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Segment Reporting (Notes)

6 Months Ended

Jun. 30, 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 June 30, 2019
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	292		$	768		$	66		$	—		$	1,126
Food and beverage ⁽¹⁾	260			141			6			—			407
Rooms ⁽¹⁾	301			106			—			—			407
Management fees	—			—			15			—			15
Reimbursed management costs	—			—			54			—			54
Entertainment and other	111			47			15			(2		)	171
Total contract revenues	964			1,062			156			(2		)	2,180
Real estate leases ⁽²⁾	38			2			1			—			41
Other revenues	—			—			1			—			1
Net revenues	$	1,002		$	1,064		$	158		$	(2	)	$	2,222

Depreciation and amortization	$	119		$	106		$	16		$	—		$	241
Income/(loss) from operations	265			158			(154		)	—			269
Interest expense	(83		)	(142		)	(118		)	—			(343		)
Other income/(loss) ⁽³⁾	2			1			(304		)	—			(301		)
Income tax benefit ⁽⁴⁾	—			—			60			—			60



	Three Months Ended June 30, 2018
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	311		$	691		$	60		$	—		$	1,062
Food and beverage	246			138			7			—			391
Rooms	282			105			1			—			388
Management fees	—			1			15			(1		)	15
Reimbursed management costs	—			1			47			—			48
Entertainment and other	114			43			16			(1		)	172
Total contract revenues	953			979			146			(2		)	2,076
Other revenues	39			3			1			—			43
Net revenues	$	992		$	982		$	147		$	(2	)	$	2,119

Depreciation and amortization	$	132		$	121		$	15		$	—		$	268
Income/(loss) from operations	246			131			(95		)	—			282
Interest expense	(80		)	(139		)	(115		)	—			(334		)
Other income/(loss) ⁽³⁾	(2		)	—			47			—			45
Income tax benefit ⁽⁴⁾	—			—			36			—			36

Condensed Statements of Operations - By Segment

	Six Months Ended June 30, 2019
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	566		$	1,512		$	131		$	—		$	2,209
Food and beverage ⁽¹⁾	515			278			12			—			805
Rooms ⁽¹⁾	600			192			1			—			793
Management fees	—			—			30			—			30
Reimbursed management costs	—			1			105			—			106
Entertainment and other	205			87			26			(2		)	316
Total contract revenues	1,886			2,070			305			(2		)	4,259
Real estate leases ⁽²⁾	71			4			1			—			76
Other revenues	—			—			2			—			2
Net revenues	$	1,957		$	2,074		$	308		$	(2	)	$	4,337

Depreciation and amortization	$	247		$	209		$	32		$	—		$	488
Income/(loss) from operations	491			274			(256		)	—			509
Interest expense	(166		)	(285		)	(241		)	—			(692		)
Other income/(loss) ⁽³⁾	2			1			(442		)	—			(439		)
Income tax benefit ⁽⁴⁾	—			—			89			—			89



	Six Months Ended June 30, 2018
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	568		$	1,354		$	123		$	—		$	2,045
Food and beverage	487			273			14			—			774
Rooms	562			191			2			—			755
Management fees	—			2			31			(3		)	30
Reimbursed management costs	—			1			99			—			100
Entertainment and other	206			82			23			(2		)	309
Total contract revenues	1,823			1,903			292			(5		)	4,013
Other revenues	71			5			2			—			78
Net revenues	$	1,894		$	1,908		$	294		$	(5	)	$	4,091

Depreciation and amortization	$	274		$	242		$	32		$	—		$	548
Income/(loss) from operations	394			217			(204		)	—			407
Interest expense	(158		)	(277		)	(229		)	—			(664		)
Other income ⁽³⁾	—			2			227			—			229
Income tax benefit ⁽⁴⁾	—			—			23			—			23

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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 $15 million and $29 million of variable rental income for the three and six months ended June 30, 2019, respectively.


