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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Caesars Entertainment Inc | NASDAQ:CZR | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.05 | 2.93% | 36.87 | 36.50 | 36.89 | 37.48 | 35.12 | 35.32 | 12,240,270 | 00:39:21 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
62-1411755
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
One Caesars Palace Drive, Las Vegas, Nevada
|
|
89109
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
o
|
Accelerated filer
|
x
|
|
|
|
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
o
|
|
|
|
|
|
|
Emerging growth company
|
o
|
Class
|
Outstanding at October 30, 2018
|
Common stock, $0.01 par value
|
669,733,000
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
(In millions)
|
September 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents ($17 and $58 attributable to our VIEs)
|
$
|
1,563
|
|
|
$
|
2,558
|
|
Restricted cash
|
123
|
|
|
116
|
|
||
Receivables, net
|
472
|
|
|
494
|
|
||
Due from affiliates, net
|
4
|
|
|
11
|
|
||
Prepayments and other current assets ($3 and $2 attributable to our VIEs)
|
178
|
|
|
239
|
|
||
Inventories
|
40
|
|
|
39
|
|
||
Total current assets
|
2,380
|
|
|
3,457
|
|
||
Property and equipment, net ($84 and $57 attributable to our VIEs)
|
16,029
|
|
|
16,154
|
|
||
Goodwill
|
4,083
|
|
|
3,815
|
|
||
Intangible assets other than goodwill
|
3,008
|
|
|
1,609
|
|
||
Restricted cash
|
40
|
|
|
35
|
|
||
Deferred income taxes
|
2
|
|
|
2
|
|
||
Deferred charges and other assets ($46 and $0 attributable to our VIEs)
|
424
|
|
|
364
|
|
||
Total assets
|
$
|
25,966
|
|
|
$
|
25,436
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable ($3 and $3 attributable to our VIEs)
|
$
|
325
|
|
|
$
|
318
|
|
Accrued expenses and other current liabilities ($1 and $0 attributable to our VIEs)
|
1,260
|
|
|
1,326
|
|
||
Interest payable
|
135
|
|
|
38
|
|
||
Contract liabilities
|
154
|
|
|
129
|
|
||
Current portion of financing obligations
|
15
|
|
|
9
|
|
||
Current portion of long-term debt
|
164
|
|
|
64
|
|
||
Total current liabilities
|
2,053
|
|
|
1,884
|
|
||
Financing obligations
|
9,957
|
|
|
9,355
|
|
||
Long-term debt
|
8,811
|
|
|
8,849
|
|
||
Deferred income taxes
|
716
|
|
|
577
|
|
||
Deferred credits and other liabilities
|
1,262
|
|
|
1,474
|
|
||
Total liabilities
|
22,799
|
|
|
22,139
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
|
|
||
Stockholders’ equity
|
|
|
|
||||
Caesars stockholders’ equity
|
3,079
|
|
|
3,226
|
|
||
Noncontrolling interests
|
88
|
|
|
71
|
|
||
Total stockholders’ equity
|
3,167
|
|
|
3,297
|
|
||
Total liabilities and stockholders’ equity
|
$
|
25,966
|
|
|
$
|
25,436
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In millions, except per share data)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Casino
|
$
|
1,102
|
|
|
$
|
389
|
|
|
$
|
3,147
|
|
|
$
|
1,199
|
|
Food and beverage
|
408
|
|
|
206
|
|
|
1,182
|
|
|
617
|
|
||||
Rooms
|
395
|
|
|
253
|
|
|
1,150
|
|
|
742
|
|
||||
Other revenue
|
213
|
|
|
145
|
|
|
600
|
|
|
409
|
|
||||
Management fees
|
16
|
|
|
—
|
|
|
46
|
|
|
—
|
|
||||
Reimbursed management costs
|
51
|
|
|
—
|
|
|
151
|
|
|
—
|
|
||||
Net revenues
|
2,185
|
|
|
993
|
|
|
6,276
|
|
|
2,967
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
|
|
|
|
|
|
||||||||
Casino
|
625
|
|
|
210
|
|
|
1,756
|
|
|
659
|
|
||||
Food and beverage
|
284
|
|
|
143
|
|
|
823
|
|
|
426
|
|
||||
Rooms
|
123
|
|
|
83
|
|
|
359
|
|
|
245
|
|
||||
Property, general, administrative, and other
|
467
|
|
|
247
|
|
|
1,340
|
|
|
724
|
|
||||
Reimbursable management costs
|
51
|
|
|
—
|
|
|
151
|
|
|
—
|
|
||||
Depreciation and amortization
|
295
|
|
|
150
|
|
|
843
|
|
|
348
|
|
||||
Corporate expense
|
79
|
|
|
40
|
|
|
237
|
|
|
129
|
|
||||
Other operating costs
|
29
|
|
|
36
|
|
|
128
|
|
|
53
|
|
||||
Total operating expenses
|
1,953
|
|
|
909
|
|
|
5,637
|
|
|
2,584
|
|
||||
Income from operations
|
232
|
|
|
84
|
|
|
639
|
|
|
383
|
|
||||
Interest expense
|
(341
|
)
|
|
(120
|
)
|
|
(1,005
|
)
|
|
(409
|
)
|
||||
Restructuring and support expenses and other
|
109
|
|
|
(448
|
)
|
|
338
|
|
|
(2,319
|
)
|
||||
Loss before income taxes
|
—
|
|
|
(484
|
)
|
|
(28
|
)
|
|
(2,345
|
)
|
||||
Income tax benefit/(provision)
|
111
|
|
|
45
|
|
|
134
|
|
|
(34
|
)
|
||||
Net income/(loss)
|
111
|
|
|
(439
|
)
|
|
106
|
|
|
(2,379
|
)
|
||||
Net (income)/loss attributable to noncontrolling interests
|
(1
|
)
|
|
6
|
|
|
(1
|
)
|
|
7
|
|
||||
Net income/(loss) attributable to Caesars
|
$
|
110
|
|
|
$
|
(433
|
)
|
|
$
|
105
|
|
|
$
|
(2,372
|
)
|
|
|
|
|
|
|
|
|
||||||||
Earnings/(loss) per share - basic and diluted
|
|
|
|
|
|
|
|
|
|||||||
Basic earnings/(loss) per share
|
$
|
0.16
|
|
|
$
|
(2.90
|
)
|
|
$
|
0.15
|
|
|
$
|
(15.97
|
)
|
Diluted earnings/(loss) per share
|
$
|
0.14
|
|
|
$
|
(2.90
|
)
|
|
$
|
0.15
|
|
|
$
|
(15.97
|
)
|
Weighted-average common shares outstanding - basic
|
681
|
|
|
149
|
|
|
692
|
|
|
148
|
|
||||
Weighted-average common shares outstanding - diluted
|
835
|
|
|
149
|
|
|
697
|
|
|
148
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income/(loss)
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
Change in fair market value of interest rate swaps, net of tax
|
11
|
|
|
—
|
|
|
24
|
|
|
—
|
|
||||
Other
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Other comprehensive income, net of income taxes
|
13
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||
Comprehensive income/(loss)
|
124
|
|
|
(439
|
)
|
|
114
|
|
|
(2,379
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Amounts attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
1
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Comprehensive loss attributable to noncontrolling interests
|
—
|
|
|
6
|
|
|
3
|
|
|
7
|
|
||||
Comprehensive income/(loss) attributable to Caesars
|
$
|
124
|
|
|
$
|
(433
|
)
|
|
$
|
117
|
|
|
$
|
(2,372
|
)
|
|
Caesars Stockholders’ Equity/(Deficit)
|
|
|
|
|
||||||||||||||||||||||||||
(In millions)
|
Common
Stock
|
|
Treasury
Stock
|
|
Additional
Paid-in-
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
|
Total
Caesars
Stockholders’
Equity/(Deficit)
|
|
Noncontrolling
Interests
|
|
Total Equity/(Deficit)
|
||||||||||||||||
Balance as of December 31, 2016
|
$
|
1
|
|
|
$
|
(29
|
)
|
|
$
|
8,676
|
|
|
$
|
(10,307
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1,660
|
)
|
|
$
|
53
|
|
|
$
|
(1,607
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,372
|
)
|
|
—
|
|
|
(2,372
|
)
|
|
(7
|
)
|
|
(2,379
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
(8
|
)
|
|
32
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||||||
Change in noncontrolling interest, net of distributions and contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||
Balance as of September 30, 2017
|
$
|
1
|
|
|
$
|
(37
|
)
|
|
