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.)
|
|
|
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One Caesars Palace Drive, Las Vegas, Nevada
|
|
89109
|
(Address of principal executive offices)
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(Zip Code)
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Class
|
Outstanding at May 1, 2017
|
Common stock, $0.01 par value
|
148,721,371
|
|
|
|
Page
|
||
Item 1.
|
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Item 2.
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Item 3.
|
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Item 4.
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||
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||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
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||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
(In millions)
|
March 31, 2017
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents ($1,115 and $1,157 attributable to our VIEs)
|
$
|
1,454
|
|
|
$
|
1,513
|
|
Restricted cash ($3,000 and $3,040 attributable to our VIEs)
|
3,041
|
|
|
3,113
|
|
||
Receivables, net ($84 and $76 attributable to our VIEs)
|
159
|
|
|
160
|
|
||
Due from affiliates ($26 and $64 attributable to our VIEs)
|
26
|
|
|
64
|
|
||
Prepayments and other current assets ($80 and $61 attributable to our VIEs)
|
145
|
|
|
118
|
|
||
Inventories ($5 and $7 attributable to our VIEs)
|
17
|
|
|
20
|
|
||
Total current assets
|
4,842
|
|
|
4,988
|
|
||
Property and equipment, net ($2,534 and $2,537 attributable to our VIEs)
|
7,429
|
|
|
7,446
|
|
||
Goodwill ($206 and $206 attributable to our VIEs)
|
1,608
|
|
|
1,608
|
|
||
Intangible assets other than goodwill ($187 and $191 attributable to our VIEs)
|
417
|
|
|
433
|
|
||
Restricted cash ($5 and $5 attributable to our VIEs)
|
105
|
|
|
5
|
|
||
Deferred charges and other assets ($235 and $240 attributable to our VIEs)
|
411
|
|
|
414
|
|
||
Total assets
|
$
|
14,812
|
|
|
$
|
14,894
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Deficit
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable ($114 and $143 attributable to our VIEs)
|
$
|
188
|
|
|
$
|
215
|
|
Due to affiliates ($47 and $94 attributable to our VIEs)
|
67
|
|
|
112
|
|
||
Accrued expenses and other current liabilities ($307 and $312 attributable to our VIEs)
|
641
|
|
|
664
|
|
||
Accrued restructuring and support expenses
|
7,033
|
|
|
6,601
|
|
||
Interest payable ($30 and $14 attributable to our VIEs)
|
133
|
|
|
67
|
|
||
Current portion of long-term debt ($20 and $21 attributable to our VIEs)
|
46
|
|
|
89
|
|
||
Total current liabilities
|
8,108
|
|
|
7,748
|
|
||
Long-term debt ($2,252 and $2,254 attributable to our VIEs)
|
6,743
|
|
|
6,749
|
|
||
Deferred income taxes
|
1,794
|
|
|
1,722
|
|
||
Deferred credits and other liabilities ($34 and $33 attributable to our VIEs)
|
93
|
|
|
93
|
|
||
Total liabilities
|
16,738
|
|
|
16,312
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
||||
Caesars stockholders’ deficit
|
(3,722
|
)
|
|
(3,177
|
)
|
||
Noncontrolling interests
|
1,796
|
|
|
1,759
|
|
||
Total stockholders’ deficit
|
(1,926
|
)
|
|
(1,418
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
14,812
|
|
|
$
|
14,894
|
|
|
Three Months Ended March 31,
|
||||||
(In millions, except per share data)
|
2017
|
|
2016
|
||||
Revenues
|
|
|
|
||||
Casino
|
$
|
532
|
|
|
$
|
538
|
|
Food and beverage
|
196
|
|
|
201
|
|
||
Rooms
|
243
|
|
|
229
|
|
||
Other revenue
|
129
|
|
|
122
|
|
||
Less: casino promotional allowances
|
(137
|
)
|
|
(140
|
)
|
||
Net revenues
|
963
|
|
|
950
|
|
||
Operating expenses
|
|
|
|
||||
Direct
|
|
|
|
||||
Casino
|
283
|
|
|
285
|
|
||
Food and beverage
|
93
|
|
|
93
|
|
||
Rooms
|
63
|
|
|
59
|
|
||
Property, general, administrative, and other
|
234
|
|
|
250
|
|
||
Depreciation and amortization
|
102
|
|
|
112
|
|
||
Corporate expense
|
33
|
|
|
41
|
|
||
Other operating costs
|
(3
|
)
|
|
22
|
|
||
Total operating expenses
|
805
|
|
|
862
|
|
||
Income from operations
|
158
|
|
|
88
|
|
||
Interest expense
|
(147
|
)
|
|
(151
|
)
|
||
Restructuring of CEOC and other
|
(463
|
)
|
|
(237
|
)
|
||
Loss from continuing operations before income taxes
|
(452
|
)
|
|
(300
|
)
|
||
Income tax provision
|
(72
|
)
|
|
(7
|
)
|
||
Loss from continuing operations, net of income taxes
|
(524
|
)
|
|
(307
|
)
|
||
Discontinued operations, net of income taxes
|
—
|
|
|
33
|
|
||
Net loss
|
(524
|
)
|
|
(274
|
)
|
||
Net income attributable to noncontrolling interests
|
(22
|
)
|
|
(34
|
)
|
||
Net loss attributable to Caesars
|
$
|
(546
|
)
|
|
$
|
(308
|
)
|
|
|
|
|
||||
Loss per share - basic and diluted
|
|
|
|
||||
Basic and diluted loss per share from continuing operations
|
$
|
(3.71
|
)
|
|
$
|
(2.35
|
)
|
Basic and diluted earnings per share from discontinued operations
|
—
|
|
|
0.23
|
|
||
Basic and diluted loss per share
|
$
|
(3.71
|
)
|
|
$
|
(2.12
|
)
|
|
|
|
|
||||
Weighted-average common stock outstanding
|
147
|
|
|
145
|
|
|
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, 2015
|
$
|
1
|
|
|
$
|
(21
|
)
|
|
$
|
8,190
|
|
|
$
|
(7,184
|
)
|
|
$
|
1
|
|
|
$
|
987
|
|
|
$
|
1,246
|
|
|
$
|
2,233
|
|
Net income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(308
|
)
|
|
—
|
|
|
(308
|
)
|
|
34
|
|
|
(274
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
(3
|
)
|
|
10
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||||
CIE stock transactions, net
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(5
|
)
|
|
(18
|
)
|
||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||||
Balance as of March 31, 2016
|
$
|
1
|
|
|
$
|
(24
|
)
|
|
$
|
8,187
|
|
|
$
|
(7,492
|
)
|
|
$
|
1
|
|
|
$
|
673
|
|
|
$
|
1,273
|
|
|
$
|
1,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance as of December 31, 2016
|
$
|
1
|
|
|
$
|
(29
|
)
|
|
$
|
7,605
|
|
|
$
|
(10,753
|
)
|
|
(1
|
)
|
|
$
|
(3,177
|
)
|
|
$
|
1,759
|
|
|
$
|
(1,418
|
)
|
|
Net income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(546
|
)
|
|
—
|
|
|
(546
|
)
|
|
22
|
|
|
(524
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
(7
|
)
|
|
8
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||||
Change in noncontrolling interest, net of distributions and contributions
|
—
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||||
Balance as of March 31, 2017
|
$
|
