margin increased 50 basis points to 27.5%. |
• | Enterprise-wide Las Vegas full year net revenues increased 2.5%, or $91 million, from $3.66 billion to $3.75 billion. Enterprise-wide Las Vegas full year adjusted EBITDAR increased 4.9%, or $64 million, from $1.30 billion to $1.36 billion, while Enterprise-wide Las Vegas full year adjusted EBITDAR margin increased 90 basis points to 36.3%. |
• | Domestic marketing costs represented 20.1% of gross revenue, down 160 basis points year over year, and labor costs represented 23.6% of gross revenue, down 30 basis points year over year. |
Net Revenues | |||||||||||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||
Las Vegas | $ | 949 | $ | 860 | $ | 89 | 10.3 | % | $ | 3,753 | $ | 2,902 | $ | 851 | 29.3 | % | |||||||||||||
Other U.S. | 1,014 | 888 | 126 | 14.2 | % | 4,047 | 1,758 | 2,289 | 130.2 | % | |||||||||||||||||||
All Other | 152 | 153 | (1 | ) | (0.7 | )% | 591 | 208 | 383 | 184.1 | % | ||||||||||||||||||
Caesars | $ | 2,115 | $ | 1,901 | $ | 214 | 11.3 | % | $ | 8,391 | $ | 4,868 | $ | 3,523 | 72.4 | % |
Net Revenues - Enterprise-wide (Non-GAAP) (1) | |||||||||||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||
Las Vegas | $ | 949 | $ | 880 | $ | 69 | 7.8 | % | $ | 3,753 | $ | 3,662 | $ | 91 | 2.5 | % | |||||||||||||
Other U.S. | 1,014 | 928 | 86 | 9.3 | % | 4,047 | 3,883 | 164 | 4.2 | % | |||||||||||||||||||
All Other | 152 | 162 | (10 | ) | (6.2 | )% | 591 | 622 | (31 | ) | (5.0 | )% | |||||||||||||||||
Caesars | $ | 2,115 | $ | 1,970 | $ | 145 | 7.4 | % | $ | 8,391 | $ | 8,167 | $ | 224 | 2.7 | % |
Income/(Loss) from Operations | |||||||||||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||
Las Vegas | $ | 181 | $ | 134 | $ | 47 | 35.1 | % | $ | 716 | $ | 549 | $ | 167 | 30.4 | % | |||||||||||||
Other U.S. | 45 | 76 | (31 | ) | (40.8 | )% | 434 | 199 | 235 | 118.1 | % | ||||||||||||||||||
All Other | (126 | ) | (56 | ) | (70 | ) | (125.0 | )% | (411 | ) | (211 | ) | (200 | ) | (94.8 | )% | |||||||||||||
Caesars | $ | 100 | $ | 154 | $ | (54 | ) | (35.1 | )% | $ | 739 | $ | 537 | $ | 202 | 37.6 | % |
Net Income/(Loss) Attributable to Caesars | |||||||||||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||
Las Vegas | $ | 98 | $ | 80 | $ | 18 | 22.5 | % | $ | 392 | $ | 484 | $ | (92 | ) | (19.0 | )% | ||||||||||||
Other U.S. | (98 | ) | (236 | ) | 138 | 58.5 | % | (122 | ) | (103 | ) | (19 | ) | (18.4 | )% | ||||||||||||||
All Other | 198 | 2,160 | (1,962 | ) | (90.8 | )% | 33 | (749 | ) | 782 | * | ||||||||||||||||||
Caesars | $ | 198 | $ | 2,004 | $ | (1,806 | ) | (90.1 | )% | $ | 303 | $ | (368 | ) | $ | 671 | * |
Adjusted EBITDAR (1) | |||||||||||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||
Las Vegas | $ | 351 | $ | 291 | $ | 60 | 20.6 | % | $ | 1,362 | $ | 1,007 | $ | 355 | 35.3 | % | |||||||||||||
Other U.S. | 230 | 201 | 29 | 14.4 | % | 1,014 | 398 | 616 | 154.8 | % | |||||||||||||||||||
All Other | (14 | ) | — | (14 | ) | * | (68 | ) | (44 | ) | (24 | ) | (54.5 | )% | |||||||||||||||
Caesars | $ | 567 | $ | 492 | $ | 75 | 15.2 | % | $ | 2,308 | $ | 1,361 | $ | 947 | 69.6 | % |
Adjusted EBITDAR - Enterprise-wide (Non-GAAP) (1) | |||||||||||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||
Las Vegas | $ | 351 | $ | 297 | $ | 54 | 18.2 | % | $ | 1,362 | $ | 1,298 | $ | 64 | 4.9 | % | |||||||||||||
Other U.S. | 230 | 208 | 22 | 10.6 | % | 1,014 | 926 | 88 | 9.5 | % | |||||||||||||||||||
All Other | (14 | ) | 1 | (15 | ) | * | (68 | ) | (18 | ) | (50 | ) | * | ||||||||||||||||
Caesars | $ | 567 | $ | 506 | $ | 61 | 12.1 | % | $ | 2,308 | $ | 2,206 | $ | 102 | 4.6 | % |
(In millions) | December 31, 2018 | ||
Cash and cash equivalents | $ | 1,491 | |
Revolver capacity | 1,200 | ||
Revolver capacity drawn or committed to letters of credit | (175 | ) | |
Total liquidity | $ | 2,516 |
• | our ability to respond to changes in the industry, particularly digital transformation, and to take advantage of the opportunity for legalized sports betting in multiple jurisdictions in the United States (which may require third-party arrangements and/or regulatory approval); |
• | development of our announced convention center in Las Vegas, CAESARS FORUM, and certain of our other announced projects are subject to risks associated with new construction projects, including those described below; |
