EX-99.1 2 a2019q4cecex991earningsrel.htm EXHIBIT 99.1 2019 Q4 CEC Ex 99.1 Earnings Release


Exhibit 99.1

a2015q4ceccaesarslogoa20.jpg
Contact:
 
Media
 
Investors
 
 
Richard Broome
 
Joyce Arpin
 
 
(702) 407-6476
 
(702) 880-4707  
Caesars Entertainment Reports Fourth Quarter and Full Year 2019 Results
Received Stockholder Approval for Merger with Eldorado Resorts
Closed Previously Announced Sale of Rio Las Vegas to Dreamscape
Announced Sale of Harrah’s Reno to CAI Investments
Expanded Caesars-branded Sportsbooks to 29 Locations in Seven States
LAS VEGAS, February 25, 2020 - Caesars Entertainment Corporation (NASDAQ: CZR) (“CEC,” “Caesars,” “Caesars Entertainment,” or the “Company”) today reported fourth quarter and full-year 2019 results as summarized in the discussion below, which highlights certain GAAP and non-GAAP financial measures on a consolidated basis.
Fourth Quarter Highlights
•
Fourth quarter net revenues increased 2.6%, or $54 million, from $2.12 billion to $2.17 billion.
•
Fourth quarter income from operations increased 77.0%, or $77 million, from $100 million to $177 million.
•
Fourth quarter net income/(loss) decreased $502 million, from income of $198 million to a loss of $304 million.
•
Non-GAAP adjusted EBITDA increased 2.8%, or $16 million, from $567 million to $583 million.
•
Non-GAAP adjusted EBITDA, excluding Rio, increased 3.4%, or $19 million, to $572 million.
Full Year Highlights
•
Full year net revenues increased 4.2%, or $351 million, from $8.39 billion to $8.74 billion.
•
Full year income from operations decreased 16.4%, or $121 million, from $739 million to $618 million.
•
Full year net income/(loss) decreased $1.50 billion, from income of $303 million to a loss of $1.20 billion.
•
Non-GAAP adjusted EBITDA increased 4.2%, or $97 million, from $2.31 billion to $2.41 billion.
“Caesars Entertainment delivered another quarter of solid operational performance,” said Tony Rodio, President and Chief Executive Officer of Caesars Entertainment. “Caesars’ results were largely driven by the strong demand at our Las Vegas properties, excellent cost controls, and the addition of sports betting in several states which drove increased visitation. In addition, our focus on costs and operating efficiencies across the company contributed to the excellent performance.” he added.
Additional Developments
Completed Sale of the Rio All-Suite Hotel & Casino
On December 5, 2019, the Company announced it has completed the previously announced sale of the Rio All-Suite Hotel & Casino for $516.3 million. Caesars will continue to manage and operate the Rio for a minimum of two years through a lease agreement, and the property will remain part of the Caesars Rewards network during the term of the lease.

1


Stockholders Approve Merger of Caesars Entertainment and Eldorado Resorts
On November 15, 2019, Caesars Entertainment and Eldorado Resorts, Inc. announced that at separate Special Meetings of Stockholders, their respective stockholders approved certain actions in connection with the Company’s proposed merger with Eldorado Resorts, Inc. (the “Merger”). The transaction is expected to be consummated in the first half of 2020 and remains subject to the receipt of certain regulatory gaming and other approvals, and other closing conditions.
Sale of Harrah’s Reno
On January 15, 2020, Caesars Entertainment and VICI Properties Inc. announced an agreement to sell Harrah’s Reno for $50 million. The proceeds of the transaction shall be split 75% to VICI and 25% to Caesars. Under the terms of the agreement, Caesars will continue to operate the property upon closing of the transaction, which will allow Caesars to cease operations at the property during the second half of 2020.
Basis of Presentation
Certain additional non-GAAP financial measures have been added to highlight the results of the Company. “Hold adjusted” results are adjusted to reflect the hold we achieved compared to the hold we expected. See the table at the end of this press release for the reconciliation of non-GAAP to GAAP presentations.
This release also includes the indicators ADR and RevPAR. See Supplemental Information in this release for information regarding how we define ADR and RevPAR. Our definition and calculation of ADR and RevPAR may be different than the definition and calculation of similarly titled indicators presented by other companies.
Financial Results
Caesars views each property as an operating segment and aggregates such properties into three regionally-focused reportable segments: (i) Las Vegas, (ii) Other U.S. and (iii) All Other, which is consistent with how Caesars manages 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. “All Other” includes managed, international and other properties as well as parent and other adjustments to reconcile to consolidated Caesars results.
Net Revenues
 