$
|
8,708
|
|
|
$
|
(12,679
|
)
|
|
$
|
(1
|
)
|
|
$
|
(4,008
|
)
|
|
$
|
42
|
|
|
$
|
(3,966
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance as of December 31, 2017
|
$
|
7
|
|
|
$
|
(152
|
)
|
|
$
|
14,040
|
|
|
$
|
(10,675
|
)
|
|
$
|
6
|
|
|
$
|
3,226
|
|
|
$
|
71
|
|
|
$
|
3,297
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
105
|
|
|
1
|
|
|
106
|
|
||||||||
Stock-based compensation
|
—
|
|
|
(12
|
)
|
|
59
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
||||||||
Repurchase of common stock
|
—
|
|
|
(311
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(311
|
)
|
|
—
|
|
|
(311
|
)
|
||||||||
Other comprehensive income/(loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
|
(4
|
)
|
|
8
|
|
||||||||
Change in noncontrolling interest, net of distributions and contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
||||||||
Balance as of September 30, 2018
|
$
|
7
|
|
|
$
|
(475
|
)
|
|
$
|
14,099
|
|
|
$
|
(10,570
|
)
|
|
$
|
18
|
|
|
$
|
3,079
|
|
|
$
|
88
|
|
|
$
|
3,167
|
|
|
Nine Months Ended September 30,
|
||||||
(In millions)
|
2018
|
|
2017
|
||||
Cash flows provided by operating activities
|
$
|
692
|
|
|
$
|
263
|
|
Cash flows from investing activities
|
|
|
|
||||
Acquisition of Centaur, net of cash and restricted cash acquired
|
(1,578
|
)
|
|
—
|
|
||
Acquisitions of property and equipment, net of change in related payables
|
(342
|
)
|
|
(245
|
)
|
||
Payments to acquire certain gaming rights
|
(10
|
)
|
|
—
|
|
||
Deconsolidation of subsidiary cash
|
—
|
|
|
(57
|
)
|
||
Proceeds from the sale and maturity of investments
|
30
|
|
|
28
|
|
||
Payments to acquire investments
|
(19
|
)
|
|
(21
|
)
|
||
Cash flows used in investing activities
|
(1,919
|
)
|
|
(295
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from long-term debt and revolving credit facilities
|
1,167
|
|
|
585
|
|
||
Debt issuance costs and fees
|
(5
|
)
|
|
(19
|
)
|
||
Repayments of long-term debt and revolving credit facilities
|
(1,116
|
)
|
|
(673
|
)
|
||
Proceeds from sale-leaseback financing arrangement
|
508
|
|
|
—
|
|
||
Distribution of CIE sale proceeds
|
—
|
|
|
(63
|
)
|
||
Proceeds from the issuance of common stock
|
4
|
|
|
7
|
|
||
Repurchase of common stock
|
(311
|
)
|
|
—
|
|
||
Taxes paid related to net share settlement of equity awards
|
(12
|
)
|
|
(8
|
)
|
||
Financing obligation payments
|
(11
|
)
|
|
—
|
|
||
Contributions from noncontrolling interest owners
|
20
|
|
|
—
|
|
||
Distributions to noncontrolling interest owners
|
—
|
|
|
(6
|
)
|
||
Cash flows provided by/(used in) financing activities
|
244
|
|
|
(177
|
)
|
||
Net decrease in cash, cash equivalents, and restricted cash
|
(983
|
)
|
|
(209
|
)
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
2,709
|
|
|
4,658
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
1,726
|
|
|
$
|
4,449
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
||||
Cash paid for interest
|
$
|
782
|
|
|
$
|
319
|
|
Cash paid for income taxes
|
5
|
|
|
3
|
|
||
Non-cash investing and financing activities:
|
|
|
|
||||
Change in accrued capital expenditures
|
51
|
|
|
2
|
|
||
Deferred consideration for acquisition of Centaur
|
66
|
|
|
—
|
|
(In millions)
|
September 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
1,563
|
|
|
$
|
2,558
|
|
Restricted cash, current
|
123
|
|
|
116
|
|
||
Restricted cash, non-current
|
40
|
|
|
35
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
1,726
|
|
|
$
|
2,709
|
|
(1)
|
See
above.
|
•
|
ASU 2014-09,
Revenue from Contracts with Customers
(see
Note 12
).
|
•
|
ASU 2016-16,
Income Taxes
(see
Note 14
).
|
•
|
ASU 2018-09,
Codification Improvements.
|
•
|
ASU 2018-05,
Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118
.
|
•
|
ASU 2018-04,
Investments — Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273.
|
•
|
ASU 2017-09,
Compensation - Stock Compensation
.
|
•
|
ASU 2017-01,
Business Combinations
.
|
•
|
ASU 2016-18,
Statement of Cash Flows
.
|
•
|
ASU 2016-01,
Financial Instruments - Overall
.
|
(1)
|
Deferred consideration is payable in an installment of
$25 million
on the second anniversary of the Centaur Closing Date and
$50 million
on the third anniversary of the Centaur Closing Date with prepayments and right of setoff permitted, subject to the terms and conditions of the Unit Purchase Agreement.
$66 million
represents the present value of future expected cash flows.
|
(In millions)
|
Fair Value
|
|
Weighted-Average
Useful Life (years)
|
||
Assets acquired:
|
|
|
|
||
Cash and cash equivalents
|
$
|
39
|
|
|
|
Receivables, net
|
2
|
|
|
|
|
Other current assets
|
26
|
|
|
|
|
Property and equipment
|
297
|
|
|
|
|
Intangible assets other than goodwill
|
|
|
|
||
Trade names and trademarks
|
14
|
|
|
2.5
|
|
Gaming rights
(1)
|
1,390
|
|
|
|
|
Customer relationships
|
41
|
|
|
15.0
|
|
Total assets
|
1,809
|
|
|
|
|
|
|
|
|
||
Liabilities assumed:
|
|
|
|
||
Current liabilities
|
(92
|
)
|
|
|
|
Deferred income taxes
|
(285
|
)
|
|
|
|
Total liabilities
|
(377
|
)
|
|
|
|
Net identifiable assets acquired
|
1,432
|
|
|
|
|
Goodwill
|
270
|
|
|
|
|
Total Centaur equity value
|
$
|
1,702
|
|
|
|
(1)
|
Indefinite-lived intangible assets.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenues
|
$
|
2,210
|
|
|
$
|
1,116
|
|
|
$
|
6,551
|
|
|
$
|
3,337
|
|
Net loss attributable to Caesars
|
(70
|
)
|
|
(230
|
)
|
|
(26
|
)
|
|
(2,131
|
)
|
(In millions)
|
September 30, 2018
|
|
December 31, 2017
(1)
|
||||
Land
|
$
|
4,871
|
|
|
$
|
4,857
|
|
Buildings, riverboats, and leasehold and land improvements
|
12,157
|
|
|
11,824
|
|
||
Furniture, fixtures, and equipment
|
1,530
|
|
|
1,277
|
|
||
Construction in progress
|
244
|
|
|
329
|
|
||
Total property and equipment
|
18,802
|
|
|
18,287
|
|
||
Less: accumulated depreciation
|
(2,773
|
)
|
|
(2,133
|
)
|
||
Total property and equipment, net
|
$
|
16,029
|
|
|
$
|
16,154
|
|
(1)
|
We reclassified
$73 million
in land improvements to Buildings, riverboats and leasehold and land improvements to align with our 2018 reporting presentation.
|
Depreciation Expense and Capitalized Interest
|
|||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Depreciation expense
|
$
|
277
|
|
|
$
|
135
|
|
|
$
|
792
|
|
|
$
|
303
|
|
Capitalized interest
|
2
|
|
|
2
|
|
|
5
|
|
|
4
|
|
Changes in Carrying Value of Goodwill and Other Intangible Assets
|
|||||||||||
|
Amortizing Intangible Assets
|
|
Non-Amortizing Intangible Assets
|
||||||||
(In millions)
|
|
Goodwill
|
|
Other
|
|||||||
Balance as of December 31, 2017
|
$
|
355
|
|
|
$
|
3,815
|
|
|
$
|
1,254
|
|
Centaur acquisition
(1)
|
55
|
|
|
270
|
|
|
1,390
|
|
|||
Amortization
|
(51
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
—
|
|
|
(2
|
)
|
|
5
|
|
|||
Balance as of September 30, 2018
|
$
|
359
|
|
|
$
|
4,083
|
|
|
$
|
2,649
|
|
(1)
|
See
Note 4
for further details relating to the acquisition of Centaur.