• | we may not be able to realize the anticipated benefits of our acquisition of Centaur, including anticipated benefits from introducing table games to the acquired properties, which is subject to approvals and may not occur; |
• | the impact of our operating structure following CEOC’s emergence from bankruptcy; |
• | 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 effect of reductions in consumer discretionary spending due to economic downturns or other factors and changes in consumer demands; |
• | the ability to realize improvements in our business and results of operations through our property renovation investments, technology deployments, business process improvement initiatives and other continuous improvement initiatives; |
• | the ability to take advantage of opportunities to grow our revenue; |
• | the ability to use net operating losses to offset future taxable income as anticipated; |
• | the ability to realize all of the anticipated benefits of current or potential future acquisitions; |
• | the ability to effectively compete against our competitors; |
• | the financial results of our consolidated businesses; |
• | the impact of our substantial indebtedness, including its impact on our ability to raise additional capital in the future and react to changes in the economy, and lease obligations and the restrictions in our debt and lease agreements; |
• | the ability to access available and reasonable financing or additional capital on a timely basis and on acceptable terms or at all, including our ability to refinance our indebtedness on acceptable terms; |
• | the ability of our customer tracking, customer loyalty, and yield management programs to continue to increase customer loyalty and hotel sales; |
• | changes in the extensive governmental regulations to which we are subject and (i) changes in laws, including increased tax rates, smoking bans, regulations, or accounting standards, (ii) third-party relations, and (iii) approvals, decisions, disciplines and fines of courts, regulators, and governmental bodies; |
• | compliance with the extensive laws and regulations to which we are subject, including applicable gaming laws, the Foreign Corrupt Practices Act and other anti-corruption laws, and the Bank Secrecy Act and other anti-money laundering laws; |
• | our ability to recoup costs of capital investments through higher revenues; |
• | growth in consumer demand for non-gaming offerings; |
• | abnormal gaming holds (“gaming hold” is the amount of money that is retained by the casino from wagers by customers); |
• | the effects of competition, including locations of competitors, growth of online gaming, competition for new licenses, and operating and market competition; |
• | our ability to protect our intellectual property rights and damages caused to our brands due to the unauthorized use of our brand names by third parties in ways outside of our control; |
• | the ability to timely and cost-effectively integrate companies that we acquire into our operations; |
• | the ability to execute on our brand licensing and management strategy is subject to third party agreements and other risks associated with new projects; |
• | not being able to realize all of our anticipated cost savings; |
• | the potential difficulties in employee retention, recruitment, and motivation, including in connection with our Chief Executive Officer transition; |
• | our ability to retain our performers or other entertainment offerings on acceptable terms or at all; |
• | the risk of fraud, theft, and cheating; |
• | seasonal fluctuations resulting in volatility and an adverse effect on our operating results; |
• | any impairments to goodwill, indefinite-lived intangible assets, or long-lived assets that we may incur; |
• | 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; |
• | the impact of adverse legal proceedings and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation; |
• | acts of war or terrorist incidents, severe weather conditions, uprisings, or natural disasters, including losses therefrom, losses in revenues and damage to property, and the impact of severe weather conditions on our ability to attract customers to certain facilities of ours; |
• | fluctuations in energy prices; |
• | work stoppages and other labor problems; |