1
|
|
|
$
|
(36
|
)
|
|
$
|
7,614
|
|
|
$
|
(11,300
|
)
|
|
$
|
(1
|
)
|
|
$
|
(3,722
|
)
|
|
$
|
1,796
|
|
|
$
|
(1,926
|
)
|
|
Three Months Ended March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Cash flows provided by operating activities
|
$
|
125
|
|
|
$
|
64
|
|
Cash flows from investing activities
|
|
|
|
||||
Acquisitions of property and equipment, net of change in related payables
|
(72
|
)
|
|
(44
|
)
|
||
Return of investment from discontinued operations
|
—
|
|
|
68
|
|
||
Proceeds from the sale and maturity of investments
|
5
|
|
|
20
|
|
||
Investments in non-consolidated affiliates
|
(10
|
)
|
|
—
|
|
||
Payments to acquire investments
|
(6
|
)
|
|
(3
|
)
|
||
Other
|
—
|
|
|
(1
|
)
|
||
Cash flows provided by/(used in) investing activities
|
(83
|
)
|
|
40
|
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from long-term debt and revolving credit facilities
|
—
|
|
|
55
|
|
||
Repayments of long-term debt and revolving credit facilities
|
(54
|
)
|
|
(104
|
)
|
||
Repurchase of CIE shares and distribution of sale proceeds
|
—
|
|
|
(28
|
)
|
||
Distributions to noncontrolling interest owners
|
(12
|
)
|
|
(6
|
)
|
||
Other
|
(7
|
)
|
|
3
|
|
||
Cash flows used in financing activities
|
(73
|
)
|
|
(80
|
)
|
||
Cash flows from discontinued operations
|
|
|
|
||||
Cash flows from operating activities
|
—
|
|
|
53
|
|
||
Cash flows from investing activities
|
—
|
|
|
(6
|
)
|
||
Cash flows from financing activities
|
—
|
|
|
(68
|
)
|
||
Net cash from discontinued operations
|
—
|
|
|
(21
|
)
|
||
|
|
|
|
||||
Change in cash, cash equivalents, and restricted cash classified as held for sale
|
—
|
|
|
18
|
|
||
|
|
|
|
||||
Net increase/(decrease) in cash, cash equivalents, and restricted cash
|
(31
|
)
|
|
21
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
4,631
|
|
|
1,394
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
4,600
|
|
|
$
|
1,415
|
|
|
|
|
|
||||
Supplemental Cash Flow Information
|
|
|
|
||||
Cash paid for interest
|
$
|
75
|
|
|
$
|
80
|
|
Cash paid for income taxes
|
—
|
|
|
24
|
|
||
Non-cash investing and financing activities:
|
|
|
|
||||
Change in accrued capital expenditures
|
(2
|
)
|
|
9
|
|
•
|
we have limited unrestricted cash available to meet the financial commitments of CEC, primarily resulting from significant expenditures made to (1) defend against the litigation matters disclosed below and (2) support a plan of reorganization for CEOC (the “Restructuring”);
|
•
|
we have made material future commitments to support the Restructuring described below; and
|
•
|
we are a defendant in litigation relating to certain CEOC transactions dating back to 2010 and other legal matters (see
Note 3
) that could result in one or more adverse rulings against us if the Restructuring is not completed.
|
(a)
|
Sixth Amended and Restated Restructuring Support and Forbearance Agreement, dated October 4, 2016, with certain parties holding claims under CEOC’s first lien notes (the “First Lien Bond RSA”);
|
(b)
|
Second Amended Restructuring Support and Forbearance Agreement, dated October 4, 2016, with certain parties holding claims under CEOC’s first lien credit agreement (the “First Lien Bank RSA”);
|
(c)
|
Restructuring Support, Forbearance and Settlement Agreement, dated October 4, 2016, with certain parties holding claims under CEOC’s second lien note agreements (the “Second Lien RSA”);
|
(d)
|
Amendment No. 1 to First Amended and Restated Restructuring Support and Forbearance Agreement, dated October 4, 2016, with certain parties holding claims under CEOC’s subsidiary guaranteed notes (the “SGN RSA”);
|
(e)
|
First Amended and Restated Restructuring Support, Settlement, and Contribution Agreement, dated July 9, 2016, with CEOC (the “CEC RSA”);
|
(f)
|
Amended and Restated Restructuring Support Agreement, dated July 9, 2016, with CAC and CEOC (the “CAC RSA”); and
|
(g)
|
Restructuring Support and Settlement Agreement, dated June 22, 2016, with the unsecured claimholders’ committee in the Chapter 11 cases (the “UCC RSA”).
|
Accrued Restructuring and Support Expenses
|
|||||||
|
Accrued as of
|
||||||
(In millions)
|
March 31, 2017
|
|
December 31, 2016
|
||||
Forbearance fees and other payments to creditors
|
$
|
975
|
|
|
$
|
970
|
|
Bank Guaranty Settlement
|
738
|
|
|
734
|
|
||
Issuance of CEC common stock
|
3,367
|
|
|
2,936
|
|
||
Issuance of CEC Convertible Notes
|
1,630
|
|
|
1,600
|
|
||
PropCo Call Right agreement
|
131
|
|
|
131
|
|
||
Payment of creditor expenses, settlement charges, and other fees
|
157
|
|
|
195
|
|
||
Payment to CEOC
|
35
|
|
|
35
|
|
||
Total accrued
|
$
|
7,033
|
|
|
$
|
6,601
|
|
•
|
Purchase 100% of OpCo common stock for
$700 million
;
|
•
|
Issuance of CEC common stock in exchange for OpCo preferred stock;
|
•
|
PropCo has right of first refusal on the real property assets associated with all new domestic non-Las Vegas gaming facility opportunities, with CEC or OpCo leasing such properties; and
|
•
|
Guarantee of OpCo’s payment obligations to PropCo under the leases of the CEOC Properties.
|
Cash and Available Revolver Capacity
|
|||||||||||||||
|
March 31, 2017
|
||||||||||||||
(In millions)
|
CERP
|
|
CGP
|
|
CES
|
|
Other
|
||||||||
Cash and cash equivalents
|
$
|
224
|
|
|
$
|
1,031
|
|
|
$
|
84
|
|
|
$
|
115
|
|
Revolver capacity
|
270
|
|
|
160
|
|
|
—
|
|
|
—
|
|
||||
Revolver capacity drawn or committed to letters of credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
494
|
|
|
$
|
1,191
|
|
|
$
|
84
|
|
|
$
|
115
|
|
•
|
Litigation commenced by Wilmington Savings Fund Society, FSB on August 4, 2014 (the “Delaware Second Lien Lawsuit”);
|
•
|
Litigation commenced by parties on September 3, 2014 and October 2, 2014 (the “Senior Unsecured Lawsuits”);
|
•
|
Litigation commenced by UMB Bank on November 25, 2014 (the “Delaware First Lien Lawsuit”);
|
•
|
Demands for payment made by Wilmington Savings Fund Society, FSB on February 13, 2015 (the “February 13 Notice”);
|
•
|
Demands for payment made by BOKF, N.A., on February 18, 2015 (the “February 18 Notice”);
|
•
|
Litigation commenced by BOKF, N.A. on March 3, 2015 (the “New York Second Lien Lawsuit”);
|
•
|
Litigation commenced by UMB Bank on June 15, 2015 (the “New York First Lien Lawsuit”); and
|
•
|
Litigation commenced by Wilmington Trust, National Association on October 20, 2015 (the “New York Senior Notes Lawsuit”).