⁽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.

Adjusted EBITDA - By Segment

Adjusted 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 June 30, 2019
(In millions)	Las Vegas			Other U.S.			All Other			Elimination		Caesars
Net income/(loss) attributable to Caesars	$	184		$	16		$	(515	)	$	—	$	(315	)
Net income/(loss) attributable to noncontrolling interests	—			1			(1		)	—		—
Income tax benefit ⁽¹⁾	—			—			(60		)	—		(60		)
Other income/(loss) ⁽²⁾	(2		)	(1		)	304			—		301
Interest expense	83			142			118			—		343
Depreciation and amortization	119			106			16			—		241
Impairment of intangible assets	—			—			50			—		50
Other operating costs ⁽³⁾	2			—			22			—		24
Stock-based compensation expense	2			3			17			—		22
Other items ⁽⁴⁾	1			3			21			—		25
Adjusted EBITDA	$	389		$	270		$	(28	)	$	—	$	631



	Three Months Ended June 30, 2018
(In millions)	Las Vegas		Other U.S.			All Other			Elimination			Caesars
Net income/(loss) attributable to Caesars	$	164	$	(9	)	$	(126	)	$	—		$	29
Net income/(loss) attributable to noncontrolling interests	—		1			(1		)	—			—
Income tax benefit ⁽¹⁾	—		—			(36		)	—			(36		)
Other (income)/loss ⁽²⁾	2		—			(47		)	—			(45		)
Interest expense	80		139			115			—			334
Depreciation and amortization	132		121			15			—			268
Other operating costs ⁽³⁾	1		1			30			1			33
Stock-based compensation expense	2		3			15			—			20
Other items ⁽⁴⁾	2		2			17			(1		)	20
Adjusted EBITDA	$	383	$	258		$	(18	)	$	—		$	623



	Six Months Ended June 30, 2019
(In millions)	Las Vegas			Other U.S.			All Other			Elimination		Caesars
Net income/(loss) attributable to Caesars	$	327		$	(10	)	$	(849	)	$	—	$	(532	)
Net loss attributable to noncontrolling interests	—			—			(1		)	—		(1		)
Income tax benefit ⁽¹⁾	—			—			(89		)	—		(89		)
Other (income)/loss ⁽²⁾	(2		)	(1		)	442			—		439
Interest expense	166			285			241			—		692
Depreciation and amortization	247			209			32			—		488
Impairment of intangible assets	—			—			50			—		50
Other operating costs ⁽³⁾	5			12			36			—		53
Stock-based compensation expense	4			5			34			—		43
Other items ⁽⁴⁾	2			3			45			—		50
Adjusted EBITDA	$	749		$	503		$	(59	)	$	—	$	1,193



	Six Months Ended June 30, 2018
(In millions)	Las Vegas		Other U.S.			All Other			Elimination			Caesars
Net income/(loss) attributable to Caesars	$	236	$	(59	)	$	(182	)	$	—		$	(5	)
Net income/(loss) attributable to noncontrolling interests	—		1			(1		)	—			—
Income tax benefit ⁽¹⁾	—		—			(23		)	—			(23		)
Other income ⁽²⁾	—		(2		)	(227		)	—			(229		)
Interest expense	158		277			229			—			664
Depreciation and amortization	274		242			32			—			548
Other operating costs ⁽³⁾	29		7			62			1			99
Stock-based compensation expense	4		5			29			—			38
Other items ⁽⁴⁾	3		3			44			(1		)	49
Adjusted EBITDA	$	704	$	474		$	(37	)	$	—		$	1,141

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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.

Condensed Balance Sheets - By Segment

	June 30, 2019
(In millions)	Las Vegas		Other U.S.		All Other		Elimination			Caesars
Total assets	$	14,051	$	8,666	$	6,548	$	(3,129	)	$	26,136
Total liabilities	5,842		5,748		11,747		(9		)	23,328



	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