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Segment Reporting

9 Months Ended

Sep. 30, 2019

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 September 30, 2019
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	292		$	781		$	58		$	—		$	1,131
Food and beverage ⁽¹⁾	250			156			5			—			411
Rooms ⁽¹⁾	284			123			2			—			409
Management fees	—			—			16			(1		)	15
Reimbursed management costs	—			1			52			—			53
Entertainment and other	113			54			11			(1		)	177
Total contract revenues	939			1,115			144			(2		)	2,196
Real estate leases ⁽²⁾	34			4			—			—			38
Other revenues	—			—			2			—			2
Net revenues	$	973		$	1,119		$	146		$	(2	)	$	2,236

Depreciation and amortization	$	121		$	103		$	31		$	—		$	255
Income/(loss) from operations	(155		)	194			(107		)	—			(68		)
Interest expense	(82		)	(143		)	(116		)	—			(341		)
Other income/(loss) ⁽³⁾	—			(2		)	29			—			27
Income tax benefit ⁽⁴⁾	—			—			22			—			22



	Three Months Ended September 30, 2018
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	249		$	789		$	64		$	—		$	1,102
Food and beverage	244			158			6			—			408
Rooms	271			124			—			—			395
Management fees	—			(2		)	18			—			16
Reimbursed management costs	—			1			50			—			51
Entertainment and other	106			52			12			(2		)	168
Total contract revenues	870			1,122			150			(2		)	2,140
Other revenues	40			3			2			—			45
Net revenues	$	910		$	1,125		$	152		$	(2	)	$	2,185

Depreciation and amortization	$	149		$	129		$	17		$	—		$	295
Income/(loss) from operations	141			172			(81		)	—			232
Interest expense	(87		)	(137		)	(117		)	—			(341		)
Other income ⁽³⁾	4			—			105			—			109
Income tax benefit ⁽⁴⁾	—			—			111			—			111

Condensed Statements of Operations - By Segment

	Nine Months Ended September 30, 2019
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	858		$	2,293		$	189		$	—		$	3,340
Food and beverage ⁽¹⁾	765			434			17			—			1,216
Rooms ⁽¹⁾	884			315			3			—			1,202
Management fees	—			—			46			(1		)	45
Reimbursed management costs	—			2			157			—			159
Entertainment and other	318			141			37			(3		)	493
Total contract revenues	2,825			3,185			449			(4		)	6,455
Real estate leases ⁽²⁾	105			8			1			—			114
Other revenues	—			—			4			—			4
Net revenues	$	2,930		$	3,193		$	454		$	(4	)	$	6,573

Depreciation and amortization	$	368		$	312		$	63		$	—		$	743
Income/(loss) from operations	336			468			(363		)	—			441
Interest expense	(248		)	(428		)	(357		)	—			(1,033		)
Other income/(loss) ⁽³⁾	2			(1		)	(413		)	—			(412		)
Income tax benefit ⁽⁴⁾	—			—			111			—			111



	Nine Months Ended September 30, 2018
(In millions)	Las Vegas			Other U.S.			All Other			Elimination			Caesars
Casino	$	817		$	2,143		$	187		$	—		$	3,147
Food and beverage	731			431			20			—			1,182
Rooms	833			315			2			—			1,150
Management fees	—			—			49			(3		)	46
Reimbursed management costs	—			2			149			—			151
Entertainment and other	312			134			35			(4		)	477
Total contract revenues	2,693			3,025			442			(7		)	6,153
Other revenues	111			8			4			—			123
Net revenues	$	2,804		$	3,033		$	446		$	(7	)	$	6,276

Depreciation and amortization	$	423		$	371		$	49		$	—		$	843
Income/(loss) from operations	535			389			(285		)	—			639
Interest expense	(245		)	(414		)	(346		)	—			(1,005		)
Other income ⁽³⁾	4			2			332			—			338
Income tax benefit ⁽⁴⁾	—			—			134			—			134

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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 $13 million and $42 million of variable rental income for the three and nine months ended September 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, and (iv) certain items that we do not consider indicative of its ongoing operating performance at an operating property level. Included in Adjusted EBITDA is property rent expense of $3 million and $9 million for the three and nine months ended September 30, 2019, respectively, related to certain land parcels leased from VICI.