Three Months Ended December 31,
 
Years Ended December 31,
(Dollars in millions)
2019
 
2018
 
$ Change
 
% Change
 
2019
 
2018
 
$ Change
 
% Change
Las Vegas
$
989

 
$
949

 
$
40

 
4.2
 %
 
$
3,919

 
$
3,753

 
$
166

 
4.4
%
Other U.S.
1,032

 
1,014

 
18

 
1.8
 %
 
4,225

 
4,047

 
178

 
4.4
%
All Other
148

 
152

 
(4
)
 
(2.6
)%
 
598

 
591

 
7

 
1.2
%
Caesars
$
2,169

 
$
2,115

 
$
54

 
2.6
 %
 
$
8,742

 
$
8,391

 
$
351

 
4.2
%
During the fourth quarter of 2019, net revenues increased $54 million as compared to 2018 driven by growth in all business verticals, with significant growth in Las Vegas due to healthy consumer demand and a higher cash customer mix. Other U.S. net revenues increased $18 million year over year primarily due to growth in Iowa and Indiana as a result of our new sportsbooks and better results in Atlantic City. All Other net revenues decreased $4 million year over year, primarily due to lower gaming volumes in the UK, offset by one-time payments to CIE for early terminations of WSOP licensing agreements. Across all of our casino properties, hold had a favorable impact of $5 million to $10 million this quarter compared to the prior year, and was $10 million to $15 million above our expectations.
During the year ended December 31, 2019, net revenues increased $351 million as compared to 2018 driven primarily by the acquisition of Centaur in July 2018, strong Las Vegas results and favorable hold. These positive factors were offset by lower gaming volume at our Atlantic City properties as a result of increased competition and inclement weather across some of our properties. Across all of our casino properties, hold had a favorable impact of $60 million to $65 million this year compared to the prior year and was $30 million to $35 million above our expectations.

2


Income from Operations
 
Three Months Ended December 31,
 
Years Ended December 31,
(Dollars in millions)
2019
 
2018
 
$ Change
 
% Change
 
2019
 
2018
 
$ Change
 
% Change
Las Vegas
$
224

 
$
181

 
$
43

 
23.8
%
 
$
560

 
$
716

 
$
(156
)
 
(21.8
)%
Other U.S.
57

 
45

 
12

 
26.7
%
 
525

 
434

 
91

 
21.0
 %
All Other
(104
)
 
(126
)
 
22

 
17.5
%
 
(467
)
 
(411
)
 
(56
)
 
(13.6
)%
Caesars
$
177

 
$
100

 
$
77

 
77.0
%
 
$
618

 
$
739

 
$
(121
)
 
(16.4
)%
During the fourth quarter of 2019, income from operations increased $77 million primarily due to a $54 million increase in net revenues in the fourth quarter of 2019 compared with 2018, as explained above. The decrease in operating expenses of $23 million also contributed to the increase of income from operations. The decrease in operating expenses was primarily due to a decrease in depreciation and amortization expense of $24 million, due to high accelerated depreciation in 2018 related to certain renovation projects in 2018, and lower impairment charges related to goodwill compared to 2018 and lower impairment charges related to tangible and other intangible assets related to Horseshoe Hammond in 2019. These decreases were partially offset by an increase in property, general, administrative and other primarily due to expenses related to payroll and our sports partnerships.
During the year ended December 31, 2019, income from operations decreased $121 million compared with 2018 due to an increase in operating expenses of $472 million offset by an increase in net revenue of $351 million in 2019 compared with 2018, as explained above. Operating expenses increased $223 million as a result of our acquisition of Centaur in 2018. Impairment of tangible and other intangible assets increased by $406 million due to the recognition of impairment charges in 2019 related to land and buildings and gaming rights. These increases were partially offset by a decrease of $151 million in depreciation and amortization expense, excluding Centaur, primarily due to higher depreciation expense in 2018 from disposals of property and equipment related to renovation projects at certain Las Vegas properties and accelerated depreciation of assets.
Net Income/(Loss) Attributable to Caesars
 
Three Months Ended December 31,
 
Years Ended December 31,
(Dollars in millions)
2019
 
2018
 
$ Change
 
% Change
 
2019
 
2018
 
$ Change
 
% Change
Las Vegas
$
139

 
$
98

 
$
41

 
41.8
%
 
$
229

 
$
392

 
$
(163
)
 
(41.6
)%
Other U.S.
(85
)
 
(98
)
 
13

 
13.3
%
 
(46
)
 
(122
)
 
76

 
62.3
 %
All Other
(358
)
 
198

 
(556
)
 
*

 
(1,378
)
 
33

 
(1,411
)
 
*

Caesars
$
(304
)
 
$
198

 
$
(502
)
 
*

 
$
(1,195
)
 
$
303

 
$
(1,498
)
 