|
Gross Carrying Value and Accumulated Amortization of Intangible Assets Other Than Goodwill
|
|||||||||||||||||||||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||
(Dollars in millions)
|
Weighted
Average
Remaining
Useful Life
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Amortizing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names and trademarks
|
2.3
|
|
$
|
14
|
|
|
$
|
(1
|
)
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Customer relationships
|
4.7
|
|
1,071
|
|
|
(741
|
)
|
|
330
|
|
|
1,030
|
|
|
(693
|
)
|
|
337
|
|
||||||
Contract rights
|
6.3
|
|
3
|
|
|
(2
|
)
|
|
1
|
|
|
3
|
|
|
(2
|
)
|
|
1
|
|
||||||
Gaming rights and other
|
5.8
|
|
43
|
|
|
(28
|
)
|
|
15
|
|
|
43
|
|
|
(26
|
)
|
|
17
|
|
||||||
|
|
|
$
|
1,131
|
|
|
$
|
(772
|
)
|
|
359
|
|
|
$
|
1,076
|
|
|
$
|
(721
|
)
|
|
355
|
|
||
Non-amortizing intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trademarks
|
|
790
|
|
|
|
|
|
|
790
|
|
|||||||||||||||
Gaming rights
|
|
1,606
|
|
|
|
|
|
|
211
|
|
|||||||||||||||
Total Rewards
|
|
253
|
|
|
|
|
|
|
253
|
|
|||||||||||||||
|
|
2,649
|
|
|
|
|
|
|
1,254
|
|
|||||||||||||||
Total intangible assets other than goodwill
|
|
$
|
3,008
|
|
|
|
|
|
|
$
|
1,609
|
|
Estimated Fair Value
|
|||||||||||||||
(In millions)
|
Balance
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Government bonds
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
Derivative instruments - interest rate swaps
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
52
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Derivative instruments - CEC Convertible Notes
|
$
|
738
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
738
|
|
Disputed claims liability
|
73
|
|
|
—
|
|
|
—
|
|
|
73
|
|
||||
Total liabilities at fair value
|
$
|
811
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
811
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government bonds
|
25
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
33
|
|
|
$
|
8
|
|
|
$
|
25
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Derivative instruments - CEC Convertible Notes
|
$
|
1,016
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,016
|
|
Disputed claims liability
|
112
|
|
|
—
|
|
|
—
|
|
|
112
|
|
||||
Total liabilities at fair value
|
$
|
1,128
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,128
|
|
Changes in Level 3 Fair Value Measurements
|
|||||||||||||||
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||
(In millions)
|
Derivative Instruments
|
|
Disputed Claims Liability
|
|
Derivative Instruments
|
|
Disputed Claims Liability
|
||||||||
Balance as of beginning of period
|
$
|
831
|
|
|
$
|
86
|
|
|
$
|
1,016
|
|
|
$
|
112
|
|
Change in fair value recorded in Restructuring and support expenses and other
|
(97
|
)
|
|
(1
|
)
|
|
(282
|
)
|
|
(10
|
)
|
||||
Change due to resolved claims in Disputed claims liability
|
4
|
|
|
(12
|
)
|
|
4
|
|
|
(29
|
)
|
||||
Balance as of end of period
|
$
|
738
|
|
|
$
|
73
|
|
|
$
|
738
|
|
|
$
|
73
|
|
•
|
Incremental cost of borrowing -
6.0%
|
•
|
Expected volatility -
30%
|
•
|
Risk-free rate -
3.0%
|
Effective Date
|
|
Notional Amount
(In millions)
|
|
Fixed Rate Paid
|
|
Variable Rate Received as of
September 30, 2018
|
|
Maturity Date
|
12/31/2018
|
|
250
|
|
2.274%
|
|
N/A
|
|
12/31/2022
|
12/31/2018
|
|
200
|
|
2.828%
|
|
N/A
|
|
12/31/2022
|
12/31/2018
|
|
600
|
|
2.739%
|
|
N/A
|
|
12/31/2022
|
1/1/2019
|
|
250
|
|
2.153%
|
|
N/A
|
|
12/31/2020
|
1/1/2019
|
|
250
|
|
2.196%
|
|
N/A
|
|
12/31/2021
|
1/1/2019
|
|
400
|
|
2.788%
|
|
N/A
|
|
12/31/2021
|
1/1/2019
|
|
200
|
|
2.828%
|
|
N/A
|
|
12/31/2022
|
1/2/2019
|
|
250
|
|
2.172%
|
|
N/A
|
|
12/31/2020
|
1/2/2019
|
|
200
|
|
2.731%
|
|
N/A
|
|
12/31/2020
|
1/2/2019
|
|
400
|
|
2.707%
|
|
N/A
|
|
12/31/2021
|
(In millions)
|
Accrual Obligation End Date
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Iowa greyhound pari-mutuel racing fund
|
December 2021
|
|
$
|
33
|
|
|
$
|
40
|
|
Future obligations under land lease agreements
(1)
|
December 2092
|
|
43
|
|
|
43
|
|
||
Permanent closure of international properties
(2)
|
January 2032
|
|
10
|
|
|
18
|
|
||
Total
|
|
|
$
|
86
|
|
|
$
|
101
|
|
(1)
|
Associated with the abandonment of a construction project near the Mississippi Gulf Coast.
|
(2)
|
Properties include Alea Leeds, Golden Nugget and Southend.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
(Dollars in millions)
|
Final
Maturity
|
|
Rate(s)
(1)
|
|
Face Value
|
|
Book Value
|
|
Book Value
|
||||||
Secured debt
|
|
|
|
|
|
|
|||||||||
CRC Revolving Credit Facility
|
2022
|
|
variable
(2)
|
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
—
|
|
CRC Term Loan
|
2024
|
|
variable
(3)
|
|
4,665
|
|
|
4,586
|
|
|
4,616
|
|
|||
CEOC LLC Revolving Credit Facility
|
2022
|
|
variable
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
CEOC LLC Term Loan
|
2024
|
|
variable
(5)
|
|
1,489
|
|
|
1,487
|
|
|
1,499
|
|
|||
Unsecured debt
|
|
|
|
|
|
|
|||||||||
CEC Convertible Notes
|
2024
|
|
5.00%
|
|
1,082
|
|
|
1,082
|
|
|
1,078
|
|
|||
CRC Notes
|
2025
|
|
5.25%
|
|
1,700
|
|
|
1,666
|
|
|
1,664
|
|
|||
Special Improvement District Bonds
|
2037
|
|
4.30%
|
|
54
|
|
|
54
|
|
|
56
|
|
|||
Total debt
|
|
9,090
|
|
|
8,975
|
|
|
8,913
|
|
||||||
Current portion of long-term debt
|
|
(164
|
)
|
|
(164
|
)
|
|
(64
|
)
|
||||||
Long-term debt
|
|
$
|
8,926
|
|
|
$
|
8,811
|
|
|
$
|
8,849
|
|
|||
|
|
|
|
|
|
|
|||||||||
Unamortized discounts and deferred finance charges
|
|
|
|
$
|
115
|
|
|
$
|
121
|
|
|||||
Fair value
|
|
$
|
9,031
|
|
|
|
|
|
(1)
|
Interest rate is fixed, except where noted.
|
(2)
|
London Interbank Offered Rate (“LIBOR”) plus
2.00%
. On May 4, 2018, the interest rate was reduced from the previous LIBOR plus
2.25%
to LIBOR plus
2.13%
and on August 2, 2018, the interest rate was further reduced to LIBOR plus
2.00%
due to step-downs based on the senior secured leverage ratio in accordance with the CRC Credit Agreement.
|
(3)
|
LIBOR plus
2.75%
.
|
(4)
|
LIBOR plus
2.00%
.
|
(5)
|
LIBOR plus
2.00%
. On April 16, 2018, the interest rate was repriced from the previous LIBOR plus
2.50%
, see CEOC LLC Term Loan Repricing section below.
|
Annual Estimated Debt Service Requirements as of September 30, 2018
|
|||||||||||||||||||||||||||
|
Remaining
|
|
Years Ended December 31,
|
|
|
|
|
||||||||||||||||||||
(In millions)
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Annual maturities of long-term debt
|
$
|
16
|
|
|
$
|
164
|
|
|
$
|
64
|
|
|
$
|
64
|
|
|
$
|
64
|
|
|
$
|
8,718
|
|
|
$
|
9,090
|
|
Estimated interest payments
|
150
|
|
|
490
|
|
|
490
|
|
|
490
|
|
|
480
|
|
|
1,030
|
|
|
3,130
|
|
|||||||
Total debt service obligation
(1)
|
$
|
166
|
|
|
$
|
654
|
|
|
$
|
554
|
|
|
$
|
554
|
|
|
$
|
544
|
|
|
$
|
9,748
|
|
|
$
|
12,220
|
|
(1)
|
Debt principal payments are estimated amounts based on maturity dates and potential borrowings under our revolving credit facilities. Interest payments are estimated based on the forward-looking LIBOR curve and include the estimated impact of the
ten
interest rate swap agreements (see
Note 7
). Actual payments may differ from these estimates.