|
(In millions)
|
March 31, 2017
|
|
December 31, 2016
|
||||
Cash and cash equivalents
|
$
|
1,454
|
|
|
$
|
1,513
|
|
Restricted cash, current portion
|
3,041
|
|
|
3,113
|
|
||
Restricted cash, non-current portion
|
105
|
|
|
5
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
4,600
|
|
|
$
|
4,631
|
|
(In millions)
|
March 31, 2017
|
|
December 31, 2016
|
||||
Land and land improvements
|
$
|
3,584
|
|
|
$
|
3,584
|
|
Buildings and leasehold improvements
|
4,164
|
|
|
4,149
|
|
||
Furniture, fixtures, and equipment
|
1,354
|
|
|
1,346
|
|
||
Construction in progress
|
97
|
|
|
55
|
|
||
Total property and equipment
|
9,199
|
|
|
9,134
|
|
||
Less: accumulated depreciation
|
(1,770
|
)
|
|
(1,688
|
)
|
||
Total property and equipment, net
|
$
|
7,429
|
|
|
$
|
7,446
|
|
Depreciation Expense and Capitalized Interest
|
|||||||
|
Three Months Ended March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Depreciation expense
(1)
|
$
|
87
|
|
|
$
|
96
|
|
Capitalized interest
|
1
|
|
|
—
|
|
(1)
|
Depreciation expense in the first quarter of
2017
includes
$5 million
of accelerated depreciation due to asset removal and replacement in connection with property renovations primarily at Planet Hollywood Resort & Casino compared with
$20 million
in
2016
related to property renovations primarily at Harrah’s Las Vegas and Flamingo Las Vegas.
|
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, 2016
|
$
|
285
|
|
|
$
|
1,608
|
|
|
$
|
148
|
|
Amortization
|
(16
|
)
|
|
—
|
|
|
—
|
|
|||
Balance as of March 31, 2017
|
$
|
269
|
|
|
$
|
1,608
|
|
|
$
|
148
|
|
Gross Carrying Value and Accumulated Amortization of Intangible Assets Other Than Goodwill
|
|||||||||||||||||||||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||
(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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
4.2
|
|
$
|
893
|
|
|
$
|
(645
|
)
|
|
$
|
248
|
|
|
$
|
893
|
|
|
$
|
(630
|
)
|
|
$
|
263
|
|
Contract rights
|
7.8
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
||||||
Gaming rights and other
|
7.3
|
|
43
|
|
|
(24
|
)
|
|
19
|
|
|
43
|
|
|
(23
|
)
|
|
20
|
|
||||||
|
|
|
$
|
939
|
|
|
$
|
(670
|
)
|
|
269
|
|
|
$
|
939
|
|
|
$
|
(654
|
)
|
|
285
|
|
||
Non-amortizing
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Trademarks
|
|
126
|
|
|
|
|
|
|
126
|
|
|||||||||||||||
Gaming rights
|
|
22
|
|
|
|
|
|
|
22
|
|
|||||||||||||||
|
|
|
|
|
|
|
148
|
|
|
|
|
|
|
148
|
|
||||||||||
Total intangible assets other than goodwill
|
|
$
|
417
|
|
|
|
|
|
|
$
|
433
|
|
Estimated Fair Value
|
|||||||||||||||
(In millions)
|
Balance
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
March 31, 2017
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Issuance of CEC Convertible Notes
|
$
|
1,630
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,630
|
|
Issuance of CEC common stock
|
2,367
|
|
|
—
|
|
|
2,367
|
|
|
—
|
|
||||
PropCo Call Right
|
131
|
|
|
—
|
|
|
—
|
|
|
131
|
|
||||
Total liabilities at fair value
|
$
|
4,128
|
|
|
$
|
—
|
|
|
$
|
2,367
|
|
|
$
|
1,761
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Issuance of CEC Convertible Notes
|
$
|
1,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,600
|
|
Issuance of CEC common stock
|
1,936
|
|
|
—
|
|
|
1,936
|
|
|
—
|
|
||||
PropCo Call Right
|
131
|
|
|
—
|
|
|
—
|
|
|
131
|
|
||||
Total liabilities at fair value
|
$
|
3,667
|
|
|
$
|
—
|
|
|
$
|
1,936
|
|
|
$
|
1,731
|
|
Changes in Level 3 Fair Value Measurements
|
|||||||
|
Three Months Ended March 31, 2017
|
||||||
(In millions)
|
CEC Convertible Notes
|
|
PropCo Call Right
|
||||
Balance as of beginning of period
|
$
|
1,600
|
|
|
$
|
131
|
|
Loss in restructuring of CEOC and other
|
30
|
|
|
—
|
|
||
Balance as of end of period
|
$
|
1,630
|
|
|
$
|
131
|
|
•
|
Incremental cost of borrowing -
5%
|
•
|
Expected volatility -
30%
|
•
|
Risk-free rate -
2.2%
|
•
|
Ratio of EBITDAR to Initial Rent under Property Lease -
1.67
to 1.00
|
•
|
EBITDAR volatility -
25%
|
•
|
Enterprise value to revenue volatility -
14%
|
•
|
Ratio of initial purchase price to property lease rent -
12.00
to 1.00
|
•
|
EBITDAR to multiple correlation -
0.0%
|
•
|
Composite projected revenue growth rate -
2.4%
|
•
|
Composite projected EBITDAR margin growth rate -
23.2%
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||
(In millions)
|
Face Value
|
|
Book Value
|
|
Book Value
|
||||||
CERP
|
$
|
4,570
|
|
|
$
|
4,517
|
|
|
$
|
4,563
|
|
CGP
|
2,324
|
|
|
2,272
|
|
|
2,275
|
|
|||
Total debt
|
6,894
|
|
|
6,789
|
|
|
6,838
|
|
|||
Current portion of long-term debt
|
(46
|
)
|
|
(46
|
)
|
|
(89
|
)
|
|||
Long-term debt
|
$
|
6,848
|
|
|
$
|
6,743
|
|
|
$
|
6,749
|
|
|
|
|
|
|
|
||||||
Unamortized discounts and deferred finance charges
|
|
|
$
|
105
|
|
|
$
|
110
|
|
||
Fair value
|
$
|
7,132
|
|
|
|
|
|
(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 LIBOR curve. Actual payments may differ from these estimates.