*

____________________
* Percentage is not meaningful.
During the fourth quarter of 2019, net income/(loss) attributable to Caesars decreased $502 million from net income of $198 million to net loss of $304 million due to an increase in other loss of $627 million primarily due to a change in the fair value of the derivative liability related to the conversion option of CEC’s 5.00% convertible senior notes maturing in 2024 (the “CEC Convertible Notes”), offset by an increase of $43 million in tax benefit and an increase of $77 million in income from operations, as explained above.
During the year ended December 31, 2019, net income/(loss) attributable to Caesars decreased $1.5 billion from net income of $303 million to net loss of $1.2 billion due to an increase in other loss of $1.38 billion primarily due to a year over year change in the fair value of the derivative liability related to the CEC Convertible Notes. In addition, a $44 million change in the fair value of disputed claims liability related to Caesars Entertainment Operating Company, Inc.’s emergence from bankruptcy in 2017, and an increase in interest expense of $24 million as a result of our failed sale-leaseback financing obligations also contributed to the decrease of net income/(loss) attributable to Caesars. Income from operations also decreased $121 million in 2019 compared with 2018, as explained above. These were partially offset by an increase of $20 million in tax benefit.

3


Adjusted EBITDA (1) 
 
Three Months Ended December 31,
 
Years Ended December 31,
(Dollars in millions)
2019
 
2018
 
$ Change
 
% Change
 
2019
 
2018
 
$ Change
 
% Change
Las Vegas
$
363

 
$
351

 
$
12

 
3.4
 %
 
$
1,468

 
$
1,362

 
$
106

 
7.8
 %
Other U.S.
247

 
230

 
17

 
7.4
 %
 
1,052

 
1,014

 
38

 
3.7
 %
All Other
(27
)
 
(14
)
 
(13
)
 
(92.9
)%
 
(115
)
 
(68
)
 
(47
)
 
(69.1
)%
Caesars
$
583

 
$
567

 
$
16

 
2.8
 %
 
$
2,405

 
$
2,308

 
$
97

 
4.2
 %
____________________
(1) See the Reconciliation of Net Income/(Loss) Attributable to Caesars Entertainment Corporation to Adjusted EBITDA.
During the fourth quarter of 2019, adjusted EBITDA improved $16 million as compared to 2018 driven primarily by the increase in revenues explained above and excellent cost controls across the properties and corporate office, including a reduction in payroll and professional services expenses. This increase was offset by continued investments in sports sponsorships. Across all of our casinos, hold had a favorable impact of $0 to $5 million year over year and was $5 million to $10 million above our expectations. Excluding the performance at Rio, adjusted EBITDA improved $19 million to $572 million as compared to 2018.
During the year ended December 31, 2019, adjusted EBITDA improved $97 million as compared to 2018 due to strong Las Vegas results and the acquisition of Centaur in July 2018, offset by competition in Atlantic City and increased investments in sports sponsorships. Across all of our casinos, hold had a favorable impact of $40 million to $45 million year over year and was $20 million to $25 million above our expectations.
Cash and Available Revolver Capacity
(In millions)
December 31, 2019
Cash and cash equivalents
$
1,755

Revolver capacity
1,200

Revolver capacity committed to letters of credit
(64
)
Total liquidity
$
2,891

Conference Call Information
Caesars Entertainment Corporation (NASDAQ: CZR) will host a conference call at 2:00 p.m. Pacific Time Tuesday, February 25, 2020, to discuss its fourth quarter and full year results, certain forward-looking information and other matters related to Caesars Entertainment Corporation, including certain financial and other information. The press release, webcast, and presentation materials will be available on the Investor Relations section of www.caesars.com.
If you would like to ask questions and be an active participant in the call, you may dial 877-637-3676, or 832-412-1752 for international callers, and enter Conference ID 9679718 approximately 10 minutes before the call start time. A recording of the live call will be available on the Company’s website for 90 days after the event. Supplemental materials have been posted on the Caesars Entertainment Investor Relations website at http://investor.caesars.com/events-and-presentations.
About Caesars
Caesars Entertainment is one of the world’s most diversified casino-entertainment providers and the most geographically diverse U.S. casino-entertainment company. Since its beginning in Reno, Nevada, in 1937, Caesars Entertainment has grown through development of new resorts, expansions and acquisitions. Caesars Entertainment’s resorts operate primarily under the Caesars®, Harrah’s® and Horseshoe® brand names. Caesars Entertainment’s portfolio also includes the Caesars Entertainment UK family of casinos. Caesars Entertainment is focused on building loyalty and value with its guests through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. Caesars Entertainment is committed to its employees, suppliers, communities and the environment through its PEOPLE PLANET PLAY framework. For more information, please visit www.caesars.com/corporate.
Forward Looking Information
This release includes “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. We have based these forward-looking statements on our current expectations about future events. Further, these statements contain words such as “may,” “will,” “project,” ” “expect,” “believe,” “anticipate,” “intend,” “continue,” or “plan,” or