|
Basic and Dilutive Net Earnings Per Share Reconciliation
|
|||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In millions, except per share data)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income/(loss) attributable to Caesars
|
$
|
110
|
|
|
$
|
(433
|
)
|
|
$
|
105
|
|
|
$
|
(2,372
|
)
|
Dilutive effect of CEC Convertible Notes, net of tax
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Adjusted net income/(loss) attributable to Caesars
|
$
|
119
|
|
|
$
|
(433
|
)
|
|
$
|
105
|
|
|
$
|
(2,372
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding - basic
|
681
|
|
|
149
|
|
|
692
|
|
|
148
|
|
||||
Dilutive potential common shares: Stock-based compensation awards
|
4
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Dilutive potential common shares: CEC Convertible Notes
|
150
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average common shares outstanding - diluted
|
835
|
|
|
149
|
|
|
697
|
|
|
148
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings/(loss) per share
|
$
|
0.16
|
|
|
$
|
(2.90
|
)
|
|
$
|
0.15
|
|
|
$
|
(15.97
|
)
|
Diluted earnings/(loss) per share
|
$
|
0.14
|
|
|
$
|
(2.90
|
)
|
|
$
|
0.15
|
|
|
$
|
(15.97
|
)
|
Weighted-Average Number of Anti-Dilutive Shares Excluded from Calculation of EPS
|
|||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Stock-based compensation awards
|
1
|
|
|
16
|
|
|
1
|
|
|
19
|
|
CEC Convertible Notes
|
—
|
|
|
—
|
|
|
150
|
|
|
—
|
|
Total anti-dilutive common stock
|
1
|
|
|
16
|
|
|
151
|
|
|
19
|
|
Effect of Adopting New Revenue Recognition Standard - Balance Sheets
|
|||||||||||
(In millions)
|
Previously Reported
|
|
ASC Adjustments
|
|
As Recast
|
||||||
December 31, 2017
|
|
|
|
|
|
||||||
Receivables, net
|
$
|
496
|
|
|
$
|
(2
|
)
|
|
$
|
494
|
|
Property and equipment, net
(1)
|
16,228
|
|
|
(74
|
)
|
|
16,154
|
|
|||
Accrued expenses and other current liabilities
(2)
|
1,459
|
|
|
(133
|
)
|
|
1,326
|
|
|||
Contract liabilities
(2)
|
—
|
|
|
129
|
|
|
129
|
|
|||
Financing obligations
(1)
|
9,429
|
|
|
(74
|
)
|
|
9,355
|
|
|||
Deferred credits and other liabilities
|
1,473
|
|
|
1
|
|
|
1,474
|
|
|||
Stockholders’ equity
|
3,296
|
|
|
1
|
|
|
3,297
|
|
|||
December 31, 2016
|
|
|
|
|
|
||||||
Stockholders’ deficit
|
$
|
(1,609
|
)
|
|
$
|
2
|
|
|
$
|
(1,607
|
)
|
(1)
|
The conditions that were considered prohibited forms of continuing involvement related to our sale of the Golf Course Properties (see
Note 8
) are no longer considered continuing involvement under the new revenue recognition standard. As of result of adopting the new standard on a full retrospective basis, we are now reflecting this transaction as a completed sale in the period in which it occurred.
|
(2)
|
Adjustments are primarily related to the reclassification of assets and liabilities in accordance with the new accounting and disclosure requirements.
|
Effect of Adopting New Revenue Recognition Standard - Statements of Operations
|
|||||||||||||||||||
|
Three Months Ended September 30, 2017
|
||||||||||||||||||
|
Prior to Adoption
|
|
Post Adoption
|
||||||||||||||||
(In millions)
|
CEC
|
|
CAC
|
|
Eliminations
|
|
Total
|
|
Total
|
||||||||||
Net revenues
|
$
|
986
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
986
|
|
|
$
|
993
|
|
Total operating expenses
|
900
|
|
|
5
|
|
|
—
|
|
|
905
|
|
|
909
|
|
|||||
Income/(loss) from operations
|
86
|
|
|
(5
|
)
|
|
—
|
|
|
81
|
|
|
84
|
|
|||||
Net income/(loss)
|
(460
|
)
|
|
5
|
|
|
14
|
|
|
(441
|
)
|
|
(439
|
)
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
|
Prior to Adoption
|
|
Post Adoption
|
||||||||||||||||
(In millions)
|
CEC
|
|
CAC
|
|
Eliminations
|
|
Total
|
|
Total
|
||||||||||
Net revenues
|
$
|
2,951
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,951
|
|
|
$
|
2,967
|
|
Total operating expenses
|
2,550
|
|
|
22
|
|
|
—
|
|
|
2,572
|
|
|
2,584
|
|
|||||
Income/(loss) from operations
|
401
|
|
|
(22
|
)
|
|
—
|
|
|
379
|
|
|
383
|
|
|||||
Net income/(loss)
|
(2,410
|
)
|
|
4
|
|
|
23
|
|
|
(2,383
|
)
|
|
(2,379
|
)
|
Disaggregation of Revenue by Segment
|
|||||||||||||||||||
|
Three Months Ended September 30, 2018
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Eliminations
|
|
Total
|
||||||||||
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
|
40
|
|
|
3
|
|
|
2
|
|
|
—
|
|
|
45
|
|
|||||
Net revenues
|
$
|
910
|
|
|
$
|
1,125
|
|
|
$
|
152
|
|
|
$
|
(2
|
)
|
|
$
|
2,185
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Eliminations
|
|
Total
|
||||||||||
Casino
|
$
|
203
|
|
|
$
|
171
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
389
|
|
Food and beverage
|
156
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
206
|
|
|||||
Rooms
|
206
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
253
|
|
|||||
Entertainment and other
|
77
|
|
|
13
|
|
|
7
|
|
|
(1
|
)
|
|
96
|
|
|||||
Total contract revenues
|
642
|
|
|
281
|
|
|
22
|
|
|
(1
|
)
|
|
944
|
|
|||||
Other
|
45
|
|
|
3
|
|
|
1
|
|
|
—
|
|
|
49
|
|
|||||
Net revenues
|
$
|
687
|
|
|
$
|
284
|
|
|
$
|
23
|
|
|
$
|
(1
|
)
|
|
$
|
993
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Eliminations
|
|
Total
|
||||||||||
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
|
111
|
|
|
8
|
|
|
4
|
|
|
—
|
|
|
123
|
|
|||||
Net revenues
|
$
|
2,804
|
|
|
$
|
3,033
|
|
|
$
|
446
|
|
|
$
|
(7
|
)
|
|
$
|
6,276
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Eliminations
|
|
Total
|
||||||||||
Casino
|
$
|
605
|
|
|
$
|
556
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
1,199
|
|
Food and beverage
|
474
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
617
|
|
|||||
Rooms
|
622
|
|
|
120
|
|
|
—
|
|
|
—
|
|
|
742
|
|
|||||
Entertainment and other
|
210
|
|
|
43
|
|
|
16
|
|
|
(2
|
)
|
|
267
|
|
|||||
Total contract revenues
|
1,911
|
|
|
862
|
|
|
54
|
|
|
(2
|
)
|
|
2,825
|
|
|||||
Other
|
131
|
|
|
8
|
|
|
3
|
|
|
—
|
|
|
142
|
|
|||||
Net revenues
|
$
|
2,042
|
|
|
$
|
870
|
|
|
$
|
57
|
|
|
$
|
(2
|
)
|
|
$
|
2,967
|
|
Receivables
|
|||||||
(In millions)
|
September 30, 2018
|
|
December 31, 2017
|
||||
Casino
|
$
|
181
|
|
|
$
|
173
|
|
Food and beverage and rooms
|
78
|
|
|
59
|
|
||
Entertainment and other
|
80
|
|
|
79
|
|
||
Contract receivables, net
|
339
|
|
|
311
|
|
||
Other
|
133
|
|
|
183
|
|
||
Receivables, net
|
$
|
472
|
|
|
$
|
494
|
|
Allowance for Doubtful Accounts
|
|||||||||||
(In millions)
|
Contracts
|
|
Other
|
|
Total
|
||||||
Balance as of December 31, 2017
|
$
|
44
|
|
|
$
|
7
|
|
|
$
|
51
|
|
Provision for doubtful accounts
|
9
|
|
|
(2
|
)
|
|
7
|
|
|||
Write-offs less recoveries
|
(12
|
)
|
|
(2
|
)
|
|
(14
|
)
|
|||
Balance as of September 30, 2018
|
$
|
41
|
|
|
$
|
3
|
|
|
$
|
44
|
|
Contract Liabilities
|
|||||||||||
(In millions)
|
Total Rewards
|
|
Customer Advances
|
|
Total
|
||||||
Beginning balance as of June 30, 2018
|
$
|
68
|
|
|
$
|
84
|
|
|
$
|
152
|
|
Amount recognized during the period
(1)
|
(34
|
)
|
|
(126
|
)
|
|
(160
|
)
|
|||
Amount accrued during the period
|
38
|
|
|
130
|
|
|
168
|
|
|||
Ending balance as of September 30, 2018
(2)
|
$
|
72
|
|
|
$
|
88
|
|
|
$
|
160
|
|
(1)
|
Includes
$5 million
for Total Rewards and
$5 million
for Customer Advances recognized from the June 30, 2018 Contract liability balances.