|
(2)
|
See
Note 17
for additional information about CGP’s debt.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
(Dollars in millions)
|
Final
Maturity
|
|
Rate(s)
(1)
|
|
Face Value
|
|
Book Value
|
|
Book Value
|
||||||
CERP Credit Facility
|
|
|
|
|
|
|
|
|
|
||||||
CERP Revolving Credit Facility
(2)
|
2018
|
|
variable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40
|
|
CERP Senior Secured Term Loan
(3)
|
2020
|
|
7.00%
|
|
2,419
|
|
|
2,382
|
|
|
2,387
|
|
|||
CERP Notes
|
|
|
|
|
|
|
|
|
|
||||||
CERP First Lien Notes
|
2020
|
|
8.00%
|
|
1,000
|
|
|
994
|
|
|
993
|
|
|||
CERP Second Lien Notes
|
2021
|
|
11.00%
|
|
1,150
|
|
|
1,140
|
|
|
1,140
|
|
|||
Capital lease obligations and other
|
2017
|
|
various
|
|
1
|
|
|
1
|
|
|
3
|
|
|||
Total CERP Debt
|
|
4,570
|
|
|
4,517
|
|
|
4,563
|
|
||||||
Current portion of CERP long-term debt
|
|
(26
|
)
|
|
(26
|
)
|
|
(68
|
)
|
||||||
CERP long-term debt
|
|
$
|
4,544
|
|
|
$
|
4,491
|
|
|
$
|
4,495
|
|
(1)
|
Interest rate is fixed, except where noted.
|
(2)
|
Variable interest rate for amounts currently borrowed is determined by adding LIBOR to a base rate of 6.00%.
|
(3)
|
Variable interest rate calculated as a fixed rate plus the greater of LIBOR or a 1% floor. The rate is set at the 1% floor as of March 31, 2017.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
(Dollars in millions)
|
Final
Maturity
|
|
Rate(s)
(1)
|
|
Face Value
|
|
Book Value
|
|
Book Value
|
||||||
CGPH Credit Facilities
|
|
|
|
|
|
|
|
|
|
||||||
CGPH Senior Secured Revolving Credit Facility
(2)(3)
|
2019
|
|
variable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CGPH Senior Secured Term Loan
(2)(4)
|
2021
|
|
6.25%
|
|
1,143
|
|
|
1,117
|
|
|
1,119
|
|
|||
CGPH Notes
|
2022
|
|
9.38%
|
|
675
|
|
|
663
|
|
|
662
|
|
|||
Cromwell Credit Facility
(2)(5)
|
2019
|
|
11.00%
|
|
171
|
|
|
167
|
|
|
167
|
|
|||
Horseshoe Baltimore Credit and FF&E Facilities
|
|
|
|
|
|
|
|
|
|
||||||
Horseshoe Baltimore Revolving Facility Loan
(6)
|
2018
|
|
variable
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Horseshoe Baltimore Credit Facility
(5)
|
2020
|
|
8.25%
|
|
296
|
|
|
287
|
|
|
287
|
|
|||
Horseshoe Baltimore FF&E Facility
(5)(7)
|
2019
|
|
8.75%
|
|
20
|
|
|
20
|
|
|
22
|
|
|||
Other secured debt
|
2018
|
|
8.00%
|
|
5
|
|
|
4
|
|
|
4
|
|
|||
Special Improvement District Bonds
|
2037
|
|
5.30%
|
|
14
|
|
|
14
|
|
|
14
|
|
|||
Total CGP Debt
|
|
2,324
|
|
|
2,272
|
|
|
2,275
|
|
||||||
Current portion of CGP long-term debt
|
|
(20
|
)
|
|
(20
|
)
|
|
(21
|
)
|
||||||
CGP long-term debt
|
|
$
|
2,304
|
|
|
$
|
2,252
|
|
|
$
|
2,254
|
|
(1)
|
Interest rate is fixed, except where noted.
|
(2)
|
See
Note 17
.
|
(3)
|
Variable interest rate calculated as LIBOR plus 5.00%.
|
(4)
|
Variable interest rate calculated as a fixed rate plus the greater of LIBOR or a 1% floor. The rate is set at the 1% floor as of March 31, 2017.
|
(5)
|
Variable interest rate calculated as a fixed rate plus the greater of LIBOR or a 1.25% floor. The rate is set at the 1.25% floor as of March 31, 2017.
|
(6)
|
Variable interest rate calculated as LIBOR plus 7.00%.
|
(7)
|
This represents an equipment financing term loan facility.
|
Credit Facility
|
|
Covenant Type
|
|
Effective Period
|
|
Requirement
|
|
CERP Credit Facility
|
|
CERP Maximum SSLR
|
|
From inception
|
|
8.00
|
to 1.00
|
CGPH Senior Secured Term Loan
|
|
CGPH Maximum SSLR
|
|
From inception
|
|
6.00
|
to 1.00
|
Horseshoe Baltimore Credit and FF&E Facilities
(1)
|
|
CBAC Maximum SSLR
|
|
Q1 - Q4 2017
|
|
6.00
|
to 1.00
|
|
CBAC Maximum SSLR
|
|
Q1 2018 and thereafter
|
|
4.75
|
to 1.00
|
|
Cromwell Credit Facility
(2)
|
|
Cromwell Maximum SSLR
|
|
Q2 2016 - Q1 2017
|
|
5.00
|
to 1.00
|
|
Cromwell Maximum SSLR
|
|
Q2 2017 and thereafter
|
|
4.75
|
to 1.00
|
(1)
|
CBAC Borrower, LLC (“CBAC”) is a joint venture in which Caesars Baltimore Investment Company, LLC (“CBIC”) holds an interest. CBIC is a wholly owned subsidiary of CGP.
|
(2)
|
See
Note 17
.