• | our ability to collect on credit extended to our customers; |
• | the effects of environmental and structural building conditions relating to our properties and our exposure to environmental liability, including as a result of unknown environmental contamination; |
• | a disruption, failure, or breach of our network, information systems, or other technology, or those of our vendors, on which we are dependent; |
• | risks and costs associated with protecting the integrity and security of internal, employee and customer data; |
• | access to insurance for our assets on reasonable terms; and |
• | the impact, if any, of unfunded pension benefits under multi-employer pension plans. |
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
(In millions, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenues | |||||||||||||||
Casino | $ | 1,100 | $ | 969 | $ | 4,247 | $ | 2,168 | |||||||
Food and beverage | 392 | 365 | 1,574 | 982 | |||||||||||
Rooms | 369 | 332 | 1,519 | 1,074 | |||||||||||
Other revenue | 189 | 175 | 789 | 584 | |||||||||||
Management fees | 14 | 12 | 60 | 12 | |||||||||||
Reimbursed management costs | 51 | 48 | 202 | 48 | |||||||||||
Net revenues | 2,115 | 1,901 | 8,391 | 4,868 | |||||||||||
Operating expenses | |||||||||||||||
Direct | |||||||||||||||
Casino | 637 | 554 | 2,393 | 1,213 | |||||||||||
Food and beverage | 283 | 267 | 1,106 | 693 | |||||||||||
Rooms | 121 | 115 | 480 | 360 | |||||||||||
Property, general, administrative, and other | 421 | 400 | 1,761 | 1,124 | |||||||||||
Reimbursable management costs | 51 | 48 | 202 | 48 | |||||||||||
Depreciation and amortization | 302 | 278 | 1,145 | 626 | |||||||||||
Impairment of goodwill | 43 | — | 43 | — | |||||||||||
Impairment of tangible and other intangible assets | 35 | — | 35 | — | |||||||||||
Corporate expense | 95 | 73 | 332 | 202 | |||||||||||
Other operating costs | 27 | 12 | 155 | 65 | |||||||||||
Total operating expenses | 2,015 | 1,747 | 7,652 | 4,331 | |||||||||||
Income from operations | 100 | 154 | 739 | 537 | |||||||||||
Interest expense | (341 | ) | (364 | ) | (1,346 | ) | (773 | ) | |||||||
Gain on deconsolidation of subsidiaries | — | — | — | 31 | |||||||||||
Restructuring and support expenses | — | 322 | — | (2,028 | ) | ||||||||||
Loss on extinguishment of debt | — | (215 | ) | (1 | ) | (232 | ) | ||||||||
Other income | 452 | 78 | 791 | 95 | |||||||||||
Income/(loss) before income taxes | 211 | (25 | ) | 183 | (2,370 | ) | |||||||||
Income tax benefit/(provision) | (13 | ) | 2,029 | 121 | 1,995 | ||||||||||
Net income/(loss) | 198 | 2,004 | 304 | (375 | ) | ||||||||||
Net (income)/loss attributable to noncontrolling interests | — | — | (1 | ) | 7 | ||||||||||
Net income/(loss) attributable to Caesars | $ | 198 | $ | 2,004 | $ | 303 | $ | (368 | ) | ||||||
Earnings/(loss) per share - basic and diluted | |||||||||||||||
Basic earnings/(loss) per share | $ | 0.29 | $ | 3.01 | $ | 0.44 | $ | (1.32 | ) | ||||||
Diluted earnings/(loss) per share | 0.25 | 2.48 | 0.41 | (1.32 | ) |
As of December 31, | |||||||
(In millions) | 2018 | 2017 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents ($14 and $58 attributable to our VIEs) | $ | 1,491 | $ | 2,558 | |||
Restricted cash | 115 | 116 | |||||
Receivables, net | 457 | 494 | |||||
Due from affiliates, net | 6 | 11 | |||||
Prepayments and other current assets ($6 and $2 attributable to our VIEs) | 155 | 239 | |||||
Inventories | 41 | 39 | |||||
Total current assets | 2,265 | 3,457 | |||||
Property and equipment, net ($137 and $57 attributable to our VIEs) | 16,045 | 16,154 | |||||
Goodwill | 4,044 | 3,815 | |||||
Intangible assets other than goodwill | 2,977 | 1,609 | |||||
Restricted cash | 51 | 35 | |||||
Deferred income taxes | 10 | 2 | |||||
Deferred charges and other assets ($35 and $0 attributable to our VIEs) | 383 | 364 | |||||
Total assets | $ | 25,775 | $ | 25,436 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Accounts payable ($41 and $3 attributable to our VIEs) | $ | 399 | $ | 318 | |||
Accrued expenses and other current liabilities ($1 and $0 attributable to our VIEs) | 1,217 | 1,326 | |||||
Interest payable | 56 | 38 | |||||
Contract liabilities | 144 | 129 | |||||
Current portion of financing obligations | 20 | 9 | |||||
Current portion of long-term debt | 164 | 64 | |||||