4


the negative of these words or other words or expressions of similar meaning may identify forward-looking statements. In particular, they include statements relating to, among other things, the Merger, future actions, new projects, strategies, future performance, the outcomes of contingencies, such as legal proceedings, and future financial results of Caesars. These forward-looking statements are based on current expectations and projections about future events.
Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified, and, consequently, the actual performance of Caesars Entertainment may differ materially from that expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, and other factors described from time to time in Caesars Entertainment’s reports filed with the Securities and Exchange Commission (including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein):
•
risks related to the Merger, including, but not limited to: (1) the inability to complete the Merger due to the failure to satisfy certain conditions to completion of the Merger, including the receipt of certain gaming and other regulatory approvals related to the Merger; (2) uncertainties as to the timing of the completion of the Merger and the ability of each party to complete the Merger; (3) disruption of our current plans and operations; (4) the inability to retain and hire key personnel; (5) competitive responses to the Merger; (6) termination fees and unexpected costs, charges or expenses resulting from the Merger; (7) the outcome of any legal proceedings instituted against us or our directors related to the Merger Agreement; (8) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; (9) the inability to obtain, or delays in obtaining, cost savings and synergies from the Merger; (10) delays, challenges and expenses associated with integrating the combined companies’ existing businesses and the indebtedness planned to be incurred in connection with the Merger; and (11) legislative, regulatory and economic developments;
•
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 Holdings, LLC;
•
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;
•
foreign regulatory policies, particularly in mainland China or other countries in which our customers reside or where we have operations, including restrictions on foreign currency exchange or importation of currency, and the judicial enforcement of gaming debts;
•
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 or divestitures;
•
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;

5


•
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;
•
our ability to attract, retain, and motivate employees, including in connection with the Merger;
•
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 (such as the outcome of the British Gambling Commission’s review of CEUK operations), and fines and taxation;
•
acts of war or terrorist incidents, disease, 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;

6


•
access to insurance for our assets on reasonable terms; and
•
the impact, if any, of unfunded pension benefits under multi-employer pension plans.
Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Caesars Entertainment disclaims any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated or, if no date is stated, as of the date of this release.


7


CAESARS ENTERTAINMENT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

 
Three Months Ended December 31,
 
Years Ended December 31,
(In millions, except per share data)
2019
 
2018
 
2019
 
2018
Revenues
 
 
 
 
 
 
 
Casino
$
1,108

 
$
1,100

 
$
4,448

 
$
4,247

Food and beverage
402

 
392

 
1,618

 
1,574

Rooms
379

 
369

 
1,581

 
1,519

Other revenue
213

 
189

 
824

 
789

Management fees
14

 
14

 
59

 
60

Reimbursed management costs
53

 
51

 
212

 
202

Net revenues
2,169

 
2,115

 
8,742

 
8,391

Operating expenses
 
 
 
 
 
 
 
Direct
 
 
 
 
 
 
 
Casino
624

 
630

 
2,511

 
2,380

Food and beverage
280

 
276

 
1,113

 
1,092

Rooms
122

 
117

 
486

 
472

Property, general, administrative, and other
478

 
439

 
1,882

 
1,796

Reimbursable management costs
53

 
51

 
212

 
202

Depreciation and amortization
278

 
302

 
1,021

 
1,145

Impairment of goodwill
27

 
43

 
27

 
43

Impairment of tangible and other intangible assets
11

 
35

 
441

 
35

Corporate expense
69

 
95

 
295

 
332

Other operating costs
50

 
27

 
136

 
155

Total operating expenses
1,992

 
2,015

 
8,124

 
7,652

Income from operations
177

 
100

 
618

 
739

Interest expense
(337
)
 
(341
)
 
(1,370
)
 
(1,346
)
Loss on extinguishment of debt
—

 
—

 
—

 
(1
)
Other income/(loss)
(175
)
 
452

 
(587
)
 
791

Income/(loss) before income taxes
(335
)
 
211

 
(1,339
)
 
183

Income tax benefit/(provision)
30

 
(13
)
 
141

 
121

Net income/(loss)
(305
)
 
198

 
(1,198
)
 
304

Net (income)/loss attributable to noncontrolling interests
1

 
—

 
3

 
(1
)
Net income/(loss) attributable to Caesars
$
(304
)
 
$
198

 
$
(1,195
)
 
$
303

 
 
 
 
 
 
 
 
Earnings/(loss) per share - basic and diluted
 
 
 
 
 
 
 
Basic earnings/(loss) per share
$
(0.45
)
 
$
0.29

 
$
(1.77
)
 
$
0.44

Diluted loss per share
(0.45
)
 
(0.15
)
 
(1.77
)
 
(0.25
)



8


CAESARS ENTERTAINMENT CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)

 
As of December 31,
(In millions)
2019
 
2018
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents ($8 and $14 attributable to our VIEs)
$
1,755