|
Basic and Dilutive Net Earnings Per Share Reconciliation
|
|||||||
|
Three Months Ended March 31,
|
||||||
(In millions, except per share data)
|
2017
|
|
2016
|
||||
Loss from continuing operations attributable to Caesars, net of income taxes
|
$
|
(546
|
)
|
|
$
|
(341
|
)
|
Income from discontinued operations attributable to Caesars, net of income taxes
|
—
|
|
|
33
|
|
||
Net loss attributable to Caesars
|
$
|
(546
|
)
|
|
$
|
(308
|
)
|
|
|
|
|
||||
Weighted-average common stock outstanding
|
147
|
|
|
145
|
|
||
|
|
|
|
||||
Basic and diluted loss per share from continuing operations
|
$
|
(3.71
|
)
|
|
$
|
(2.35
|
)
|
Basic and diluted earnings per share from discontinued operations
|
—
|
|
|
0.23
|
|
||
Basic and diluted loss per share
|
$
|
(3.71
|
)
|
|
$
|
(2.12
|
)
|
Weighted-Average Number of Anti-Dilutive Shares Excluded from Calculation of EPS
|
|||||
|
Three Months Ended March 31,
|
||||
(In millions)
|
2017
|
|
2016
|
||
Stock options
|
11
|
|
|
11
|
|
Restricted stock units and awards
|
8
|
|
|
6
|
|
Total anti-dilutive common stock
|
19
|
|
|
17
|
|
Estimated Retail Value of Casino Promotional Allowances
|
|||||||
|
Three Months Ended March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Food and beverage
|
$
|
70
|
|
|
$
|
73
|
|
Rooms
|
59
|
|
|
60
|
|
||
Other
|
8
|
|
|
7
|
|
||
|
$
|
137
|
|
|
$
|
140
|
|
Estimated Cost of Providing Casino Promotional Allowances
|
|||||||
|
Three Months Ended March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Food and beverage
|
$
|
43
|
|
|
$
|
44
|
|
Rooms
|
20
|
|
|
20
|
|
||
Other
|
5
|
|
|
3
|
|
||
|
$
|
68
|
|
|
$
|
67
|
|
Composition of Caesars Entertainment Stock-Based Compensation Expense
|
|||||||
|
Three Months Ended March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Corporate expense
|
$
|
7
|
|
|
$
|
8
|
|
Property, general, administrative, and other
|
1
|
|
|
2
|
|
||
Total stock-based compensation expense
|
$
|
8
|
|
|
$
|
10
|
|
Outstanding at End of Period
|
|||||||||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||
|
Quantity
(1)
|
|
Wtd Avg
(2)
|
|
Quantity
|
|
Wtd Avg
(2)
|
||||||
Stock options
(3)
|
9,735,585
|
|
|
$
|
10.29
|
|
|
9,820,168
|
|
|
$
|
11.69
|
|
Restricted stock units
|
5,886,330
|
|
|
8.00
|
|
|
8,447,922
|
|
|
7.95
|
|
(1)
|
There were no grants of stock options or restricted stock units related to CEC common stock during the
three months ended
March 31, 2017
.
|
(2)
|
Represents weighted average exercise price for stock options and weighted average fair value for restricted stock units.
|
(3)
|
On March 14, 2017, we modified vested and unvested stock options held by active employees with exercise prices above the then-current market price of CEC’s common stock to have an exercise price of
$9.45
.
|
Composition of CIE Stock-Based Compensation Expense
|
|||||||
|
Three Months Ended March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Property, general, administrative, and other
|
$
|
—
|
|
|
$
|
13
|
|
Income Tax Allocation
|
|||||||
|
Three Months Ended March 31,
|
||||||
(Dollars in millions)
|
2017
|
|
2016
|
||||
Loss from continuing operations, before income taxes
|
$
|
(452
|
)
|
|
$
|
(300
|
)
|
Income tax provision
|
$
|
(72
|
)
|
|
$
|
(7
|
)
|
Effective tax rate
|
(15.9
|
)%
|
|
(2.3
|
)%
|
||
|
|
|
|
||||
Discontinued operations, before income taxes
|
$
|
—
|
|
|
$
|
66
|
|
Income tax provision
|
$
|
—
|
|
|
$
|
(33
|
)
|
•
|
Repurchased all of the shares of CIE common stock held by Rock Gaming Interactive LLC, and its other minority investors (collectively, the "Minority Investors") in exchange for the right to receive cash payments representing the fair market value of the shares of CIE common stock at Closing.
|
•
|
Accelerated the vesting of all of the outstanding options, restricted stock units and warrants of CIE (collectively, "CIE equity awards") and canceled all such CIE equity awards in exchange for the right to receive cash payments equal to the intrinsic value of such awards.
|
Effect on Statements of Operations of Discontinued Operations
|
|||
(In millions)
|
Three Months Ended March 31, 2016
|
||
Revenues
|
|
||
Social and mobile games
|
$
|
218
|
|
Operating expenses
|
|
||
Platform fees
|
64
|
|
|
Property, general, administrative, and other
(1)
|
88
|
|
|
Total operating expenses
|
152
|
|
|
Pre-tax income from discontinued operations
|
66
|
|
|
Income tax provision
|
(33
|
)
|
|
Total income from discontinued operations, net of income taxes
|
$
|
33
|
|
(1)
|
Property, general, administrative, and other includes stock-based compensation expense directly identifiable with employees of the SMG Business of
$15 million
for the
three months ended
March 31, 2016
.
|
|
Three Months Ended March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Transactions with Sponsors and their affiliates
|
|
|
|
||||
Reimbursements and expenses
|
$
|
—
|
|
|
$
|
6
|
|
Expenses paid to Sponsors’ portfolio companies
|
—
|
|
|
1
|
|
||
Expenses paid on behalf of CAC
|
9
|
|
|
6
|
|
||
Transactions with CEOC
|
|
|
|
||||
Shared services allocated expenses to CEOC
|
96
|
|
|
91
|
|
||
Shared services allocated expenses from CEOC
|
23
|
|
|
25
|
|
||
Management fees incurred
|
11
|
|
|
10
|
|
||
Octavius Tower lease revenue
|
9
|
|
|
9
|
|
||
Other expenses incurred
|
4
|
|
|
7
|
|
|
Three Months Ended March 31, 2016
|
||||||||||||||||||
(In millions)
|
CERP
|
|
CGP
|
|
Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Other revenues
|
$
|
76
|
|
|
$
|
50
|
|
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
$
|
122
|
|
Net revenues
|
528
|
|
|
426
|
|
|
1
|
|
|
(5
|
)
|
|
950
|
|
|||||
Depreciation and amortization
|
73
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|||||
Income/(loss) from operations
|
78
|
|
|
51
|
|
|
(41
|
)
|
|
—
|
|
|
88
|
|
|||||
Interest expense
|
(99
|
)
|
|
(52
|
)
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|||||
Restructuring of CEOC and other
|
(1
|
)
|
|
1
|
|
|
(237
|
)
|
|
—
|
|
|
(237
|
)
|
|||||
Income tax benefit/(provision)
|
6
|
|
|
1
|
|
|
(14
|
)
|
|
—
|
|
|
(7
|
)
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||
(In millions)
|
CERP
|
|
CGP
|
|
Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Net income/(loss) attributable to company
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
(560
|
)
|
|
$
|
—
|
|
|
$
|
(546
|
)
|
Net income/(loss) attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
23
|
|
|
—
|
|
|
22
|
|
|||||
Income tax provision
|
