65




UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

2021

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                 

Commission File No.

001-3662936629

ELDORADO RESORTS,

CAESARS ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

Nevada

46-3657681

Delaware

46-3657681
(State or other jurisdiction of


incorporation or organization)

(I.R.S. Employer


Identification No.)

100 West Liberty Street, Suite 1150,12th Floor, Reno, Nevada 89501

(Address and zip code of principal executive offices)

(775) 328‑0100

328-0100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.00001 par value

ERI

CZR

NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑acceleratednon-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑212b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non‑acceleratedNon-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑212b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the Registrant’s Common Stock, $0.00001 par value per share, outstanding as of May 6, 2020April 30, 2021 was 77,816,973.

208,698,623.

ELDORADO RESORTS,
CAESARS ENTERTAINMENT, INC.

QUARTERLY REPORT FOR THE THREE MONTHS ENDED

MARCH 31, 2020

TABLE OF CONTENTS

Page

Page

2

2

Consolidated Condensed Balance Sheets at March 31, 2020 (unaudited) and December 31, 2019

2

Consolidated Condensed Statements of Operations for the Three Months Ended March 31, 2020 and 2019 (unaudited)

3

Consolidated Condensed Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2020 and 2019 (unaudited)Loss

4

Consolidated Condensed Statements of Stockholders’ Equity for the Three Months Ended March 31, 2020 and 2019 (unaudited)

5

Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited)

6

Condensed Notes to Consolidated Condensed Financial Statements (unaudited)

7

29

34

49

50

49

51

50

52

50

52

51

54

53

54

53

54

53

54

53

54

54

55

SIGNATURES

55

56







PART I-FINANCIALI - FINANCIAL INFORMATION

Item 1.  Unaudited Financial Statements.

ELDORADO RESORTS,Statements

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(dollars in thousands)

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

 

(unaudited)

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

671,747

 

 

$

 

206,317

 

Restricted cash and investments

 

 

 

7,613

 

 

 

 

3,507

 

Marketable securities

 

 

 

31,385

 

 

 

 

34,634

 

Accounts receivable, net

 

 

 

43,693

 

 

 

 

53,899

 

Due from affiliates

 

 

 

696

 

 

 

 

3,806

 

Inventories

 

 

 

17,070

 

 

 

 

18,379

 

Prepaid expenses

 

 

 

27,741

 

 

 

 

30,966

 

Assets held for sale

 

 

 

442,461

 

 

 

 

253,135

 

Total current assets

 

 

 

1,242,406

 

 

 

 

604,643

 

Investment in and advances to unconsolidated affiliates

 

 

 

135,898

 

 

 

 

135,828

 

Property and equipment, net

 

 

 

2,455,332

 

 

 

 

2,614,524

 

Gaming licenses and other intangibles, net

 

 

 

1,063,169

 

 

 

 

1,111,398

 

Goodwill

 

 

 

810,187

 

 

 

 

909,717

 

Right-of-use assets

 

 

 

129,889

 

 

 

 

188,219

 

Other assets, net

 

 

 

54,291

 

 

 

 

76,224

 

Total assets

 

$

 

5,891,172

 

 

$

 

5,640,553

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

 

246,109

 

 

$

 

246,175

 

Accounts payable

 

 

 

46,514

 

 

 

 

61,951

 

Accrued property, gaming and other taxes

 

 

 

29,891

 

 

 

 

43,050

 

Accrued payroll and related

 

 

 

65,246

 

 

 

 

62,337

 

Accrued interest

 

 

 

35,462

 

 

 

 

36,480

 

Income taxes payable

 

 

 

44,727

 

 

 

 

23,898

 

Short-term lease obligation

 

 

 

14,157

 

 

 

 

19,991

 

Accrued other liabilities

 

 

 

157,230

 

 

 

 

157,079

 

Liabilities related to assets held for sale

 

 

 

131,672

 

 

 

 

37,485

 

Total current liabilities

 

 

 

771,008

 

 

 

 

688,446

 

Long-term financing obligation to GLPI

 

 

 

973,122

 

 

 

 

970,519

 

Long-term debt, less current portion

 

 

 

2,780,691

 

 

 

 

2,324,541

 

Deferred income taxes

 

 

 

158,134

 

 

 

 

197,266

 

Long-term lease obligation

 

 

 

99,449

 

 

 

 

176,932

 

Other long-term liabilities

 

 

 

168,559

 

 

 

 

165,592

 

Total liabilities

 

 

 

4,950,963

 

 

 

 

4,523,296

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

 

 

Common stock, 200,000,000 shares authorized, 77,802,894

   and 77,569,117 issued and outstanding, net of treasury shares, par value

   $0.00001 as of March 31, 2020 and December 31, 2019, respectively

 

 

 

1

 

 

 

 

1

 

Paid-in capital

 

 

 

758,137

 

 

 

 

759,547

 

Retained earnings

 

 

 

190,825

 

 

 

 

366,463

 

Treasury stock at cost, 223,823 shares held at March 31, 2020 and December 31, 2019

 

 

 

(9,131

)

 

 

 

(9,131

)

Accumulated other comprehensive income

 

 

 

377

 

 

 

 

377

 

Total stockholders’ equity

 

 

 

940,209

 

 

 

 

1,117,257

 

Total liabilities and stockholders’ equity

 

$

 

5,891,172

 

 

$

 

5,640,553

 

(UNAUDITED)

(In millions)March 31,
2021		December 31,
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$1,794 $1,758 
Restricted cash and investments2,073 2,021 
Accounts receivable, net324 338 
Due from affiliates48 44 
Inventories41 44 
Prepayments and other current assets236 250 
Assets held for sale ($0 and $130 attributable to our VIEs)2,046 2,212 
Total current assets6,562 6,667 
Investment in and advances to unconsolidated affiliates263 173 
Property and equipment, net14,083 14,333 
Gaming rights and other intangibles, net4,235 4,253 
Goodwill9,729 9,723 
Other assets, net1,147 1,236 
Total assets$36,019 $36,385 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$148 $165 
Accrued interest238 229 
Accrued other liabilities1,307 1,239 
Current portion of long-term debt67 67 
Liabilities related to assets held for sale ($0 and $130 attributable to our VIEs)744 885 
Total current liabilities2,504 2,585 
Long-term financing obligation12,334 12,295 
Long-term debt14,103 14,073 
Deferred income taxes1,091 1,166 
Other long-term liabilities1,357 1,232 
Total liabilities31,389 31,351 
Commitments and contingencies (Note 8)


0
0STOCKHOLDERS' EQUITY:
Caesars stockholders’ equity4,613 5,016 
Noncontrolling interests17 18 
Total stockholders’ equity4,630 5,034 
Total liabilities and stockholders’ equity$36,019 $36,385 
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.


Table of Contents

ELDORADO RESORTS,

2

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

Casino and pari-mutuel commissions

 

$

 

339,749

 

 

$

 

470,686

 

Food and beverage

 

 

 

56,246

 

 

 

 

75,281

 

Hotel

 

 

 

48,376

 

 

 

 

64,784

 

Other

 

 

 

28,698

 

 

 

 

25,072

 

Net revenues

 

 

 

473,069

 

 

 

 

635,823

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

Casino and pari-mutuel commissions

 

 

 

159,156

 

 

 

 

210,306

 

Food and beverage

 

 

 

53,255

 

 

 

 

60,385

 

Hotel

 

 

 

22,268

 

 

 

 

23,650

��

Other

 

 

 

9,181

 

 

 

 

11,249

 

Marketing and promotions

 

 

 

24,953

 

 

 

 

32,301

 

General and administrative

 

 

 

91,675

 

 

 

 

119,888

 

Corporate

 

 

 

16,482

 

 

 

 

16,754

 

Impairment charges

 

 

 

160,758

 

 

 

 

958

 

Depreciation and amortization

 

 

 

50,433

 

 

 

 

57,757

 

Total operating expenses

 

 

 

588,161

 

 

 

 

533,248

 

Gain on sale or disposal of property and equipment

 

 

 

1,458

 

 

 

 

22,318

 

Transaction expenses

 

 

 

(9,294

)

 

 

 

(1,894

)

(Loss) income from unconsolidated affiliates

 

 

 

(252

)

 

 

 

605

 

Operating (loss) income

 

 

 

(123,180

)

 

 

 

123,604

 

OTHER EXPENSE:

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

(66,464

)

 

 

 

(73,510

)

Loss on extinguishment of debt

 

 

 

(158

)

 

 

 

—

 

Unrealized loss on investments and marketable securities

 

 

 

(23,008

)

 

 

 

(1,460

)

Total other expense

 

 

 

(89,630

)

 

 

 

(74,970

)

(Loss) income before income taxes

 

 

 

(212,810

)

 

 

 

48,634

 

Benefit (provision) for income taxes

 

 

 

37,172

 

 

 

 

(10,405

)

Net (loss) income

 

$

 

(175,638

)

 

$

 

38,229

 

Net (loss) income per share of common stock:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

(2.25

)

 

$

 

0.49

 

Diluted

 

$

 

(2.25

)

 

$

 

0.49

 

Weighted average basic shares outstanding

 

 

 

77,954,038

 

 

 

 

77,567,147

 

Weighted average diluted shares outstanding

 

 

 

77,954,038

 

 

 

 

78,589,110

 

(UNAUDITED)

Three Months Ended March 31,
(In millions, except per share data)20212020
REVENUES:
Casino and pari-mutuel commissions$1,140 $340 
Food and beverage166 56 
Hotel215 48 
Other178 29 
Net revenues1,699 473 
EXPENSES:
Casino and pari-mutuel commissions541 179 
Food and beverage106 53 
Hotel81 22 
Other68 9 
General and administrative366 98 
Corporate66 16 
Impairment charges0 161 
Depreciation and amortization265 50 
Transaction costs and other operating costs20 8 
Total operating expenses1,513 596 
Operating income (loss)186 (123)
OTHER EXPENSE:
Interest expense, net(563)(67)
Other loss(133)(23)
Total other expense(696)(90)
Loss from continuing operations before income taxes(510)(213)
Benefit for income taxes79 37 
Net loss from continuing operations, net of income taxes(431)(176)
Discontinued operations, net of income taxes7 0 
Net loss(424)(176)
Net loss attributable to noncontrolling interests1 0 
Net loss attributable to Caesars$(423)$(176)
Net loss per share - basic and diluted:
Basic loss per share from continuing operations$(2.06)$(2.25)
Basic income per share from discontinued operations0.03 0 
Basic loss per share$(2.03)$(2.25)
Diluted loss per share from continuing operations$(2.06)$(2.25)
Diluted income per share from discontinued operations0.03 0 
Diluted loss per share$(2.03)$(2.25)
Weighted average basic shares outstanding208 78 
Weighted average diluted shares outstanding208 78 
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.


Table of Contents

ELDORADO RESORTS,

3

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(dollars in thousands)

(unaudited)

LOSS

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

Net (loss) income

 

$

 

(175,638

)

 

$

 

38,229

 

Other comprehensive income, net of tax

 

 

 

—

 

 

 

 

—

 

Comprehensive (loss) income, net of tax

 

$

 

(175,638

)

 

$

 

38,229

 

(UNAUDITED)

Three Months Ended March 31,
(In millions)20212020
Net loss$(424)$(176)
Change in fair market value of interest rate swaps, net of tax12 0 
Other(1)0 
Other comprehensive income, net of tax11 0 
Comprehensive loss(413)(176)
Comprehensive loss attributable to noncontrolling interests1 0 
Comprehensive loss attributable to Caesars$(412)$(176)
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.


Table of Contents

ELDORADO RESORTS,

4

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(dollars in thousands)

(unaudited)

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income

 

 

Shares

 

 

Amount

 

 

Total

 

Balance, December 31, 2019

 

 

77,792,940

 

 

$

 

1

 

 

$

 

759,547

 

 

$

 

366,463

 

 

$

 

377

 

 

 

 

223,823

 

 

$

 

(9,131

)

 

$

 

1,117,257

 

Issuance of restricted stock units

 

 

356,367

 

 

 

 

—

 

 

 

 

5,742

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

5,742

 

Net loss

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(175,638

)

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(175,638

)

Shares withheld related to net share settlement

   of stock awards

 

 

(122,590

)

 

 

 

—

 

 

 

 

(7,152

)

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(7,152

)

Balance, March 31, 2020

 

 

78,026,717

 

 

$

 

1

 

 

$

 

758,137

 

 

$

 

190,825

 

 

$

 

377

 

 

 

 

223,823

 

 

$

 

(9,131

)

 

$

 

940,209

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

77,438,889

 

 

$

 

1

 

 

$

 

748,076

 

 

$

 

290,206

 

 

$

 

1

 

 

 

 

223,823

 

 

$

 

(9,131

)

 

$

 

1,029,153

 

Cumulative change in accounting principle, net of tax

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(4,744

)

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(4,744

)

Issuance of restricted stock units

 

 

330,641

 

 

 

 

—

 

 

 

 

4,948

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

4,948

 

Net income

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

38,229

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

38,229

 

Shares withheld related to net share settlement

   of stock awards

 

 

(106,542

)

 

 

 

—

 

 

 

 

(4,322

)

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(4,322

)

Balance, March 31, 2019

 

 

77,662,988

 

 

$

 

1

 

 

$

 

748,702

 

 

$

 

323,691

 

 

$

 

1

 

 

 

 

223,823

 

 

$

 

(9,131

)

 

$

 

1,063,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(UNAUDITED)

Caesars Stockholders’ Equity
Common StockTreasury Stock
(In millions)SharesAmountPaid-in
Capital		Retained
Earnings (Accumulated Deficit)		Accumulated
Other
Comprehensive
Income		AmountNon controlling InterestsTotal Stockholders’ Equity
Balance, December 31, 201978 $0 $760 $366 $0 $(9)$0 $1,117 
Issuance of restricted stock units— — 6 — — — — 6 
Net loss— — — (176)— — — (176)
Shares withheld related to net share settlement of stock awards— — (7)— — — — (7)
Balance, March 31, 202078 $0 $759 $190 $0 $(9)$0 $940 
Balance, December 31, 2020208 $0 $6,382 $(1,391)$34 $(9)$18 $5,034 
Issuance of restricted stock units— — 23 — — — — 23 
Net loss— — — (423)— — (1)(424)
Other comprehensive income, net of tax— — — — 11 — — 11 
Shares withheld related to net share settlement of stock awards— — (14)— — — — (14)
Balance, March 31, 2021208 $0 $6,391 $(1,814)$45 $(9)$17 $4,630 
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.


Table of Contents

ELDORADO RESORTS,

5

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

 

(175,638

)

 

$

 

38,229

 

Adjustments to reconcile net (loss) income to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

50,433

 

 

 

 

57,757

 

Amortization of deferred financing costs, discount and debt premium

 

 

 

4,187

 

 

 

 

4,547

 

Deferred revenue

 

 

 

(1,889

)

 

 

 

(1,397

)

Equity in loss (gain) of unconsolidated affiliates

 

 

 

252

 

 

 

 

(605

)

Loss on extinguishment of debt

 

 

 

158

 

 

 

 

—

 

Lease amortization

 

 

 

855

 

 

 

 

675

 

Unrealized loss on investments

 

 

 

23,008

 

 

 

 

1,460

 

Stock compensation expense

 

 

 

5,742

 

 

 

 

4,948

 

Gain on sale or disposal of property and equipment

 

 

 

(1,458

)

 

 

 

(22,318

)

Impairment charges

 

 

 

160,758

 

 

 

 

958

 

(Benefit) provision for deferred income taxes

 

 

 

(39,130

)

 

 

 

5,224

 

Other

 

 

 

360

 

 

 

 

145

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

 

8,603

 

 

 

 

(3,933

)

Prepaid expenses and other assets

 

 

 

589

 

 

 

 

14,331

 

Income taxes payable

 

 

 

20,829

 

 

 

 

(26,398

)

Accounts payable and accrued other liabilities

 

 

 

(27,135

)

 

 

 

(8,183

)

Net cash provided by operating activities

 

 

 

30,524

 

 

 

 

65,440

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment, net

 

 

 

(23,201

)

 

 

 

(38,360

)

Purchase of restricted investments

 

 

 

(82

)

 

 

 

(80

)

Deposits and proceeds from sale of businesses, property and equipment, net of cash sold

 

 

 

10,515

 

 

 

 

167,945

 

Investment in and loans to unconsolidated affiliates

 

 

 

(321

)

 

 

 

—

 

Net cash (used in) provided by investing activities

 

 

 

(13,089

)

 

 

 

129,505

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Payments under Revolving Credit Facility

 

 

 

—

 

 

 

 

(205,000

)

Borrowings under Revolving Credit Facility

 

 

 

465,000

 

 

 

 

—

 

Payments on Term Loan

 

 

 

(10,000

)

 

 

 

—

 

Debt issuance costs

 

 

 

—

 

 

 

 

(386

)

Taxes paid related to net share settlement of equity awards

 

 

 

(7,152

)

 

 

 

(4,322

)

Payments on other long-term payables

 

 

 

(109

)

 

 

 

(118

)

Net cash provided by (used in) financing activities

 

 

 

447,739

 

 

 

 

(209,826

)

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

 

 

465,174

 

 

 

 

(14,881

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

 

216,578

 

 

 

 

246,691

 

Cash, cash equivalents and restricted cash, end of period

 

$

 

681,752

 

 

$

 

231,810

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO

   AMOUNTS REPORTED WITHIN THE CONDENSED CONSOLIDATED BALANCE SHEETS:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

671,747

 

 

$

 

216,883

 

Restricted cash

 

 

 

3,567

 

 

 

 

7,892

 

Restricted and escrow cash included in other noncurrent assets

 

 

 

6,438

 

 

 

 

7,035

 

Total cash, cash equivalents and restricted cash

 

$

 

681,752

 

 

$

 

231,810

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$

 

63,527

 

 

$

 

62,885

 

Income taxes (refunded) paid, net

 

 

 

(16,141

)

 

 

 

38,898

 

NON-CASH FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Payables for capital expenditures

 

 

 

15,957

 

 

 

 

10,676

 

(UNAUDITED)

Three Months Ended March 31,
(In millions)20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities$45 $30 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net(65)(23)
Acquisition of gaming rights(2)0 
Proceeds from sale of businesses, property and equipment, net of cash sold4 10 
Proceeds from the sale of investments42 0 
Proceeds from insurance related to property damage26 0 
Investments in unconsolidated affiliates(30)0 
Net cash used in investing activities(25)(13)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt and revolving credit facilities0 465 
Repayments of long-term debt and revolving credit facilities(16)(10)
Taxes paid related to net share settlement of equity awards(14)(7)
Net cash provided by (used in) financing activities(30)448 
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Cash flows from operating activities27 0 
Net cash from discontinued operations27 0 
Effect of foreign currency exchange rates on cash21 0 
Increase in cash, cash equivalents and restricted cash38 465 
Cash, cash equivalents and restricted cash, beginning of period4,216 217 
Cash, cash equivalents and restricted cash, end of period$4,254 $682 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO AMOUNTS REPORTED WITHIN THE CONSOLIDATED CONDENSED BALANCE SHEETS:
Cash and cash equivalents$1,794 $672 
Restricted cash included in restricted cash and investments2,050 4 
Restricted and escrow cash included in other assets, net410 6 
Total cash, cash equivalents and restricted cash$4,254 $682 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid$490 $64 
Income taxes refunded, net(1)(16)
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Payables for capital expenditures33 16 
Land contributed to joint venture61 0 
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.


Table of Contents

ELDORADO RESORTS,

6
CAESARS ENTERTAINMENT, INC.

CONDENSED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(unaudited)

(UNAUDITED)
The accompanying consolidated condensed financial statements include the accounts of Caesars Entertainment, Inc., a Delaware corporation, and its consolidated subsidiaries which may be referred to as the “Company,” “CEI,” “Caesars,” “we,” “our,” or “us” within these financial statements.
This Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report”). Capitalized terms used but not defined in this Form 10-Q have the same meanings as in the 2020 Annual Report.
We also refer to (i) our Consolidated Condensed Financial Statements as our “Financial Statements,” (ii) our Consolidated Condensed Balance Sheets as our “Balance Sheets,” (iii) our Consolidated Condensed Statements of Operations and Consolidated Condensed Statements of Comprehensive Loss as our “Statements of Operations,” and (iv) our Consolidated Condensed Statements of Cash Flows as our “Statements of Cash Flows.”

Note 1. Organization and Basis of Presentation

Organization

The accompanying consolidated financial statements include the accounts of Eldorado Resorts, Inc. (“ERI” or the “Company”), a Nevada corporation formed in September 2013, and its consolidated subsidiaries.