Total current liabilities | 2,000 | 1,884 | |||||
Financing obligations | 10,057 | 9,355 | |||||
Long-term debt | 8,801 | 8,849 | |||||
Deferred income taxes | 730 | 577 | |||||
Deferred credits and other liabilities ($5 and $0 attributable to our VIEs) | 849 | 1,474 | |||||
Total liabilities | 22,437 | 22,139 | |||||
Stockholders’ equity | |||||||
Common stock | 7 | 7 | |||||
Treasury stock | (485 | ) | (152 | ) | |||
Additional paid-in capital | 14,124 | 14,040 | |||||
Accumulated deficit | (10,372 | ) | (10,675 | ) | |||
Accumulated other comprehensive income/(loss) | (24 | ) | 6 | ||||
Total Caesars stockholders’ equity | 3,250 | 3,226 | |||||
Noncontrolling interests | 88 | 71 | |||||
Total stockholders’ equity | 3,338 | 3,297 | |||||
Total liabilities and stockholders’ equity | $ | 25,775 | $ | 25,436 |
Years Ended December 31, | |||||||
(In millions) | 2018 | 2017 | |||||
Cash flows from operating activities | |||||||
Net income/(loss) | $ | 304 | $ | (375 | ) | ||
Adjustments to reconcile net income/(loss) to cash flows from operating activities: | |||||||
Non-cash change in restructuring accrual | — | 2,065 | |||||
Interest accrued on financing obligations | 142 | 27 | |||||
Deferred income taxes | (145 | ) | (1,858 | ) | |||
Gain on deconsolidation of subsidiaries | — | (31 | ) | ||||
Depreciation and amortization | 1,145 | 626 | |||||
Loss on extinguishment of debt | 1 | 232 | |||||
Change in fair value of derivative liability | (697 | ) | (64 | ) | |||
Stock-based compensation expense | 79 | 43 | |||||
Amortization of deferred finance costs and debt discount/premium | 15 | 26 | |||||
Provision for doubtful accounts | 21 | 8 | |||||
Impairment of goodwill | 43 | — | |||||
Impairment of intangible and tangible assets | 35 | — | |||||
Other non-cash adjustments to net income/(loss) | (28 | ) | 32 | ||||
Net changes in: | |||||||
Accounts receivable | 14 | (75 | ) | ||||
Due from affiliates, net | 5 | (55 | ) | ||||
Inventories, prepayments and other current assets | 76 | 64 | |||||
Deferred charges and other assets | (69 | ) | (26 | ) | |||
Accounts payable | (78 | ) | (4 | ) | |||
Interest payable | 19 | (35 | ) | ||||
Accrued expenses | (101 | ) | 15 | ||||
Contract liabilities | 18 | 3 | |||||
Restructuring accruals | — | (2,880 | ) | ||||
Deferred credits and other liabilities | (6 | ) | (63 | ) | |||
Other | (7 | ) | 2 | ||||
Cash flows provided by/(used in) operating activities | 786 | (2,323 | ) | ||||
Cash flows from investing activities | |||||||
Acquisition of businesses, net of cash and restricted cash acquired | (1,578 | ) | 561 | ||||
Acquisition of property and equipment, net of change in related payables | (565 | ) | (598 | ) | |||
Deconsolidation of subsidiary cash | — | (57 | ) | ||||
Consolidation of Korea Joint Venture | — | 19 | |||||
Payments to acquire certain gaming rights | (20 | ) | — | ||||
Payments to acquire investments | (22 | ) | (12 | ) | |||
Proceeds from the sale and maturity of investments | 43 | 33 | |||||
Other | 7 | (1 | ) | ||||
Cash flows used in investing activities | (2,135 | ) | (55 | ) |
Years Ended December 31, | |||||||
(In millions) | 2018 | 2017 | |||||
Cash flows from financing activities | |||||||
Proceeds from long-term debt and revolving credit facilities | 1,167 | 7,550 | |||||
Debt issuance and extension costs and fees | (5 | ) | (288 | ) | |||
Repayments of long-term debt and revolving credit facilities | (1,130 | ) | (7,846 | ) | |||
Proceeds from sale-leaseback financing arrangement | 745 | 1,136 | |||||
Proceeds from the issuance of common stock | 6 | 11 | |||||
Repurchase of common stock | (311 | ) | — | ||||
Distribution of CIE sale proceeds | — | (63 | ) | ||||
Taxes paid related to net share settlement of equity awards | (22 | ) | (11 | ) | |||
Financing obligation payments | (173 | ) | (54 | ) | |||
Contributions from noncontrolling interest owners | 20 | — | |||||
Distributions to noncontrolling interest owners | — | (6 | ) | ||||
Cash flows provided by financing activities | 297 | 429 | |||||
Net decrease in cash, cash equivalents, and restricted cash | (1,052 | ) | (1,949 | ) | |||
Cash, cash equivalents, and restricted cash, beginning of period | 2,709 | 4,658 | |||||
Cash, cash equivalents, and restricted cash, end of period | $ | 1,657 | $ | 2,709 | |||