6
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
72
|
|
|||||
Restructuring of CEOC and other
|
—
|
|
|
—
|
|
|
463
|
|
|
—
|
|
|
463
|
|
|||||
Interest expense
|
98
|
|
|
48
|
|
|
1
|
|
|
—
|
|
|
147
|
|
|||||
Depreciation and amortization
|
56
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|||||
Corporate expense
|
10
|
|
|
7
|
|
|
16
|
|
|
—
|
|
|
33
|
|
|||||
Other operating costs
|
1
|
|
|
6
|
|
|
(10
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Property EBITDA
|
$
|
177
|
|
|
$
|
114
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
290
|
|
|
Three Months Ended March 31, 2016
|
||||||||||||||||||
(In millions)
|
CERP
|
|
CGP
|
|
Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Net income/(loss) attributable to company
|
$
|
(16
|
)
|
|
$
|
30
|
|
|
$
|
(322
|
)
|
|
$
|
—
|
|
|
$
|
(308
|
)
|
Net income attributable to noncontrolling interests
|
—
|
|
|
4
|
|
|
30
|
|
|
—
|
|
|
34
|
|
|||||
Discontinued operations, net of income taxes
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|||||
Income tax (benefit)/provision
|
(6
|
)
|
|
(1
|
)
|
|
14
|
|
|
—
|
|
|
7
|
|
|||||
Restructuring of CEOC and other
|
1
|
|
|
(1
|
)
|
|
237
|
|
|
—
|
|
|
237
|
|
|||||
Interest expense
|
99
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
151
|
|
|||||
Depreciation and amortization
|
73
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|||||
Corporate expense
|
11
|
|
|
7
|
|
|
24
|
|
|
(1
|
)
|
|
41
|
|
|||||
Other operating costs
|
2
|
|
|
1
|
|
|
19
|
|
|
—
|
|
|
22
|
|
|||||
CIE stock-based compensation
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||
Property EBITDA
|
$
|
164
|
|
|
$
|
111
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
276
|
|
Condensed Balance Sheets - By Segment
|
|||||||||||||||||||
|
March 31, 2017
|
||||||||||||||||||
(In millions)
|
CERP
|
|
CGP
|
|
Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Total assets
|
$
|
6,959
|
|
|
$
|
7,290
|
|
|
$
|
1,217
|
|
|
$
|
(654
|
)
|
|
$
|
14,812
|
|
Total liabilities
|
5,876
|
|
|
2,664
|
|
|
8,263
|
|
|
(65
|
)
|
|
16,738
|
|
|
December 31, 2016
|
||||||||||||||||||
(In millions)
|
CERP
|
|
CGP
|
|
Other
|
|
Elimination
|
|
Caesars
|
||||||||||
Total assets
|
$
|
6,941
|
|
|
$
|
7,353
|
|
|
$
|
1,246
|
|
|
$
|
(646
|
)
|
|
$
|
14,894
|
|
Total liabilities
|
5,903
|
|
|
2,709
|
|
|
7,758
|
|
|
(58
|
)
|
|
16,312
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Caesars Entertainment Resort Properties (“CERP”); and
|
•
|
Caesars Growth Partners (“CGP”).
|
•
|
we have limited unrestricted cash available to meet the financial commitments of CEC, primarily resulting from significant expenditures made to (1) defend against the litigation matters disclosed below and (2) support a plan of reorganization for CEOC (the “Restructuring”);
|
•
|
we have made material future commitments to support the Restructuring described below; and
|
•
|
we are a defendant in litigation relating to certain CEOC transactions dating back to 2010 and other legal matters (see
Note 3
) that could result in one or more adverse rulings against us if the Restructuring is not completed.
|
Consolidated Operating Results
|
||||||||||||||
|
Three Months Ended March 31,
|
|
Fav/(Unfav)
|
|||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
Casino revenues
|
$
|
532
|
|
|
$
|
538
|
|
|
$
|
(6
|
)
|
|
(1.1
|
)%
|
Net revenues
|
963
|
|
|
950
|
|
|
13
|
|
|
1.4
|
%
|
|||
Income from operations
|
158
|
|
|
88
|
|
|
70
|
|
|
79.5
|
%
|
|||
Restructuring of CEOC and other
|
(463
|
)
|
|
(237
|
)
|
|
(226
|
)
|
|
(95.4
|
)%
|
|||
Loss from continuing operations, net of income taxes
|
(524
|
)
|
|
(307
|
)
|
|
(217
|
)
|
|
(70.7
|
)%
|
|||
Discontinued operations, net of income taxes
|
—
|
|
|
33
|
|
|
(33
|
)
|
|
(100.0
|
)%
|
|||
Net loss attributable to Caesars
|
(546
|
)
|
|
(308
|
)
|
|
(238
|
)
|
|
(77.3
|
)%
|
|||
Property EBITDA
(1)
|
290
|
|
|
276
|
|
|
14
|
|
|
5.1
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Operating margin
(2)
|
16.4
|
%
|
|
9.3
|
%
|
|
—
|
|
|
7.1 pts
|
|
(1)
|
See the Reconciliation of Non-GAAP Financial Measures discussion later in this
MD&A for a reconciliation of
Property EBITDA.
|
(2)
|
Operating margin is calculated as income from operations divided by net revenues.
|
Net Revenues by Category - Consolidated
|
||||||||||||||
|
Three Months Ended March 31,
|
|
Fav/(Unfav)
|
|||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
Casino
|
$
|
532
|
|
|
$
|
538
|
|
|
$
|
(6
|
)
|
|
(1.1
|
)%
|
Food and beverage
|
196
|
|
|
201
|
|
|
(5
|
)
|
|
(2.5
|
)%
|
|||
Rooms
|
243
|
|
|
229
|
|
|
14
|
|
|
6.1
|
%
|
|||
Other
|
129
|
|
|
122
|
|
|
7
|
|
|
5.7
|
%
|
|||
Less: casino promotional allowances (“Casino promo”)
|
(137
|
)
|
|
(140
|
)
|
|
3
|
|
|
2.1
|
%
|
|||
Net revenues
|
$
|
963
|
|
|
$
|
950
|
|
|
$
|
13
|
|
|
1.4
|
%
|
Net Revenues - Segment
|
||||||||||||||
|
Three Months Ended March 31,
|
|
Fav/(Unfav)
|
|||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
CERP
|
$
|
546
|
|
|
$
|
528
|
|
|
$
|
18
|
|
|
3.4
|
%
|
CGP
|
421
|
|
|
426
|
|
|
(5
|
)
|
|
(1.2
|
)%
|
|||
Other
|
(4
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
%
|
|||
Net revenues
|
$
|
963
|
|
|
$
|
950
|
|
|
$
|
13
|
|
|
1.4
|
%
|
(1)
|
Average cash 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.
|
•
|
Rooms revenues increased
$14 million
, or
10.3%
during the
first quarter of 2017
. Increased resort fees and improved hotel yield continued to drive an increase in our cash ADR to
$138
in
2017
from
$123
in
2016
. Harrah’s Las Vegas had an
18%
increase in room nights available during the
first quarter of 2017
compared with the prior year period due to construction at the property during the first quarter of
2016
, which contributed to an increase in rooms revenues of
$6 million
in
2017
.
|
•
|
Casino revenues increased
$8 million
, or
2.9%
, during the
first quarter of 2017
primarily due to higher gaming volumes.
|
•
|
Casino revenues declined
$13 million
, or
4.9%
, during the
first quarter of 2017
due to unfavorable gaming hold, as well as unfavorable gaming volumes primarily at Harrah’s New Orleans and Horseshoe Baltimore, which also was affected by increased competition and a short-term dealer shortage.
|
•
|
Other revenues increased
$5 million
, or
10.0%
, primarily due to new performers and additional shows at Planet Hollywood Resort & Casino (“Planet Hollywood”), which contributed higher entertainment revenues for the
first quarter of 2017
.