The Company is a geographically diversified gaming and hospitality company thatwas founded in 1973 by the Carano family with 23 gaming facilitiesthe opening of the Eldorado Hotel Casino in 11Reno, Nevada. The Company partnered with MGM Resorts International to build Silver Legacy Resort Casino in Reno, Nevada in 1993 and, beginning in 2005, grew through a series of acquisitions, including the acquisition of Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) in 2005, MTR Gaming Group, Inc. in 2014, Circus Circus Reno and the 50% membership interest in the Silver Legacy that was owned by MGM Resorts International in 2015, Isle of Capri Casinos, Inc. (“Isle” or “Isle of Capri”) in 2017 and Grand Victoria Casino (“Elgin”) and Tropicana Entertainment, Inc. (“Tropicana”) in 2018.
On July 20, 2020, the Company completed the merger with Caesars Entertainment Corporation (“Former Caesars”) pursuant to which Former Caesars became a wholly-owned subsidiary of the Company (the “Merger”).
The Company owns, leases or manages an aggregate of 54 domestic properties in 16 states as of March 31, 2020. The Company’s properties, which are located in Colorado, Florida, Illinois, Indiana, Iowa, Mississippi, Missouri, Louisiana, Nevada, New Jersey and Ohio, featurewith approximately 23,90054,600 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 6603,200 table games and approximately 11,30047,700 hotel rooms.rooms as of March 31, 2021. We also have international operations in 5 countries outside of the U.S. In addition, we have other domestic and international properties that are authorized to use the brands and marks of Caesars Entertainment, Inc., as well as other non-gaming properties. Upon completion of our previously announced sales, or expected sales, of certain gaming properties, we expect to continue to own, lease or manage 48 properties. See Note 15 for segment information. The Company’s primary source of revenue is generated by gaming operations,, and the Company utilizes its hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops and other services to attract customers to its properties.

properties.

The Company was founded in 1973has entered into several agreements to divest of certain properties and initiated plans to divest of other assets, including non-core properties or divestitures required by the Carano family with the openingregulatory agencies. See Note 2 for further discussion of the Eldorado HotelMerger and other transactions and Note 3 for a discussion of properties recently sold or currently held for sale.
Certain properties, including Harrah’s Louisiana Downs, Caesars Southern Indiana, Horseshoe Hammond, and Caesars UK group, including Emerald Resort & Casino, in Reno, Nevada.met held for sale criteria as of the date of the closing of the Merger. The sales of these properties are expected to close within one year and the properties are classified as discontinued operations.
Acquisition of William Hill
In 1993,On September 30, 2020, the Company partneredannounced that it had reached an agreement with MGM Resorts International to build Silver Legacy Resort Casino,William Hill PLC on the first mega-themed resort in Reno. In 2005, the Company acquired its first property outsideterms of Reno when it purchased a casino in Shreveport, Louisiana, now known as Eldorado Shreveport. In September 2014, the Company merged with MTR Gaming Group, Inc. and acquired gaming and racing facilities in Ohio, Pennsylvania and West Virginia. The following year, in November 2015, the Company acquired Circus Circus Reno (“Circus Reno”) and the 50% membership interest in the Silver Legacy that was owned by MGM Resorts International. On May 1, 2017, the Company completed itsrecommended cash acquisition of Isle of Capri Casinos, Inc. (“Isle” or “Isle of Capri”), adding 13 gaming properties to its portfolio (the “Isle Acquisition”). On August 7, 2018, the Company acquired the Elgin Riverboat Resort – Riverboat Casino d/b/a Grand Victoria Casino (“Elgin”) (the “Elgin Acquisition”). On October 1, 2018, the Company completed its acquisition of Tropicana Entertainment, Inc. (“Tropicana”), adding 7 properties to its portfolio (the “Tropicana Acquisition”).

On January 11, 2019 and March 8, 2019, respectively, the Company completed its sales of Presque Isle Downs & Casino (“Presque”) and Lady Luck Casino Nemacolin (“Nemacolin”), which are both located in Pennsylvania. On December 6, 2019, the Company completed its sales of Mountaineer Casino, Racetrack and Resort (“Mountaineer”), Isle Casino Cape Girardeau (“Cape Girardeau”) and Lady Luck Casino Caruthersville (“Caruthersville”). Mountaineer is located in West Virginia and Cape Girardeau and Caruthersville are located in Missouri.

On June 24, 2019, the Company entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, and as it may be further amended from time to time, the “Merger Agreement”) with Caesars Entertainment Corporation (“Caesars”) pursuant to which a wholly-owned subsidiarythe Company would acquire the entire issued and to be issued share capital (other than shares owned by the Company or held in treasury) of William Hill PLC, in an all-cash transaction of approximately £2.9 billion. In order to manage the risk of appreciation of the Company will merge with and into Caesars, with Caesars surviving as a wholly-owned subsidiary ofGBP denominated purchase price the Company (the “Merger”). In connection with the execution of the Merger Agreement, the Company also entered into a Master Transaction Agreement (the “MTA”) with VICI Properties L.P., a Delaware limited partnership (“VICI”), pursuant toforeign exchange forward contracts, which among other things, the Company has agreed to consummate one or more sale and leaseback transactions with VICI and/or its affiliates with respect to certain property described in the MTA. Consummationwere settled as of the Merger is subject to the satisfaction or waiver of certain conditions, including anti-trust and regulatory approvals. The Company expects that the Merger will be consummated in mid-2020.March 31, 2021. See

Note 7.

On July 10, 2019,September 29, 2020, the Company entered into a definitive agreementdebt financing commitment letter pursuant to sellwhich the equity interests of Rainbow Casino Vicksburg Partnership, L.P.lenders party thereto committed to arrange and IOC-Kansas City, L.L.C., the entities that hold Lady Luck Casino Vicksburg and Isle of Capri Casino Kansas City, to Twin River Worldwide Holdings, Inc. (“Twin River”). The definitive agreement provides that the consummationprovide a newly formed subsidiary of the sale is subjectCompany with (a) a £1.0 billion senior secured 540-day bridge loan facility, (b) a £116 million senior secured 540-day revolving credit facility and (c) a £503 million senior secured 60-day bridge loan facility (collectively, the “Debt Financing”), which was amended and restated on December 11, 2020 in order to satisfactionjoin additional lenders as parties thereto.
Pending negotiation of customary conditions, including receiptthe definitive loan agreement for the Debt Financing, on October 6, 2020, a newly formed subsidiary of required regulatory approvals. The transaction is expected to be consummated in the second quarter of 2020. See Note 4.


On January 13, 2020 and March 9, 2020, respectively, the Company entered into definitive purchase agreements to sell the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC, the entities that hold Eldorado Shreveport and MontBleu, to Maverick Gaming LLC (“Maverick”). On April 24, 2020, the agreements with Maverick were terminated and the Company entered into a definitive£1.5 billion Interim Facilities Agreement (the “Interim Facilities Agreement”) with Deutsche Bank

Table of Contents
7
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
AG, London Branch and JPMorgan Chase Bank, N.A. to provide: (a) a 90-day £1.0 billion interim asset sale bridge facility and (b) a 90-day £503 million interim cash confirmation bridge facility, which Interim Facilities Agreement was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
On April 20, 2021, a UK Court sanctioned the proposed acquisition and on April 22, 2021, the Company completed the acquisition of William Hill PLC for £2.9 billion, or approximately $4.0 billion (the “William Hill Acquisition”). See Note 2.
In addition to the financing transactions described above, certain net assets of Caesars and William Hill will be assessed in determining the consideration transferred and the allocation of the purchase agreementprice.
In connection with Twin River Worldwide Holdings, Inc.the William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Company entered into a Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and certainDeutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing. The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility. The proceeds of its affiliatesthe bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the saleacquisition and (ii) to pay fees and expenses related to the acquisition and related transactions. The proceeds of the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLCrevolving credit facility under the Bridge Credit Agreement will be used for aggregate consideration of $155 million, subject to a working capital adjustment.  and general corporate purposes. The definitive agreement provides thatInterim Facilities Agreement was terminated upon the consummationexecution of the saleBridge Credit Agreement for the Debt Financing. The Bridge Credit Agreement is subject to satisfaction of customary conditions, including receipt of required regulatory approvals, and further provides that the Company’s obligation to consummate the sale is subject to the closing of the Merger with Caesars and the buyer’s obligation to consummate the sale is subject to receipt of financing sufficient to enable it to pay the consideration due at closing.  The transactionincluded within William Hill’s non-U.S. operations which is expected to close in the first quarter of 2021.

The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of March 31, 2020:

Segment

Property

Date Acquired

State

West

Eldorado Resort Casino Reno ("Eldorado Reno")

(a)

Nevada

Silver Legacy Resort Casino ("Silver Legacy")

(a)

Nevada

Circus Circus Reno ("Circus Reno")

(a)

Nevada

MontBleu Casino Resort & Spa ("MontBleu")

October 1, 2018 (c)

Nevada

Tropicana Laughlin Hotel & Casino ("Laughlin")

October 1, 2018

Nevada

Isle Casino Hotel - Blackhawk ("Isle Black Hawk")

May 1, 2017

Colorado

Lady Luck Casino - Black Hawk ("Lady Luck Black Hawk")

May 1, 2017

Colorado

Midwest (b)

Isle Casino Waterloo ("Waterloo")

May 1, 2017

Iowa

Isle Casino Bettendorf ("Bettendorf")

May 1, 2017

Iowa

Isle of Capri Casino Boonville ("Boonville")

May 1, 2017

Missouri

Isle of Capri Casino Kansas City ("Kansas City")

May 1, 2017 (c)

Missouri

South

Isle Casino Racing Pompano Park ("Pompano")

May 1, 2017

Florida

Eldorado Resort Casino Shreveport ("Eldorado Shreveport")

(a) (c)

Louisiana

Isle of Capri Casino Hotel Lake Charles ("Lake Charles")

May 1, 2017

Louisiana

Belle of Baton Rouge Casino & Hotel ("Baton Rouge")

October 1, 2018

Louisiana

Isle of Capri Casino Lula ("Lula")

May 1, 2017

Mississippi

Lady Luck Casino Vicksburg ("Vicksburg")

May 1, 2017 (c)

Mississippi

Trop Casino Greenville ("Greenville")

October 1, 2018

Mississippi

East (b)

Eldorado Gaming Scioto Downs ("Scioto Downs")

(a)

Ohio

Tropicana Casino and Resort, Atlantic City ("Trop AC")

October 1, 2018

New Jersey

Central

Grand Victoria Casino ("Elgin")

August 7, 2018

Illinois

Lumière Place Casino ("Lumière")

October 1, 2018

Missouri

Tropicana Evansville ("Evansville")

October 1, 2018

Indiana

(a)

Property was aggregated into segment prior to January 1, 2016.

be divested.

(b)

Presque was sold on January 11, 2019, Nemacolin was sold on March 8, 2019 and Mountaineer was sold on December 6, 2019. All three properties were previously reported in the East segment. Cape Girardeau and Caruthersville were sold on December 6, 2019. Both properties were previously reported in the Midwest segment.

Reclassifications

(c)

The Company entered into agreements to sell Kansas City, Vicksburg, Eldorado Shreveport and MontBleu. The Kansas City and Vicksburg sales are expected to close in the second quarter of 2020. The Eldorado Shreveport and MontBleu sales are expected to close in the first quarter of 2021.

Reclassifications

Certain reclassifications of prior year presentations have been made to conform to the current period presentation.

Marketing and promotions expense previously disclosed for the three months ended March 31, 2020 has been reclassified to Casino and pari-mutuel commissions expense and General and administrative expense based on the nature of the expense.

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments, all of which are normal and recurring, considered necessary for a fair presentation. The results of operations for these interim periods are not necessarily indicative of the operating results for other quarters, for the full year or any future period.

The executive decision maker of our Company reviews operating results, assesses performance and makes decisions on a “significant market” basis. Management views each of our casinos as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, and their management and reporting structure. The Company’s principal operating activities occur in 5 geographic regions and reportable segments. The reportable segments are based on the similar characteristics of the operating segments within the regions in which they operate: West, Midwest, South, East, and Central. See the table aboveNote 15 for a listing of properties included in each segment.

segment and the determination of our segments.

The presentation of financial information herein for the period after the Company’s acquisition of Former Caesars on July 20, 2020 is not fully comparable to the periods prior to the acquisition. In addition, the presentation of financial information herein for the periods after the Company’s sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, and the Company’s sales of Mountaineer, Cape Girardeau and Caruthersville on December 6, 2019various properties are not fully comparable to the periods prior to their respective sale dates. See Note 4.

These unaudited2 for further discussion of the Merger and related transactions and Note 3 for properties recently sold or currently held for sale.

Consolidation of Subsidiaries and Variable Interest Entities
Our consolidated condensed financial statements shouldinclude the accounts of Caesars and its subsidiaries after elimination of all intercompany accounts and transactions.
We consolidate all subsidiaries in which we have a controlling financial interest and variable interest entities (“VIEs”) for which we or one of our consolidated subsidiaries is the primary beneficiary. Control generally equates to ownership percentage, whereby (i) affiliates that are more than 50% owned are consolidated; (ii) investments in affiliates of 50% or less but greater than 20% are generally accounted for using the equity method where we have determined that we have significant influence over the entities; and (iii) investments in affiliates of 20% or less are generally accounted for as investments in equity securities.
We consider ourselves the primary beneficiary of a VIE when we have both the power to direct the activities that most significantly affect the results of the VIE and the right to receive benefits or the obligation to absorb losses of the entity that could be readpotentially significant to the VIE. We review our investments for VIE consideration if a reconsideration event occurs to determine if the investment continues to qualify as a VIE. If we determine an investment no longer qualifies as a VIE, there may be a material effect to our financial statements.
Table of Contents
8
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Consolidation of Korea Joint Venture
The Company had a joint venture to acquire, develop, own, and operate a casino resort project in conjunctionIncheon, South Korea (the “Korea JV”). We determined that the Korea JV was a VIE and the Company was the primary beneficiary, and therefore, we had consolidated the Korea JV into our financial statements. As of December 31, 2020, the assets and liabilities of the Korea JV were classified as held for sale and consisted of $130 million of Property and equipment and other assets and $130 million of current and other long-term liabilities. We sold our interest in the Korea JV on January 21, 2021 and derecognized its assets and liabilities from our Balance Sheets. There was 0 gain or loss associated with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

sale.

Recent Developments Related to COVID-19

In January 2020, an outbreak of a new strain of coronavirus (“COVID-19”) was identified and has since spread throughout much of the world, including the United States.U.S. All of the Company’s casino properties have beenwere temporarily closed since March 18,for the period from mid-March 2020 through mid-May 2020 due to orders issued by various state government agencies in connectionand tribal bodies as part of certain precautionary measures intended to help slow the spread of the COVID-19 public health emergency. The Company has resumed certain operations at substantially all of our properties as of March 31, 2021, with the COVID-19 pandemic. As a resultexception of these closures, the COVID-19 pandemic has had an adverse effect on the Company’s business, financial conditionLake Charles which was severely damaged by Hurricane Laura (See Note 8), and resultsmany of operations forour international properties. During the three months ended March 31, 2020. 2021, most of our properties have experienced positive trends as restrictions on maximum capacities and amenities available are eased.
The Company continued to pay its full-time employees through April 10, 2020, including tips and tokes.tokens. Effective April 11, 2020, the Company furloughed approximately 90% of its employees, implemented salary reductions and committed to continue to provide benefits to its employees through June 30,their furloughed period. A portion of the Company’s workforce has returned to service as the properties have resumed operations with limited capacities and in compliance with operating restrictions imposed by governmental or tribal orders, directives, and guidelines. Due to a triggering event resulting from the COVID-19 public health emergency, the Company recognized impairment charges of $116 million related to goodwill and trade names during the three months ended March 31, 2020.
The COVID-19 public health emergency has had, and continues to have, a material adverse effect on the Company’s business, financial condition and results of operations for the three months ended March 31, 2021 and 2020. As a result, the terms of these payroll changes combinedour debt arrangements provide that the financial covenant measurement period is not effective through September 30, 2021, so long as we comply with other cost saving measures, the Company’s daily operating expenses reduced significantly.a minimum liquidity requirement. See Note 9. In an effort to maintain liquidity and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets,addition, on March 19, 2021, the Company borrowed $465 million underfiled a lawsuit against its revolving credit facility on March 16, 2020. Theinsurance carriers for losses attributed to COVID-19 public health emergency. See Note 8.
Although the Company is experiencing positive operating trends thus far in 2021, the extent of the ongoing and future effects of the COVID-19 pandemicpublic health emergency on the Company’s business and the casino resort industry generally is uncertain, but the Company expects that it will continue to have a significant impact on its business, results of operations and financial condition.uncertain. The extent and duration of the negative impact of COVID-19 public health emergency will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, restrictions on operations imposed by governmental authorities, the length of time thatpotential for authorities reimposing stay at home orders or additional restrictions in response to continued developments with the Company’s casinos remain closed,COVID-19 public health emergency, the Company’s ability to adapt to newevolving operating procedures, upon re-opening of its casinos, the impact on consumer demand and discretionary spending, the length of time it takes for demand to return, the efficacy and availability of vaccines, and the Company’s ability to adjust its cost structures for the duration of the outbreak’s impacteffect on its operations. Due to declines in recent performance and the expected impact on future cash flows as a result of COVID-19, the Company recognized impairment charges related to goodwill and trade names for the three months ended March 31, 2020. See Note 7 for details.

Recently Issued Accounting Pronouncements

Pronouncements Implemented in 2020

In June 2016 (modified in November 2018), the

The Financial Accounting Standards Board (“FASB”(the “FASB”) issued ASU No 2016-13, Financial Instruments – Credit Losses related to the timing of recognizing impairment losses on financial assets.  The newfollowing authoritative guidance lowersamending the threshold on when losses are incurred, from a determination that a loss is probable to a determination that a loss is expected. The change in guidance is applicable to our evaluation of the Casino Reinvestment Development AuthorityFASB Accounting Standards Codification (“CRDA”ASC”) investments. The guidance is effective for interim and annual periods beginning after December 15, 2019.  Adoption of the guidance required a modified-retrospective approach and a cumulative adjustment to retained earnings to the first reporting period that the update is effective. The Company.
Effective January 1, 2021, we adopted the new guidance on January 1, 2020. Adoption of this guidancefollowing Accounting Standards Updates (“ASU”) which did not have a material impacteffect on the Company’s Consolidated Financial Statements.

our financial statements:

In August 2018, the FASB issued •ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). This generally means that an intangible asset is recognized for the software license and, to the extent that the payments attributable to the software license are made over time, a liability also is recognized. If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract. This generally means that the fees associated with the hosting element (service) of the arrangement are expensed as incurred. The amendment was effective for annual and interim periods beginning after December 15, 2019. The Company adopted the new guidance on January 1, 2020. Adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. This amendment modifies the disclosure requirements for fair value measurements and was effective for annual and interim periods beginning after December 15, 2019. The Company adopted the new guidance on January 1, 2020. Adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

Pronouncements To Be Implemented In Future Periods

In August 2018, the FASB issued ASU No 2018-14, Compensation –Retirement– Retirement Benefits – Defined Benefit Plans – General.  This amendment improves disclosures over defined benefit plans and is effective for interim and annual periods ending after December 15,General

The following ASUs were not implemented as of March 31, 2021:
Previously Disclosed
In March 2020, with early adoption allowed.  The Company anticipates adopting this amendment during the first quarter of 2021, and currently does not expect it to have a significant impact on its Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying2020-04, Reference Rate Reform. The amendments in this update are intended to provide relief to the Accountingcompanies that have contracts, hedging relationships or other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate which is expected to be discontinued because of reference rate reform.

Table of Contents
9
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The amendments provide optional expedients and exceptions for Income Taxes. This amendment modifies accounting guidelines for income taxesapplying GAAP to contracts, hedging relationships, and isother transactions if certain criteria are met. The amendments in this update are effective for annualas of March 12, 2020 and interim periods beginning aftercompanies may elect to apply the amendments prospectively through December 15, 2020 with early adoption allowed.31, 2022. The Company will adopt thehas not yet adopted this new guidance on January 1, 2021. The Companyand is evaluating the qualitative and quantitative effect the new guidance will have on its Consolidated Financial Statements.