Supplemental Cash Flow Information | |||||||
Cash paid for interest | $ | 1,169 | $ | 749 | |||
Cash paid for income taxes | 8 | 7 | |||||
Non-Cash Settlement of Accrued Restructuring and Support Expenses | |||||||
Issuance of convertible notes and call right | — | 2,349 | |||||
Issuance of CEC common stock | — | 3,435 | |||||
Other non-cash investing and financing activities: | |||||||
Change in accrued capital expenditures | 149 | (6 | ) | ||||
Deferred consideration for acquisition of Centaur | 66 | — |
Three Months Ended December 31, 2018 | Three Months Ended December 31, 2017 | ||||||||||||||||||||||||||||||
(Dollars in millions) | Las Vegas | Other U.S. | All Other (g) | CEC | Las Vegas | Other U.S. | All Other (g) | CEC | |||||||||||||||||||||||
Net income/(loss) attributable to Caesars | $ | 98 | $ | (98 | ) | $ | 198 | $ | 198 | $ | 80 | $ | (236 | ) | $ | 2,160 | $ | 2,004 | |||||||||||||
Net income/(loss) attributable to noncontrolling interests | — | 1 | (1 | ) | — | — | — | — | — | ||||||||||||||||||||||
Income tax (benefit)/provision | — | — | 13 | 13 | — | (2 | ) | (2,027 | ) | (2,029 | ) | ||||||||||||||||||||
Restructuring and support expenses (a) | — | — | — | — | — | 177 | (499 | ) | (322 | ) | |||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | 1 | 214 | 215 | |||||||||||||||||||||||
Other (income)/losses (b) | 1 | — | (453 | ) | (452 | ) | (3 | ) | — | (75 | ) | (78 | ) | ||||||||||||||||||
Interest expense 1 | 82 | 142 | 117 | 341 | 57 | 136 | 171 | 364 | |||||||||||||||||||||||
Depreciation and amortization 2 | 159 | 130 | 13 | 302 | 143 | 120 | 15 | 278 | |||||||||||||||||||||||
Impairment of goodwill | — | 17 | 26 | 43 | — | — | — | — | |||||||||||||||||||||||
Impairment of tangible and other intangible assets | — | 26 | 9 | 35 | — | — | — | — | |||||||||||||||||||||||
Corporate expense | — | — | 95 | 95 | — | — | 73 | 73 | |||||||||||||||||||||||
Other operating costs (c) | 10 | 8 | 9 | 27 | 8 | — | 4 | 12 | |||||||||||||||||||||||
Property EBITDAR | 350 | 226 | 26 | 602 | 285 | 196 | 36 | 517 | |||||||||||||||||||||||
Corporate expense | — | — | (95 | ) | (95 | ) | — | — | (73 | ) | (73 | ) | |||||||||||||||||||
Stock-based compensation expense (d) | 2 | 3 | 19 | 24 | 2 | 2 | 13 | 17 | |||||||||||||||||||||||
Other items (e) | (1 | ) | 1 | 36 | 36 | 4 | 3 | 24 | 31 | ||||||||||||||||||||||
Adjusted EBITDAR | $ | 351 | $ | 230 | $ | (14 | ) | $ | 567 | $ | 291 | $ | 201 | $ | — | $ | 492 | ||||||||||||||
Net revenues | $ | 949 | $ | 1,014 | $ | 152 | $ | 2,115 | $ | 860 | $ | 888 | $ | 153 | $ | 1,901 | |||||||||||||||
Adjusted EBITDAR margin (f) | 37.0 | % | 22.7 | % | (9.2 | )% | 26.8 | % | 33.8 | % | 22.6 | % | — | % | 25.9 | % | |||||||||||||||
Interest expense on debt | $ | — | $ | 2 | $ | 112 | $ | 114 | $ | — | $ | 6 | $ | 169 | $ | 175 | |||||||||||||||
Interest expense on financing obligations | 82 | 140 | 5 | 227 | 57 | 130 | 2 | 189 | |||||||||||||||||||||||
1Interest expense | $ | 82 | $ | 142 | $ | 117 | $ | 341 | $ | 57 | $ | 136 | $ | 171 | $ | 364 | |||||||||||||||
Cash payments on financing obligations (incl. principal) | $ | 72 | $ | 162 | $ | — | $ | 234 | $ | 63 | $ | 151 | $ | — | $ | 214 | |||||||||||||||
Depreciation and amortization expense | $ | 111 | $ | 63 | $ | 13 | $ | 187 | $ | 98 | $ | 47 | $ | 15 | $ | 160 | |||||||||||||||
Depreciation on failed sale-leaseback assets | 48 | 67 | — | 115 | 45 | 73 | — | 118 | |||||||||||||||||||||||
2Depreciation and amortization | $ | 159 | $ | 130 | $ | 13 | $ | 302 | $ | 143 | $ | 120 | $ | 15 | $ | 278 |
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||||||||||||||||||||||||
(Dollars in millions) | Las Vegas | Other U.S. | All Other (g) | CEC | Las Vegas | Other U.S. | All Other (g) | CEC | |||||||||||||||||||||||
Net income/(loss) attributable to Caesars | $ | 392 | $ | (122 | ) | $ | 33 | $ | 303 | $ | 484 | $ | (103 | ) | $ | (749 | ) | $ | (368 | ) | |||||||||||
Net income/(loss) attributable to noncontrolling interests | — | 2 | (1 | ) | 1 | — | (7 | ) | — | (7 | ) | ||||||||||||||||||||
Income tax benefit | — | — | (121 | ) | (121 | ) | — | (2 | ) | (1,993 | ) | (1,995 | ) | ||||||||||||||||||
Gain on deconsolidation of subsidiary | — | — | — | — | — | (31 | ) | — | (31 | ) | |||||||||||||||||||||
