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Segment Reporting (Notes)

3 Months Ended

Mar. 31, 2019

Segment Reporting

We view each property as an operating segment and aggregate such properties into three regionally-focused reportable segments: (i) Las Vegas, (ii) Other U.S. and (iii) All Other, which is consistent with how we manage the business.

The results of each reportable segment presented below are consistent with the way management assesses these results and allocates resources, which is a consolidated view that adjusts for the effect of certain transactions between reportable segments within Caesars. We recast previously reported segment amounts to conform to the way management assesses results and allocates resources for the current year. Net revenues are presented disaggregated by category for contract revenues separate from other revenues by segment.

“All Other” includes managed, international and other properties as well as parent and other adjustments to reconcile to consolidated Caesars results.

Condensed Statements of Operations - By Segment

	Three Months Ended March 31, 2019
(In millions)	Las Vegas			Other U.S.			All Other			Elimination		Caesars
Casino	$	274		$	744		$	65		$	—	$	1,083
Food and beverage ⁽¹⁾	255			137			6			—		398
Rooms ⁽¹⁾	299			86			1			—		386
Management fees	—			—			15			—		15
Reimbursed management costs	—			1			51			—		52
Entertainment and other	94			40			11			—		145
Total contract revenues	922			1,008			149			—		2,079
Real estate leases ⁽²⁾	33			2			—			—		35
Other revenues	—			—			1			—		1
Net revenues	$	955		$	1,010		$	150		$	—	$	2,115

Depreciation and amortization	$	128		$	103		$	16		$	—	$	247
Income/(loss) from operations	226			116			(102		)	—		240
Interest expense	(83		)	(143		)	(123		)	—		(349		)
Other loss ⁽³⁾	—			—			(138		)	—		(138		)
Income tax benefit ⁽⁴⁾	—			—			29			—		29



	Three Months Ended March 31, 2018
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	257		$	663		$	63		$	—		$	983
Food and beverage	242			134			7			—			383
Rooms	280			86			1			—			367
Management fees	—			1			16			(2		)	15
Reimbursed management costs	—			1			51			—			52
Entertainment and other	92			39			7			(1		)	137
Total contract revenues	871			924			145			(3		)	1,937
Other revenues	32			2			1			—			35
Net revenues ⁽⁵⁾	$	903		$	926		$	146		$	(3	)	$	1,972

Depreciation and amortization	$	142		$	121		$	17		$	—		$	280
Income/(loss) from operations	148			86			(109		)	—			125
Interest expense	(78		)	(138		)	(114		)	—			(330		)
Other income ⁽³⁾	2			2			180			—			184
Income tax provision ⁽⁴⁾	—			—			(13		)	—			(13		)

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⁽¹⁾	As a result of the adoption of ASC 842, as of January 1, 2019, revenue generated from the lease components of lodging arrangements and conventions are no longer considered contract revenue under ASC 606, Revenue from Contracts with Customers. A portion of these balances relate to lease revenues under ASC 842. See Note 7 for further details.


⁽²⁾	Real estate leases revenue includes $14 million of variable rental income.


⁽³⁾	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.


⁽⁴⁾	Taxes are recorded at the consolidated level and not estimated or recorded to our Las Vegas and Other U.S. segments.


⁽⁵⁾	Certain prior year amounts have been reclassified to conform to the current year presentation of our reportable segments.

Adjusted EBITDA - By Segment

Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) is presented as a measure of the Company’s performance. Adjusted EBITDA is defined as revenues less operating expenses and is comprised of net income/(loss) before (i) interest expense, net of interest capitalized and interest income, (ii) income tax (benefit)/provision, (iii) depreciation and amortization, (iv) corporate expenses, and (v) certain items that we do not consider indicative of its ongoing operating performance at an operating property level.

In evaluating Adjusted EBITDA you should be aware that, in the future, we may incur expenses that are the same or similar to some of the adjustments in this presentation. The presentation of Adjusted EBITDA should not be construed as an inference that future results will be unaffected by unusual or unexpected items.

Adjusted EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net income/(loss) as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies within the industry. Adjusted EBITDA is included because management uses Adjusted EBITDA to measure performance and allocate resources, and believes that Adjusted EBITDA provides investors with additional information consistent with that used by management.



	Three Months Ended March 31, 2019
(In millions)	Las Vegas		Other U.S.			All Other			Elimination		Caesars
Net income/(loss) attributable to Caesars	$	143	$	(26	)	$	(334	)	$	—	$	(217	)
Net loss attributable to noncontrolling interests	—		(1		)	—			—		(1		)
Income tax benefit ⁽¹⁾	—		—			(29		)	—		(29		)
Other loss ⁽²⁾	—		—			138			—		138
Interest expense	83		143			123			—		349
Depreciation and amortization	128		103			16			—		247
Other operating costs ⁽³⁾	3		12			14			—		29
Stock-based compensation expense	2		2			17			—		21
Other items ⁽⁴⁾	1		—			24			—		25
Adjusted EBITDA	$	360	$	233		$	(31	)	$	—	$	562



	Three Months Ended March 31, 2018
(In millions)	Las Vegas			Other U.S.			All Other			Elimination		Caesars
Net income/(loss) attributable to Caesars	$	72		$	(50	)	$	(56	)	$	—	$	(34	)
Income tax provision ⁽¹⁾	—			—			13			—		13
Other income ⁽²⁾	(2		)	(2		)	(180		)	—		(184		)
Interest expense	78			138			114			—		330
Depreciation and amortization	142			121			17			—		280
Other operating costs ⁽³⁾	28			6			32			—		66
Stock-based compensation expense	2			2			14			—		18
Other items ⁽⁴⁾	1			1			27			—		29
Adjusted EBITDA	$	321		$	216		$	(19	)	$	—	$	518

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⁽¹⁾	Taxes are recorded at the consolidated level and not estimated or recorded to our Las Vegas and Other U.S. segments.


⁽²⁾	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.

⁽³⁾

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, weather related property closure costs, severance costs, gains and losses on asset sales, demolition costs primarily at our Las Vegas properties for renovations, and project opening costs.


⁽⁴⁾	Amounts include other add-backs and deductions to arrive at Adjusted EBITDA but not separately identified such as professional and consulting services, sign-on and retention bonuses, business optimization expenses and transformation expenses, severance and relocation costs, litigation awards and settlements, and permit remediation costs.

Condensed Balance Sheets - By Segment

	March 31, 2019
(In millions)	Las Vegas		Other U.S.		All Other		Elimination			Caesars
Total assets	$	13,978	$	8,690	$	6,496	$	(3,128	)	$	26,036
Total liabilities	5,771		5,735		11,416		(8		)	22,914



	December 31, 2018
(In millions)	Las Vegas		Other U.S.		All Other		Elimination			Caesars
Total assets	$	13,987	$	8,565	$	6,046	$	(2,823	)	$	25,775
Total liabilities	5,730		5,143		11,267		297			22,437