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging. This update amends guidance on convertible instruments and the guidance on derivative scope exception for contracts in an entity’s own equity. The amendments for convertible instruments reduce the number of accounting models for convertible debt instruments and convertible preferred stock. In addition, the amendments provide guidance on instruments that will continue to be subject to separation models and improves disclosure for convertible instruments and guidance for earnings per share. Furthermore, the update amends guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The amendments in this update are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. These amendments should be applied on either a modified retrospective basis or a fully retrospective basis. The Company is currently assessing the effect the adoption of this standard will have on its Financial Statements.
Note 2. Leases

Acquisitions and Purchase Price Accounting

Merger with Caesars Entertainment Corporation
On July 20, 2020, the Merger was consummated and Former Caesars became a wholly-owned subsidiary of the Company. The strategic rationale for the Merger includes, but is not limited to, the following:
•Creation of the largest owner, operator and manager of domestic gaming assets
•Diversification of the Company’s domestic footprint
•Access to iconic brands, rewards programs and new gaming opportunities expected to enhance customer experience
•Realization of significant identified synergies
The total purchase consideration for Former Caesars was $10.9 billion. The estimated purchase consideration in the acquisition was determined with reference to its acquisition date fair value.
(In millions)Consideration
Cash consideration paid$6,090 
Shares issued to Former Caesars shareholders (a)
2,381 
Cash paid to retire Former Caesars debt2,356 
Other consideration paid48 
Total purchase consideration$10,875 

____________________
(a)Former Caesars common stock was converted into the right to receive approximately 0.3085 shares of Company Common Stock, with a value equal to approximately $12.41 in cash (based on the volume weighted average price per share of Company Common Stock for the ten trading days ending on July 16, 2020).
Preliminary Purchase Price Allocation
The fair values are based on management’s analysis including preliminary work performed by third party valuation specialists, which are subject to finalization over the one-year measurement period. The purchase price accounting for Former Caesars is preliminary as it relates to determining the fair value of certain assets and liabilities, including goodwill, and is subject to change. The following table summarizes the preliminary allocation of the purchase consideration to the identifiable assets acquired and liabilities assumed of Former Caesars, with the excess recorded as goodwill as of March 31, 2021:
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10
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In millions)Fair Value
Current and other assets$4,149 
Property and equipment12,691 
Goodwill8,928 
Intangible assets (a)
3,364 
Other noncurrent assets676 
Total assets$29,808 
Current liabilities$1,844 
Financing obligation8,149 
Long-term debt6,591 
Noncurrent liabilities2,331 
Total liabilities18,915 
Noncontrolling interests18 
Net assets acquired$10,875 
____________________
(a)Intangible assets consist of gaming rights valued at $388 million, trade names valued at $2.1 billion, Caesars Rewards programs valued at $523 million and customer relationships valued at $403 million.
As noted above, the preliminary purchase price allocation is subject to a measurement period and our estimates as of December 31, 2020 have been revised as of March 31, 2021. The net impact of these changes in our preliminary valuations was a $6 million increase to goodwill, $8 million increase to current liabilities and $2 million decrease to noncurrent liabilities. The effect of these revisions during the quarter did not have any impact on our Statements of Operations.
The fair values of the assets acquired and liabilities assumed were determined using the market, income, and cost approaches, or a combination. Valuation methodologies under both a market and income approach used for the identifiable net assets acquired in the Former Caesars acquisition make use of Level 3 inputs, such as expected cash flows and projected financial results. The market approach indicates value for a subject asset based on available market pricing for comparable assets.
Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the estimated fair value of those items at the Former Caesars acquisition date. Assets and liabilities held for sale are recorded at fair value, less costs to sell, based on the agreements reached as of the acquisition date, or an income approach.
Certain financial assets acquired were determined to have experienced more than insignificant deterioration of credit quality since origination. A reconciliation of the difference between the purchase price of financial assets, including acquired markers, and the face value of the assets is as follows:
(In millions)
Purchase price of financial assets$95 
Allowance for credit losses at the acquisition date based on the acquirer’s assessment89 
Discount (premium) attributable to other factors2 
Face value of financial assets$186 
The fair value of land was determined using the sales comparable approach. The market data is then adjusted for any significant differences, to the extent known, between the identified comparable sites and the site being valued. The value of building and site improvements was estimated via the income approach. Other personal property assets such as furniture, gaming and computer equipment, fixtures, computer software, and restaurant equipment were valued using the cost approach which is based on replacement or reproduction costs of the asset. The cost approach is an estimation of fair value developed by computing the current cost of replacing a property and subtracting any depreciation resulting from one or more of the following factors: physical deterioration, functional obsolescence, and/or economic obsolescence.
Non-amortizing intangible assets acquired primarily include trademarks, Caesars Rewards and gaming rights. The fair value for these intangible assets was determined using either the relief from royalty method and excess earnings method under the income approach or a replacement cost market approach.
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11
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Trademarks and Caesars Rewards were valued using the relief from royalty method, which presumes that without ownership of such trademarks or loyalty program, the Company would have to make a stream of payments to a brand or franchise owner in return for the right to use their name or program. By virtue of this asset, the Company avoids any such payments and records the related intangible value of the Company’s ownership of the brand name or program. The acquired trademarks, including Caesars Rewards are indefinite lived intangible assets.
Customer relationships are valued using an income approach, comparing the prospective cash flows with and without the customer relationships in place to estimate the fair value of the customer relationships, with the fair value assumed to be equal to the discounted cash flows of the business that would be lost if the customer relationships were not in place and needed to be replaced. We estimate the useful life of these customer relationships to be approximately seven years from the Merger date.
Gaming rights include our gaming licenses in various jurisdictions and may have indefinite lives or an estimated useful life. The fair value of the gaming rights was determined using the excess earnings or replacement cost methodology, based on whether the license resides in gaming jurisdictions where competition is limited to a specified number of licensed gaming operators. The excess earnings methodology is an income approach methodology that estimates the projected cash flows of the business attributable to the gaming license intangible asset, which is net of charges for the use of other identifiable assets of the business including working capital, fixed assets and other intangible assets. The replacement cost of the gaming license was used as an indicator of fair value. The acquired gaming rights have indefinite lives, with the exception of one jurisdiction in which we estimate the useful life of the license to be approximately 34 years.
Goodwill is the result of expected synergies from the operations of the combined company and the assembled workforce of Former Caesars. The final assignment of goodwill to our reporting units has not been completed. The goodwill acquired will not generate amortization deductions for income tax purposes.
The fair value of long-term debt has been calculated based on market quotes. The fair value of the financing obligations were calculated as the net present value of both the fixed base rent payments and the forecasted variable payments plus the expected residual value of the land and building returned at the end of the expected usage period.
The Company hasrecognized acquisition-related transaction costs in connection with the Merger of $12 million and $9 million for the three months ended March 31, 2021 and 2020, respectively. These costs were associated with legal, IT costs, internal labor and professional services and were recorded in Transaction costs and other operating costs in our Statements of Operations.
For the period of January 1, 2021 through March 31, 2021, the properties of Former Caesars generated net revenues of $1.3 billion, excluding discontinued operations, and finance leasesnet loss of $482 million.
Acquisition of William Hill
On April 22, 2021, we completed the previously announced acquisition of William Hill PLC for variouscash consideration of approximately £2.9 billion, or approximately $4.0 billion, based on the GBP:USD exchange rate on the closing date.
Currently, William Hill PLC’s U.S. subsidiary, William Hill U.S. Holdco (“William Hill US” and together with William Hill PLC, “William Hill”) operates 37 sportsbooks at our properties in 8 states (see Note 4) and, following the William Hill Acquisition, Caesars and William Hill will conduct sports wagering across 17 states across the U.S. plus the District of Columbia. Additionally, we will operate regulated online real estatemoney gaming businesses in 4 states — Nevada, Pennsylvania, New Jersey, and equipment.Michigan — and continue to leverage the World Series of Poker (“WSOP”) brand, and license the WSOP trademarks for a variety of products and services. Extensive usage of digital platforms and growing bettor demand are driving the market for online sports betting platforms in the U.S. and the William Hill Acquisition positions us to address this growing market. The Company intends to divest the non-U.S. operations including the UK and international online divisions and the retail betting shops.
The Company previously held an equity interest in William Hill PLC and William Hill US (see Note 4). Accordingly, the acquisition will be accounted for as a business combination achieved in stages, or a “step acquisition.” The major classes of assets acquired include cash and cash equivalents, trade and other accounts receivable, property and equipment, intangible assets, and other assets. The major classes of liabilities assumed include trade and other accounts payable, accrued expenses, long-term debt and other liabilities. Certain of the Company’s lease agreements include rental payments based on a percentagenet assets of sales over specified contractual amounts, rental payments adjusted periodically for inflationWilliam Hill are the result of transactions with Caesars. Such net assets will be assessed and rental payments based on usage. The Company’s leases include options to extendmay be eliminated in connection with the lease term one month to 60 years. ExceptWilliam Hill Acquisition.
Given the short period of time from the acquisition completion date and the date of these consolidated condensed financial statements, and the size and complexity of the transaction, the initial accounting for the Master Leasebusiness combination is incomplete at this time. The Company is not able to provide the valuation of certain components of consideration transferred or provide the
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12
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
allocation of consideration paid to the assets acquired or liabilities assumed. Supplemental pro forma revenue and earnings of the combined company are predicated on the completion of the business combination accounting and allocation of consideration.
The Company recognized acquisition-related transaction costs of $5 million for the three months ended March 31, 2021.
Note 3. Assets Held for Sale
The Company periodically divests assets that it does not consider core to its business to raise capital or, in some cases, to comply with GLP Capital, L.P.,conditions, terms, obligations or restrictions imposed by antitrust, gaming and other regulatory entities. The carrying value of the net assets held for sale are compared to the expected selling price and any expected losses are recorded immediately. Gains or losses associated with the disposal of assets held for sale are recorded within other operating partnershipcosts, unless the assets represent a discontinued operation.
Held for sale - Continuing operations
MontBleu, Evansville and Baton Rouge
On April 6, 2021, the Company consummated the sale of the equity interests of MontBleu Casino Resort & Spa (“MontBleu”) to Bally’s Corporation (formerly Twin River Worldwide Holdings, Inc.) for $15 million, subject to a customary working capital adjustment, resulting in a loss of approximately $2 million. The purchase price for MontBleu is due no later than the first anniversary of the consummation of the transaction. MontBleu’s assets and liabilities were held for sale as of March 31, 2021, and the results of operations are included in income from continuing operations in the periods presented.
As a result of the execution of the agreement to sell MontBleu, an impairment charge totaling $45 million was recorded during the three months ended March 31, 2020 due to the carrying value exceeding the estimated net sales proceeds. The impairment charges resulted in a reduction to the carrying amounts of the right-of-use assets, property and equipment, and goodwill and other intangibles totaling $18 million, $23 million and $4 million, respectively. MontBleu was within the Regional segment.
On July 16, 2020, in connection with its review of the Merger, the Indiana Gaming Commission determined as a condition to their approval of the Merger that the Company will be required to divest 3 properties within the state of Indiana in order to avoid undue economic concentration. On October 27, 2020, the Company entered into an agreement to sell the equity interests of Tropicana Evansville (“Evansville”) to Gaming and Leisure Properties, Inc. (“GLPI”), and Bally’s Corporation for $480 million, subject to a customary working capital adjustment. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in mid-2021. On December 24, 2020, the Company entered into an agreement to sell the equity interests of Caesars Southern Indiana. In addition, the Company plans to enter into an agreement to sell Horseshoe Hammond prior to December 31, 2021. Evansville met the requirements for presentation as assets held for sale as of March 31, 2021, while Caesars Southern Indiana and Horseshoe Hammond met the requirements for presentation as discontinued operations (see Note 9),discussion below).
On December 1, 2020, the Company entered into a definitive agreement with CQ Holding Company, Inc. to sell the equity interests of Belle of Baton Rouge Casino & Hotel (“Baton Rouge”). The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021. Baton Rouge met the requirements for presentation as assets held for sale as of March 31, 2021.
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13
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The assets and liabilities held for sale of continuing operations, accounted for at carrying value unless fair value is lower, were as follows as of March 31, 2021 and December 31, 2020:
March 31, 2021
(In millions)MontBleuEvansvilleBaton Rouge
Assets:
Cash$2 $8 $2 
Property and equipment, net37 302 2 
Goodwill0 9 0 
Gaming licenses and other intangibles, net0 138 0 
Other assets, net33 33 1 
Assets held for sale$72 $490 $5 
Current liabilities$8 $11 $3 
Other long-term liabilities63 13 1 
Liabilities related to assets held for sale$71 $24 $4 
December 31, 2020
(In millions)MontBleuEvansvilleBaton Rouge
Assets:
Cash$3 $7 $2 
Property and equipment, net37 302 2 
Goodwill0 9 0 
Gaming licenses and other intangibles, net0 138 0 
Other assets, net32 49 1 
Assets held for sale$72 $505 $5 
Current liabilities$8 $12 $2 
Other long-term liabilities63 24 1 
Liabilities related to assets held for sale$71 $36 $3 
The following information presents the net revenues and net income (loss) for the Company’s lease agreements doproperties considered continuing operations, that are held for sale:
Three Months Ended March 31, 2021
(In millions)MontBleuEvansvilleBaton Rouge
Net revenues$11 $31 $4 
Net income (loss)4 13 (1)
Three Months Ended March 31, 2020
(In millions)MontBleuEvansvilleBaton Rouge
Net revenues$9 $33 $6 
Net income (loss)(42)1 (10)
Held for sale - Sold
Eldorado Shreveport, Kansas City and Vicksburg Divestitures
Prior to their respective closing dates, Eldorado Shreveport, Isle of Capri Casino Kansas City (“Kansas City”), and Lady Luck Casino Vicksburg (“Vicksburg”) met the requirements for presentation as assets held for sale under GAAP. However, they did not contain any material residual value guarantees or material restrictive covenants.

meet the requirements for presentation as discontinued operations. All properties were previously reported in the Regional segment.

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14
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The componentsfollowing information presents the net revenues and net income of lease expense are as follows (in thousands):

 

Classification on the

 

Three Months Ended

 

Three Months Ended

 

 

Statement of Operations

 

March 31, 2020

 

March 31, 2019

 

Operating lease expense:

 

 

 

 

 

 

 

 

 

 

Operating lease expense

Operating expense

 

$

 

4,448

 

$

 

4,052

 

Short-term and variable lease expense

Operating expense

 

 

 

8,804

 

 

 

11,814

 

Finance lease expense:

 

 

 

 

 

 

 

 

 

 

Interest expense on lease liabilities

Interest expense, net

 

 

 

24,821

 

 

 

24,603

 

Amortization of ROU assets

Depreciation and amortization expense

 

 

 

4,089

 

 

 

2,511

 

Total lease expense

 

 

$

 

42,162

 

$

 

42,980

 


Supplemental cash flow information related to leases is as follows (in thousands):

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

 

 

Operating cash flows for operating leases

 

$

 

5,246

 

 

$

 

5,248

 

Operating cash flows for finance leases

 

$

 

22,298

 

 

$

 

22,029

 

In addition to the payments madeheld for operating leases noted above, the Company paid $8.8 million and $11.8 million in short-term and variable leasessale properties, which were recently sold, for the three months ended March 31, 2020 and 2019, respectively.

Note 3. Revenue Recognition

The Company recognizes as casino revenue the net win from gaming activities, which is the difference between gaming wins and losses, not the total amount wagered. Progressive jackpots are accrued and charged to revenue at the time the obligation to pay the jackpot is established. Gaming revenues are recognized net of certain cash and free play incentives. Pari-mutuel commissions consist of commissions earned from thoroughbred and harness racing and importing of simulcast signals from other race tracks and are recognized at the time wagers are made. Such commissions are a designated portion2020:

Three Months Ended March 31, 2020
(In millions)Eldorado ShreveportKansas CityVicksburg
Net revenues$23 $14 $5 
Net income2 3 0 
Held for sale - Discontinued operations
As result of the wagering handleMerger, certain Former Caesars properties, including Harrah’s Louisiana Downs, Caesars Southern Indiana, Horseshoe Hammond, and Caesars UK group, including Emerald Resorts & Casino met held for sale criteria as determined by state racing commissions and are shown net of the taxes assessed by state and local agencies, as well as purses and other contractual amounts paid to horsemen associations. The Company recognizes revenues from fees earned through the exporting of simulcast signals to other race tracks at the time wagers are made and recorded on a gross basis. Such fees are based upon a predetermined percentage of handle as contracted with the other race tracks.

The Company’s consolidated statement of operations presents net revenue disaggregated by type or naturedate of the goodclosing of the Merger. The sales of these properties have or service. A summary of net revenues disaggregated by type of revenue and reportable segment is presented below (amounts in thousands). Refer to Notes 1 and 15 for additional information on the Company’s reportable segments.

 

 

Three Months Ended March 31, 2020

 

 

 

West

 

 

Midwest

 

 

South

 

 

East

 

 

Central

 

 

Corporate

and Other

 

 

Total

 

Casino

 

$

 

44,977

 

 

$

 

53,313

 

 

$

 

79,652

 

 

$

 

79,931

 

 

$

 

81,876

 

 

$

 

—

 

 

$

 

339,749

 

Food and beverage

 

 

 

23,583

 

 

 

 

3,399

 

 

 

 

10,651

 

 

 

 

9,464

 

 

 

 

9,149

 

 

 

 

—

 

 

 

 

56,246

 

Hotel

 

 

 

21,845

 

 

 

 

2,544

 

 

 

 

4,934

 

 

 

 

13,560

 

 

 

 

5,493

 

 

 

 

—

 

 

 

 

48,376

 

Other

 

 

 

15,085

 

 

 

 

1,537

 

 

 

 

1,815

 

 

 

 

5,101

 

 

 

 

3,187

 

 

 

 

1,973

 

 

 

 

28,698

 

Net revenues

 

$

 

105,490

 

 

$

 

60,793

 

 

$

 

97,052

 

 

$

 

108,056

 

 

$

 

99,705

 

 

$

 

1,973

 

 

$

 

473,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2019

 

 

 

West

 

 

Midwest

 

 

South

 

 

East

 

 

Central

 

 

Corporate

and Other

 

 

Total

 

Casino

 

$

 

53,406

 

 

$

 

85,169

 

 

$

 

109,350

 

 

$

 

124,951

 

 

$

 

97,810

 

 

$

 

—

 

 

$

 

470,686

 

Food and beverage

 

 

 

27,978

 

 

 

 

6,087

 

 

 

 

14,709

 

 

 

 

14,721

 

 

 

 

11,786

 

 

 

 

—

 

 

 

 

75,281

 

Hotel

 

 

 

27,508

 

 

 

 

3,622

 

 

 

 

6,337

 

 

 

 

19,997

 

 

 

 

7,320

 

 

 

 

—

 

 

 

 

64,784

 

Other

 

 

 

9,203

 

 

 

 

1,909

 

 

 

 

2,318

 

 

 

 

6,564

 

 

 

 

3,556

 

 

 

 

1,522

 

 

 

 

25,072

 

Net revenues

 

$

 

118,095

 

 

$

 

96,787

 

 

$

 

132,714

 

 

$

 

166,233

 

 

$

 

120,472

 

 

$

 

1,522

 

 

$

 

635,823

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract and Contract Related Liabilities

The Company records contract or contract-related liabilities related to differences between the timing of cash receipts from the customer and the recognition of revenue. The Company generally has three types of liabilities related to contracts with customers: (1) outstanding chip liability, which represents the amounts owed in exchange for gaming chips held by a customer, (2) player loyalty program obligations, which represents the deferred allocation of revenue relating to player loyalty program incentives earned, and (3) customer deposits and other deferred revenue, which is primarily funds deposited by customers related to gaming play, advance payments on goods and services yet to be provided (such as advance ticket sales and deposits on rooms and convention space or for unpaid wagers), and deferred revenues associated with the Company’s interests in William Hill (see Note 6) and The Stars Group (“TSG”). Except for deferred revenues related to William Hill and TSG, these liabilities are generally expected to be recognized as revenueclose within one year and the properties are classified as discontinued operations. Caesars UK group, including Emerald Resorts & Casino, is within the Managed, International, CIE segment while all other discontinued operations are in the Regional segment.

On September 3, 2020, the Company and VICI Properties L.P., a Delaware limited partnership (“VICI”) entered into an agreement to sell the equity interests of being purchased, earned, or depositedHarrah’s Louisiana Downs to Rubico Acquisition Corp. for $22 million, subject to a customary working capital adjustment, which proceeds will be split between the Company and are recorded within accrued other liabilities onVICI. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
On December 24, 2020, the Company entered into an agreement to sell the equity interests of Caesars Southern Indiana to the Eastern Band of Cherokee Indians (“EBCI”) for $250 million, subject to customary purchase price adjustments. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals, and is expected to close in the third quarter of 2021.
The following information presents the net revenues and net income (loss) for the Company’s Consolidated Balance Sheets.


The following table summarizes the activity related to contract and contract-related liabilities (in thousands):

 

 

Outstanding Chip Liability

 

 

Player Loyalty Liability

 

 

Customer Deposits and Other

Deferred Revenue

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Balance at January 1

 

$

 

9,770

 

 

$

 

8,930

 

 

$

 

13,461

 

 

$

 

17,639

 

 

$

 

171,641

 

 

$

 

27,588

 

Balance at March 31

 

 

 

7,166

 

 

 

 

8,775

 

 

 

 

12,336

 

 

 

 

17,285

 

 

 

 

172,027

 

 

 

 

175,915

 

Increase / (decrease)

 

$

 

(2,604

)

 

$

 

(155

)

 

$

 

(1,125

)

 

$

 

(354

)

 

$

 

386

 

 

$

 

148,327

 

The March 31, 2020 balances exclude liabilities related to assets heldproperties that are part of discontinued operations for sale recorded in 2020 and 2019 (see Note 4).  The significant change in customer deposits and other deferred revenue during the three months ended March 31, 20192021:

Three Months Ended March 31, 2021
(In millions)Harrah’s Louisiana DownsHorseshoe HammondCaesars UKCaesars Southern Indiana
Net revenues$13 $93 $10 $49 
Net income (loss)4 14 (7)0 
The assets and liabilities held for sale as discontinued operations, accounted for at carrying value unless fair value was primarily attributed to the initial recognitionlower, were as follows as of March 31, 2021 and December 31, 2020:
March 31, 2021
(In millions)Harrah’s Louisiana DownsHorseshoe HammondCaesars UKCaesars Southern Indiana
Assets:
Cash$7 $16 $18 $8 
Property and equipment, net10 405 75 415 
Goodwill3 141 3 136 
Gaming licenses and other intangibles, net5 30 29 23 
Other assets, net0 37 114 4 
Assets held for sale$25 $629 $239 $586 
Current liabilities$8 $28 $65 $17 
Other long-term liabilities (a)
5 72 116 334 
Liabilities related to assets held for sale$13 $100 $181 $351 
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15
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
December 31, 2020
(In millions)Harrah’s Louisiana DownsHorseshoe HammondCaesars UKCaesars Southern Indiana
Assets:
Cash$6 $18 $32 $8 
Property and equipment, net11 402 75 418 
Goodwill3 141 3 136 
Gaming licenses and other intangibles, net5 30 28 23 
Other assets, net0 38 117 4 
Assets held for sale$25 $629 $255 $589 
Current liabilities$6 $26 $73 $13 
Other long-term liabilities (a)
6 72 120 332 
Liabilities related to assets held for sale$12 $98 $193 $345 
____________________
(a)We have included $339 million and $336 million of deferred finance obligation as of March 31, 2021 and December 31, 2020, respectively, as held for sale liabilities for Caesars Southern Indiana and Harrah’s Louisiana Downs, which represent our preliminary purchase price allocation of the Company’s interestsliability which will be derecognized upon completion of those divestitures. We have not included any portion of the deferred finance obligation associated with Horseshoe Hammond as held for sale as we do not yet have any sale agreements in William Hill, which is recorded in other long-term liabilitiesplace or know the effect of any possible master lease modification on the Consolidated Balance Sheets (see Note 6).

our deferred finance lease liability.