 
$
1,491

Restricted cash
117

 
115

Receivables, net
437

 
457

Due from affiliates, net
41

 
6

Prepayments and other current assets ($4 and $6 attributable to our VIEs)
174

 
155

Inventories
35

 
41

Assets held for sale
50

 
—

Total current assets
2,609

 
2,265

Property and equipment, net ($212 and $137 attributable to our VIEs)
14,976

 
16,045

Goodwill
4,012

 
4,044

Intangible assets other than goodwill
2,824

 
2,977

Restricted cash
12

 
51

Deferred income taxes
2

 
10

Deferred charges and other assets ($26 and $35 attributable to our VIEs)
910

 
383

Total assets
$
25,345

 
$
25,775

 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable ($97 and $41 attributable to our VIEs)
$
444

 
$
399

Accrued expenses and other current liabilities ($2 and $1 attributable to our VIEs)
1,323

 
1,217

Interest payable
33

 
56

Contract liabilities
178

 
144

Current portion of financing obligations
21

 
20

Current portion of long-term debt
64

 
164

Total current liabilities
2,063

 
2,000

Financing obligations
10,070

 
10,057

Long-term debt
8,478

 
8,801

Deferred income taxes
555

 
730

Deferred credits and other liabilities ($18 and $5 attributable to our VIEs)
1,968

 
849

Total liabilities
23,134

 
22,437

Stockholders’ equity
 
 
 
Common stock
7

 
7

Treasury stock
(510
)
 
(485
)
Additional paid-in capital
14,262

 
14,124

Accumulated deficit
(11,567
)
 
(10,372
)
Accumulated other comprehensive loss
(61
)
 
(24
)
Total Caesars stockholders’ equity
2,131

 
3,250

Noncontrolling interests
80

 
88

Total stockholders’ equity
2,211

 
3,338

Total liabilities and stockholders’ equity
$
25,345

 
$
25,775


9


CAESARS ENTERTAINMENT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 
Years Ended December 31,
(In millions)
2019
 
2018
Cash flows from operating activities
 
 
 
Net income/(loss)
$
(1,198
)
 
$
304

Adjustments to reconcile net income/(loss) to cash flows from operating activities:
 
 
 
Interest accrued on financing obligations
131

 
142

Deferred income taxes
(152
)
 
(145
)
Depreciation and amortization
1,021

 
1,145

Loss on extinguishment of debt
—

 
1

Change in fair value of derivative liability
620

 
(697
)
Operating lease expense
35

 
—

Stock-based compensation expense
88

 
79

Amortization of deferred finance costs and debt discount/premium
17

 
15

Provision for doubtful accounts
26

 
21

Impairment of goodwill
27

 
43

Impairment of intangible and tangible assets
441

 
35

Other non-cash adjustments to net income/(loss)
17

 
(28
)
Net changes in:
 
 
 
Accounts receivable
(9
)
 
14

Due from affiliates, net
(35
)
 
5

Inventories, prepayments and other current assets
(14
)
 
76

Deferred charges and other assets
20

 
(69
)
Accounts payable
6

 
(78
)
Interest payable
(24
)
 
19

Accrued expenses
11

 
(101
)
Contract liabilities
47

 
18

Operating lease liability
(34
)
 
—

Deferred credits and other liabilities
(42
)
 
(6
)
Other
8

 
(7
)
Cash flows provided by operating activities
1,007

 
786

Cash flows from investing activities
 
 
 
Acquisition of property and equipment, net of change in related payables
(829
)
 
(565
)
Acquisition of businesses, net of cash and restricted cash acquired
—

 
(1,578
)
Proceeds from sale of Rio
470

 
—

Payments to acquire certain gaming rights
—

 
(20
)
Payments to acquire investments
(13
)
 
(22
)
Proceeds from the sale and maturity of investments
32

 
43

Other
12

 
7

Cash flows used in investing activities
(328
)
 
(2,135
)

10


 
Years Ended December 31,
(In millions)
2019
 
2018
Cash flows from financing activities
 
 
 
Proceeds from long-term debt and revolving credit facilities
—

 
1,167

Debt issuance and extension costs and fees
(28
)
 
(5
)
Repayments of long-term debt and revolving credit facilities
(414
)
 
(1,130
)
Proceeds from sale-leaseback financing arrangement
—

 
745

Proceeds from the issuance of common stock
47

 
6

Repurchase of common stock
—

 
(311
)
Taxes paid related to net share settlement of equity awards
(28
)
 
(22
)
Financing obligation payments
(22
)
 
(173
)
Contributions from noncontrolling interest owners
—

 
20

Distributions to noncontrolling interest owners
(1
)
 
—

Cash flows provided by/(used in) financing activities
(446
)
 
297

 
 
 
 
Change in cash, cash equivalents, and restricted cash classified as assets held for sale
(6
)
 
—

 
 
 
 