|
•
|
Cash ADR increased to
$147
in 2017 from
$136
in
2016
; however, Planet Hollywood had a reduction of
17%
in room nights available in during the
first quarter of 2017
compared with the prior year period due to construction at the property in the current year.
|
*
|
Not meaningful.
|
Income/(Loss) from Operations - Segment
|
||||||||||||||
|
Three Months Ended March 31,
|
|
Fav/(Unfav)
|
|||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
CERP
|
$
|
110
|
|
|
$
|
78
|
|
|
$
|
32
|
|
|
41.0
|
%
|
CGP
|
55
|
|
|
51
|
|
|
4
|
|
|
7.8
|
%
|
|||
Other
|
(7
|
)
|
|
(41
|
)
|
|
34
|
|
|
82.9
|
%
|
|||
Income from operations
|
$
|
158
|
|
|
$
|
88
|
|
|
$
|
70
|
|
|
79.5
|
%
|
Interest Expense - Segment
|
||||||||||||||
|
Three Months Ended March 31,
|
|
Fav/(Unfav)
|
|||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
CERP
|
98
|
|
|
99
|
|
|
1
|
|
|
1.0
|
%
|
|||
CGP
|
48
|
|
|
52
|
|
|
4
|
|
|
7.7
|
%
|
|||
Other
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
(100.0
|
)%
|
|||
Interest expense
|
$
|
147
|
|
|
$
|
151
|
|
|
$
|
4
|
|
|
2.6
|
%
|
Other Factors Affecting Net Loss - Consolidated
|
||||||||||||||
|
Three Months Ended March 31,
|
|
Fav/(Unfav)
|
|||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
Restructuring of CEOC and other
|
$
|
(463
|
)
|
|
$
|
(237
|
)
|
|
$
|
(226
|
)
|
|
(95.4
|
)%
|
Income tax provision
|
(72
|
)
|
|
(7
|
)
|
|
(65
|
)
|
|
*
|
|
|||
Discontinued operations, net of income taxes
|
—
|
|
|
33
|
|
|
(33
|
)
|
|
(100.0
|
)%
|
*
|
Not meaningful.
|
Summary of Cash and Revolver Capacity
|
|||||||||||||||
|
March 31, 2017
|
||||||||||||||
(In millions)
|
CERP
|
|
CGP
|
|
CES
|
|
Other
|
||||||||
Cash and cash equivalents
|
$
|
224
|
|
|
$
|
1,031
|
|
|
$
|
84
|
|
|
$
|
115
|
|
Revolver capacity
|
270
|
|
|
160
|
|
|
—
|
|
|
—
|
|
||||
Revolver capacity drawn or committed to letters of credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
494
|
|
|
$
|
1,191
|
|
|
$
|
84
|
|
|
$
|
115
|
|
Annual Estimated Debt Service Requirements
|
|||||||||||||||||||||||||||
(In millions)
|
Remaining 2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
CERP
|
$
|
360
|
|
|
$
|
415
|
|
|
$
|
425
|
|
|
$
|
3,710
|
|
|
$
|
1,280
|
|
|
$
|
—
|
|
|
$
|
6,190
|
|
CGP
(1)
|
166
|
|
|
215
|
|
|
387
|
|
|
460
|
|
|
1,189
|
|
|
727
|
|
|
3,144
|
|
|||||||
Total principal and interest
|
$
|
526
|
|
|
$
|
630
|
|
|
$
|
812
|
|
|
$
|
4,170
|
|
|
$
|
2,469
|
|
|
$
|
727
|
|
|
$
|
9,334
|
|
(1)
|
See
Note 17
for additional information about CGP’s debt.
|
Summary of Capital Expenditures
|
|||||||||||
|
Three Months Ended March 31,
|
|
Increase/
(Decrease) |
||||||||
(In millions)
|
2017
|
|
2016
|
|
|||||||
Development
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
Renovation/refurbishment
|
59
|
|
|
37
|
|
|
22
|
|
|||
Other
|
13
|
|
|
5
|
|
|
8
|
|
|||
Total capital expenditures
|
$
|
72
|
|
|
$
|
44
|
|
|
$
|
28
|
|
|
|
|
|
|
|
||||||
Included in capital expenditures:
|
|
|
|
|
|
||||||
Capitalized payroll costs
|
$
|
1
|
|
|
$
|
—
|
|
|
|
||
Capitalized interest
|
1
|
|
|
—
|
|
|
|
•
|
Hotel remodeling projects at CGP’s Planet Hollywood, Bally’s Las Vegas, and Harrah’s New Orleans;
|
•
|
Hotel remodeling projects at CERP’s Flamingo Las Vegas, Harrah’s Atlantic City, and Harrah’s Las Vegas;
|
•
|
Hospitality and maintenance projects; and
|
•
|
IT, marketing, analytics, accounting, payroll, and other projects that benefit the operating structures.
|
Reconciliation of Property EBITDA
|
|||||||
|
Three Months Ended March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Net loss attributable to Caesars
|
$
|
(546
|
)
|
|
$
|
(308
|
)
|
Net income attributable to noncontrolling interests
|
22
|
|
|
34
|
|
||
Discontinued operations, net of income taxes
|
—
|
|
|
(33
|
)
|
||
Income tax provision
|
72
|
|
|
7
|
|
||
Restructuring of CEOC and other
|
463
|
|
|
237
|
|
||
Interest expense
|
147
|
|
|
151
|
|
||
Depreciation and amortization
|
102
|
|
|
112
|
|
||
Corporate expense
|
33
|
|
|
41
|
|
||
Other operating costs
|
(3
|
)
|
|
22
|
|
||
CIE stock-based compensation
|
—
|
|
|
13
|
|
||
Property EBITDA
|
$
|
290
|
|
|
$
|
276
|
|
Segment Property EBITDA
(1)
|
||||||||||||||
|
Three Months Ended March 31,
|
|
Fav/(Unfav)
|
|||||||||||
|
|
|||||||||||||
(Dollars in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
CERP
|
$
|
177
|
|
|
$
|
164
|
|
|
$
|
13
|
|
|
7.9
|
%
|
CGP
|
114
|
|
|
111
|
|
|
3
|
|
|
2.7
|
%
|
|||
Other
|
(1
|
)
|
|
1
|
|
|
(2
|
)
|
|
*
|
|
|||
Property EBITDA
|
$
|
290
|
|
|
$
|
276
|
|
|
$
|
14
|
|
|
5.1
|
%
|
*
|
Not meaningful.
|
(1)
|
See reconciliation of net income/(loss) to Property EBITDA by segment at
Note 16
.