Note 4. Assets Held for Sale

Kansas City, Vicksburg, Eldorado ShreveportInvestments in and MontBleu

On July 10, 2019, theAdvances to Unconsolidated Affiliates

William Hill
The Company entered into a definitive25-year agreement, which became effective January 29, 2019, with William Hill which granted to sellWilliam Hill the equity interestsright to conduct betting activities, including operating our sportsbooks, in retail channels under certain skins for online channels with respect to the Company’s current and future properties, and conduct certain real money online gaming activities. The Company received a 20% ownership interest in William Hill US as well as 13 million ordinary shares of the entities that hold Vicksburg and Kansas City to Twin River for approximately $230 million,William Hill PLC, which shares initially received were subject to a working capital adjustment.restrictions on transfer. The definitive agreements provide thattime restrictions on approximately 6 million shares expire within the consummation of the salesnext twelve months and are subject to satisfaction of customary conditions, including receipt of required regulatory approvals.

On January 13, 2020 and March 9, 2020, respectively,classified as current. Additionally, the Company entered into definitive purchase agreementsreceives a profit share from the operations of sports betting and other gaming activities associated with the Company’s properties. “Skin” in the context of this agreement refers to sell the equity interestsCompany’s ability to grant to William Hill an online channel that allows William Hill to operate online casino and sports gaming activities in reliance on, and utilizing the benefit of, Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC, the entities that hold Eldorado Shreveport and MontBleu,any licenses granted to Maverick.  On April 24, 2020, the purchase agreements with Maverick were terminated and the Company entered into a definitive purchase agreement with Twin River and certain ofor its affiliates for the sale of the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC for aggregate consideration of $155 million.  The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals, and further provides that the Company’s obligation to consummate the sale is subject to the closing of the Merger with Caesars and the buyer’s obligation to consummate the sale is subject to receipt of financing sufficient to enable it to pay the consideration due at closing.  

Kansas City and Vicksburg met the requirements for presentation as assets held for sale under generally accepted accounting principles as of December 31, 2019 and March 31, 2020. Eldorado Shreveport and MontBleu met the requirements for presentation as assets held for sale assubsidiaries.

As of March 31, 2020. However, none2021 and December 31, 2020, the Company’s receivable from William Hill totaled $13 million and $7 million, respectively, and is reflected in Due from affiliates on the Balance Sheets.
The Company is accounting for its investment in William Hill US under the equity method. The fair value of the pending divestitures metCompany’s initial investment in William Hill US of $129 million at January 29, 2019 was determined using Level 3 inputs. As of March 31, 2021 and December 31, 2020, the requirementscarrying value of the Company’s interest in William Hill US totaled $126 million and $128 million, respectively, and is recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets.
The Company is accounting for presentationits investment in William Hill PLC as discontinued operationsan investment in equity securities. As of March 31, 2021 and areDecember 31, 2020, the fair value of the William Hill PLC shares totaled $45 million and $44 million, respectively, net of cumulative unrealized gains of $18 million and $17 million, respectively, and is included in income from continuing operations inOther assets, net on the periods presented.

As a resultBalance Sheets. The Company recorded an unrealized gain of the agreement to sell MontBleu,$1 million and an impairment charge totaling $45.6unrealized loss of $19 million was recorded during the three months ended March 31, 2021 and 2020, duerespectively.

As described above, the Company granted William Hill the right to the carryinguse of certain skins to operate online sports betting operations through our market access in each state and operate retail sports betting in our current and future properties for an equity method investment. The fair value exceeding the estimated net sales proceeds. The impairment charges resulted in a reduction to the carrying amounts of the right-of-use assets, propertyWilliam Hill US and equipment, goodwillWilliam Hill PLC shares received have been deferred and other intangibles totaling $17.8are recognized as revenue on a straight-line basis over the 25-year agreement term. The Company recognized revenue of $2 million (see Note 7), $23.2 million and $4.6 million, respectively.


The assets and liabilities held for sale, accounted for at carrying value as it was lower than fair value, were as follows as of March 31, 2020 (in thousands):

 

 

March 31, 2020

 

 

 

Shreveport

 

 

MontBleu

 

 

 

Kansas City

 

Vicksburg

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

$

 

1,760

 

 

$

 

882

 

 

$

 

361

 

 

 

 

$

 

174

 

 

$

 

3,177

 

Due from affiliates

 

 

 

—

 

 

 

 

157

 

 

 

 

—

 

 

 

 

 

 

(15

)

 

 

 

142

 

Inventories

 

 

 

1,016

 

 

 

 

596

 

 

 

 

43

 

 

 

 

 

 

129

 

 

 

 

1,784

 

Right-of-use assets

 

 

 

12,156

 

 

 

 

27,720

 

 

 

 

36,776

 

 

 

 

 

 

—

 

 

 

 

76,652

 

Prepaid expenses and other

 

 

 

956

 

 

 

 

1,222

 

 

 

 

334

 

 

 

 

 

 

4,186

 

 

 

 

6,698

 

Property and equipment, net

 

 

 

85,010

 

 

 

 

36,317

 

 

 

 

39,148

 

 

 

 

 

 

31,493

 

 

 

 

191,968

 

Goodwill

 

 

 

—

 

 

 

 

—

 

 

 

 

39,623

 

 

 

 

 

 

8,806

 

 

 

 

48,429

 

Other intangibles, net

 

 

 

20,574

 

 

 

 

—

 

 

 

 

90,329

 

 

 

 

 

 

2,708

 

 

 

 

113,611

 

Assets held for sale

 

$

 

121,472

 

 

$

 

66,894

 

 

$

 

206,614

 

 

 

 

$

 

47,481

 

 

$

 

442,461

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

 

596

 

 

$

 

659

 

 

$

 

147

 

 

 

 

$

 

91

 

 

$

 

1,493

 

Accrued payroll and related

 

 

 

2,381

 

 

 

 

1,248

 

 

 

 

723

 

 

 

 

 

 

421

 

 

 

 

4,773

 

Accrued property and other taxes

 

 

 

805

 

 

 

 

200

 

 

 

 

145

 

 

 

 

 

 

216

 

 

 

 

1,366

 

Short-term lease obligation

 

 

 

1,086

 

 

 

 

5,354

 

 

 

 

1,528

 

 

 

 

 

 

—

 

 

 

 

7,968

 

Long-term lease obligations

 

 

 

13,228

 

 

 

 

63,017

 

 

 

 

33,721

 

 

 

 

 

 

—

 

 

 

 

109,966

 

Accrued other liabilities

 

 

 

2,397

 

 

 

 

2,284

 

 

 

 

891

 

 

 

 

 

 

252

 

 

 

 

5,824

 

Other long-term liabilities

 

 

 

60

 

 

 

 

23

 

 

 

 

168

 

 

 

 

 

 

31

 

 

 

 

282

 

Liabilities related to assets held for sale

 

$

 

20,553

 

 

$

 

72,785

 

 

$

 

37,323

 

 

 

 

$

 

1,011

 

 

$

 

131,672

 

The assets and liabilities held for sale, accounted for at carrying value as it was lower than fair value, were as follows as of December 31, 2019 (in thousands):

 

 

December 31, 2019

 

 

 

Kansas City

 

 

Vicksburg

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

$

 

285

 

 

$

 

75

 

 

$

 

360

 

Inventories

 

 

 

52

 

 

 

 

119

 

 

 

 

171

 

Right-of-use assets

 

 

 

36,135

 

 

 

 

—

 

 

 

 

36,135

 

Prepaid expenses and other

 

 

 

216

 

 

 

 

4,168

 

 

 

 

4,384

 

Property and equipment, net

 

 

 

39,126

 

 

 

 

31,493

 

 

 

 

70,619

 

Goodwill

 

 

 

39,623

 

 

 

 

8,806

 

 

 

 

48,429

 

Other intangibles, net

 

 

 

90,329

 

 

 

 

2,708

 

 

 

 

93,037

 

Assets held for sale

 

$

 

205,766

 

 

$

 

47,369

 

 

$

 

253,135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

 

307

 

 

$

 

188

 

 

$

 

495

 

Accrued payroll and related

 

 

 

567

 

 

 

 

327

 

 

 

 

894

 

Accrued property and other taxes

 

 

 

26

 

 

 

 

891

 

 

 

 

917

 

Short-term lease obligation

 

 

 

764

 

 

 

 

—

 

 

 

 

764

 

Long-term lease obligation

 

 

 

33,080

 

 

 

 

—

 

 

 

 

33,080

 

Accrued other liabilities

 

 

 

1,055

 

 

 

 

280

 

 

 

 

1,335

 

Liabilities related to assets held for sale

 

$

 

35,799

 

 

$

 

1,686

 

 

$

 

37,485

 


The following information presents the net revenues and net income (loss) for the Company’s properties that are held for sale (in thousands):

 

 

Three Months ended March 31, 2020

 

 

 

Shreveport

 

 

MontBleu

 

 

Kansas City

 

 

Vicksburg

 

Net revenues

 

$

 

22,550

 

 

$

 

8,617

 

 

$

 

13,748

 

 

$

 

4,530

 

Net income (loss)

 

 

 

1,679

 

 

 

 

(42,164

)

 

 

 

3,214

 

 

 

 

(473

)

Mountaineer, Caruthersville and Cape Girardeau Divestitures

The sales of Mountaineer, Caruthersville and Cape Girardeau were consummated on December 6, 2019. Mountaineer was previously reported in the East segment and Caruthersville and Cape Girardeau were previously reported in the Midwest segment.

Prior to the closing date, Mountaineer, Cape Girardeau and Caruthersville met the requirements for presentation as assets held for sale. However, they did not meet the requirements for presentation as discontinued operations. Mountaineer was reported in the East segment and Cape Girardeau and Caruthersville were reported in Midwest segment.

The following information presents the net revenues and net income of Mountaineer, Cape Girardeau and Caruthersville for the three months ended March 31, 2019 (in thousands):

 

 

Three Months ended March 31, 2019

 

 

 

Mountaineer

 

 

Cape Girardeau

 

 

Caruthersville

 

Net revenues

 

$

 

30,165

 

 

$

 

15,401

 

 

$

 

8,927

 

Net income

 

 

 

1,623

 

 

 

 

2,114

 

 

 

 

1,780

 

Presque2021 and Nemacolin Divestitures2020, and is recorded in Other revenue in the Statements of Operations.

Table of Contents

16
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
As of March 31, 2021 and December 31, 2020, the balance of the William Hill deferred revenue totaled $132 million and $134 million, respectively, and is recorded in other long-term liabilities on the Balance Sheets.
On April 22, 2021, the Company consummated its previously announced acquisition of William Hill PLC in an all-cash transaction. See Note 1. The saleinvestments and transactions among Caesars and William Hill described above will be assessed as part of Presque closedthe consideration transferred and the allocation of the purchase price. See Note 2.
Pompano Joint Venture
In April 2018, the Company entered into a joint venture with Cordish Companies (“Cordish”) to plan and develop a mixed-use entertainment and hospitality destination expected to be located on January 11, 2019 resultingunused land adjacent to the casino and racetrack at the Company’s Pompano property. As the managing member, Cordish will operate the business and manage the development, construction, financing, marketing, leasing, maintenance and day-to-day operation of the various phases of the project. Additionally, Cordish will be responsible for the development of the master plan for the project with the Company’s input and will submit it for the Company’s review and approval. The Company has made cash contributions totaling $1 million and has contributed land. On February 12, 2021, the Company contributed an additional 186 acres to the joint venture for a fair value of $61 million. Total contributions of approximately 206 acres of land have been made with a fair value of approximately $69 million, and the Company has no further obligation to contribute additional real estate or cash as of March 31, 2021. We entered into a short-term lease agreement in February 2021, which we can cancel at anytime, to lease back a gainportion of the land from the joint venture.
While the Company holds a 50% variable interest in the joint venture, it is not the primary beneficiary; as such the investment in the joint venture is accounted for using the equity method. The Company participates evenly with Cordish in the profits and losses of the joint venture, which are included in Transaction costs and other operating costs on salethe Statements of $22.1 million,Operations. As of March 31, 2021 and December 31, 2020, the Company’s investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets.
Note 5. Property and Equipment
(In millions)March 31, 2021December 31, 2020
Land$2,113 $2,174 
Buildings, riverboats, and leasehold and land improvements11,702 11,686 
Furniture, fixtures, and equipment1,426 1,404 
Construction in progress134 118 
Total property and equipment15,375 15,382 
Less: accumulated depreciation(1,292)(1,049)
Total property and equipment, net$14,083 $14,333 
Our property and equipment is subject to various operating leases for which we are the lessor. We lease our property and equipment related to our hotel rooms, convention space and retail space through various short-term and long-term operating leases.
Depreciation Expense
Three Months Ended March 31,
(In millions)20212020
Depreciation expense$245 $43 
Depreciation is calculated using the straight-line method over the shorter of the estimated useful life of the asset or the related lease.
Note 6. Goodwill and Intangible Assets, net
The purchase price of final working capital adjustments,an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. The Company determines the estimated fair values after review and consideration of relevant information including discounted cash flows, quoted market prices, and estimates made by management. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is recorded as goodwill.
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17
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Changes in Carrying Value of Goodwill and Other Intangible Assets
Non-Amortizing Intangible Assets
(In millions)Amortizing Intangible AssetsGoodwillOther
December 31, 2020$479 $9,723 $3,774 
Amortization(20)— — 
Acquisition of gaming rights— 0 2 
Other— 6 — 
March 31, 2021$459 $9,729 $3,776 
Gross Carrying Value and Accumulated Amortization of Intangible Assets Other Than Goodwill
March 31, 2021December 31, 2020
(Dollars in millions)Useful LifeGross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Amortizing intangible assets
Customer relationships3 - 7 years$488 $(111)$377 $488 $(92)$396 
Gaming rights and other34 years84 (2)82 84 (1)83 
$572 $(113)459 $572 $(93)479 
Non-amortizing intangible assets
Trademarks2,161 2,161 
Gaming rights1,092 1,090 
Caesars Rewards523 523 
3,776 3,774 
Total amortizing and non-amortizing intangible assets, net$4,235 $4,253 
Amortization expense with respect to intangible assets for the three months ended March 31, 2019.2021 and 2020 totaled $20 million and $7 million, respectively, which is included in depreciation and amortization in the Statements of Operations.
Estimated Five-Year Amortization
Remaining 2021Years Ended December 31,
(In millions)20222023202420252026
Estimated annual amortization expense$61 $64 $60 $60 $60 $60 
Note 7. Fair Value Measurements
Items Measured at Fair Value on a Recurring Basis: The salefollowing table sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the Balance Sheets at March 31, 2021 and December 31, 2020:
March 31, 2021
(In millions)Level 1Level 2Level 3Total
Assets:
Restricted cash and investments$1 $1 $45 $47 
Marketable securities20 11 0 31 
Total assets at fair value$21 $12 $45 $78 
Liabilities:
Derivative instruments - 5% Convertible Notes$0 $477 $0 $477 
Derivative instruments - interest rate swaps0 75 0 75 
Total liabilities at fair value$0 $552 $0 $552 
Table of Nemacolin closed on March 8, 2019 resultingContents
18
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
December 31, 2020
(In millions)Level 1Level 2Level 3Total
Assets:
Restricted cash and investments$1 $3 $44 $48 
Marketable securities23 10 0 33 
Derivative instruments - FX forward0 40 0 40 
Total assets at fair value$24 $53 $44 $121 
Liabilities:
Derivative instruments - 5% Convertible Notes$0 $326 $0 $326 
Derivative instruments - interest rate swaps0 90 0 90 
Total liabilities at fair value$0 $416 $0 $416 
The change in a gain on sale of $0.1 million, net of final working capital adjustments,restricted cash and investments valued using Level 3 inputs for the three months ended March 31, 2019.  Presque and Nemacolin2021 is as follows:
(In millions)Level 3 Investments
Fair value of investment at December 31, 2020$44 
Unrealized gain1 
Fair value at March 31, 2021$45 
There were both previously reportedno transfers in the East segment.

The following information presents the net revenues and net income (loss)or out of Presque and Nemacolin prior to the respective divestitures (in thousands):

 

 

Three Months ended March 31, 2019

 

 

 

Presque

 

 

Nemacolin

 

Net revenues

 

$

 

3,235

 

 

$

 

4,836

 

Net loss

 

 

 

(42

)

 

 

 

(754

)

These amounts include historical operating results, adjusted to eliminate the internal allocation of interest expense that was not be assumed by the buyer.

Note 5. Stock-Based Compensation and Stockholders’ Equity

Share Repurchase Program

In November 2018, the Company’s Board of Directors authorized a $150 million common stock repurchase program (the “Share Repurchase Program”) pursuant to which the Company may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The Share Repurchase Program has no time limit and may be suspended or discontinued at any time without notice. There is no minimum number of shares of common stock that the Company is required to repurchase under the Share Repurchase Program.

The Company acquired 223,823 shares of common stock at an aggregate value of $9.1 million and an average of $40.80 per share in 2018. NaN shares were repurchased in 2019 orLevel 3 investments during the three months ended March 31, 2020.

2021.