Net increase/(decrease) in cash, cash equivalents, and restricted cash
227

 
(1,052
)
Cash, cash equivalents, and restricted cash, beginning of period
1,657

 
2,709

Cash, cash equivalents, and restricted cash, end of period
$
1,884

 
$
1,657

 
 
 
 
Supplemental Cash Flow Information
 
 
 
Cash paid for interest
$
1,259

 
$
1,169

Cash paid for income taxes
6

 
8

Other non-cash investing and financing activities:
 
 
 
ROU assets obtained in exchange for new operating lease liabilities
104

 
—

Change in accrued capital expenditures
62

 
149

Deferred consideration for acquisition of Centaur
—

 
66

Financing for sale of Rio
34

 
—


11


CAESARS ENTERTAINMENT CORPORATION
SUPPLEMENTAL INFORMATION
Average daily rate (“ADR”) is calculated as the cash or comp revenue recognized during the period divided by the corresponding rooms occupied. Total ADR is calculated as total room revenue divided by total rooms occupied.
Revenue per available room (“RevPAR”) is calculated as the total room revenue recognized during the period divided by total room nights available for the period.
Property earnings before interest, taxes, depreciation and amortization (“EBITDA”) is presented as a measure of the Company’s performance. Property EBITDA is defined as revenues less property operating expenses and is comprised of net income/(loss) before (i) interest expense, including finance obligation expenses, net of interest capitalized and interest income, (ii) income tax (benefit)/provision, (iii) depreciation and amortization, (iv) corporate expenses, (v) certain items that the Company does not consider indicative of its ongoing operating performance at an operating property level, and (vi) lease payments associated with our financing obligation. Included in Adjusted EBITDA is property rent expense of $3 million and $12 million for the three months and year ended December 31, 2019, respectively, related to certain land parcels leased from VICI.
In evaluating property EBITDA you should be aware that, in the future, the Company may incur expenses that are the same or similar to some of the adjustments in this presentation. The presentation of Property EBITDA should not be construed as an inference that future results will be unaffected by unusual or unexpected items.
Property 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 accounting principles generally accepted in the United States (“GAAP” or “U.S. GAAP”)). Property EBITDA may not be comparable to similarly titled measures reported by other companies within the industry. Property EBITDA is included because management uses property EBITDA to measure performance and allocate resources, and believes that property EBITDA provides investors with additional information consistent with that used by management.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash and other items as exhibited in the following reconciliation and is presented as a supplemental measure of the Company’s performance. Management believes that adjusted EBITDA provides investors with additional information and allows a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the Company. In addition, compensation of management is in part determined by reference to certain of such financial information. As a result, we believe this supplemental information is useful to investors who are trying to understand the results of the Company.
Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net revenues. Adjusted EBITDA margin is included because management uses adjusted EBITDA margin to measure performance and allocate resources, and believes that adjusted EBITDA margin provides investors with additional information consistent with that used by management.
Because not all companies use identical calculations, the presentation of adjusted EBITDA and adjusted EBITDA margin may not be comparable to other similarly titled measures of other companies.
In addition, we present adjusted EBITDA, further adjusted to show the impact on the period of the hold we achieved versus the hold we expected. Management believes presentation of this further adjusted information allows a better understanding of the materiality of those impacts relative to the Company’s overall performance.
The following tables reconcile net income/(loss) attributable to Caesars Entertainment Corporation to property EBITDA and adjusted EBITDA for the periods indicated and reconciles hold adjusted results.

12


CAESARS ENTERTAINMENT CORPORATION
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME/(LOSS) ATTRIBUTABLE TO CAESARS ENTERTAINMENT CORPORATION TO ADJUSTED EBITDA
 
Three Months Ended December 31, 2019
 
Three Months Ended December 31, 2018
(Dollars in millions)
Las Vegas
 
Other U.S.
 
All Other (f)
 
CEC
 
Las Vegas
 
Other U.S.
 
All Other (f)
 
CEC
Net income/(loss) attributable to Caesars
$
139

 
$
(85
)
 
$
(358
)
 
$
(304
)
 
$
98

 
$
(98
)
 
$
198

 
$
198

Net income/(loss) attributable to noncontrolling interests
—

 
—

 
(1
)
 
(1
)
 
—

 
1

 
(1
)
 
—

Income tax (benefit)/provision
—

 
—

 
(30
)
 
(30
)
 
—

 
—

 
13

 
13

Other (income)/loss (a)
3

 
(2
)
 
174

 
175

 
1

 
—

 
(453
)
 
(452
)
Interest expense 1
82

 
144

 
111

 
337

 
82

 
142

 
117

 
341

Depreciation and amortization 2
127

 
143

 
8

 
278

 
159

 
130

 
13

 
302

Impairment of goodwill
—

 
27

 
—

 
27

 
—

 
17

 
26

 
43

Impairment of tangible and other intangible assets
—

 
11

 
—

 
11

 
—

 
26

 
9

 
35

Corporate expense
—

 
—

 
69

 
69

 
—

 
—

 
95

 
95

Other operating costs (b)
10

 
6

 
34

 
50

 
10

 
8

 
9

 
27

Property EBITDA
361


244


7


612


350


226


26


602

Corporate expense
—

 
—

 
(69
)
 