|
(2)
|
$6 million
included within Deferred credits and other liabilities.
|
(In millions)
|
Total Rewards
|
|
Customer Advances
|
|
Total
|
||||||
Beginning balance as of December 31, 2017
(1)
|
$
|
62
|
|
|
$
|
69
|
|
|
$
|
131
|
|
Amount recognized during the period
(2)
|
(97
|
)
|
|
(409
|
)
|
|
(506
|
)
|
|||
Amount accrued during the period
|
107
|
|
|
428
|
|
|
535
|
|
|||
Ending balance as of September 30, 2018
(3)
|
$
|
72
|
|
|
$
|
88
|
|
|
$
|
160
|
|
(1)
|
$2 million
included within Deferred credits and other liabilities.
|
(2)
|
Includes
$29 million
for Total Rewards and
$64 million
for Customer Advances recognized from the December 31, 2017 Contract liability balances.
|
(3)
|
$6 million
included within Deferred credits and other liabilities.
|
Outstanding at End of Period
|
|||||||||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Quantity
(1)
|
|
Wtd Avg
(2)
|
|
Quantity
|
|
Wtd Avg
(2)
|
||||||
Stock options
(3)
|
8,642,179
|
|
|
$
|
10.48
|
|
|
9,227,890
|
|
|
$
|
10.36
|
|
Restricted stock units
(4)
|
16,964,640
|
|
|
11.72
|
|
|
17,274,659
|
|
|
11.22
|
|
||
Performance stock units
(5)
|
1,535,385
|
|
|
10.25
|
|
|
—
|
|
|
—
|
|
(1)
|
During the
nine months ended
September 30, 2018
,
4.1 million
RSUs were issued under the 2017 Performance Incentive Plan. There were
no
grants of stock options during the
nine months ended
September 30, 2018
.
|
(2)
|
Represents weighted average exercise price for stock options, weighted average grant date fair value for RSUs, and the price of CEC common stock as of the balance sheet date for PSUs.
|
(3)
|
During the
nine months ended
September 30, 2018
,
526,174
stock options were exercised.
|
(4)
|
During the
nine months ended
September 30, 2018
,
3,684,153
restricted stock units vested.
|
(5)
|
No
PSUs have vested during the
nine months ended
September 30, 2018
.
|
Income Tax Allocation
|
|||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Loss before income taxes
|
$
|
—
|
|
|
$
|
(484
|
)
|
|
$
|
(28
|
)
|
|
$
|
(2,345
|
)
|
Income tax benefit/(provision)
|
$
|
111
|
|
|
$
|
45
|
|
|
$
|
134
|
|
|
$
|
(34
|
)
|
Effective tax rate
|
*
|
|
|
9.3
|
%
|
|
478.6
|
%
|
|
(1.4
|
)%
|
*
|
Not meaningful.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Transactions with Sponsors and their affiliates
|
|
|
|
|
|
|
|
||||||||
Expenses paid to Sponsors’ portfolio companies
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
18
|
|
|
$
|
2
|
|
Transactions with Horseshoe Baltimore
|
|
|
|
|
|
|
|
||||||||
Management fees
|
2
|
|
|
1
|
|
|
7
|
|
|
1
|
|
||||
Reimbursements and allocated expenses
|
1
|
|
|
4
|
|
|
4
|
|
|
4
|
|
||||
Transactions with CEOC
|
|
|
|
|
|
|
|
||||||||
Shared services allocated expenses to CEOC
|
—
|
|
|
108
|
|
|
—
|
|
|
312
|
|
||||
Shared services allocated expenses from CEOC
|
—
|
|
|
25
|
|
|
—
|
|
|
71
|
|
||||
Management fees incurred
|
—
|
|
|
11
|
|
|
—
|
|
|
33
|
|
||||
Octavius Tower lease revenue
|
—
|
|
|
8
|
|
|
—
|
|
|
26
|
|
||||
Other expenses incurred
|
—
|
|
|
3
|
|
|
—
|
|
|
9
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Net revenues
|
$
|
687
|
|
|
$
|
284
|
|
|
$
|
23
|
|
|
$
|
(1
|
)
|
|
$
|
993
|
|
Depreciation and amortization
|
124
|
|
|
24
|
|
|
2
|
|
|
—
|
|
|
150
|
|
|||||
Income/(loss) from operations
|
107
|
|
|
47
|
|
|
(70
|
)
|
|
—
|
|
|
84
|
|
|||||
Interest expense
|
—
|
|
|
(3
|
)
|
|
(117
|
)
|
|
—
|
|
|
(120
|
)
|
|||||
Restructuring and support expenses and other
(1)
|
—
|
|
|
20
|
|
|
(468
|
)
|
|
—
|
|
|
(448
|
)
|
|||||
Income tax benefit
(2)
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Elimination
|
|
Caesars
|
||||||||||
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
|
)
|
|||||
Restructuring and support expenses and other
(1)
|
4
|
|
|
2
|
|
|
332
|
|
|
—
|
|
|
338
|
|
|||||
Income tax benefit
(2)
|
—
|
|
|
—
|
|
|
134
|
|
|
—
|
|
|
134
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Net revenues
|
$
|
2,042
|
|
|
$
|
870
|
|
|
$
|
57
|
|
|
$
|
(2
|
)
|
|
$
|
2,967
|
|
Depreciation and amortization
|
277
|
|
|
66
|
|
|
5
|
|
|
—
|
|
|
348
|
|
|||||
Income/(loss) from operations
|
415
|
|
|
123
|
|
|
(155
|
)
|
|
—
|
|
|
383
|
|
|||||
Interest expense
|
(8
|
)
|
|
(17
|
)
|
|
(384
|
)
|
|
—
|
|
|
(409
|
)
|
|||||
Restructuring and support expenses and other
(1)
|
(3
|
)
|
|
20
|
|
|
(2,336
|
)
|
|
—
|
|
|
(2,319
|
)
|
|||||
Income tax provision
(2)
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
(1)
|
2018 amount primarily represents a change in fair value of our derivative liability related to the conversion option of the CEC Convertible Notes; 2017 amount primarily represents CEC’s costs in connection with the restructuring of CEOC.
|
(2)
|
Taxes are recorded at the consolidated level and not estimated or recorded to our Las Vegas and Other U.S. segments.