Restructuring and support expenses (a) | — | — | — | — | — | 177 | 1,851 | 2,028 | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 1 | 1 | 4 | 13 | 215 | 232 | |||||||||||||||||||||||
Other income (b) | (3 | ) | (2 | ) | (786 | ) | (791 | ) | (4 | ) | (1 | ) | (90 | ) | (95 | ) | |||||||||||||||
Interest expense 1 | 327 | 556 | 463 | 1,346 | 65 | 153 | 555 | 773 | |||||||||||||||||||||||
Depreciation and amortization 2 | 582 | 501 | 62 | 1,145 | 420 | 186 | 20 | 626 | |||||||||||||||||||||||
Impairment of goodwill | — | 17 | 26 | 43 | — | — | — | — | |||||||||||||||||||||||
Impairment of tangible and other intangible assets | — | 26 | 9 | 35 | — | — | — | — | |||||||||||||||||||||||
Corporate expense | — | — | 332 | 332 | — | — | 202 | 202 | |||||||||||||||||||||||
Other operating costs (c) | 52 | 21 | 82 | 155 | 25 | 3 | 37 | 65 | |||||||||||||||||||||||
Property EBITDAR | 1,350 | 999 | 100 | 2,449 | 994 | 388 | 48 | 1,430 | |||||||||||||||||||||||
Corporate expense | — | — | (332 | ) | (332 | ) | — | — | (202 | ) | (202 | ) | |||||||||||||||||||
Stock-based compensation expense (d) | 8 | 10 | 61 | 79 | 4 | 3 | 36 | 43 | |||||||||||||||||||||||
Other items (e) | 4 | 5 | 103 | 112 | 9 | 7 | 74 | 90 | |||||||||||||||||||||||
Adjusted EBITDAR | $ | 1,362 | $ | 1,014 | $ | (68 | ) | $ | 2,308 | $ | 1,007 | $ | 398 | $ | (44 | ) | $ | 1,361 | |||||||||||||
Net revenues | $ | 3,753 | $ | 4,047 | $ | 591 | $ | 8,391 | $ | 2,902 | $ | 1,758 | $ | 208 | $ | 4,868 | |||||||||||||||
Adjusted EBITDAR margin (f) | 36.3 | % | 25.1 | % | (11.5 | )% | 27.5 | % | 34.7 | % | 22.6 | % | (21.2 | )% | 28.0 | % | |||||||||||||||
Interest expense on debt | $ | 2 | $ | 4 | $ | 451 | $ | 457 | $ | 8 | $ | 23 | $ | 553 | $ | 584 | |||||||||||||||
Interest expense on financing obligations | 325 | 552 | 12 | 889 | 57 | 130 | 2 | 189 | |||||||||||||||||||||||
1Interest expense | $ | 327 | $ | 556 | $ | 463 | $ | 1,346 | $ | 65 | $ | 153 | $ | 555 | $ | 773 | |||||||||||||||
Cash payments on financing obligations (incl. principal) | $ | 248 | $ | 477 | $ | — | $ | 725 | $ | 63 | $ | 151 | $ | — | $ | 214 | |||||||||||||||
Depreciation and amortization expense | $ | 383 | $ | 210 | $ | 62 | $ | 655 | $ | 375 | $ | 113 | $ | 20 | $ | 508 | |||||||||||||||
Depreciation on failed sale-leaseback assets | 199 | 291 | — | 490 | 45 | 73 | — | 118 | |||||||||||||||||||||||
2Depreciation and amortization | $ | 582 | $ | 501 | $ | 62 | $ | 1,145 | $ | 420 | $ | 186 | $ | 20 | $ | 626 |
Three Months Ended December 31, 2018 | Three Months Ended December 31, 2018 | ||||||||||||||||||||||||||
(Dollars in millions) | CEC | Less: Centaur | CEC Excluding Centaur | Las Vegas | Other U.S. | All Other (g) | CEC Excluding Centaur | ||||||||||||||||||||
Net income/(loss) attributable to Caesars | $ | 198 | $ | (27 | ) | $ | 171 | $ | 98 | $ | (125 | ) | $ | 198 | $ | 171 | |||||||||||
Net income/(loss) attributable to noncontrolling interests | — | — | — | — | 1 | (1 | ) | — | |||||||||||||||||||
Income tax provision | 13 | — | 13 | — | — | 13 | 13 | ||||||||||||||||||||
Other (income)/losses (b) | (452 | ) | — | (452 | ) | 1 | — | (453 | ) | (452 | ) | ||||||||||||||||
Interest expense | 341 | — | 341 | 82 | 142 | 117 | 341 | ||||||||||||||||||||
Depreciation and amortization | 302 | (10 | ) | 292 | 159 | 120 | 13 | 292 | |||||||||||||||||||
Impairment of goodwill | 43 | — | 43 | — | 17 | 26 | 43 | ||||||||||||||||||||
Impairment of tangible and other intangible assets | 35 | — | 35 | — | 26 | 9 | 35 | ||||||||||||||||||||
Corporate expense | 95 | — | 95 | — | — | 95 | 95 | ||||||||||||||||||||
Other operating costs (c) | 27 | (2 | ) | 25 | 10 | 6 | 9 | 25 | |||||||||||||||||||
Property EBITDAR | 602 | (39 | ) | 563 | 350 | 187 | 26 | 563 | |||||||||||||||||||
Corporate expense | (95 | ) | — | (95 | ) | — | — | (95 | ) | (95 | ) | ||||||||||||||||
Stock-based compensation expense (d) | 24 | — | 24 | 2 | 3 | 19 | 24 | ||||||||||||||||||||
Other items (e) | 36 | — | 36 | (1 | ) | 1 | 36 | 36 | |||||||||||||||||||
Adjusted EBITDAR | $ | 567 | $ | (39 | ) | $ | 528 | $ | 351 | $ | 191 | $ | (14 | ) | $ | 528 | |||||||||||
Net revenues | $ | 2,115 | $ | (121 | ) | $ | 1,994 | $ | 949 | $ | 893 | $ | 152 | $ | 1,994 | ||||||||||||
Adjusted EBITDAR margin (f) | 26.8 | % | 32.2 | % | 26.5 | % | 37.0 | % | 21.4 | % | (9.2 | )% | 26.5 | % |