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 September 30, 2019
(In millions)	Las Vegas			Other U.S.		All Other			Elimination		Caesars
Net income/(loss) attributable to Caesars	$	(237	)	$	49	$	(171	)	$	—	$	(359	)
Net loss attributable to noncontrolling interests	—			—		(1		)	—		(1		)
Income tax benefit ⁽¹⁾	—			—		(22		)	—		(22		)
Other (income)/loss ⁽²⁾	—			2		(29		)	—		(27		)
Interest expense	82			143		116			—		341
Depreciation and amortization	121			103		31			—		255
Impairment of tangible and other intangible assets	380			—		—			—		380
Other operating costs ⁽³⁾	7			4		22			—		33
Stock-based compensation expense	2			2		15			—		19
Other items ⁽⁴⁾	1			—		15			—		16
Adjusted EBITDA	$	356		$	303	$	(24	)	$	—	$	635



	Three Months Ended September 30, 2018
(In millions)	Las Vegas			Other U.S.		All Other			Elimination			Caesars
Net income attributable to Caesars	$	58		$	35	$	17		$	—		$	110
Net income attributable to noncontrolling interests	—			—		1			—			1
Income tax benefit ⁽¹⁾	—			—		(111		)	—			(111		)
Other income ⁽²⁾	(4		)	—		(105		)	—			(109		)
Interest expense	87			137		117			—			341
Depreciation and amortization	149			129		17			—			295
Other operating costs ⁽³⁾	13			6		11			(1		)	29
Stock-based compensation expense	2			2		13			—			17
Other items ⁽⁴⁾	2			1		23			1			27
Adjusted EBITDA	$	307		$	310	$	(17	)	$	—		$	600



	Nine Months Ended September 30, 2019
(In millions)	Las Vegas			Other U.S.		All Other			Elimination		Caesars
Net income/(loss) attributable to Caesars	$	90		$	39	$	(1,020	)	$	—	$	(891	)
Net loss attributable to noncontrolling interests	—			—		(2		)	—		(2		)
Income tax benefit ⁽¹⁾	—			—		(111		)	—		(111		)
Other (income)/loss ⁽²⁾	(2		)	1		413			—		412
Interest expense	248			428		357			—		1,033
Depreciation and amortization	368			312		63			—		743
Impairment of tangible and other intangible assets	380			—		50			—		430
Other operating costs ⁽³⁾	12			16		58			—		86
Stock-based compensation expense	6			7		49			—		62
Other items ⁽⁴⁾	3			2		55			—		60
Adjusted EBITDA	$	1,105		$	805	$	(88	)	$	—	$	1,822



	Nine Months Ended September 30, 2018
(In millions)	Las Vegas			Other U.S.			All Other			Elimination		Caesars
Net income/(loss) attributable to Caesars	$	294		$	(24	)	$	(165	)	$	—	$	105
Net income attributable to noncontrolling interests	—			1			—			—		1
Income tax benefit ⁽¹⁾	—			—			(134		)	—		(134		)
Other income ⁽²⁾	(4		)	(2		)	(332		)	—		(338		)
Interest expense	245			414			346			—		1,005
Depreciation and amortization	423			371			49			—		843
Other operating costs ⁽³⁾	42			13			73			—		128
Stock-based compensation expense	6			7			42			—		55
Other items ⁽⁴⁾	5			4			67			—		76
Adjusted EBITDA	$	1,011		$	784		$	(54	)	$	—	$	1,741

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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 (2018 only), 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

	September 30, 2019
(In millions)	Las Vegas		Other U.S.		All Other		Elimination			Caesars
Total assets	$	13,567	$	8,627	$	6,411	$	(3,130	)	$	25,475
Total liabilities	5,799		5,785		11,434		(10		)	23,008



	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