|
|
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
|
)
|
|||||
Restructuring and support expenses and other
(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
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Net income/(loss) attributable to Caesars
|
$
|
107
|
|
|
$
|
70
|
|
|
$
|
(610
|
)
|
|
$
|
—
|
|
|
$
|
(433
|
)
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Income tax benefit
(1)
|
—
|
|
|
—
|
|
|
(45
|
)
|
|
—
|
|
|
(45
|
)
|
|||||
Restructuring and support expenses and other
(2)
|
—
|
|
|
(20
|
)
|
|
468
|
|
|
—
|
|
|
448
|
|
|||||
Interest expense
|
—
|
|
|
3
|
|
|
117
|
|
|
—
|
|
|
120
|
|
|||||
Depreciation and amortization
|
124
|
|
|
24
|
|
|
2
|
|
|
—
|
|
|
150
|
|
|||||
Other operating costs
(3)
|
2
|
|
|
1
|
|
|
33
|
|
|
—
|
|
|
36
|
|
|||||
Stock-based compensation expense
|
1
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
8
|
|
|||||
Other items
(4)
|
1
|
|
|
2
|
|
|
23
|
|
|
—
|
|
|
26
|
|
|||||
Adjusted EBITDA
|
$
|
235
|
|
|
$
|
74
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
304
|
|
|
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
|
)
|
|||||
Restructuring and support expenses and other
(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
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Net income/(loss) attributable to Caesars
|
$
|
404
|
|
|
$
|
133
|
|
|
$
|
(2,909
|
)
|
|
$
|
—
|
|
|
$
|
(2,372
|
)
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
Income tax provision
(1)
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|||||
Restructuring and support expenses and other
(2)
|
3
|
|
|
(20
|
)
|
|
2,336
|
|
|
—
|
|
|
2,319
|
|
|||||
Interest expense
|
8
|
|
|
17
|
|
|
384
|
|
|
—
|
|
|
409
|
|
|||||
Depreciation and amortization
|
277
|
|
|
66
|
|
|
5
|
|
|
—
|
|
|
348
|
|
|||||
Other operating costs
(3)
|
17
|
|
|
3
|
|
|
33
|
|
|
—
|
|
|
53
|
|
|||||
Stock-based compensation expense
|
2
|
|
|
1
|
|
|
23
|
|
|
—
|
|
|
26
|
|
|||||
Other items
(4)
|
5
|
|
|
4
|
|
|
50
|
|
|
—
|
|
|
59
|
|
|||||
Adjusted EBITDA
|
$
|
716
|
|
|
$
|
197
|
|
|
$
|
(44
|
)
|
|
$
|
—
|
|
|
$
|
869
|
|
(1)
|
Taxes are recorded at the consolidated level and not estimated or recorded to our Las Vegas and Other U.S. segments.
|
(2)
|
2018 amount primarily represents a change in fair value of our derivative liability related to the conversion option of the CEC Convertible Notes; 2017 amount primarily represents CEC’s costs in connection with the restructuring of CEOC.
|
(3)
|
Amounts primarily represent costs incurred in connection with costs associated with the development activities and reorganization activities, and/or recoveries associated with such items.
|
(4)
|
Other items includes other add-backs and deductions to arrive at Adjusted EBITDA but not separately identified such as litigation awards and settlements, costs associated with CEOC’s restructuring and related litigation, severance and relocation costs, sign-on and retention bonuses, permit remediation costs, and business optimization expenses.
|
Condensed Balance Sheets - By Segment
|
|||||||||||||||||||
|
September 30, 2018
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Total assets
|
$
|
13,990
|
|
|
$
|
8,633
|
|
|
$
|
6,342
|
|
|
$
|
(2,999
|
)
|
|
$
|
25,966
|
|
Total liabilities
|
5,856
|
|
|
5,082
|
|
|
11,720
|
|
|
141
|
|
|
22,799
|
|
|
December 31, 2017
|
||||||||||||||||||
(In millions)
|
Las Vegas
|
|
Other U.S.
|
|
All Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Total assets
|
$
|
14,145
|
|
|
$
|
6,865
|
|
|
$
|
7,458
|
|
|
$
|
(3,032
|
)
|
|
$
|
25,436
|
|
Total liabilities
|
5,239
|
|
|
5,012
|
|
|
11,780
|
|
|
108
|
|
|
22,139
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
CEOC LLC Operating Results
|
|||||||
(In millions)
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||
Casino
|
$
|
670
|
|
|
$
|
2,030
|
|
Food and beverage
|
201
|
|
|
586
|
|
||
Rooms
|
156
|
|
|
428
|
|
||
Other revenue
|
74
|
|
|
179
|
|
||
Management fees
|
15
|
|
|
43
|
|
||
Reimbursed management costs
|
51
|
|
|
151
|
|
||
Net revenues
|
$
|
1,167
|
|
|
$
|
3,417
|
|
|
|
|
|
||||
Income from operations
|
$
|
104
|
|
|
$
|
261
|
|
Interest expense
|
(222
|
)
|
|
(652
|
)
|
||
Restructuring and support expenses and other
|
14
|
|
|
34
|
|
||
Net loss
|
(104
|
)
|
|
(357
|
)
|
||
Net loss attributable to Caesars
|
(104
|
)
|
|
(359
|
)
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||
(In millions)
|
Depreciation Expense
|
|
Interest Expense
|
|
Rental Payments
|
|
Depreciation Expense
|
|
Interest Expense
|
|
Rental Payments
|
||||||||||||
Harrah’s Las Vegas lease
|
$
|
3
|
|
|
$
|
19
|
|
|
$
|
14
|
|
|
$
|
11
|
|
|
$
|
58
|
|
|
$
|
58
|
|
CEOC LLC leases
|
122
|
|
|
203
|
|
|
115
|
|
|
364
|
|
|
596
|
|
|
434
|
|
||||||
Total
|
$
|
125
|
|
|
$
|
222
|
|
|
$
|
129
|
|
|
$
|
375
|
|
|
$
|
654
|
|
|
$
|
492
|
|
Horseshoe Baltimore Operating Results
|
|||||||
(In millions)
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||||
Casino
|
$
|
42
|
|
|
$
|
168
|
|
Food and beverage
|
3
|
|
|
13
|
|
||
Other revenue
|
2
|
|
|
7
|
|
||
Management fees
|
(1
|
)
|
|
(3
|
)
|
||
Net revenues
|
$
|
46
|
|
|
$
|
185
|
|
|
|
|
|
||||
Income from operations
|
$
|
6
|
|
|
$
|
17
|
|
Interest expense
|
(3
|
)
|
|
(18
|
)
|
||
Loss on extinguishment of debt
|
(12
|
)
|
|
(12
|
)
|
||
Net loss
|
(9
|
)
|
|
(13
|
)
|
||
Net loss attributable to Caesars
|
(3
|
)
|
|
(6
|
)
|
*
|
Not meaningful.
|
(1)
|
See the “Reconciliation of Non-GAAP Financial Measures” discussion later in this MD&A
for a reconciliation of Adjusted
EBITDA.
|
(2)
|
Operating margin is calculated as income from operations divided by net revenues.
|
Net Revenues - Consolidated
|
|||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Fav/(Unfav)
|
|
Nine Months Ended September 30,
|
|
Fav/(Unfav)
|
||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
Casino
|
$
|
1,102
|
|
|
$
|
389
|
|
|
$
|
713
|
|
|
183.3
|
%
|
|
$
|
3,147
|
|
|
$
|
1,199
|
|
|
$
|
1,948
|
|
|
162.5
|
%
|
Food and beverage
|
408
|
|
|
206
|
|
|
202
|
|
|
98.1
|
%
|
|
1,182
|
|
|
617
|
|
|
565
|
|
|
91.6
|
%
|
||||||
Rooms
|
395
|
|
|
253
|
|
|
142
|
|
|
56.1
|
%
|
|
1,150
|
|
|
742
|
|
|
408
|
|
|
55.0
|
%
|
||||||
Other revenue
|
213
|
|
|
145
|
|
|
68
|
|
|
46.9
|
%
|
|
600
|
|
|
409
|
|
|
191
|
|
|
46.7
|
%
|
||||||
Management fees
|
16
|
|
|
—
|
|
|
16
|
|
|
*
|
|
|
46
|
|
|
—
|
|
|
46
|
|
|
*
|
|
||||||
Reimbursed management costs
|
51
|
|
|
—
|
|
|
51
|
|
|
*
|
|
|
151
|
|
|
—
|
|
|
151
|
|
|
*
|
|
||||||
Net revenues
|
$
|
2,185
|
|
|
$
|
993
|
|
|
$
|
1,192
|
|
|
120.0
|
%
|
|
$
|
6,276
|
|
|
$
|
2,967
|
|
|
$
|
3,309
|
|
|
111.5
|
%
|
Net Revenues - Segment
|
|||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Fav/(Unfav)
|
|
Nine Months Ended September 30,
|
|
Fav/(Unfav)
|
||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
Las Vegas
|
$
|
910
|
|
|
$
|
687
|
|
|
$
|
223
|
|
|
32.5
|
%
|
|
$
|
2,804
|
|
|
$
|
2,042
|
|
|
$
|
762
|
|
|
37.3
|
%
|
Other U.S.
|
1,125
|
|
|
284
|
|
|
841
|
|
|
*
|
|
|
3,033
|
|
|
870
|
|
|
2,163
|
|
|
*
|
|
||||||
All Other
|
150
|
|
|
22
|
|
|
128
|
|
|
*
|
|
|
439
|
|
|
55
|
|
|
384
|
|
|
*
|
|
||||||
Net revenues
|
$
|
2,185
|
|
|
$
|
993
|
|
|
$
|
1,192
|
|
|
120.0
|
%
|
|
$
|
6,276
|
|
|
$
|
2,967
|
|
|
$
|
3,309
|
|
|
111.5
|
%
|
*
|
Not meaningful.