Year Ended December 31, 2018 | Year Ended December 31, 2018 | ||||||||||||||||||||||||||
(Dollars in millions) | CEC | Less: Centaur | CEC Excluding Centaur | Las Vegas | Other U.S. | All Other (g) | CEC Excluding Centaur | ||||||||||||||||||||
Net income/(loss) attributable to Caesars | $ | 303 | $ | (49 | ) | $ | 254 | $ | 392 | $ | (171 | ) | $ | 33 | $ | 254 | |||||||||||
Net income/(loss) attributable to noncontrolling interests | 1 | — | 1 | — | 2 | (1 | ) | 1 | |||||||||||||||||||
Income tax benefit | (121 | ) | — | (121 | ) | — | — | (121 | ) | (121 | ) | ||||||||||||||||
Loss on extinguishment of debt | 1 | — | 1 | — | — | 1 | 1 | ||||||||||||||||||||
Other income (b) | (791 | ) | — | (791 | ) | (3 | ) | (2 | ) | (786 | ) | (791 | ) | ||||||||||||||
Interest expense | 1,346 | — | 1,346 | 327 | 556 | 463 | 1,346 | ||||||||||||||||||||
Depreciation and amortization | 1,145 | (18 | ) | 1,127 | 582 | 483 | 62 | 1,127 | |||||||||||||||||||
Impairment of goodwill | 43 | — | 43 | — | 17 | 26 | 43 | ||||||||||||||||||||
Impairment of tangible and other intangible assets | 35 | — | 35 | — | 26 | 9 | 35 | ||||||||||||||||||||
Corporate expense | 332 | — | 332 | — | — | 332 | 332 | ||||||||||||||||||||
Other operating costs (c) | 155 | (4 | ) | 151 | 52 | 17 | 82 | 151 | |||||||||||||||||||
Property EBITDAR | 2,449 | (71 | ) | 2,378 | 1,350 | 928 | 100 | 2,378 | |||||||||||||||||||
Corporate expense | (332 | ) | — | (332 | ) | — | — | (332 | ) | (332 | ) | ||||||||||||||||
Stock-based compensation expense (d) | 79 | — | 79 | 8 | 10 | 61 | 79 | ||||||||||||||||||||
Other items (e) | 112 | — | 112 | 4 | 5 | 103 | 112 | ||||||||||||||||||||
Adjusted EBITDAR | $ | 2,308 | $ | (71 | ) | $ | 2,237 | $ | 1,362 | $ | 943 | $ | (68 | ) | $ | 2,237 | |||||||||||
Net revenues | $ | 8,391 | $ | (226 | ) | $ | 8,165 | $ | 3,753 | $ | 3,821 | $ | 591 | $ | 8,165 | ||||||||||||
Adjusted EBITDAR margin (f) | 27.5 | % | 31.4 | % | 27.4 | % | 36.3 | % | 24.7 | % | (11.5 | )% | 27.4 | % |
Three Months Ended December 31, 2017 | Three Months Ended December 31, 2017 | ||||||||||||||||||||||||||
(Dollars in millions) | CEC | CEOC | Enterprise-wide | Las Vegas | Other U.S. | All Other (g) | Enterprise-wide | ||||||||||||||||||||
Net income/(loss) attributable to Caesars | $ | 2,004 | $ | 9,884 | $ | 11,888 | $ | (2,381 | ) | $ | (3,562 | ) | $ | 17,831 | $ | 11,888 | |||||||||||
Net income/(loss) attributable to noncontrolling interests | — | (19 | ) | (19 | ) | — | (21 | ) | 2 | (19 | ) | ||||||||||||||||
Net income from discontinued operations | — | (26 | ) | (26 | ) | — | — | (26 | ) | (26 | ) | ||||||||||||||||
Income tax benefit | (2,029 | ) | (6 | ) | (2,035 | ) | — | (2 | ) | (2,033 | ) | (2,035 | ) | ||||||||||||||
Restructuring and support expenses (a) | (322 | ) | (9,835 | ) | (10,157 | ) | 2,467 | 3,529 | (16,153 | ) | (10,157 | ) | |||||||||||||||
Loss on extinguishment of debt | 215 | — | 215 | — | 1 | 214 | 215 | ||||||||||||||||||||
Other income (b) | (78 | ) | — | (78 | ) | (2 | ) | (1 | ) | (75 | ) | (78 | ) | ||||||||||||||
Interest expense | 364 | 15 | 379 | 57 | 136 | 186 | 379 | ||||||||||||||||||||
Depreciation and amortization | 278 | 2 | 280 | 144 | 121 | 15 | 280 | ||||||||||||||||||||
Corporate expense | 73 | 1 | 74 | — | — | 74 | 74 | ||||||||||||||||||||
Other operating costs (c) | 12 | (1 | ) | 11 | 7 | 2 | 2 | 11 | |||||||||||||||||||
Property EBITDAR | 517 | 15 | 532 | 292 | 203 | 37 | 532 | ||||||||||||||||||||
Corporate expense | (73 | ) | (1 | ) | (74 | ) | — | — | (74 | ) | (74 | ) | |||||||||||||||
Stock-based compensation expense (d) | 17 | 1 | 18 | 2 | 3 | 13 | 18 | ||||||||||||||||||||
Other items (e) | 31 | (1 | ) | 30 | 3 | 2 | 25 | 30 | |||||||||||||||||||
Adjusted EBITDAR | $ | 492 | $ | 14 | $ | 506 | $ | 297 | $ | 208 | $ | 1 | $ | 506 | |||||||||||||
Net revenues | $ | 1,901 | $ | 69 | $ | 1,970 | $ | 880 | $ | 928 | $ | 162 | $ | 1,970 | |||||||||||||
Adjusted EBITDAR margin (f) | 25.9 | % | 20.3 | % | 25.7 | % | 33.8 | % | 22.4 | % | 0.6 | % | 25.7 | % |
Year Ended December 31, 2017 | Year Ended December 31, 2017 | ||||||||||||||||||||||||||||||
(Dollars in millions) | CEC | CEOC | Less: Baltimore | Enterprise-wide | Las Vegas | Other U.S. | All Other (g) | Enterprise-wide | |||||||||||||||||||||||