(69
)
 
—

 
—

 
(95
)
 
(95
)
Stock-based compensation expense (c)
2

 
3

 
21

 
26

 
2

 
3

 
19

 
24

Other items (d)
—

 
—

 
14

 
14

 
(1
)
 
1

 
36

 
36

Adjusted EBITDA
$
363


$
247


$
(27
)

$
583


$
351


$
230


$
(14
)

$
567

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
989

 
$
1,032

 
$
148

 
$
2,169

 
$
949

 
$
1,014

 
$
152

 
$
2,115

Adjusted EBITDA margin (e)
36.7
%
 
23.9
%
 
(18.2
)%
 
26.9
%
 
37.0
%
 
22.7
%
 
(9.2
)%
 
26.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense on debt
$
1

 
$
—

 
$
108

 
$
109

 
$
—

 
$
2

 
$
112

 
$
114

Interest expense on financing obligations
81

 
144

 
3

 
228

 
82

 
140

 
5

 
227

1Interest expense
$
82

 
$
144

 
$
111

 
$
337

 
$
82

 
$
142

 
$
117

 
$
341

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash payments on financing obligations (incl. principal)
$
98

 
$
166

 
$
4

 
$
268

 
$
72

 
$
162

 
$
—

 
$
234

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
$
83

 
$
54

 
$
8

 
$
145

 
$
111

 
$
63

 
$
13

 
$
187

Depreciation on failed sale-leaseback assets
44

 
89

 
—

 
133

 
48

 
67

 
—

 
115

2Depreciation and amortization
$
127

 
$
143

 
$
8

 
$
278

 
$
159

 
$
130

 
$
13

 
$
302



13


CAESARS ENTERTAINMENT CORPORATION
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME/(LOSS) ATTRIBUTABLE TO CAESARS ENTERTAINMENT CORPORATION TO ADJUSTED EBITDA
 
Year Ended December 31, 2019
 
Year Ended December 31, 2018
(Dollars in millions)
Las Vegas
 
Other U.S.
 
All Other (f)
 
CEC
 
Las Vegas
 
Other U.S.
 
All Other (f)
 
CEC
Net income/(loss) attributable to Caesars
$
229

 
$
(46
)
 
$
(1,378
)
 
$
(1,195
)
 
$
392

 
$
(122
)
 
$
33

 
$
303

Net income/(loss) attributable to noncontrolling interests
—

 
—

 
(3
)
 
(3
)
 
—

 
2

 
(1
)
 
1

Income tax benefit
—

 
—

 
(141
)
 
(141
)
 
—

 
—

 
(121
)
 
(121
)
Loss on extinguishment of debt
—

 
—

 
—

 
—

 
—

 
—

 
1

 
1

Other (income)/loss (a)
1

 
(1
)
 
587

 
587

 
(3
)
 
(2
)
 
(786
)
 
(791
)
Interest expense 1
330

 
572

 
468

 
1,370

 
327

 
556

 
463

 
1,346

Depreciation and amortization 2
495

 
455

 
71

 
1,021

 
582

 
501

 
62

 
1,145

Impairment of goodwill
—

 
27

 
—

 
27

 
—

 
17

 
26

 
43

Impairment of tangible and other intangible assets
380

 
11

 
50

 
441

 
—

 
26

 
9

 
35

Corporate expense
—

 
—

 
295

 
295

 
—

 
—

 
332

 
332

Other operating costs (b)
22

 
22

 
92

 
136

 
52

 
21

 
82

 
155

Property EBITDA
1,457

 
1,040

 
41

 
2,538

 
1,350

 
999

 
100

 
2,449

Corporate expense
—

 
—

 
(295
)
 
(295
)
 
—

 
—

 
(332
)
 
(332
)
Stock-based compensation expense (c)
8

 
10

 
70

 
88

 
8

 
10

 
61

 
79

Other items (d)
3

 
2

 
69

 
74

 
4

 
5

 
103

 
112

Adjusted EBITDA
$
1,468

 
$
1,052

 
$
(115
)
 
$
2,405

 
$
1,362

 
$
1,014

 
$
(68
)
 