|
Cash ADR
(1)
|
||||
Three Months Ended September 30, 2018 versus 2017
|
|
Nine Months Ended September 30, 2018 versus 2017
|
(1)
|
Cash average daily rate (“cash ADR”) is a key indicator by which we evaluate the performance of our properties and is determined by rooms revenues and rooms occupied. 2017 excludes CEOC’s results prior to the Effective Date but includes Horseshoe Baltimore’s results through the deconsolidation date; 2018 includes CEOC LLC’s results but excludes Horseshoe Baltimore’s results.
|
•
|
Casino revenues increased $
85 million
in
2018
compared with
2017
primarily due to the acquisition of Centaur, which contributed
$97 million
in the Other U.S. region. This was partially offset by a decrease in gaming volume and unfavorable hold in the Las Vegas region.
|
•
|
This increase was offset by a decrease in Rooms revenues of $
14 million
in
2018
compared with
2017
primarily due to weaker demand in the leisure segment from a citywide lack of events and conventions in the quarter in the Las Vegas region.
|
•
|
Casino revenues increased $
86 million
in
2018
compared with
2017
primarily due to the acquisition of Centaur, which contributed
$97 million
in the Other U.S. region. This was partially offset by a decrease in gaming volume and unfavorable hold in the Las Vegas region.
|
•
|
Other revenues increased $
19 million
in
2018
compared with
2017
primarily due to revenue from valet and self-parking fees that were fully implemented in Las Vegas in 2017 and increases in retail revenues at certain Las Vegas properties.
|
•
|
This increase was offset by a decrease in Rooms revenues by
$20 million
in
2018
compared with
2017
primarily due to a convention and other citywide events that took place in Las Vegas in
2017
that did not reoccur in
2018
. Food and beverage revenues also decreased by
$8 million
in
2018
compared with
2017
primarily in the Las Vegas region including a decrease in non-recurring banquet revenues in the first half of
2017
.
|
Income from Operations by Category - Consolidated
|
|||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Fav/(Unfav)
|
|
Nine Months Ended September 30,
|
|
Fav/(Unfav)
|
||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
Net revenues
|
$
|
2,185
|
|
|
$
|
993
|
|
|
$
|
1,192
|
|
|
120.0
|
%
|
|
$
|
6,276
|
|
|
$
|
2,967
|
|
|
$
|
3,309
|
|
|
111.5
|
%
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Casino
|
625
|
|
|
210
|
|
|
(415
|
)
|
|
(197.6
|
)%
|
|
1,756
|
|
|
659
|
|
|
(1,097
|
)
|
|
(166.5
|
)%
|
||||||
Food and beverage
|
284
|
|
|
143
|
|
|
(141
|
)
|
|
(98.6
|
)%
|
|
823
|
|
|
426
|
|
|
(397
|
)
|
|
(93.2
|
)%
|
||||||
Rooms
|
123
|
|
|
83
|
|
|
(40
|
)
|
|
(48.2
|
)%
|
|
359
|
|
|
245
|
|
|
(114
|
)
|
|
(46.5
|
)%
|
||||||
Property, general, administrative, and other
|
467
|
|
|
247
|
|
|
(220
|
)
|
|
(89.1
|
)%
|
|
1,340
|
|
|
724
|
|
|
(616
|
)
|
|
(85.1
|
)%
|
||||||
Reimbursable management costs
|
51
|
|
|
—
|
|
|
(51
|
)
|
|
*
|
|
|
151
|
|
|
—
|
|
|
(151
|
)
|
|
*
|
|
||||||
Depreciation and amortization
|
295
|
|
|
150
|
|
|
(145
|
)
|
|
(96.7
|
)%
|
|
843
|
|
|
348
|
|
|
(495
|
)
|
|
(142.2
|
)%
|
||||||
Corporate expense
|
79
|
|
|
40
|
|
|
(39
|
)
|
|
(97.5
|
)%
|
|
237
|
|
|
129
|
|
|
(108
|
)
|
|
(83.7
|
)%
|
||||||
Other operating costs
|
29
|
|
|
36
|
|
|
7
|
|
|
19.4
|
%
|
|
128
|
|
|
53
|
|
|
(75
|
)
|
|
(141.5
|
)%
|
||||||
Total operating expenses
|
1,953
|
|
|
909
|
|
|
(1,044
|
)
|
|
(114.9
|
)%
|
|
5,637
|
|
|
2,584
|
|
|
(3,053
|
)
|
|
(118.2
|
)%
|
||||||
Income from operations
|
$
|
232
|
|
|
$
|
84
|
|
|
$
|
148
|
|
|
176.2
|
%
|
|
$
|
639
|
|
|
$
|
383
|
|
|
$
|
256
|
|
|
66.8
|
%
|
Income from Operations - Segment
|
|||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Fav/(Unfav)
|
|
Nine Months Ended September 30,
|
|
Fav/(Unfav)
|
||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
Las Vegas
|
$
|
141
|
|
|
$
|
107
|
|
|
$
|
34
|
|
|
31.8
|
%
|
|
$
|
535
|
|
|
$
|
415
|
|
|
$
|
120
|
|
|
28.9
|
%
|
Other U.S.
|
172
|
|
|
47
|
|
|
125
|
|
|
*
|
|
|
389
|
|
|
123
|
|
|
266
|
|
|
*
|
|
||||||
All Other
|
(81
|
)
|
|
(70
|
)
|
|
(11
|
)
|
|
(15.7
|
)%
|
|
(285
|
)
|
|
(155
|
)
|
|
(130
|
)
|
|
(83.9
|
)%
|
||||||
Income from operations
|
$
|
232
|
|
|
$
|
84
|
|
|
$
|
148
|
|
|
176.2
|
%
|
|
$
|
639
|
|
|
$
|
383
|
|
|
$
|
256
|
|
|
66.8
|
%
|
*
|
Not meaningful.
|
•
|
Net revenues increased
$71 million
in
2018
compared with
2017
as explained above.
|
•
|
This increase was offset by an increase in operating expenses of
$21 million
in
2018
compared with
2017
primarily due to the acquisition of Centaur which contributed
$83 million
to the increase. In addition to the effect of Centaur, operating expenses decreased due to (i) a decrease of
$33 million
in Depreciation and amortization primarily as a result of lower accelerated depreciation in
2018
compared with
2017
due to the removal and replacement of certain assets in connection with ongoing property renovation projects and (ii) other decreases of
$29 million
primarily due to exit fees of
$26 million
for amounts payable to NV Energy in
2017
.
|
•
|
Net revenues increased
$77 million
in
2018
compared with
2017
as explained above.
|
•
|
This increase was offset by an increase in operating expenses of
$65 million
in
2018
compared with
2017
primarily due to the acquisition of Centaur which contributed
$83 million
to the increase. In addition to the effect of Centaur operating expenses decreased due to:
|
◦
|
A decrease of
$43 million
in direct expenses primarily due to operating efficiencies driven by lower marketing and labor costs.
|
◦
|
A decrease of
$20 million
in Depreciation and amortization primarily as a result of lower accelerated depreciation in
2018
compared with
2017
due to the removal and replacement of certain assets in connection with ongoing property renovation projects.
|
◦
|
These decreases were partially offset by an increase of
$44 million
in Other operating costs primarily due to
$20 million
related to lease termination costs, a
$9 million
loss on asset sales in
2018
and
$6 million
in acquisition costs for Centaur. In addition, during the first quarter of
2017
, CEC benefitted from the reimbursement of
$19 million
for amounts related to the Korea joint venture development that were previously written off. These were partially offset by a decrease in legal fees of
$8 million
in
2018
compared with
2017
.
|
Other Factors Affecting Net Income/(Loss) - Consolidated
|
|||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Fav/(Unfav)
|
|
Nine Months Ended September 30,
|
|
Fav/(Unfav)
|
||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
Interest expense
|
$
|
(341
|
)
|
|
$
|
(120
|
)
|
|
$
|
(221
|
)
|
|
(184.2
|
)%
|
|
$
|
(1,005
|
)
|
|
$
|
(409
|
)
|
|
$
|
(596
|
)
|
|
(145.7
|
)%
|
Restructuring and support expenses and other
|
109
|
|
|
(448
|
)
|
|
557
|
|
|
*
|
|
|
338
|
|
|
(2,319
|
)
|
|
2,657
|
|
|
*
|
|
||||||
Income tax benefit/(provision)
|
111
|
|
|
45
|
|
|
66
|
|
|
146.7
|
%
|
|
134
|
|
|
(34
|
)
|
|
168
|
|
|
*
|
|
*
|
Not meaningful.