Restricted Cash and Investments

Stock-Based Compensation

The estimated fair values of the Company’s restricted cash and investments are based upon quoted prices available in active markets (Level 1), or quoted prices for similar assets in active and inactive markets (Level 2), or quoted prices available in active markets adjusted for time restrictions related to the sale of the investment (Level 3) and represent the amounts the Company would expect to receive if the Company sold the restricted cash and investments. Restricted cash classified as Level 1 includes cash held in short-term certificate of deposit accounts or money market type funds. Restricted investments include shares acquired in conjunction with the Company’s sports betting agreements that contain restrictions related to the ability to liquidate shares within a specified timeframe.
Marketable Securities 
Marketable securities consist primarily of trading securities held by the Company’s captive insurance subsidiary and unrestricted shares acquired in conjunction with the Company’s sports betting agreements. These investments also include collateral for several escrow and trust agreements with third-party beneficiaries. The estimated fair values of the Company’s marketable securities are determined on an individual asset basis based upon quoted prices of identical assets available in active markets (Level 1), quoted prices of identical assets in inactive markets, or quoted prices for similar assets in active and inactive markets (Level 2), and represent the amounts the Company would expect to receive if the Company sold these marketable securities.
In November 2018, the Company entered into a 20-year agreement with The Stars Group Inc., which was subsequently acquired by Flutter Entertainment PLC (“Flutter”) to provide options to obtain access to a second skin for online sports wagering and third skin for real money online gaming and poker with respect to the Company’s properties in the U.S. Under the terms of the agreement, the Company received common shares, as a revenue share from certain operations of Flutter under the Company’s licenses. The fair value of the shares received has been deferred and is recognized as revenue on a straight-line basis over the 20-year agreement term. All shares initially received were subject to a one year restriction on transfer from the date they are received. All shares held are unrestricted as of March 31, 2021.
As of March 31, 2021 and December 31, 2020, the fair value of shares held was $10 million, and is included in Prepayments and other current assets on the Balance Sheets. The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Total stock-based compensation expense inrecorded an unrealized gain of less than a million during the accompanying Consolidated Statementsthree months ended March 31, 2021, and an unrealized loss of Operations totaled $5.7 million and $4.9$3 million during the three months ended March 31, 2020, which were included in Other income (loss) on the Statements of Operations.
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19
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Derivative Instruments
The Company does not purchase or hold any derivative financial instruments for trading purposes.
5% Convertible Notes - Derivative Liability
On October 6, 2017, Former Caesars issued $1.1 billion aggregate principal amount of 5% Convertible Notes.
The 5% Convertible Notes are convertible into approximately 0.014 shares of Company Common Stock and 2019, respectively.  These$1.17 of cash per $1.00 principal amount of 5% Convertible Notes. The 5% Convertible Notes are convertible at any time at the option of the holders thereof or the Company. We do not intend to exercise our option to convert these notes prior to maturity.
Conversion of the remaining $325 million in aggregate principal amount of outstanding 5% Convertible Notes, of which $10 million was held in trust as of March 31, 2021, would result in the issuance of an aggregate of 4.5 million shares of Company Common Stock and payment of $379 million. The 5% Convertible Notes mature in October 2024 and have a remaining life of approximately 3.5 years.
Management analyzed the conversion features for derivative accounting consideration under ASC Topic 815, Derivatives and Hedging, (“ASC 815”) and determined that the 5% Convertible Notes contain bifurcated derivative features and qualify for derivative accounting. In accordance with ASC 815, the Company has bifurcated the conversion features of the 5% Convertible Notes and recorded a derivative liability. The 5% Convertible Notes derivative features are not designated as hedging instruments. The derivative features of the 5% Convertible Notes are carried on the Company’s Balance Sheets at fair value in Other long-term liabilities. The derivative liability is marked-to-market each period and the change in fair value, which is primarily due to fluctuations in the share price of our common stock, is recorded as a component of Other income (loss) in the Statements of Operations. For the three months ended March 31, 2021, the change in fair value resulted in a loss of $151 million. The derivative liability associated with the 5% Convertible Notes will remain in effect until such time as the underlying convertible notes are exercised or terminated and the resulting derivative liability will be reclassified from a liability to equity as of such date.
Valuation Methodology
The 5% Convertible Notes had an initial face value of $1.1 billion, an initial term of seven years, and a coupon rate of 5%.
As of March 31, 2021 we estimated the fair value of the 5% Convertible Notes using a market-based approach that incorporated the value of both the straight debt and conversion features of the 5% Convertible Notes. The valuation model incorporated actively traded prices of the 5% Convertible Notes as of the reporting date, and assumptions regarding the incremental cost of borrowing for CEI. The key assumption used in the valuation model is the actively traded price of the 5% Convertible Notes and the incremental cost of borrowing is an indirectly observable input. The fair value for the conversion features of the 5% Convertible Notes is classified as Level 2 measurement.
Key Assumptions as of March 31, 2021:
•Actively traded price of 5% Convertible Notes - $254.05
•Incremental cost of borrowing - 4.3%
Forward contracts
In relation to the William Hill Acquisition, on September 28, 2020, the Company entered into a foreign exchange forward contract to hedge the risk of appreciation of the GBP denominated purchase price. On October 9, 2020, the Company entered into a foreign exchange forward contract to purchase £536 million at a contracted exchange rate. On March 25, 2021, the forward contract was settled, for which the Company received $41 million in proceeds. The Company recorded a gain of approximately $1 million during the three months ended March 31, 2021, which was recorded in the Other income (loss) on the Statements of Operations.
Interest Rate Swap Derivatives
We assumed Former Caesars interest rate swaps to manage the mix of assumed debt between fixed and variable rate instruments. As of March 31, 2021, we have 7 interest rate swap agreements to fix the interest rate on $2.3 billion of variable rate debt related to the Caesars Resort Collection (“CRC”) Credit Agreement. The interest rate swaps are designated as cash flow hedging instruments. The difference to be paid or received under the terms of the interest rate swap agreements is accrued as interest rates change and recognized as an adjustment to interest expense at settlement. Changes in the variable interest rates to be received pursuant to the terms of the interest rate swap agreements will have a corresponding effect on future
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20
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
cash flows.
The major terms of the interest rate swap agreements as of March 31, 2021 are as follows:
Effective Date
Notional Amount
(In millions)
Fixed Rate PaidVariable Rate Received as of
March 31, 2021		Maturity Date
1/1/20192502.196%0.1145%12/31/2021
12/31//20182502.274%0.1145%12/31/2022
1/1/20194002.788%0.1145%12/31/2021
12/31//20182002.828%0.1145%12/31/2022
1/1/20192002.828%0.1145%12/31/2022
12/31//20186002.739%0.1145%12/31/2022
1/2/20194002.707%0.1145%12/31/2021
Valuation Methodology
The estimated fair values of our interest rate swap derivative instruments are derived from market prices obtained from dealer quotes for similar, but not identical, assets or liabilities. Such quotes represent the estimated amounts we would receive or pay to terminate the contracts. The interest rate swap derivative instruments are included in corporate expenseseither Other assets, net or Other long-term liabilities on our Balance Sheets. Our derivatives are recorded at their fair values, adjusted for the credit rating of the counterparty if the derivative is an asset, or adjusted for the credit rating of the Company if the derivative is a liability. None of our derivative instruments are offset and inall were classified as Level 2.
Financial Statement Effect
The effect of derivative instruments designated as hedging instruments on the caseBalance Sheets for amounts transferred into Accumulated other comprehensive income (loss) (“AOCI”) before tax was a gain of certain property positions, general and administrative expenses in$15 million during the Company’s Consolidatedthreemonths ended March 31, 2021. AOCI reclassified to Interest expense on the Statements of Operations. The Company recognized an increase in income tax benefit of $2.8Operations was $14 million for the three months ended March 31, 2020, related to stock-based compensation. The Company recognized a reduction in income tax expense of $2.6 million for the three months ended March 31, 2019 for excess tax benefits related to stock-based compensation.   

A summary of the restricted stock unit (“RSU”) activity for the three months ended March 31, 2020 is presented in the following table:

 

 

 

Restricted Stock Units

 

 

 

 

 

Units

 

 

 

Weighted-

Average Grant

Date

Fair Value

 

 

 

 

 

 

 

 

 

 

(in millions)

 

 

Unvested outstanding as of December 31, 2019

 

 

 

1,246,641

 

 

$

 

35.56

 

 

Granted (1)

 

 

 

293,367

 

 

 

 

57.73

 

 

Vested

 

 

 

(371,108

)

 

 

 

24.05

 

 

Forfeited

 

 

 

(8,333

)

 

 

 

42.13

 

 

Unvested outstanding as of March 31, 2020

 

 

 

1,160,567

 

 

$

 

45.10

 

 

(1)

Included are 20,615 RSUs granted to non-employee members of the Board of Directors during the three months ended March 31, 2020.

2021. As of March 31, 20202021, the interest rate swaps derivative liability of $75 million was recorded in Other long-term liabilities. Net settlement of these interest rate swaps results in the reclassification of deferred gains and 2019,losses within AOCI to be reclassified to the Company had $34.2 million and $28.6 million, respectively,income statement as a component of unrecognized compensation expense.interest expense as settlements occur. The RSUsestimated amount of existing gains or losses that are reported in AOCI at the reporting date that are expected to be recognized over a weighted-average periodreclassified into earnings within the next 12 months is approximately $52 million.

Accumulated Other Comprehensive Income
The changes in AOCI by component, net of 1.9 years for both periods.

There was no stock option activitytax, for the three months endedperiod through March 31, 2020. Outstanding options2021 are shown below.

(In millions)Unrealized Net Gains on Derivative InstrumentsForeign Currency Translation AdjustmentsOtherTotal
Balances as of December 31, 2020$26 $8 $0 $34 
Other comprehensive loss before reclassifications(2)0 (1)(3)
Amounts reclassified from accumulated other comprehensive income14 0 0 14 
Total other comprehensive income, net of tax12 0 (1)11 
Balances as of March 31, 2021$38 $8 $(1)$45 
Note 8. Litigation, Commitments and Contingencies
Litigation
We are a party to various legal proceedings. Such proceedings can be costly, time consuming and unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings will not materially impact our consolidated financial condition or results of operations. While we maintain insurance coverage that we believe is adequate to mitigate the risks of such proceedings, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters.
Table of Contents
21
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
On July 14, 2020, the Company filed a lawsuit for damages and declaratory relief in state court in New York relating to a transfer fee of $50 million that was assessed by the Indiana Gaming Commission upon the Company’s purchase of Hoosier Park Racino and Casino in 2017 from Centaur Holdings, LLC. Contemporaneous with the filing of the lawsuit, the Company notified the sellers that it was withholding payment of $50 million from amounts that were otherwise due to the sellers as a portion of a deferred payment for the purchase from the sellers. In the lawsuit, the Company seeks a declaration from the Court that the Sellers are required to indemnify Caesars for its losses arising out of or relating to payment of the transfer fee and that the Company is entitled to offset the $50 million transfer fee against payments otherwise due to the sellers. The Defendants in that suit have filed Motions to Dismiss the Company’s claims. Briefing on the Motion has been concluded and the parties await a decision from the Court.
COVID-19 Insurance Claims
The COVID-19 public health emergency has had a significant impact on the Company’s business and employees, as well as the communities where the Company operates and serves. The Company purchased broad property insurance coverage to protect against “all risk of physical loss or damage” and resulting business interruption, unless specifically excluded by policies. The Company submitted claims for losses incurred as a result of the COVID-19 public health emergency which are expected to exceed $2 billion. The insurance carriers under the Company’s insurance policies have asserted that the policies do not cover losses incurred by the Company as a result of the COVID-19 public health emergency and have refused to make payments under the applicable policies. Therefore, on March 19, 2021, the Company filed a lawsuit against its insurance carriers in the state court in Clark County, Nevada. There can be no assurance as to the outcome of the litigation.
General
In addition, we are a party to various legal and administrative proceedings, which have arisen in the normal course of our business. Estimated losses are accrued for these proceedings when the loss is probable and can be estimated. The current liability for the estimated losses associated with these proceedings is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of operations.
Contractual Commitments
The following contractual commitments were assumed by the Company associated with Former Caesars as result of the consummation of the Merger.
Capital Commitments
Harrah’s New Orleans
In April 2020, the Company and the State of Louisiana, by and through the Louisiana Gaming Control Board (the “LGCB”), entered into an Amended and Restated Casino Operating Contract. Additionally, the Company, New Orleans Building Corporation (“NOBC”) and the City (collectively, the “Ground Lease Parties”) entered into a Second Amended and Restated Lease Agreement (the “Ground Lease”). Based on these amendments related to Harrah’s New Orleans, the Company is required to make certain payments and to make a capital investment of $325 million on or around Harrah’s New Orleans by July 15, 2024. In connection with the capital investment in Harrah’s New Orleans, we expect to rebrand the property as Caesars New Orleans.
Atlantic City
As required by the New Jersey Gaming Control Board in connection with its approval of the Merger, we have funded $400 million in escrow to provide funds for a three year capital expenditure plan in the state of New Jersey. This amount is currently included in restricted cash. As of March 31, 2021, our restricted cash balance in the escrow account is $376 million for future capital expenditures in New Jersey.
Sports Sponsorship/Partnership Obligations
We have agreements with certain professional sports leagues and teams, sporting event facilities and sports television networks for tickets, suites, and advertising, marketing, promotional and sponsorship opportunities. As of March 31, 2021, obligations related to these agreements were $289 million with contracts extending through 2035, which include leasing of event suites that are generally considered short term leases for which we do not record a right of use asset or lease liability. We recognize expenses in the period services are rendered in accordance with the various agreements. In addition, assets or liabilities may be recorded related to the timing of payments as required by the respective agreement.
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22
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Self-Insurance
We are self-insured for workers compensation and other risk insurance, as well as health insurance and general liability. Our total estimated self-insurance liability was $227 million and $223 million as of March 31, 2021 and December 31, 2020, totaled 135,956,respectively, recorded in Accrued other liabilities in our Balance Sheets.
Due to the novel nature of the disruption resulting from the COVID-19 public health emergency, actuarial data is limited for determining its effect. The assumptions utilized by our actuaries are subject to significant uncertainty and if outcomes differ from these assumptions or events develop or progress in a negative manner, the Company could experience a material adverse effect and additional liabilities may be recorded in the future. Alternatively, as a result of the recent work stoppages and reductions in workforce, a reduction of claims in future periods could be beneficial to our financial condition and results of operations.
Contingencies
Uncertainties
Since 2009, Harrah’s New Orleans has undergone audits by state and local departments of revenue related to sales taxes on hotel rooms, parking and entertainment complimentaries. The periods that have been or are currently being audited are 2004 through 2016. In connection with these audits, certain periods have been paid under protest or are currently in various stages of litigation. On July 2, 2019, the judge denied Harrah’s New Orleans’ motion for partial summary judgment and granted the Department of Revenue’s (the “Department”) partial motion for summary judgment, finding that Harrah’s New Orleans owes state sales taxes, as well as district and New Orleans occupancy taxes to the Department on all discounted or complimentary rooms furnished by Harrah’s New Orleans to patrons or guests at Harrah’s New Orleans hotel and certain third party hotels. Caesars appealed the trial Court’s decision to the Louisiana Court of Appeal, which 125,331 optionsAppeal was rejected. Caesars has since petitioned to the Louisiana Supreme Court for review of the Appeals Court’s decision. On January 9, 2021, the Louisiana Supreme Court issued a ruling granting in part and denying in part the Company’s Petition for Appeal. In its decision, the Supreme Court upheld the lower Courts’ decisions that the Company must pay taxes for complimentaries at Harrah’s New Orleans, but overturned the lower Courts’ rulings that the Company must pay such taxes for third party hotels. This matter will now proceed to trial for a determination of the amount of taxes due pursuant to the Louisiana Supreme Court’s ruling. Former Caesars paid $9 million under protest and is being held in escrow by the Department. Harrah’s New Orleans had accrued contingent liabilities of $44 million as of March 31, 2021.
Weather disruption - Lake Charles
On August 27, 2020, Hurricane Laura made landfall on Lake Charles as a Category 4 storm severely damaging the Isle of Capri Casino Lake Charles. During the threemonths ended as of March 31, 2021, the Company received insurance proceeds of approximately $26 million related to damaged fixed assets and remediation costs. The Company also recorded a gain of approximately $8 million as proceeds received were exercisable.

in excess of the losses incurred and the net book value of the damaged property. The property will remain closed until 2022 when construction of a new land-based casino is expected to be complete.
Table of Contents
23
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 9. Long-Term Debt
Long-term debt consisted of the following:
March 31, 2021December 31,
2020
(Dollars in millions)Final
Maturity		RatesFace ValueBook ValueBook Value
Secured Debt
CRC Revolving Credit Facility2022
variable (a)
$0 $0 $0 
CRC Term Loan2024
variable (b)
4,547 4,146 4,133 
CEI Revolving Credit Facility2025
variable (a)
0 0 0 
CRC Incremental Term Loan2025
variable (c)
1,791 1,707 1,707 
CRC Senior Secured Notes20255.75%1,000 981 981 
CEI Senior Secured Notes20256.25%3,400 3,336 3,333 
Convention Center Mortgage Loan20257.70%400 398 397 
Unsecured Debt
5% Convertible Notes20245.00%315 291 288 
CRC Notes20255.25%1,700 1,507 1,499 
CEI Senior Notes20278.125%1,800 1,769 1,768 
Special Improvement District Bonds20374.30%51 51 51 
Long-term notes and other payables2 2 2 
Total debt15,006 14,188 14,159 
Current portion of long-term debt(67)(67)(67)
Deferred finance charges associated with the CEI Revolving Credit Facility0 (18)(19)
Long-term debt$14,939 $14,103 $14,073 
Unamortized premiums, discounts and deferred finance charges$836 $883 
Fair value$15,435 
____________________
(a)Borrowing rates for our revolving credit facilities vary based on the election made at the time of draw down.
(b)LIBOR plus 2.75%.
(c)LIBOR plus 4.50%.
Annual Estimated Debt Service Requirements as of March 31, 2021
RemainingYears Ended December 31,
(In millions)20212022202320242025ThereafterTotal
Annual maturities of long-term debt$50 $67 $67 $4,753 $8,226 $1,843 $15,006 
Estimated interest payments560 820 810 850 600 300 3,940 
Total debt service obligation (a)
$610 $887 $877 $5,603 $8,826 $2,143 $18,946 
____________________
(a)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 7 interest rate swap agreements related to our CRC Credit Facility (see Note 7). Actual payments may differ from these estimates.
Current Portion of Long-Term Debt
The current portion of long-term debt as of March 31, 2021 includes the principal payments on the term loans, other unsecured borrowings, and special improvement district bonds that are contractually due within 12 months.
Debt Discounts or Premiums and Deferred Finance Charges
Debt discounts or premiums and deferred finance charges incurred in connection with the issuance of debt are amortized to interest expense based on the related debt agreements primarily using the effective interest method. Unamortized discounts are written off and included in our gain or loss calculations to the extent we extinguish debt prior to its original maturity date.
Table of Contents
24
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Fair Value
The fair value of debt has been calculated primarily based on the borrowing rates available as of March 31, 2021 and based on market quotes of our publicly traded debt. We classify the fair value of debt within Level 1 and Level 2 in the fair value hierarchy.
Terms of Outstanding Debt
Debt Covenant Compliance
The CRC Credit Agreement, the CEI Revolving Credit Facility, and the indentures governing the CEI Senior Secured Notes, the CEI Senior Notes, the CRC Senior Secured Notes and the CRC Notes contain covenants which are standard and customary for these types of agreements. These include negative covenants, which, subject to certain exceptions and baskets, limit the Company’s and its subsidiaries’ ability to (among other items) incur additional indebtedness, make investments, make restricted payments, including dividends, grant liens, sell assets and make acquisitions.
The indenture for the 5% Convertible Notes contains limited covenants as a result of amendments that became effective in connection with the consummation of the Merger. The CRC Revolving Credit Facility and CEI Revolving Credit Facility include a maximum first-priority net senior secured leverage ratio financial covenant of 6.35:1, which is applicable solely to the extent that certain testing conditions are satisfied. Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness outstanding under the relevant debt document.
The Company’s results of operations have been materially adversely affected by the impacts of the COVID-19 public health emergency. As a result, the current terms of the CEI Revolving Credit Facility, the CRC Credit Agreement provide that the financial covenant measurement period is not effective through September 30, 2021 so long as the Company and CRC, respectively, comply with a minimum liquidity requirement, which includes any such availability under the applicable revolving credit facilities.
As of March 31, 2021, the Company was in compliance with all of the applicable financial covenants described above.
Guarantees
The CEI Revolving Credit Facility and the CEI Senior Secured Notes are guaranteed on a senior secured basis by each existing and future material wholly-owned domestic subsidiary of CEI (subject to certain exceptions) and are secured by substantially all of the existing and future property and assets of CEI and its subsidiary guarantors (subject to certain exceptions). The CEI Senior Notes are guaranteed on a senior unsecured basis by such subsidiaries.
The CRC Credit Agreement and the CRC Senior Secured Notes are guarantees on a senior secured basis by each existing and future material wholly-owned domestic subsidiary of CRC (subject to certain exceptions) and are secured by substantially all of the existing and future property and assets of CRC and its subsidiary guarantors (subject to certain exceptions). The CRC Notes are guaranteed on a senior unsecured basis by such subsidiaries.

Note 6. Investments10. Revenue Recognition
The Company’s Statements of Operations presents net revenue disaggregated by type or nature of the good or service. A summary of net revenues disaggregated by type of revenue and reportable segment is presented below. We recast previously reported segment amounts to conform to the way management assesses results and allocates resources following the Merger. Refer to Note 15 for additional information on the Company’s reportable segments.
Three Months Ended March 31, 2021
(In millions)Las VegasRegionalManaged, International & CIECorporate
and Other		Total
Casino and pari-mutuel commissions$226 $890 $24 $0 $1,140 
Food and beverage84 81 1 0 166 
Hotel115 100 0 0 215 
Other72 37 65 4 178 
Net revenues$497 $1,108 $90 $4 $1,699 
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25
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Three Months Ended March 31, 2020
(In millions)Las VegasRegionalManaged, International & CIECorporate
and Other		Total
Casino and pari-mutuel commissions$0 $340 $0 $0 $340 
Food and beverage0 56 0 0 56 
Hotel0 48 0 0 48 
Other0 27 0 2 29 
Net revenues$0 $471 $0 $2 $473 
Accounts receivable, net include the following amounts:
(In millions)March 31, 2021December 31, 2020
Casino and pari-mutuel commissions$123 $135 
Food and beverage and hotel28 25 
Other173 178 
Accounts receivable, net$324 $338 
Contract and Contract Related Liabilities
The Company records contract or contract-related liabilities related to differences between the timing of cash receipts from the customer and the recognition of revenue. The Company generally has three types of liabilities related to contracts with customers: (1) outstanding chip liability, which represents the amounts owed in exchange for gaming chips held by a customer, (2) player loyalty program obligations, subsequently combined as Caesars Rewards, which represents the deferred allocation of revenue relating to reward credits granted to Caesars Rewards members based on on-property spending, including gaming, hotel, dining, retail shopping, and Advancesplayer loyalty program incentives earned, and (3) customer deposits and other deferred revenue, which is primarily funds deposited by customers related to Unconsolidated Affiliates

Pompano Joint Venture

In April 2018,gaming play, advance payments received for goods and services yet to be provided (such as advance ticket sales, deposits on rooms and convention space or for unpaid wagers), and deferred revenues associated with the Company entered into a joint venture with Cordish Companies (“Cordish”)Company’s existing interests in William Hill (see Note 4). Except for deferred revenues related to master plan and develop a mixed-use entertainment and hospitality destinationWilliam Hill, these liabilities are generally expected to be locatedrecognized as revenue within one year of being purchased, earned, or deposited and are recorded within accrued other liabilities on unused land adjacent to the casino and racetrack at the Company’s Pompano property.Balance Sheets.

The following table summarizes the activity related to contract and contract-related liabilities:
Outstanding Chip LiabilityCaesars RewardsCustomer Deposits and Other
Deferred Revenue
(In millions)202120202021202020212020
Balance at January 1$32 $10 $94 $13 $278 $172 
Balance at March 3128 7 93 12 298 172 
Increase / (decrease)$(4)$(3)$(1)$(1)$20 $0 
The March 31, 2021 balances exclude liabilities related to assets held for sale recorded in 2021 and 2020 (see Note 3).
Lease Revenue
Lodging Arrangements
Lodging arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant component of the arrangement and consists of the fees charged for lodging. The nonlease components primarily consist of resort fees and other miscellaneous items. As the managing member, Cordish will operatetiming and pattern of transfer of both the businesslease and managenonlease components are over the development, construction, financing, marketing, leasing, maintenance and day-to-day operationcourse of the various phases oflease term, we have elected to combine the project. Additionally, Cordish will be responsible forrevenue generated from lease and nonlease components into a single lease component based on the development ofpredominant component in the master plan forarrangement. During the project with the Company’s input and will submit it for the Company’s review and approval. The Company and Cordish have made cash contributions of $500,000 each and could be required to make additional contributions to a maximum of $2.0 million ($1.0 million per member) at the request of the managing member. The Company has agreed to contribute approximately 130 to 200 acres of land to the joint venture for the project. As ofthree months ended March 31, 2021 and 2020, we recognized approximately $215 million and December 31, 2019, we have contributed approximately 20 acres$48 million, respectively, in lease revenue related to the joint venture at a fair value of $6.6 million.