$
2,308

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
3,919

 
$
4,225

 
$
598

 
$
8,742

 
$
3,753

 
$
4,047

 
$
591

 
$
8,391

Adjusted EBITDA margin (e)
37.5
%
 
24.9
%
 
(19.2
)%
 
27.5
%
 
36.3
%
 
25.1
%
 
(11.5
)%
 
27.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense on debt
$
3

 
$
1

 
$
456

 
$
460

 
$
2

 
$
4

 
$
451

 
$
457

Interest expense on financing obligations
327

 
571

 
12

 
910

 
325

 
552

 
12

 
889

1Interest expense
$
330

 
$
572

 
$
468

 
$
1,370

 
$
327

 
$
556

 
$
463

 
$
1,346

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash payments on financing obligations (incl. principal)
$
318

 
$
494

 
$
10

 
$
822

 
$
248

 
$
477

 
$
—

 
$
725

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
$
313

 
$
165

 
$
71

 
$
549

 
$
383

 
$
210

 
$
62

 
$
655

Depreciation on failed sale-leaseback assets
182

 
290

 
—

 
472

 
199

 
291

 
—

 
490

2Depreciation and amortization
$
495

 
$
455

 
$
71

 
$
1,021

 
$
582

 
$
501

 
$
62

 
$
1,145



14


CAESARS ENTERTAINMENT CORPORATION
SUPPLEMENTAL INFORMATION - 2019 DATA EXCLUDING RIO ALL-SUITE HOTEL & CASINO (“RIO”)
RECONCILIATION OF NET INCOME/(LOSS) ATTRIBUTABLE TO CAESARS ENTERTAINMENT CORPORATION TO ADJUSTED EBITDA

 
Three Months Ended December 31, 2019
 
Three Months Ended December 31, 2019
(Dollars in millions)
CEC
 
Less: Rio
 
CEC Excluding Rio
 
Las Vegas
 
Other U.S.
 
All Other (f)
 
CEC Excluding Rio
Net income/(loss) attributable to Caesars
$
(304
)
 
$
(2
)
 
$
(306
)
 
$
137

 
$
(85
)
 
$
(358
)
 
$
(306
)
Net loss attributable to noncontrolling interests
(1
)
 
—

 
(1
)
 
—

 
—

 
(1
)
 
(1
)
Income tax benefit
(30
)
 
—

 
(30
)
 
—

 
—

 
(30
)
 
(30
)
Other (income)/loss (a)
175

 
—

 
175

 
3

 
(2
)
 
174

 
175

Interest expense
337

 
—

 
337

 
82

 
144

 
111

 
337

Depreciation and amortization
278

 
(2
)
 
276

 
125

 
143

 
8

 
276

Impairment of goodwill
27

 
—

 
27

 
—

 
27

 
—

 
27

Impairment of tangible and other intangible assets
11

 
—

 
11

 
—

 
11

 
—

 
11

Corporate expense
69

 
—

 
69

 
—

 
—

 
69

 
69

Other operating costs (b)
50

 
(7
)
 
43

 
3

 
6

 
34

 
43

Property EBITDA
612

 
(11
)
 
601

 
350

 
244

 
7

 
601

Corporate expense
(69
)
 
—

 
(69
)
 
—

 
—

 
(69
)
 
(69
)
Stock-based compensation expense (c)
26

 
—

 
26

 
2

 
3

 
21

 
26

Other items (d)
14

 
—

 
14

 
—

 
—

 
14

 
14

Adjusted EBITDA
$
583

 
$
(11
)
 
$
572

 
$
352

 
$
247

 
$
(27
)
 
$
572

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
2,169

 
$
(68
)
 
$
2,101

 
$
921

 
$
1,032

 
$
148

 
$
2,101

Adjusted EBITDA margin (e)
26.9
%
 
16.2
%
 
27.2
%
 
38.2
%
 
23.9
%
 
(18.2
)%
 
27.2
%
____________________
(a)
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.
(b)
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), regulatory settlements, weather related property closure costs, severance costs, gains and losses on asset sales, demolition costs, and project opening costs.
(c)
Amounts represent stock-based compensation expense related to shares, stock options, restricted stock units, performance stock units, and market-based stock units granted to the Company’s employees.
(d)
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, litigation awards and settlements.
(e)
Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net revenues.
(f)
Amounts include eliminating adjustments and other adjustments to reconcile to consolidated CEC adjusted EBITDA.


15


CAESARS ENTERTAINMENT CORPORATION
SUPPLEMENTAL INFORMATION
RECONCILIATIONS OF HOLD ADJUSTED REVENUE AND HOLD ADJUSTED EBITDA

 
Year Ended December 31, 2019
 
Year Ended December 31, 2018
 
 
 
 
(Dollars in millions)
CEC
 
Favorable Hold
 
Adjusted CEC
 
CEC
 
Unfavorable Hold
 
Adjusted CEC
 
$ Change
 
% Change
Net revenues
$
8,742

 
$
(31
)
 
$
8,711

 
$
8,391

 
$
28

 
$
8,419

 
$
292

 
3.5
%
Adjusted EBITDA
2,405

 
(21
)
 
2,384

 
2,308

 
20

 
2,328

 
56

 
2.4
%



16