Net income/(loss) attributable to Caesars | $ | (368 | ) | $ | 10,208 | $ | 6 | $ | 9,846 | $ | (1,781 | ) | $ | (3,034 | ) | $ | 14,661 | $ | 9,846 | ||||||||||||
Net income/(loss) attributable to noncontrolling interests | (7 | ) | (13 | ) | 7 | (13 | ) | — | (15 | ) | 2 | (13 | ) | ||||||||||||||||||
Net income from discontinued operations | — | (26 | ) | — | (26 | ) | — | — | (26 | ) | (26 | ) | |||||||||||||||||||
Income tax (benefit)/provision | (1,995 | ) | 12 | — | (1,983 | ) | — | 1 | (1,984 | ) | (1,983 | ) | |||||||||||||||||||
Gain on deconsolidation of subsidiary | (31 | ) | — | — | (31 | ) | — | (31 | ) | — | (31 | ) | |||||||||||||||||||
Restructuring and support expenses (a) | 2,028 | (9,755 | ) | — | (7,727 | ) | 2,467 | 3,533 | (13,727 | ) | (7,727 | ) | |||||||||||||||||||
Loss on extinguishment of debt | 232 | — | (12 | ) | 220 | 4 | 1 | 215 | 220 | ||||||||||||||||||||||
Other income (b) | (95 | ) | (18 | ) | — | (113 | ) | (4 | ) | (2 | ) | (107 | ) | (113 | ) | ||||||||||||||||
Interest expense | 773 | 186 | (18 | ) | 941 | 67 | 162 | 712 | 941 | ||||||||||||||||||||||
Depreciation and amortization | 626 | 267 | (20 | ) | 873 | 502 | 295 | 76 | 873 | ||||||||||||||||||||||
Corporate expense | 202 | 80 | — | 282 | — | — | 282 | 282 | |||||||||||||||||||||||
Other operating costs (c) | 65 | (16 | ) | — | 49 | 29 | 9 | 11 | 49 | ||||||||||||||||||||||
Property EBITDAR | 1,430 | 925 | (37 | ) | 2,318 | 1,284 | 919 | 115 | 2,318 | ||||||||||||||||||||||
Corporate expense | (202 | ) | (80 | ) | — | (282 | ) | — | — | (282 | ) | (282 | ) | ||||||||||||||||||
Stock-based compensation expense (d) | 43 | — | — | 43 | 4 | 3 | 36 | 43 | |||||||||||||||||||||||
Other items (e) | 90 | 39 | (2 | ) | 127 | 10 | 4 | 113 | 127 | ||||||||||||||||||||||
Adjusted EBITDAR | $ | 1,361 | $ | 884 | $ | (39 | ) | $ | 2,206 | $ | 1,298 | $ | 926 | $ | (18 | ) | $ | 2,206 | |||||||||||||
Net revenues | $ | 4,868 | $ | 3,480 | $ | (181 | ) | $ | 8,167 | $ | 3,662 | $ | 3,883 | $ | 622 | $ | 8,167 | ||||||||||||||
Adjusted EBITDAR margin (f) | 28.0 | % | 25.4 | % | 21.5 | % | 27.0 | % | 35.4 | % | 23.8 | % | (2.9 | )% | 27.0 | % |
(a) | Amounts primarily represent CEC’s costs in connection with the restructuring of CEOC. |
(b) | Amounts include changes in fair value of the derivative liability related to the conversion option of the CEC Convertible Notes and the disputed claims liability as well as interest and dividend income. |
(c) | Amounts primarily represent costs incurred in connection with development activities and reorganization activities, and/or recoveries associated with such items, including acquisition and integration costs, contract exit fees including exiting the fully bundled sales system of NV Energy for electric service at our Nevada properties, lease termination costs, gains and losses on asset sales, weather related property closure costs, demolition costs primarily at our Las Vegas properties for renovations, and project opening costs. |
(d) | Amounts represent stock-based compensation expense related to shares, stock options, restricted stock units, and performance stock units granted to the Company’s employees. |
(e) | Amounts include other add-backs and deductions to arrive at Adjusted EBITDAR but not separately identified such as professional and consulting services, sign-on and retention bonuses, business optimization expenses for IT transformation, severance and relocation costs, litigation awards and settlements, permit remediation costs, and costs associated with CEOC’s restructuring and related litigation. |
(f) | Adjusted EBITDAR margin is calculated as adjusted EBITDAR divided by net revenues. |
(g) | Amounts include eliminating adjustments and other adjustments to reconcile to consolidated CEC and Enterprise-wide adjusted EBITDAR. |
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||||||||||||||||||
(Dollars in millions) | Enterprise-wide | Unfavorable Hold | Hold Adjusted Enterprise-wide | Enterprise-wide | Unfavorable Hold | Hold Adjusted Enterprise-wide | $ Change | % Change | ||||||||||||||||||||||
Net revenues | $ | 8,391 | $ | 28 | $ | 8,419 | $ | 8,167 | $ | 37 | $ | 8,204 | $ | 215 | 2.6 | % | ||||||||||||||
Adjusted EBITDAR | 2,308 | 20 | 2,328 | 2,206 | 30 | 2,236 | 92 | 4.1 | % |
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