While the Company holds a 50% variable interest in the joint venture, it is not the primary beneficiary; as such the investment in the joint venture is accounted for using the equity method. The Company participates evenly with Cordish in the profits and losses of the joint venture,lodging arrangements, which is included in income (loss) from unconsolidated affiliates onHotel revenues in the Consolidated Statements of Operations. As

Conventions
Convention arrangements are considered short-term and generally consist of March 31, 2020lease and December 31, 2019,nonlease components. The lease component is the Company’s investmentpredominant component of the arrangement and consists of fees charged for the use of meeting space. The
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26
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
nonlease components primarily consist of food and beverage and audio/visual services. Revenue from conventions is included in Other revenue in the joint venture is recorded in investment inStatements of Operations, and advances to unconsolidated affiliates on the Consolidated Balance Sheets.


William Hill

In September 2018, the Company entered into a 25-year agreement, which became effective January 29, 2019, with William Hill PLC and William Hill US, its U.S. subsidiary (together, “William Hill”) pursuant to which the Company (i) granted to William Hill the right to conduct betting activities in retail channels and under the Company’s first skin and third skin for online channels with respect to the Company’s current and future properties located in the United States and the territories and possessions of the United States, including Puerto Rico and the U.S. Virgin Islands and (ii) agreed that William Hill will have the right to conduct real money online gaming activities utilizing the Company’s second skin available with respect to properties in such territories.  Pursuant to the terms of the agreement, in January 2019 the Company received a 20% ownership interest in William Hill US as well as 13.4 million ordinary shares of William Hill PLC, which carry certain time restrictions on when they can be sold. Additionally, the Company receives a profit share from the operations of betting and other gaming activities associated with the Company’s properties. “Skin” in the context of this agreement refers to the Company’s ability to grant to William Hill an online channel that allows William Hill to operate online casino and sports gaming activities in reliance on, and utilizing the benefit of, any licenses granted to the Company or its subsidiaries. As of March 31, 2020 and December 31, 2019, the Company’s receivable from William Hill totaled $0.6 and $3.5 million, respectively, and is reflected in due from affiliates on the Consolidated Balance Sheets.

The Company is accounting for its investment in William Hill US under the equity method. The fair value of the Company’s initial investment in William Hill US of $128.9 million at January 29, 2019 was determined using Level 3 inputs. As of March 31, 2020 and December 31, 2019, the carrying value of the Company’s interest in William Hill US totaled $127.2 million and $127.1 million, respectively, and is recorded in investment in and advances to unconsolidated affiliates on the Consolidated Balance Sheets.

As of March 31, 2020 and December 31, 2019, the fair value of the William Hill PLC shares totaled $10.0 and $29.3 million, respectively, net of a cumulative unrealized loss of $17.4 million and a cumulative unrealized gain of $2.1 million, respectively, and included in other assets, net on the Consolidated Balance Sheets. The Company recorded unrealized losses totaling $19.3 million and $2.9 million during the three months ended March 31, 2020 and 2019, respectively.

The Company also recorded deferred2021, lease revenue associated with the William Hill US and William Hill PLC shares and is recognizing revenue on a straight-line basis over the 25-year agreement term. The Company recognized revenue of $1.5 million and $0.2 million during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, the balance of the William Hill deferred revenue totaled $140.6 million and $142.1 million, respectively, and is recorded in other long-term liabilities on the Consolidated Balance Sheets.

Note 7. Intangible Assets, net

Other and intangible assets, net, include the following amounts (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

 

 

 

2020

 

 

2019

 

 

 

Useful Life

Goodwill

 

$

 

810,187

 

 

$

 

909,717

 

 

 

Indefinite

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gaming licenses

 

$

 

872,158

 

 

$

 

893,302

 

 

 

Indefinite

Trade names

 

 

 

146,279

 

 

 

 

165,479

 

 

 

Indefinite

Player loyalty programs

 

 

 

97,935

 

 

 

 

100,694

 

 

 

3 - 4 years

Subtotal

 

 

 

1,116,372

 

 

 

 

1,159,475

 

 

 

 

Accumulated amortization player loyalty programs

 

 

 

(53,203

)

 

 

 

(48,077

)

 

 

 

Total gaming licenses and other intangible assets, net

 

$

 

1,063,169

 

 

$

 

1,111,398

 

 

 

 

Gaming licenses represent intangible assets acquired from the purchase of a gaming entity located in a gaming jurisdiction where competition is limited, such as when only a limited number of gaming operators are allowedrelated to operate in the jurisdiction. These gaming license rights areconventions was not subject to amortization as the Company has determined that they have indefinite useful lives.


Goodwill represents the excess of the purchase prices of acquiring MTR Gaming, Isle, Elgin and Tropicana over the fair market value of the net assets acquired. The following table presents the change to goodwill for the three months ended March 31, 2020 (in thousands):

 

Goodwill

 

 

Accumulated Impairment

 

 

Goodwill, net

 

 

 

 

December 31, 2019

$

 

921,408

 

 

$

 

(11,691

)

 

$

 

909,717

 

Impairments

 

 

—

 

 

 

 

(99,530

)

 

 

 

(99,530

)

Assets held for sale (see Note 4)

 

 

(5

)

 

 

 

5

 

 

 

 

—

 

March 31, 2020

$

 

921,403

 

 

$

 

(111,216

)

 

$

 

810,187

 

material. During the three months ended March 31, 2020, the Company recognized impairment chargeslease revenue related to goodwillconventions was $1 million.

Real Estate Operating Leases
During the three months ended March 31, 2021 and trade names totaling $99.52020, we recognized approximately $21 million and $15.6$2 million, respectively, due to declinesof real estate lease revenue, which is included in recent performance andOther revenue in the expected impact on future cash flows as a resultStatements of COVID-19.

Additionally, in conjunction with the classificationOperations. Real estate lease revenue includes $7 million of MontBleu’s operations as assets held for sale as of March 31, 2020 (see Note 4) as a result of the announced sale, an impairment charge totaling $45.6 million was recorded due to the carrying value exceeding the estimate sales proceeds. Impairment charges recorded by segmentvariable rental income for the three months ended March 31, 2020 (in thousands) were as follows:

 

West

 

 

South

 

 

Midwest

 

 

Total

 

Goodwill

$

 

52,805

 

 

$

 

15,625

 

 

$

 

31,100

 

 

$

 

99,530

 

Trade names

 

 

8,990

 

 

 

 

5,700

 

 

 

 

5,500

 

 

 

 

20,190

 

Property, plant and equipment (see Note 4)

 

 

23,228

 

 

 

 

—

 

 

 

 

—

 

 

 

 

23,228

 

Right of use assets (see Note 4)

 

 

17,810

 

 

 

 

—

 

 

 

 

—

 

 

 

 

17,810

 

 

$

 

102,833

 

 

$

 

21,325

 

 

$

 

36,600

 

 

$

 

160,758

 

Amortization expense with respect to player loyalty programs for the three months ended March 31, 2020 and 2019 totaled $7.5 million and $7.6 million, respectively, which is included in depreciation and amortization in the Consolidated Statements of Operations. Such amortization expense is expected to be $20.6 million for the remainder of 2020 and $21.2 million and $4.2 million for the years ended December 31, 2021, and 2022, respectively.

Note 8. Income Taxes

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. The CARES Act includes, among other things, refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017. These amendments allow for retroactive accelerated income tax depreciation on certain of our leasehold improvement assets. The Company is currently assessing the financial impact of these technical amendments on our business.

The Company estimates an annual effective income tax rate based on projected results for the year and applies this rate to income before taxes to calculate income tax expense. Any refinements made due to subsequent information that affects the estimated annual effective income tax rate are reflected as adjustments in the current period.

For the three months ended March 31, 2020, the Company’s tax benefit was $37.2 million. For the three months ended March 31, 2019, the Company’s tax expense was $10.4 million. For the three months ended March 31, 2020, the difference between the effective rate and the statutory rate is attributed primarily to goodwill impairments, true-up of certain state tax benefits, state and local income taxes and changes in the valuation allowance. For the three months ended March 31, 2019, the difference between the effective rate and the statutory rate is attributed primarily to non-deductible expenses, excess tax benefits associated with stock compensation, and state and local income taxes.

As of March 31, 2020, there were 0 unrecognized tax benefits and the Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits within the next twelve months. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

The Company and its subsidiaries file US federal income tax returns and various state and local income tax returns. The Company does not have tax sharing agreements with the other members within the consolidated ERI group. With few exceptions, the Company is no longer subject to US federal or state and local tax examinations by tax authorities for years before 2008.


Note 9. Long-Term Financing Obligation

Under the prior lease accounting standard, the Company’s Master Lease with GLPI was accounted for as a failed sale-leaseback financing obligation equal to the fair value of the leased real estate assets and liabilities acquired in purchase accounting in conjunction with the acquisition of Tropicana in 2018. Upon adoption of ASC 842, the Company re-evaluated the Master Lease and determined this existing failed sale-leaseback transaction would continue to be accounted for as a financing obligation.

The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated future lease payments over the lease term of 35 years, including renewal options, using an imputed discount rate of approximately 10.2%. The value of the failed sale-leaseback financing obligations is dependent upon assumptions regarding the amount of the lease payments and the estimated discount rate of the lease payments required by a market participant.

The Master Lease provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operation of the leased properties. The Master Lease provides for an initial term of fifteen years with no purchase option. At the Company’s option, the Master Lease may be extended for up to four five-year renewal terms beyond the initial 15-year term. If we elect to renew the term of the Master Lease, the renewal will be effective as to all, but not less than all, of the leased property then subject to the Master Lease. The Company does not have the ability to terminate its obligations under the Master Lease prior to its expiration without GLPI’s consent.

The rent payable under the Master Lease is comprised of “Base Rent” and “Percentage Rent.”  Base rent is the sum of:

•

Building Base Rent: a fixed component equal to $60.9 million during the first year of the Master Lease, and thereafter escalated annually by 2%, subject to a cap that would cause the preceding year’s adjusted revenue to rent ratio for the properties in the aggregate not to fall below 1.20:1.00 for the first five years of the Master Lease and 1.80:1.00 thereafter; plus

•

Land Base Rent: an additional fixed component equal to $13.4 million, subject to adjustment in the event of the termination of the Master Lease with respect to any of the leased properties.

The percentage rent payable under the Master Lease is adjusted every two years based on the actual net revenues of the leased properties during the two-year period then ended. The initial variable rent, which is fixed for the first two years, is $13.4 million per year. The actual percentage increase is based on actual performance and is subject to change.

The initial annual rent under the terms of the lease was approximately $87.6 million and subject to annual escalations as referenced in the table below.

Under the Master Lease, the Company is required to pay the following, among other things: lease payments to the underlying ground lessor for properties that are subject to ground leases, facility maintenance costs, all insurance premiums for insurance with respect to the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties).

The estimated future lease payments include the minimum lease payments and were adjusted to reflect estimated lease payments as described in the agreements, including an annual escalator of up to 2%.


The future minimum payments related to the Master Lease financing obligation with GLPI at March 31, 2020 were as follows (in thousands):

2020 (excluding the three months ended March 31, 2020)

 

 

 

66,953

 

2021

 

 

 

90,417

 

2022

 

 

 

91,691

 

2023

 

 

 

92,990

 

2024

 

 

 

94,315

 

Thereafter

 

 

 

3,412,357

 

Total future payments

 

 

 

3,848,723

 

Less: Amounts representing interest at 10.2%

 

 

 

(3,295,701

)

Plus: Residual values

 

 

 

420,100

 

Financing obligation to GLPI

 

$

 

973,122

 

Total cash payments and interest expense related to the Master Lease totaled $22.2 million and $24.8 million, respectively, for the three months ended March 31, 2020. Total cash payments and interest expense related to the Master Lease totaled $21.9 million and $24.6 million, respectively, for the three months ended March 31, 2019.  For the initial periods of the Master Lease, cash payments are less than the interest expense recognized, which causes the failed sale-leaseback obligation to increase during the initial years of the lease term.

The Master Lease contains certain covenants, including minimum capital improvement expenditures and a rent coverage ratio. As of March 31, 2020, we were in compliance with all of the covenants under the Master Lease.

Note 10. Long-Term Debt

Long‑term debt consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Term Loan

 

$

 

488,750

 

 

$

 

498,750

 

Less: Unamortized discount and debt issuance costs

 

 

 

(7,407

)

 

 

 

(7,982

)

Net

 

 

 

481,343

 

 

 

 

490,768

 

6% Senior Notes due 2026

 

 

 

600,000

 

 

 

 

600,000

 

Less: Unamortized debt issuance costs

 

 

 

(17,420

)

 

 

 

(17,958

)

Net

 

 

 

582,580

 

 

 

 

582,042

 

6% Senior Notes due 2025

 

 

 

875,000

 

 

 

 

875,000

 

Plus: Unamortized debt premium

 

 

 

19,368

 

 

 

 

20,214

 

Less: Unamortized debt issuance costs

 

 

 

(15,296

)

 

 

 

(15,939

)

Net

 

 

 

879,072

 

 

 

 

879,275

 

7% Senior Notes due 2023

 

 

 

375,000

 

 

 

 

375,000

 

Less: Unamortized discount and debt issuance costs

 

 

 

(4,642

)

 

 

 

(4,923

)

Net

 

 

 

370,358

 

 

 

 

370,077

 

Revolving Credit Facility

 

 

 

465,000

 

 

 

 

—

 

Lumière Loan

 

 

 

246,000

 

 

 

 

246,000

 

Long-term notes and other payables

 

 

 

2,447

 

 

 

 

2,554

 

Less: Current portion

 

 

 

(246,109

)

 

 

 

(246,175

)

Total long-term debt

 

$

 

2,780,691

 

 

$

 

2,324,541

 

Amortization of the debt issuance costs and the discount and/or premium associated with our indebtedness totaled $1.6 million and $1.9 million for the three months ended March 31, 20202020.

Note 11. Earnings per Share
The following table illustrates the reconciliation of the numerators and 2019, respectively.  Amortizationdenominators of debt issuance costs is computed using the effective interest methodbasic and is included in interest expense.

In accordance with ASC Topic 470-50, Debt Modifications and Extinguishments (“ASC 470-50”), the Company recognized adiluted net loss on the early retirement of debt totaling $0.2 millionper share computations for the three months ended March 31, 2020 related to2021 and 2020:

Three Months Ended March 31,
(In millions, except per share data)20212020
Net loss from continuing operations attributable to Caesars, net of income taxes$(430)$(176)
Discontinued operations, net of income taxes7 0 
Net loss attributable to Caesars$(423)$(176)
Shares outstanding:
Weighted average shares outstanding – basic208 78 
Weighted average shares outstanding – diluted208 78 
Basic loss per share from continuing operations$(2.06)$(2.25)
Basic income per share from discontinued operations0.03 0 
Net loss per common share attributable to common stockholders – basic:$(2.03)$(2.25)
Diluted loss per share from continuing operations$(2.06)$(2.25)
Diluted income per share from discontinued operations0.03 0 
Net loss per common share attributable to common stockholders – diluted:$(2.03)$(2.25)
For a pro-rated write off of deferred financing costs associated with permanent payments on our Term Loan. The Company did not incur a similar loss during the three months ended March 31, 2019.

Scheduled maturities of long‑term debt are $246.0 million for the remainder of 2020, $0.2 millionperiod in 2021, $0.2 million in 2022, $840.1 million in 2023, $0.2 million in 2024, and $2.0 billion thereafter.


Term Loan and Revolving Credit Facility

The Company is party to a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto dated as of April 17, 2017 (as amended the “Credit Facility”), consisting of a $1.45 billion term loan facility (the “Term Loan Facility” or “Term Loan”) and a $500.0 million revolving credit facility (the “Revolving Credit Facility”). The Company’s obligations under the Revolving Credit Facility will mature on October 1, 2023. The Company’s obligations under the Term Loan Facility will mature on April 17, 2024. The Company was required to make quarterly principal payments of $3.6 million on the Term Loan Facility on the last day of each fiscal quarter beginning on June 30, 2017 but satisfied this requirement as a result of the principal prepayment of $444.5 million on September 13, 2017 in conjunction with the issuance of the additional 6% Senior Notes due 2025. In addition,which the Company is required to make mandatory payments of amounts outstanding under the Credit Facility with the proceeds of certain casualty events, debt issuances, and asset sales and, depending on its consolidated total leverage ratio, the Company may be required to applygenerated a portion of its excess cash flow to repay amounts outstanding under the Credit Facility.

As of March 31, 2020, the Company had $488.8 million outstanding on the Term Loan and $465.0 outstanding under the Revolving Credit Facility. During the three months ended March 31, 2020, the Company elected to draw down availability under the Revolving Credit Facility as a precautionary measure to enhance its liquidity and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets. The Company had $16.8 million of available borrowing capacity, after consideration of $18.2 million in outstanding letters of credit under its Revolving Credit Facility, as of March 31, 2020.

In 2019, the Company utilized $360.0 million and $150.0 million of net proceeds from the sales of Mountaineer, Cape Girardeau and Caruthersville and the sale of Presque, respectively, to repay a portion of amounts outstanding under the Term Loan.

The interest rate per annum applicable to loans under the Revolving Credit Facility are, at our option, either LIBOR plus a margin ranging from 1.75% to 2.50% or a base rate plus a margin from 0.75% to 1.50%, the margin is based on our total leverage ratio. The interest rate per annum applicable to the loans under the Term Loan Facility is, at our option, either LIBOR plus 2.25%, or a base rate plus 1.25%; provided, however, that in no event will LIBOR be less than zero or the base rate be less than 1.00%. Additionally, the Company pays a commitment fee on the unused portion of the Revolving Credit Facility of 0.50% per annum. As of March 31, 2020,loss, the weighted average interest rate on the Term Loan and Revolving Credit Facility were 3.25% and 2.81%, respectively.  

Lumière Loan

We borrowed $246 million from GLPI to fund the purchase price of the real estate underlying Lumière. The Lumière Loan bears interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until October 1, 2020, and matures on October 1, 2020. The Lumière Loanshares outstanding - basic was secured by a first priority mortgage on the Lumière real property that was released pursuant to its terms on October 1, 2019. In connection with the issuance of the Lumière Loan, we agreed to use our commercially reasonable efforts to transfer one or more of the Grand Victoria Casino, Isle Casino Bettendorf, Isle Casino Hotel Waterloo, Isle of Capri Lula, Lady Luck Casino Vicksburg and Mountaineer Casino, Racetrack and Resort or such other property or properties mutually acceptable to us and GLPI, provided that the aggregate value of such property, individually or collectively, is at least $246 million (the “Replacement Property”), to GLPI with a simultaneous leaseback to us of such Replacement Property. In connection with such Replacement Property sale, (i) we and GLPI will enter into an amendment to the Master Lease to revise the economic terms to include the Replacement Property, (ii) GLPI, or one of its affiliates, will assume the Lumière Loan and Tropicana St. Louis RE’s obligations under the Lumière Loanused in consideration of the acquisition of the Replacement Property and our obligations under the Lumière Loan will be deemed tocalculating diluted loss per share because using diluted shares would have been satisfied, and (iii) in the event the valueanti-dilutive to loss per share.

Weighted-Average Number of the Replacement Property is greater than the our outstanding obligations under the Lumière Loan, GLPI will pay us the difference between the valueAnti-Dilutive Shares Excluded from Calculation of the Replacement Property and the amount of outstanding obligations under the Lumière Loan. If such Replacement Property transaction is not consummated prior to the maturity date of the Lumière Loan, other than as a result of certain failures to perform by GLPI, then the amounts outstanding will be paid in full and the rent under the Master Lease will automatically increase, subject to certain escalations.


Debt and Master Lease Covenant Compliance

As of March 31, 2020, the Company was in compliance with all of the covenants under the 7% Senior Notes due 2023, 6% Senior Notes due 2025, 6% Senior Notes due 2026, the Credit Facility, the Lumière Loan and the Master Lease. However, the Company’s ability to remain in compliance with the quarterly maintenance covenants under its Credit Agreement and the Master Lease may be negatively impacted if the period of casino closures is prolonged or if the COVID-19 pandemic, measures implemented to curtail its spread or changes in the economy, discretionary spending and consumer confidence have a protracted negative effect on the Company’s business.

Failure to satisfy the quarterly maintenance covenants contained in the Credit Agreement and the Master Lease would require the Company to seek waivers or amendments of the maintenance covenants. There can be no assurance that the Company will be able to obtain required waivers or amendments, as such matters depend, in part, on factors outside of its control. If the Company fails to satisfy its quarterly maintenance covenants and is unable to obtain such waivers or amendments, its creditors could exercise remedies under the applicable documents governing such indebtedness, including acceleration of such indebtedness, and the lessor under the Master Lease could terminate the Master Lease. The acceleration of indebtedness outstanding under the Credit Agreement or the termination of the Master Lease as a result of failure to satisfy the covenants applicable to such obligations would give rise to an event of default under its outstanding senior notes entitling the holders thereof to accelerate the obligations thereunder.