|
•
|
A
$19 million
increase recognized as interest expense related to the Harrah’s Las Vegas lease agreement with VICI, which is accounted for as a failed sale-leaseback financing obligation and
$12 million
in interest expense recognized for the CEC Convertible Notes (as defined and further described in
Note 7
), which were not outstanding in the third quarter of
2017
.
|
•
|
These increases were partially offset by a $
29 million
decrease in interest expense resulting from lower interest rates due to the refinancing of debt as well as repayment of loans in
2017
.
|
•
|
A
$136 million
decrease in interest expense resulting from lower interest rates due to the refinancing of debt as well as repayment of loans in
2017
.
|
•
|
This decrease was partially offset by
$58 million
recognized as interest expense related to the Harrah’s Las Vegas lease agreement with VICI, which is accounted for as a failed sale-leaseback financing obligation, and $
40 million
in interest expense recognized for the CEC Convertible Notes, which were not outstanding in the
nine months ended
September 30, 2017
.
|
Reconciliation of Adjusted EBITDA
|
|||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income/(loss) attributable to Caesars
|
$
|
110
|
|
|
$
|
(433
|
)
|
|
$
|
105
|
|
|
$
|
(2,372
|
)
|
Net income/(loss) attributable to noncontrolling interests
|
1
|
|
|
(6
|
)
|
|
1
|
|
|
(7
|
)
|
||||
Income tax (benefit)/provision
|
(111
|
)
|
|
(45
|
)
|
|
(134
|
)
|
|
34
|
|
||||
Restructuring and support expenses and other
(1)
|
(109
|
)
|
|
448
|
|
|
(338
|
)
|
|
2,319
|
|
||||
Interest expense
|
341
|
|
|
120
|
|
|
1,005
|
|
|
409
|
|
||||
Depreciation and amortization
|
295
|
|
|
150
|
|
|
843
|
|
|
348
|
|
||||
Other operating costs
(2)
|
29
|
|
|
36
|
|
|
128
|
|
|
53
|
|
||||
Stock-based compensation expense
|
17
|
|
|
8
|
|
|
55
|
|
|
26
|
|
||||
Other items
(3)
|
27
|
|
|
26
|
|
|
76
|
|
|
59
|
|
||||
Adjusted EBITDA
|
$
|
600
|
|
|
$
|
304
|
|
|
$
|
1,741
|
|
|
$
|
869
|
|
(1)
|
2018 amount primarily represents a change in fair value of our derivative liability related to the conversion option of the CEC Convertible Notes; 2017 amount primarily represents CEC’s costs in connection with the restructuring of CEOC.
|
(2)
|
Amounts primarily represent costs incurred in connection with costs associated with the development activities and reorganization activities, and/or recoveries associated with such items.
|
(3)
|
Other items includes other add-backs and deductions to arrive at Adjusted EBITDA but not separately identified such as litigation awards and settlements, costs associated with CEOC’s restructuring and related litigation, severance and relocation costs, sign-on and retention bonuses, permit remediation costs, and business optimization expenses.
|
Segment Adjusted EBITDA
(1)
|
|||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Fav/(Unfav)
|
|
Nine Months Ended September 30,
|
|
Fav/(Unfav)
|
||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
Las Vegas
|
$
|
307
|
|
|
$
|
235
|
|
|
$
|
72
|
|
|
30.6
|
%
|
|
$
|
1,011
|
|
|
$
|
716
|
|
|
$
|
295
|
|
|
41.2
|
%
|
Other U.S.
|
310
|
|
|
74
|
|
|
236
|
|
|
*
|
|
|
784
|
|
|
197
|
|
|
587
|
|
|
*
|
|
||||||
All Other
|
(17
|
)
|
|
(5
|
)
|
|
(12
|
)
|
|
*
|
|
|
(54
|
)
|
|
(44
|
)
|
|
(10
|
)
|
|
(22.7
|
)%
|
||||||
Adjusted EBITDA
|
$
|
600
|
|
|
$
|
304
|
|
|
$
|
296
|
|
|
97.4
|
%
|
|
$
|
1,741
|
|
|
$
|
869
|
|
|
$
|
872
|
|
|
100.3
|
%
|
*
|
Not meaningful.
|
(1)
|
See reconciliation of Net income/(loss) attributable to Caesars to Adjusted EBITDA by segment in
Note 16
.
|
Summary of Cash and Revolver Capacity
|
|||||||||||||||
|
September 30, 2018
|
||||||||||||||
(In millions)
|
CRC
|
|
CEOC LLC
|
|
Other
|
|
Caesars
|
||||||||
Cash and cash equivalents
|
$
|
500
|
|
|
$
|
370
|
|
|
$
|
693
|
|
|
$
|
1,563
|
|
Revolver capacity
|
1,000
|
|
|
200
|
|
|
—
|
|
|
1,200
|
|
||||
Revolver capacity drawn or committed to letters of credit
|
(136
|
)
|
|
(50
|
)
|
|
—
|
|
|
(186
|
)
|
||||
Total
|
$
|
1,364
|
|
|
$
|
520
|
|
|
$
|
693
|
|
|
$
|
2,577
|
|
(1)
|
Debt principal payments are estimated amounts based on maturity dates and potential borrowings under our revolving credit facility. Interest payments are estimated based on the forward-looking London Interbank Offered Rate curve and include the estimated impact of the
ten
interest rate swap agreements (see
Note 7
). Actual payments may differ from these estimates.
|
(2)
|
Financing obligation principal and interest payments are estimated amounts based on the future minimum lease payments and certain estimates based on contingent rental payments (as described below). Actual payments may differ from the estimates.
|
•
|
Hotel remodeling projects at Bally’s Las Vegas, Flamingo Las Vegas, Paris Las Vegas, Harrah’s Atlantic City, and Horseshoe South Indiana;
|
•
|
Development of CAESARS FORUM;
|
•
|
Development of a casino resort project in Incheon, South Korea through a joint venture (see
Note 2
);
|
•
|
Integration and maintenance costs associated with the Centaur acquisition; and
|
•
|
Information technology, marketing, analytics, accounting, payroll, and other projects that benefit the operating structures.
|
•
|
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, including anticipated benefits from introducing table games to the acquired properties, which is subject to approvals and may not occur;
|
•
|
completion of the sale of Harrah’s Philadelphia Casino and Racetrack to VICI is subject to customary closing conditions, including certain regulatory approvals and third party approvals, which may not be satisfied;
|
•
|
the impact of our new 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;
|
•
|
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;
|
•
|
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;
|
•
|
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;
|
•
|
the potential difficulties in employee retention, recruitment, and motivation;
|
•
|
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, and fines and taxation;
|
•
|
acts of war or terrorist incidents (including the impact of the recent mass shooting in Las Vegas on tourism), 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;
|
•
|
access to insurance for our assets on reasonable terms;
|
•
|
the impact, if any, of unfunded pension benefits under multi-employer pension plans; and
|
•
|
the other factors set forth under “Risk Factors” in our
2017 Annual Report
.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Month
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Dollar Value that May Still Be Purchased Under the Program
(in millions)
|
||||||
July 1 to July 31, 2018
|
|
2,324,248
|
|
|
$
|
11.23
|
|
|
2,324,248
|
|
|
$
|
443
|
|
August 1 to August 31, 2018
|
|
25,674,273
|
|
|
9.89
|
|
|
25,674,273
|
|
|
439
|
|
||
September 1 to September 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
439
|
|
||
|
|
27,998,521
|
|
|
|
|
27,998,521
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed Herewith
|
|
Form
|
|
Period Ending
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
—
|
|
8-K
|
|
—
|
|
10.1
|
|
8/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
X
|
|
|
|
|
|
|
|
11/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
X
|
|
|
|
|
|
|
|
11/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.1
|
|
|
X
|
|
|
|
|
|
|
|
11/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.2
|
|
|
X
|
|
|
|
|
|
|
|
11/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
*
|
|
Furnished herewith.
|
|
|
|
|
CAESARS ENTERTAINMENT CORPORATION
|
|
|
|
|
November 1, 2018
|
By:
|
/S/ KEITH A. CAUSEY
|
|
|
Keith A. Causey
|
|
|
Senior Vice President and Chief Accounting Officer
|
1 Year Caesars Entertainment Chart |
1 Month Caesars Entertainment Chart |
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