|
•
|
the outcome of currently pending or threatened litigation and demands for payment by certain creditors;
|
•
|
the effects of CEOC’s bankruptcy on CEOC and its subsidiaries and affiliates, including Caesars Entertainment, and the interest of various creditors, equity holders and other constituents;
|
•
|
the ability to retain key employees during the Restructuring;
|
•
|
risks associated with third party motions in the Chapter 11 Case, which may hinder or delay CEOC’s ability to consummate the Third Amended Plan;
|
•
|
the ability (or inability) of CEC and CEOC to satisfy the conditions to the effectiveness of the Third Amended Plan;
|
•
|
adverse effects of the Chapter 11 proceedings and related litigation on Caesars Entertainment’s liquidity or results of operations;
|
•
|
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 financial results of our consolidated businesses;
|
•
|
the impact of our substantial indebtedness and the restrictions in our debt agreements;
|
•
|
access to available and reasonable financing on a timely basis, including the ability of the Company to refinance its indebtedness on acceptable terms;
|
•
|
the ability of our customer tracking, customer loyalty, and yield management programs to continue to increase customer loyalty and same-store or hotel sales;
|
•
|
changes in the extensive governmental regulations to which we are subject, and changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions, disciplines and fines of courts, regulators and governmental bodies;
|
•
|
our ability to recoup costs of capital investments through higher revenues;
|
•
|
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;
|
•
|
the ability to timely and cost-effectively integrate companies that we acquire into our operations;
|
•
|
the potential difficulties in employee retention and recruitment as a result of our substantial indebtedness or any other factor;
|
•
|
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;
|
•
|
litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation;
|
•
|
acts of war or terrorist incidents, 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 of our facilities;
|
•
|
the effects of environmental and structural building conditions relating to our properties;
|
•
|
access to insurance on reasonable terms for our assets;
|
•
|
the impact, if any, of unfunded pension benefits under multi-employer pension plans; and
|
•
|
the other factors set forth under “Risk Factors” in our
2016 Annual Report
.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
•
|
Litigation commenced by Wilmington Savings Fund Society, FSB on August 4, 2014 (the “Delaware Second Lien Lawsuit”)
|
•
|
Litigation commenced by parties on September 3, 2014 and October 2, 2014 (the “Senior Unsecured Lawsuits”)
|
•
|
Litigation commenced by UMB Bank on November 25, 2014 (the “Delaware First Lien Lawsuit”)
|
•
|
Demands for payment made by Wilmington Savings Fund Society, FSB on February 13, 2015 (the “February 13 Notice”)
|
•
|
Demands for payment made by BOKF, N.A., on February 18, 2015 (the “February 18 Notice”)
|
•
|
Litigation commenced by BOKF, N.A. on March 3, 2015 (the “New York Second Lien Lawsuit”)
|
•
|
Litigation commenced by UMB Bank on June 15, 2015 (the “New York First Lien Lawsuit”)
|
•
|
Litigation commenced by Wilmington Trust, National Association on October 20, 2015 (the “New York Senior Notes Lawsuit”)
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
First Amendment to Amended and Restated Agreement and Plan of Merger, dated as of February 20, 2017, between Caesars Entertainment Corporation and Caesars Acquisition Company.
|
|
—
|
|
8-K
|
|
—
|
|
2.1
|
|
2/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Third Amendment to the Amended and Restated Limited Liability Company Agreement of Caesars Growth Partners, LLC, dated as of February 13, 2017, entered into by and among Caesars Acquisition Company, in its capacity as Caesars Growth Partners, LLC’s managing member and as a member of Caesars Growth Partners, LLC, HIE Holdings, Inc., Harrah’s BC, Inc. and Caesars Entertainment Corporation.
|
|
—
|
|
10-K
|
|
12-31-2016
|
|
10.93
|
|
2/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
Third Amendment to the Employment Agreement between Caesars Enterprise Services, LLC and Mark Frissora, dated February 5, 2015 and effective as of March 8, 2017.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
Amendment No. 1 to the Employment Agreement between Caesars Enterprise Services, LLC and Eric Hession, dated November 10, 2014 and effective as of March 8, 2017.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
Amendment No. 1 to the Employment Agreement between Caesars Enterprise Services, LLC and Thomas Jenkin, dated January 3, 2012 and effective as of March 8, 2017.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
Amendment No. 1 to the Employment Agreement between Caesars Enterprise Services, LLC and Timothy R. Donovan, dated April 2, 2009 and effective as of March 8, 2017.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
Amendment No. 1 to the Employment Agreement between Caesars Enterprise Services, LLC and Robert J. Morse, dated April 14, 2014 and effective as of March 8, 2017.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.1
|
|
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.2
|
|
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed Herewith
|
|
Form
|
|
Period Ending
|
|
Exhibit
|
|
Filing Date
|
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
|
|
|
|
|
|
|
|
|
† Denotes a management contract or compensatory plan or arrangement.
|
* Furnished herewith.
|
|
|
|
|
CAESARS ENTERTAINMENT CORPORATION
|
|
|
|
|
May 2, 2017
|
By:
|
/S/ KEITH A. CAUSEY
|
|
|
Keith A. Causey
|
|
|
Senior Vice President and Chief Accounting Officer
|
|
CAESARS ENTERPRISE SERVICES, LLC
|
|
|
|
|
|
By:
|
/S/ MARY THOMAS
|
|
|
By: Mary Thomas
|
|
|
Title: EVP Human Resources
|
|
|
|
|
CAESARS ENTERTAINMENT CORPORATION
|
|
|
|
|
|
By:
|
/S/ MARY THOMAS
|
|
|
By: Mary Thomas
|
|
|
Title: EVP Human Resources
|
|
|
|
|
|
/S/ MARK FRISSORA
|
|
|
Mark Frissora
|
|
|
Executive
|
|
CAESARS ENTERPRISE SERVICES, LLC
|
|
|
|
|
|
By:
|
/S/ MARY THOMAS
|
|
|
By: Mary Thomas
|
|
|
Title: EVP Human Resources
|
|
|
|
|
|
/S/ ERIC HESSION
|
|
|
Eric Hession
|
|
|
Executive
|
|
CAESARS ENTERPRISE SERVICES, LLC
|
|
|
|
|
|
By:
|
/S/ MARY THOMAS
|
|
|
By: Mary Thomas
|
|
|
Title: EVP Human Resources
|
|
|
|
|
|
/S/ THOMAS JENKIN
|
|
|
Thomas Jenkin
|
|
|
Executive
|
|
CAESARS ENTERPRISE SERVICES, LLC
|
|
|
|
|
|
By:
|
/S/ MARY THOMAS
|
|
|
By: Mary Thomas
|
|
|
Title: EVP Human Resources
|
|
|
|
|
|
/S/ TIMOTHY R. DONOVAN
|
|
|
Timothy R. Donovan
|
|
|
Executive
|
|
CAESARS ENTERPRISE SERVICES, LLC
|
|
|
|
|
|
By:
|
/S/ MARY THOMAS
|
|
|
By: Mary Thomas
|
|
|
Title: EVP Human Resources
|
|
|
|
|
|
/S/ ROBERT J. MORSE
|
|
|
Robert J. Morse
|
|
|
Executive
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Caesars Entertainment Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/S/ MARK P. FRISSORA
|
Mark P. Frissora
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Caesars Entertainment Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/S/ ERIC HESSION
|
Eric Hession
|
Executive Vice President and Chief Financial Officer
|
/S/ MARK P. FRISSORA
|
Mark P. Frissora
|
President and Chief Executive Officer
|
/S/ ERIC HESSION
|
Eric Hession
|
Executive Vice President and Chief Financial Officer
|