Note 11. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there is a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows:

•

Level 1 Inputs: Quoted market prices in active markets for identical assets or liabilities.

EPS

•

Level 2 Inputs: Observable market‑based inputs or unobservable inputs that are corroborated by market data.

Three Months Ended March 31,
(In millions)20212020
Stock-based compensation awards4 1 
5% Convertible Notes4 0 
Total anti-dilutive common stock8 1 

•

Level 3 Inputs: Unobservable inputs that are not corroborated by market data.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practical to estimate fair value:

Cash and Cash Equivalents: Cash equivalents include cash held in money market funds and investments that can be redeemed immediately at the current net asset value per share. A money market fund is a mutual fund whose investments are primarily in short‑term debt securities designed to maximize current income with liquidity and capital preservation, usually maintaining per share net asset value at a constant amount, such as one dollar. Cash and cash equivalents also include cash maintained for gaming operations. The carrying amounts approximate the fair value because of the short maturity of those instruments (Level 1).

Restricted Cash and Investments: The estimated fair values of our restricted cash and investments are based upon quoted prices available in active markets (Level 1), or quoted prices for similar assets in active and inactive markets (Level 2), or quoted prices available in active markets adjusted for time restrictions related to the sale of the investment (Level 3) and represent the amounts we would expect to receive if we sold our restricted cash and investments. Restricted investments include shares acquired in conjunction with the Company’s sports betting agreements that contain restrictions related to the ability to liquidate shares within a specified timeframe.

Marketable Securities:  Marketable securities consist primarily of trading securities held by the Company’s captive insurance subsidiary and unrestricted shares acquired in conjunction with the Company’s sports betting agreements. The estimated fair values of the Company’s marketable securities are determined on an individual asset basis based upon quoted prices of identical assets available in active markets (Level 1), quoted prices of identical assets in inactive markets, or quoted prices for similar assets in active and inactive markets (Level 2), and represent the amounts we would expect to receive if we sold these marketable securities.

Long‑term Debt: The fair value of our long-term debt or other long-term obligations is estimated based on the quoted market price of the underlying debt issue (Level 1) or, when a quoted market price is not available, the discounted cash flow of future payments utilizing current rates available to us for the debt of similar remaining maturities (Level 2). Debt obligations with a short remaining maturity have a carrying amount that approximates fair value.


Items Measured at Fair Value on a Recurring Basis: The following table sets forth the assets measured at fair value on a recurring basis, by input level, in the Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 (amounts in thousands):

 

 

March 31, 2020

 

Assets:

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

      Restricted cash and investments

 

$

 

11,036

 

 

$

 

2,115

 

 

$

 

14,011

 

 

$

 

27,162

 

Marketable securities

 

 

 

24,301

 

 

 

 

7,084

 

 

 

 

—

 

 

 

 

31,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

Assets:

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Restricted cash and investments

 

$

 

11,276

 

 

$

 

2,050

 

 

$

 

29,283

 

 

$

 

42,609

 

Marketable securities

 

 

 

27,103

 

 

 

 

7,531

 

 

 

 

—

 

 

 

 

34,634

 

The change in restricted cash and investments valued using Level 3 inputs for the three months ended March 31, 2020 is as follows:

Level 3 Investments

Fair value of investment and liabilities at December 31, 2019

$

29,283

Value of additional investment received

4,678

Unrealized loss

(19,950

)

Fair value at March 31, 2020

$

14,011

There were 0 transfers between Level 1, Level 2 and Level 3 investments during the three months ended March 31, 2020.

In November 2018, the Company entered into a 20-year agreement with TSG pursuant to which it agreed to provide TSG with options to obtain access to a second skin for online sports wagering and third skin for real money online gaming and poker, in each case with respect to the Company’s properties in the United States. Under the terms of the agreement, the Company will receive a revenue share from the operation of the applicable verticals by TSG under the Company’s licenses. Pursuant to the terms of the TSG agreement, the Company received 1.1 million TSG common shares, and an additional $5.0 million in TSG common shares became payable to the Company upon TSG’s exercise of its first option; all shares are subject to a one year restriction from the date they are received. The Company may also receive additional TSG common shares in the future based on TSG net gaming revenue generated in its markets.  As of March 31, 2020 and December 31, 2019, the fair value of unrestricted shares in TSG totaled $11.0 million and $14.0 million, respectively, net of cumulative unrealized gains of $0.6 million and $3.7 million, respectively, and is included in marketable securities on the Consolidated Balance Sheet.  In addition, as of March 31, 2020, the fair value of restricted shares in TSG totaled $4.0 million, net of cumulative unrealized losses of $0.6 million, and is included in restricted cash and investments on the Consolidated Balance Sheet.  The Company recorded unrealized losses of $3.4 million during the three months ended March 31, 2020 and unrealized gains of $1.4 million during the three months ended March 31, 2019.

The estimated fair values of the Company’s financial instruments are as follows (amounts in thousands):

 

 

March 31, 2020

 

 

December 31, 2019

 

 

 

Carrying

 

 

Fair

 

 

Carrying

 

 

Fair

 

 

 

Amount

 

 

Value

 

 

Amount

 

 

Value

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7% Senior Notes due 2023

 

$

 

370,358

 

 

$

 

327,656

 

 

$

 

370,077

 

 

$

 

390,938

 

6% Senior Notes due 2025

 

 

 

879,072

 

 

 

 

765,625

 

 

 

 

879,275

 

 

 

 

922,031

 

6% Senior Notes due 2026

 

 

 

582,580

 

 

 

 

552,000

 

 

 

 

582,042

 

 

 

 

662,250

 

Term Loan

 

 

 

481,343

 

 

 

 

422,769

 

 

 

 

490,768

 

 

 

 

498,127

 

Revolving Credit Facility

 

 

 

465,000

 

 

 

 

465,000

 

 

 

 

—

 

 

 

 

—

 

Lumière Loan

 

 

 

246,000

 

 

 

 

246,000

 

 

 

 

246,000

 

 

 

 

246,000

 

Other long-term debt

 

 

 

2,447

 

 

 

 

2,447

 

 

 

 

2,553

 

 

 

 

2,553

 


Note 12. Earnings per Share

Stock-Based Compensation and Stockholders’ Equity

Stock-Based Awards
The following table illustratesCompany maintains long-term incentive plans which allow for granting stock-based compensation awards for directors, employees, officers, and consultants or advisers who render services to the reconciliationCompany or its subsidiaries, based on Company Common Stock, including performance-based and incentive stock options, restricted stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), market-based performance stock units (“MSUs”), stock appreciation rights, and other stock-based awards or dividend equivalents. Forfeitures are recognized in the period in which they occur.
Total stock-based compensation expense in the accompanying Statements of Operations totaled $23 million and $6 million during the three months ended March 31, 2021 and 2020, respectively. These amounts are included in corporate expenses and, in the case of certain property positions, general and administrative expenses in the Company’s Statements of Operations.
Table of Contents
27
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2015 Equity Incentive Plan (“2015 Plan”)
During the three months ended March 31, 2021, as part of the numerators and denominatorsannual incentive program, the Company granted 568 thousand RSUs to employees of the basicCompany with an aggregate fair value of $39 million and diluteda ratable vesting period of three years. Each RSU represents the right to receive payment in respect of 1 share of the Company’s Common Stock.
During the three months ended March 31, 2021, the Company also granted 79 thousand PSUs that are scheduled to vest in three years. On the vesting date, recipients will receive between 0% and 200% of the target number of PSUs granted, in the form of CEI common stock, based on the achievement of specified performance and service conditions. The fair value of the PSUs is based on the market price of our common stock when a mutual understanding of the key terms and conditions of the awards between the Company and recipient is achieved. The awards are remeasured each period until such an understanding is reached. The aggregate value of PSUs granted during the three months ended March 31, 2021 was $7 million.
In addition, during the three months ended March 31, 2021, the Company granted 146 thousand MSUs that are scheduled to cliff vest in three years. On the vesting date, recipients will receive between 0% and 200% of the target number of MSUs granted, in the form of Company Common Stock, based on the achievement of specified market and service conditions. The grant date fair value of the MSUs was determined using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model are the risk-free interest rate, expected volatility, expected dividends and correlation coefficient. The effect of market conditions is considered in determining the grant date fair value, which is not subsequently revised based on actual performance. The aggregate value of MSUs granted during the three months ended March 31, 2021 was $15 million.
During the three months ended March 31, 2021, there were 0 grants of stock options and 13 thousand stock options were exercised. In addition, 407 thousand, 143 thousand and 100 thousand of RSUs, PSUs and MSUs, respectively, vested under the 2015 plan.
Outstanding at End of Period
March 31, 2021December 31, 2020
Quantity
Wtd-Avg (a)
Quantity
Wtd-Avg (a)
Stock options147,481$22.97 176,724$22.57 
Restricted stock units2,565,75146.11 2,414,11142.55 
Performance stock units (b)
436,08962.12 500,48248.32 
Market-based stock units491,22466.10 446,08749.37 
____________________
(a)Represents the weighted-average exercise price for stock options, weighted-average grant date fair value for RSUs, weighted-average grant date fair value for PSUs where the grant date has been achieved, the price of CEI common stock as of the balance sheet date for PSUs where a grant date has not been achieved, and the fair value of the MSUs determined using the Monte-Carlo simulation model.
(b)PSUs were presented with RSUs as of December 31, 2020 in the 2020 Annual Report.
Share Repurchase Program
In November 2018, the Company’s Board of Directors authorized a $150 million common stock repurchase program (the “Share Repurchase Program”) pursuant to which the Company may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The Share Repurchase Program has no time limit and may be suspended or discontinued at any time without notice. There is no minimum number of shares of common stock that the Company is required to repurchase under the Share Repurchase Program.
As of March 31, 2021, the Company has acquired 223,823 shares of common stock under the Share Repurchase Program at an aggregate value of $9 million and an average of $40.80 per share. NaN shares were repurchased during the three months ended March 31, 2021 and 2020.
Table of Contents
28
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 13. Income Taxes
Income Tax Allocation
Three Months Ended March 31,
(In millions)20212020
Loss from continuing operations before income taxes$(510)$(213)
Benefit for income taxes79 37 
Effective tax rate15.5 %17.4 %
We classify accruals for uncertain tax positions within Other long-term liabilities on the Balance Sheets separate from any related income tax payable which is reported within Accrued other liabilities. The accrual amounts relate to any potential income tax liabilities resulting from uncertain tax positions as well as potential interest or penalties associated with those liabilities.
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. We have provided a valuation allowance on certain federal, state and foreign deferred tax assets that were not deemed realizable based upon estimates of future taxable income.
As a result of the Merger, the Company acquired $770 million of additional net deferred tax liabilities net of necessary valuation allowances, plus $24 million in additional accruals for uncertain tax positions. The income per share computationstax expense for the three months ended March 31, 2021 differed from the expected income tax benefit based on the federal tax rate of 21% primarily due to nondeductible expenses related to the convertible notes liability. The income tax expense for the three months ended March 31, 2020 differed from the expected income tax expense based on the federal tax rate of 21% primarily due to goodwill impairments and 2019 (dollarschanges in thousands, except per share amounts):

the valuation allowance, offset by the true-up of certain state tax benefits and state and local income taxes.

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

Net (loss) income available to common stockholders

 

$

 

(175,638

)

 

$

 

38,229

 

Shares outstanding:

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

 

 

77,954,038

 

 

 

 

77,567,147

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

 

—

 

 

 

 

104,382

 

RSUs

 

 

 

—

 

 

 

 

917,581

 

Weighted average shares outstanding – diluted

 

 

 

77,954,038

 

 

 

 

78,589,110

 

Net (loss) income per common share attributable to

     common stockholders – basic:

 

$

 

(2.25

)

 

$

 

0.49

 

Net (loss) income per common share attributable to

     common stockholders – diluted:

 

$

 

(2.25

)

 

$

 

0.49

 

The weighted average shares outstanding-diluted calculation above excludes 107,154 stock optionsCompany, including its subsidiaries, files tax returns with federal, state, and 623,999 RSUsforeign jurisdictions. The Company does not have tax sharing agreements with the other members within its consolidated group. The Company is subject to exam by various state and foreign tax authorities. With few exceptions, the Company is no longer subject to examinations by tax authorities for the three months ended March 31, 2020 as the inclusion of these shares would have an anti-dilutive effect.

Note 13. Commitmentsyears before 2017, and Contingencies

Litigation

We are parties to various legal proceedings.  Such proceedings can be costly, time consuming and unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings will not materially impact our consolidated financial condition or results of operations. While we maintain insurance coverage that we believeit is adequate to mitigate the risks of such proceedings, no assurance can be givenpossible that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters.

Merger Litigation  

In September and October of 2019, 8 putative class action lawsuits were filed against the Company and/or Caesars in connection with the Merger.  The Company was named as a party in three of such actions: Cazer v. Caesars Entertainment Corp., et al, Civil Action No. A-19-801900-C, Eighth Judicial District Court Clark County, Nevada (9/13/2019), Gershman v. Caesars Entertainment Corp., et al, Civil Action No 1:19-cv-01720-UNA, United States District Court for the District of Delaware (9/12/2019), and Palkon v. Caesars Entertainment Corp., et al, Civil Action No. 1:19-cv-01679-UNA, United States District Court for the District of Delaware (9/9/2019).  In general, those complaints asserted claims under sections 14(a), 20(a) and Rule 14a-9 of the Securities Exchange Act of 1934 challenging the adequacy of certain disclosures in the joint proxy statement/prospectus filed in connection with the Merger.  In addition, one of the complaints alleges state law breach of fiduciary duty claims against the Caesars directors. In March 2020, the Company and Caesars reached an agreement with the plaintiffs in those actions to settle those claims in exchangeliability for payment of certain fees to attorneys for the plaintiffs. As a result of that settlement, in March 2020, all eight suits were dismissed. These matters are now concluded.


Securities Action

On September 23, 2019, the Company and certain of its officers were named as defendants in a putative class action complaint filed in the United States District Court for the District of New Jersey and captioned as Elberts v. Eldorado Resorts, Inc., Case No. 2:19-cv-18230-SRC-CLW.  The complaint asserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated under the Securities Exchange Act of 1934.  The complaint alleged that the Company made material misstatements and/or omissionsunrecognized tax benefits could change during the period from March 1, 2019 through September 2, 2019.  The allegations related to disclosure concerning the subpoenas that certain of the Company’s directors and officers received from the SEC, which have been previously disclosed in the proxy statement/prospectus filed by the Company relating to the pending transaction with Caesars.  The SEC Investigation is ongoing. In March of 2020, the lead plaintiff decided not to pursue the claims any longer. As a result, this action was voluntarily dismissed by the lead plaintiff on March 17, 2020. This matter is now concluded.

General

In addition, we are a party to various legal and administrative proceedings, which have arisen in the normal course of our business. Estimated losses are accrued for these proceedings when the loss is probable and can be estimated. The current liability for the estimated losses associated with these proceedings is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of operations.

next 12 months.

Note 14. Related Affiliates

REI

As of March 31, 2020,2021, Recreational Enterprises, Inc. (“REI”) owned approximately 11.1%4.1% of outstanding common stock of the Company. The directors of REI are the Company’s Executive Chairman of the Board, Gary L. Carano, its Chief Executive Officer and Board member, Thomas R. Reeg, and its former Senior Vice President of Regional Operations, Gene Carano. In addition, Gary L. Carano also serves as the Vice President of REI and Gene Carano also serves as the Secretary and Treasurer of REI. Members of the Carano family, including Gary L. Carano and Gene Carano, own the equity interests in REI. As such, the Carano family has the ability to significantly influence the affairs of the Company. During the three months ended March 31, 20202021 and 2019,2020, there were 0 related party transactions between the Company and the Carano family other than compensation, including salary and equity incentives, and the CSY Lease listed below.

C. S. & Y. Associates

The Company owns the entire parcel on which Eldorado Reno is located, except for approximately 30,000 square feet which is leased from C. S. & Y. Associates (“CSY”) which is an entity partially owned by REI (the “CSY Lease”). The CSY Lease expires on June 30, 2057. RentAnnual rent pursuant to the CSY Lease is currently $0.6 million, annually and paid quarterly duringquarterly. Annual rent is subject to periodic rent escalations through the year.term of the lease. As of March 31, 20202021 and December 31, 2019,2020, there were 0 amounts due to or from CSY. As
Transactions with Horseshoe Baltimore
The Company holds an interest in Horseshoe Baltimore of approximately 44.3% which is accounted for as an equity method investment and is considered to be a resultrelated party. These related party transactions include items such as casino management fees, reimbursement of various costs incurred on behalf of Horseshoe Baltimore, and the allocation of other general corporate expenses. A summary of the impacttransactions with Horseshoe Baltimore is provided in the table below.
Table of COVID-19 on Eldorado Reno’s revenuesContents
29
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In millions)Three Months Ended
March 31, 2021
Transactions with Horseshoe Baltimore
Management fees$2 
Due from/to Affiliates
Amounts due from or to affiliates for each counterparty represent the closurenet receivable or payable as of the casinoend of the reporting period primarily resulting from the transactions described above and settled on a net basis by each counterparty in accordance with the legal and contractual restrictions governing transactions by and among the Company’s consolidated entities.
As of March 2020, an amendment was executed to defer rental payments for a portion of 2020, not to exceed three months, until31, 2021 and 2022.

December 31, 2020, Due from affiliates, net was $48 million and $44 million, respectively, and represented transactions with Horseshoe Baltimore and William Hill.

Note 15. Segment Information

The executive decision maker of ourthe Company reviews operating results, assesses performance and makes decisions on a “significant market” basis. Management views each of ourthe Company’s casinos as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, and their management and reporting structure. ThePrior to the Merger, our principal operating activities occurred in 5 geographic regions and reportable segments: West, Midwest, South, East and Central, in addition to Corporate and Other. Following the Merger, the Company’s principal operating activities occur in 5 geographic regions and3 regionally-focused reportable segments. The reportable segments are based on the similar characteristics of the operating segments with the way management assesses these results and allocates resources, which is a consolidated view that adjusts for the effect of certain transactions between these reportable segments within the regionsCaesars: (1) Las Vegas, (2) Regional, and (3) Managed, International, CIE, in which they operate.addition to Corporate and Other. See Note 1table below for a summary of these segments. Also, see Notes 4Note 3 and 7Note 6 for a discussion of the impairment of intangibles and long-lived assets related to certain segments.

Table of Contents
30
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of March 31, 2021:
Las VegasRegionalManaged, International, CIE
Bally’s Las Vegas (a)
Eldorado Resort Casino Reno
Harrah’s Atlantic City (a)
Managed
Caesars Palace Las Vegas (a)
Silver Legacy Resort Casino
Harrah’s Laughlin (a)
Harrah’s Ak-Chin (a)
The Cromwell (a)
Circus Circus Reno
Harrah’s New Orleans (a)
Harrah’s Cherokee (a)
Flamingo Las Vegas (a)
MontBleu Casino Resort & Spa (c)
Hoosier Park (a)
Harrah’s Cherokee Valley River (a)
Harrah’s Las Vegas (a)
Tropicana Laughlin Hotel & Casino
Indiana Grand (a)
Harrah’s Resort Southern California (a)
The LINQ Hotel & Casino (a)
Isle Casino Hotel - Black Hawk
Caesars Atlantic City (a)
Horseshoe Baltimore (a)(h)
Paris Las Vegas (a)
Lady Luck Casino - Black Hawk
Caesars Southern Indiana (a)(b)(e)
Caesars Windsor (a)
Planet Hollywood Resort & Casino (a)
Isle Casino Waterloo
Harrah’s Council Bluffs (a)
Kings & Queens Casino (a)
Rio All-Suite Hotel & Casino (a)
Isle Casino Bettendorf
Harrah’s Gulf Coast (a)
Caesars Dubai (a)
Isle of Capri Casino Boonville
Harrah’s Joliet (a)
International
Isle Casino Racing Pompano Park
Harrah’s Lake Tahoe (a)
Caesars Cairo (a)(b)
Isle of Capri Casino Hotel Lake Charles
Harrah’s Louisiana Downs (a)(b)(g)
Ramses Casino (a)(b)
Belle of Baton Rouge Casino & Hotel(i)
Harrah’s Metropolis (a)
Emerald Casino Resort (a)(b)
Isle of Capri Casino Lula
Harrah’s North Kansas City (a)
Alea Glasgow (a)(b)
Trop Casino Greenville
Harrah’s Philadelphia (a)
Alea Nottingham (a)(b)
Eldorado Gaming Scioto Downs
Harveys Lake Tahoe (a)
The Empire Casino (a)(b)
Tropicana Casino and Resort, Atlantic City
Horseshoe Bossier City (a)
Manchester235 (a)(b)
Grand Victoria Casino
Horseshoe Council Bluffs (a)
Playboy Club London (a)(b)
Lumière Place Casino
Horseshoe Hammond (a)(b)(f)
Rendezvous Brighton (a)(b)
Tropicana Evansville (d)
Horseshoe Tunica (a)
The Sportsman (a)(b)
CIE
Caesars Interactive Entertainment (a)
___________________
(a)These properties were acquired from the Merger on July 20, 2020.
(b)As a result of the Merger, the sales of these properties met the requirements for presentation as discontinued operations as of March 31, 2021.
(c)In April 2020, the Company entered into an agreement to sell MontBleu. The sale of MontBleu closed on April 6, 2021.
(d)On October 27, 2020, the Company entered into an agreement to sell Evansville, which is expected to close mid-2021.
(e)On December 24, 2020, the Company entered into an agreement to sell Caesars Southern Indiana, which is expected to close in the third quarter of 2021.
(f)The Company plans to enter into an agreement to sell Horseshoe Hammond prior to December 31, 2021.
(g)On September 3, 2020, the Company entered into an agreement to sell Harrah’s Louisiana Downs, which is expected to close in the third quarter of 2021.
(h)As of March 31, 2021, Horseshoe Baltimore was 44.3% owned by us and held as an equity-method investment.
(i)On December 1, 2020, the Company entered into an agreement to sell Belle of Baton Rouge, which is expected to close in the third quarter of 2021.
In addition to our properties listed above, other domestic and international properties, including Harrah’s Northern California, are authorized to use the brands and marks of Caesars Entertainment, Inc. Additionally, certain of our properties operate off-track betting locations, including Hoosier Park, which operates Winner’s Circle Indianapolis and Winner’s Circle New Haven, and Indiana Grand, which operates Winner’s Circle Clarksville. The LINQ Promenade is an open-air dining, entertainment, and retail promenade located on the east side of the Las Vegas Strip next to The LINQ Hotel & Casino (the “LINQ”) that features the High Roller, a 550-foot observation wheel, and the Fly LINQ Zipline attraction. We also own the CAESARS FORUM conference center, which is a 550,000 square feet conference center with 300,000 square feet of flexible meeting space, 2 of the largest pillarless ballrooms in the world and direct access to the LINQ.
“Corporate and Other” includes certain unallocated corporate overhead costs and other adjustments, including eliminations of transactions among segments, to reconcile to the Company’s consolidated results.
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31
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following table sets forth, for the periods indicated, certain operating data for our 5the Company’s 3 reportable segments.

