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Segment Reporting

3 Months Ended

Mar. 31, 2020

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. 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, 2020
(In millions)	Las Vegas			Other U.S.			All Other			Elimination		Caesars
Casino	$	249		$	655		$	54		$	—	$	958
Food and beverage ⁽¹⁾	210			115			5			—		330
Rooms ⁽¹⁾	250			66			1			—		317
Management fees	—			—			9			—		9
Reimbursed management costs	—			1			50			—		51
Entertainment and other	88			34			12			—		134
Total contract revenues	797			871			131			—		1,799
Real estate leases ⁽²⁾	25			3			—			—		28
Other revenues	—			—			1			—		1
Net revenues	$	822		$	874		$	132		$	—	$	1,828

Depreciation and amortization	$	120		$	115		$	21		$	—	$	256
Income/(loss) from operations	86			(72		)	(80		)	—		(66		)
Interest expense	(82		)	(144		)	(107		)	—		(333		)
Other income/(loss) ⁽³⁾	(2		)	3			640			—		641
Income tax provision ⁽⁴⁾	—			—			(54		)	—		(54		)



	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

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⁽¹⁾	A portion of these balances relate to lease revenues generated from the lease components of lodging arrangements and conventions. See Note 11 for further details.


⁽²⁾	Real estate leases revenue includes $9 million and $14 million of variable rental income for the three months ended March 31, 2020 and 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 for the three months ended March 31, 2020, 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 March 31, 2020
(In millions)	Las Vegas		Other U.S.			All Other			Elimination		Caesars
Net income/(loss) attributable to Caesars ⁽¹⁾	$	2	$	(212	)	$	399		$	—	$	189
Net loss attributable to noncontrolling interests	—		(1		)	—			—		(1		)
Income tax provision ⁽²⁾	—		—			54			—		54
Other (income)/loss ⁽³⁾	2		(3		)	(640		)	—		(641		)
Interest expense	82		144			107			—		333
Depreciation and amortization	120		115			21			—		256
Impairment of tangible and other intangible assets	—		65			—			—		65
Other operating costs ⁽⁴⁾	8		3			10			—		21
Stock-based compensation expense	2		2			6			—		10
Other items ⁽⁵⁾	1		2			10			—		13
Adjusted EBITDA	$	217	$	115		$	(33	)	$	—	$	299



	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 ⁽²⁾	—		—			(29		)	—		(29		)
Other loss ⁽³⁾	—		—			138			—		138
Interest expense	83		143			123			—		349
Depreciation and amortization	128		103			16			—		247
Other operating costs ⁽⁴⁾	3		12			14			—		29
Stock-based compensation expense	2		2			17			—		21
Other items ⁽⁵⁾	1		—			24			—		25
Adjusted EBITDA	$	360	$	233		$	(31	)	$	—	$	562

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⁽¹⁾	For the three months ended March 31, 2020, includes $96 million of expense accrued during the quarter related to salaries, paid time off and medical benefit costs associated with employees furloughed, offset by the CARES Act employee retention credit as a result of the COVID-19 public health emergency.


⁽²⁾	Taxes are recorded at the consolidated level and not estimated or recorded to our Las Vegas and Other U.S. segments.


⁽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⁾

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), contract termination costs, regulatory settlements, weather related property closure costs, severance costs, gains and losses on asset sales, demolition costs, and project opening costs.

⁽⁵⁾

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, and losses on inventory associated with properties temporarily closed as a result of the COVID-19 public health emergency.

Condensed Balance Sheets - By Segment

	March 31, 2020
(In millions)	Las Vegas		Other U.S.		All Other		Elimination			Caesars
Total assets	$	12,960	$	8,088	$	8,063	$	(3,131	)	$	25,980
Total liabilities	5,844		5,770		12,046		(11		)	23,649



	December 31, 2019
(In millions)	Las Vegas		Other U.S.		All Other		Elimination			Caesars
Total assets	$	13,138	$	8,509	$	6,829	$	(3,131	)	$	25,345
Total liabilities	5,896		5,730		11,519		(11		)	23,134