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Revenues and expenses

 

 

 

 

 

 

 

 

 

 

West:

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

 

105,490

 

 

$

 

118,095

 

Depreciation and amortization

 

 

 

13,938

 

 

 

 

13,143

 

Operating (loss) income

 

 

 

(97,457

)

 

 

 

10,801

 

Midwest:

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

 

60,793

 

 

 

 

96,787

 

Depreciation and amortization

 

 

 

4,522

 

 

 

 

8,421

 

Operating (loss) income

 

 

 

(19,354

)

 

 

 

27,833

 

South:

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

 

97,052

 

 

 

 

132,714

 

Depreciation and amortization

 

 

 

7,120

 

 

 

 

11,015

 

Operating (loss) income

 

 

 

(11,194

)

 

 

 

27,515

 

East:

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

 

108,056

 

 

 

 

166,233

 

Depreciation and amortization

 

 

 

11,241

 

 

 

 

12,149

 

Operating income

 

 

 

11,016

 

 

 

 

27,161

 

Central:

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

 

99,705

 

 

 

 

120,472

 

Depreciation and amortization

 

 

 

11,763

 

 

 

 

11,210

 

Operating income

 

 

 

18,114

 

 

 

 

27,070

 

Corporate:

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

 

1,973

 

 

 

 

1,522

 

Depreciation and amortization

 

 

 

1,849

 

 

 

 

1,819

 

Operating (loss) income

 

 

 

(24,305

)

 

 

 

3,224

 

Total Reportable Segments

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

 

473,069

 

 

$

 

635,823

 

Depreciation and amortization

 

$

 

50,433

 

 

$

 

57,757

 

Operating (loss) income

 

$

 

(123,180

)

 

$

 

123,604

 

Reconciliations to consolidated net income:

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

$

 

(123,180

)

 

$

 

123,604

 

Unallocated (loss) income and expenses:

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

(66,464

)

 

 

 

(73,510

)

Loss on extinguishment of debt

 

 

 

(158

)

 

 

 

—

 

Unrealized loss on investments and marketable securities

 

 

 

(23,008

)

 

 

 

(1,460

)

Benefit (provision) for income taxes

 

 

 

37,172

 

 

 

 

(10,405

)

Net (loss) income

 

$

 

(175,638

)

 

$

 

38,229

 

 We recast previously reported segment amounts to conform to the way management assesses results and allocates resources for the current year.

Three Months Ended March 31,
(In millions)20212020
Las Vegas:
Net revenues$497 $0 
Adjusted EBITDA162 0 
Regional:
Net revenues1,108 471 
Adjusted EBITDA367 111 
Managed, International, CIE:
Net revenues90 0 
Adjusted EBITDA15 0 
Corporate and Other:
Net revenues4 2 
Adjusted EBITDA(39)(8)

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Capital Expenditures, Net

 

 

 

 

 

 

 

 

 

 

West

 

$

 

8,586

 

 

$

 

16,054

 

Midwest

 

 

 

1,636

 

 

 

 

4,123

 

South

 

 

 

3,780

 

 

 

 

3,764

 

East

 

 

 

5,597

 

 

 

 

10,574

 

Central

 

 

 

2,447

 

 

 

 

2,668

 

Corporate

 

 

 

1,155

 

 

 

 

1,177

 

Total

 

$

 

23,201

 

 

$

 

38,360

 

 

 

Balance sheet as of March 31,

 

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Total Assets

 

 

 

 

 

 

 

 

 

 

West

 

$

 

1,659,542

 

 

$

 

1,816,033

 

Midwest

 

 

 

1,119,005

 

 

 

 

1,157,882

 

South

 

 

 

1,129,003

 

 

 

 

1,161,622

 

East

 

 

 

1,573,068

 

 

 

 

1,590,364

 

Central

 

 

 

1,546,207

 

 

 

 

1,539,894

 

Corporate, Other and Eliminations

 

 

 

(1,135,653

)

 

 

 

(1,625,242

)

Total

 

$

 

5,891,172

 

 

$

 

5,640,553

 

Note 16. Pending Acquisition

Caesars Entertainment Corporation

On June 24, 2019, the Company entered into an Agreement and PlanReconciliation of Merger (as amended by Amendment No. 1Adjusted EBITDA - By Segment to Agreement and Plan of Merger, datedNet Income (Loss) Attributable to Caesars

Adjusted EBITDA is presented as of August 15, 2019, and as it may be further amended from time to time, the “Merger Agreement”) with Caesars Entertainment Corporation (“Caesars”) pursuant to which a wholly-owned subsidiarymeasure of the CompanyCompany’s performance. Adjusted EBITDA is defined as revenues less operating expenses and is comprised of net income (loss) before (i) interest expense, net of interest capitalized and interest income, (ii) income tax (benefit) provision, (iii) depreciation and amortization, and (iv) certain items that we do not consider indicative of our ongoing operating performance at an operating property level.
In evaluating Adjusted EBITDA you should be aware that, in the future, we may incur expenses that are the same or similar to some of the adjustments in this presentation. The presentation of Adjusted EBITDA should not be construed as an inference that future results will merge withbe unaffected by unusual or unexpected items.
Adjusted EBITDA is a financial measure commonly used in our industry and into Caesars, with Caesars survivingshould not be construed as an alternative to net income (loss) as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a wholly-owned subsidiarymeasure of liquidity (as determined in accordance with GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies within the industry. Adjusted EBITDA is included because management uses Adjusted EBITDA to measure performance and allocate resources, and believes that Adjusted EBITDA provides investors with additional information consistent with that used by management.
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32
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Three Months Ended March 31,
(In millions)20212020
Adjusted EBITDA by Segment:
Las Vegas$162 $0 
Regional367 111 
Managed, International, CIE15 0 
Corporate and Other(39)(8)
505 103 
Reconciliation to net income (loss) attributable to Caesars:
Net loss attributable to noncontrolling interests1 0 
Net income from discontinued operations7 0 
Benefit for income taxes79 37 
Other loss (a)
(133)(23)
Interest expense, net(563)(67)
Depreciation and amortization(265)(50)
Impairment charges0 (161)
Transaction costs and other operating costs (b)
(20)(8)
Stock-based compensation(23)(6)
Other items (c)
(11)(1)
Net loss attributable to Caesars$(423)$(176)
____________________
(a)Other loss for the three months ended March 31, 2021 primarily represents a loss on the change in fair value of the Company (the “Merger”). Based on the terms and subjectderivative liability related to the conditions set forth in the Merger Agreement, the aggregate consideration payable5% Convertible Notes slightly offset by the Company in respect of outstanding shares of common stock of Caesars will be (a) an amount of cash equal to (i) the sum of (A) $8.40 plus (B) an amount equal to $0.003333 for each day from March 25, 2020 until the closing date of the Merger (such aggregate amount, the “Per Share Cash Merger Consideration”), multiplied by (ii) a number of shares of Caesars common stock equal to (A) 682,161,838 (which includes 8,271,660 shares being held in escrow trust to satisfy unsecured claims pursuant to the Third Amended Joint Plan of Reorganization, filed with the U.S. Bankruptcy Courtgain on foreign currency exchange and investments held. Other (income) loss for the Northern District of Illinois in Chicago on January 13, 2017, at Docket No. 6318, which shares are not entitled to vote) plus (B) the number of shares of Caesars common stock (the “Aggregate Caesars Share Amount”) issued after June 24, 2019 and prior to the effective time of the Merger pursuant to the exercise of certain equity awards issued under Caesars stock plans or conversion of Caesars’ outstanding convertible notes and (b) a number of shares of common stock of Eldorado equal to 0.0899 multiplied by the Aggregate Caesars Share Amount (such amount per share of Caesars common stock, the “Merger Consideration”).  Based on the number of shares of ERI and Caesars outstanding as ofthree months ended March 31, 2020 following the consummation of the Merger (assuming that all Caesars convertible notes are converted immediately following consummation of the Merger into the Per Share Cash Merger Consideration  and 0.0899 shares of common stock of Eldorado for each share of Caesars common stock into which such Caesars convertible notes were convertible immediately prior to the Merger), Eldorado and former Caesars stockholders will hold approximately 50.2% and 49.8%, respectively, of the combined company's outstanding shares of common stock.

The Merger Agreement contains customary representations and warranties by each of Caesars and Eldorado, and each party has agreed to customary covenants.


The Merger Agreement also contains termination rights for each of Caesars and Eldorado under certain circumstances. If the Merger Agreement is terminatedprimarily represents change in certain circumstances relating to changes in the recommendation of the board of directors of Caesars in favor of the Merger, entry by Caesars into an alternative transaction or in certain circumstances following the failure of Caesars stockholders to approve the Merger, Caesars will be required to pay Eldorado a termination fee of approximately $418.4 million. The Merger Agreement provides that if it is terminated in certain circumstances relating to changes in the recommendation of the board of directors of Eldorado in favor of the issuance of shares of Eldorado common stock in the Merger or in certain circumstances following the failure of Eldorado stockholders to approve such issuance, then Eldorado will be required to pay Caesars a termination fee of approximately $154.9 million. It also provides that each party will be obligated to reimburse the other party’s expenses for an amount not to exceed $50.0 million if the Merger Agreement is terminated because of the failure to obtain the required approval of such party’s stockholders (creditable against any termination fee that may subsequently be paid by such party). The Merger Agreement also provides that Eldorado will be obligated to pay a termination fee of approximately $836.8 million to Caesars if the Merger Agreement is terminated (i) due to a law or order relating to gaming or antitrust laws that prohibits or permanently enjoins the consummation of the transactions, (ii) because the required regulatory approvals were not obtained prior to June 24, 2020 (subject to extension to a date no later than December 24, 2020 pursuant to the Merger Agreement) or (iii) due to Eldorado willfully and materially breaching certain obligations with respect to the actions required to be taken by Eldorado to obtain required antitrust approvals.

Consummation of the Merger is subject to the satisfaction or waiver of certain conditions, including, among others, (1) the expiration or termination of any applicable waiting period under the HSR Act, and receipt of required gaming approvals, (2) the absence of any governmental order or law prohibiting the consummation of the Merger, (3) adoption of the Merger Agreement by holders of a majority of the outstanding shares of Caesars common stock, (4) the approval of the issuance of shares of Eldorado common stock in the Merger, (5) the effectiveness of the registration statement for Eldorado common stock to be issued in the Merger and the authorization for listing of those shares on the Nasdaq Stock Market, (6) absence of a material adverse effect on the other party, (7) the accuracy of the other party’s representations and warranties, subject to customary materiality standards, (8) compliance of the other party with its respective covenants under the Merger Agreement in all material respects and (9) conversion or certain amendments of, or another mutually agreed arrangement with respect to, Caesars’ 5.00% convertible senior notes due 2024.  Caesars’ stockholders adopted the Merger Agreement, and the Company’s stockholders approved the issues of shares of Eldorado common stock in the Merger, at separate special meetings of stockholders on November 15, 2019.  In addition, on November 27, 2019, Caesars entered into certain amendments with respect to Caesars’ 5.00% convertible senior notes due 2024.

In connection with the execution of the Merger Agreement, on June 24, 2019, the Company entered into a debt financing commitment letter (the “Initial Commitment Letter”) and related fee letters with JPMorgan Chase Bank, N.A., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Macquarie Capital (USA) Inc. and Macquarie Capital Funding LLC (the “Initial Commitment Parties”). On July 19, 2019, the Company entered into an amended and restated commitment letter (as amended, the “A&R Commitment Letter”) and related fee letters, which amended and restated the Initial Commitment Letter and related fee letters in their entirety to, among other things, add additional arrangers and lenders, including Bank of America, N.A., BofA Securities, Inc., Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch, Goldman Sachs Bank USA, SunTrust Bank, SunTrust Robinson Humphrey, Inc., U.S. Bank National Association, KeyBank National Association, KeyBanc Capital Markets Inc., Fifth Third Bank, and Citizens Bank, National Association (together with the Initial Commitment Parties, collectively, the “Commitment Parties”). Pursuant to the A&R Commitment Letter, the Commitment Parties committed to arrange and provide (i) the Company with: (w) a $1,000.0 million senior secured revolving credit facility, (x) a $3,000.0 million senior secured term loan B facility, (y) a $3,250.0 million senior secured 364-day bridge facility and (z) a $1,800.0 million senior unsecured bridge loan facility and (ii) Caesars Resort Collection, LLC, a subsidiary of Caesars, with a $2,400.0 million senior secured incremental term loan B facility (collectively, the “Debt Financing”). The proceeds of the Debt Financing will be used (a) to pay all or a portion of the cash consideration payable in the Merger, (b) to refinance allfair value of the Company’s existing syndicated bank credit facilitiesinvestments in William Hill PLC.

(b)Transaction costs and outstanding senior notes, (c) to refinance certain of Caesars’other operating costs for the three months ended March 31, 2021 and its subsidiaries’ existing debt, (d) to pay transaction fees and expenses2020primarily represent costs related to the MergerWilliam Hill Acquisition and related transactions and (e) for working capital and general corporate purposes. The availability of the borrowings under the Debt Financing is subject to the satisfaction of certain customary conditions including the substantially concurrent closing of the Merger.


On July 19, 2019, the Company entered into a commitment and engagement letter (as amended, the “Increase Commitment Letter”) and related fee letters to, if elected by the Company, increase the total size of the Debt Financing, including an increase to the senior secured term loan B facility to be arranged on a commercially reasonable efforts basis by the Commitment Parties in an amount to be agreed upon by the parties and an increase to the revolving credit facility by $830.0 million, the proceeds of which, if the Company elects to incur such financing, may be used to refinance certain existing indebtedness of Caesars Resort Collection, LLC and its subsidiaries and for working capital and general corporate purposes upon consummation of the Merger. The Increase Commitment Letter and a related engagement letter also contemplate the possibility of new senior secured and/or senior unsecured notes to be issued by the Company.

In connection with the execution of the Merger, Agreement, on June 24, 2019, the Company entered into the MTA with VICI, pursuant to which, amongvarious contract or license termination exit costs, professional services, other things, the Company has agreed, subject to the consummationacquisition costs and severance costs.

(c)Other items primarily represent certain consulting and legal fees, rent for non-operating assets, relocation expenses, and business optimization expenses.

Three Months Ended March 31,
(In millions)20212020
Capital Expenditures, Net
Las Vegas$15 $0 
Regional
46 22 
Managed, International, CIE0 0 
Corporate and Other4 1 
Total$65 $23 
(In millions)March 31, 2021December 31, 2020
Total Assets
Las Vegas$21,454 $21,464 
Regional13,918 13,732 
Managed, International, CIE443 548 
Corporate and Other204 641 
Total$36,019 $36,385 
Table of the Merger and the other applicable conditions set forth therein and in any related documents, (i) through one or more of its subsidiaries (after giving effect to the Merger) to consummate one or more sale and leaseback transactions with VICI and/or its affiliates with respect to certain property described in the MTA, including Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City (or, under certain circumstances, if necessary, certain replacement properties specified in the MTA), (ii) through one or more of its subsidiaries (after giving effect to the Merger) to amend the CPLV Lease, the Non-CPLV Lease and the Joliet Lease (each as defined in the MTA) in accordance with the terms of the MTA and receive certain consideration from VICI or its affiliates in respect thereof, (iii) to provide a guaranty in respect of each of the CPLV Lease, the Non-CPLV Lease and the Joliet Lease in accordance with the terms of the MTA, (iv) to enter into (or cause its applicable subsidiaries (after giving effect to the Merger) to enter into) certain right of first refusal agreements and a put-call right agreement in accordance with the terms of the MTA and (v) to undertake certain related transactions in connection with or related to the foregoing.  The Company expects to apply the proceeds of the VICI transactions to pay a portion of the cash consideration payable in the Merger and transaction expenses associated with the Merger and related transactions.

On September 26, 2019, the Company and VICI entered into definitive Purchase and Sale Agreements to effect the purchase and sale of Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City in connection with the transactions described in clause (i) of the preceding paragraph.

The Company expects that the Merger and related transactions will be consummated in mid-2020.


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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion together with the

The accompanying consolidated condensed financial statements includinginclude the related notes and the other financial information, contained in this Quarterly Report on Form 10-Q.

Eldorado Resorts,accounts of Caesars Entertainment, Inc., a NevadaDelaware corporation, isand its consolidated subsidiaries which may be referred to as the “Company,” “ERI,“CEI,” “Caesars,” “we,” “our,” or “us” within these financial statements.

The following discussion and analysis of the “Registrant,financial position and operating results of Caesars for the three months ended March 31, 2021 and 2020 should be read in conjunction with the unaudited consolidated condensed financial statements and the notes thereto and other financial information included elsewhere in this Form 10-Q as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“2020 Annual Report”). Capitalized terms used but not defined in this Form 10-Q have the same meanings as in the 2020 Annual Report.
We also refer to (i) our Consolidated Condensed Financial Statements as our “Financial Statements,” (ii) our Consolidated Condensed Balance Sheets as our “Balance Sheets,” (iii) our Consolidated Condensed Statements of Operations and Consolidated Condensed Statements of Comprehensive Loss as our “Statements of Operations,” and together(iv) our Consolidated Condensed Statements of Cash Flows as our “Statements of Cash Flows.” References to numbered “Notes” refer to Notes to Consolidated Condensed Financial Statements included in Item 1, “Unaudited Financial Statements.”
The statements in this discussion regarding our expectations of our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. Our actual results may differ materially from those contained in or implied by any forward-looking statements. See “CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS” in this report.
Objective
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to be a narrative explanation of the financial statements and other statistical data that should be read in conjunction with its subsidiaries may alsothe accompanying financial statements to enhance an investor’s understanding of our financial condition, changes in financial condition and results of operations. Our objectives are: (i) to provide a narrative explanation of our financial statements that will enable investors to see the Company through the eyes of management; (ii) to enhance the overall financial disclosure and provide the context within which financial information should be referredanalyzed; and (iii) to as “we,” “us” or “our.”

provide information about the quality of, and potential variability of, our earnings and cash flows so that investors can ascertain the likelihood of whether past performance is indicative of future performance.

Overview

We are a geographically diversified gaming and hospitality company with 23 gaming facilities in 11 states as of March 31, 2020. Our properties, which are located in Colorado, Florida, Illinois, Indiana, Iowa, Mississippi, Missouri, Louisiana, Nevada, New Jersey and Ohio, feature approximately 23,900 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 660 table games and approximately 11,300 hotel rooms. Our primary source of revenue is generated by gaming operations, and we utilize our hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops and other services to attract customers to our properties. All of our casino properties have been temporarily closed since March 18, 2020 due to orders issued by various state government agencies as a result of the outbreak of a new strain of coronavirus (“COVID-19”) that was identified in January 2020.  See “Recent Developments and Significant Factors Impacting Financial Results.”

We were founded in 1973 by the Carano family with the opening of the Eldorado Hotel Casino in Reno, Nevada. In 1993, we We partnered with MGM Resorts International to build Silver Legacy Resort Casino (“Silver Legacy”), the first mega-themed resort in Reno. InReno, Nevada in 1993 and, beginning in 2005, we acquired our first property outsidegrew through a series of Reno when we purchased a casinoacquisitions, including the acquisition of Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) in Shreveport, Louisiana, now known as Eldorado Shreveport. In September 2014, we merged with2005, MTR Gaming Group, Inc. and acquired gaming and racing facilities in Ohio, Pennsylvania and West Virginia. The following year, in November 2015, we acquired2014, Circus Circus Reno (“Circus Reno”) and the 50% membership interest in the Silver Legacy that was owned by MGM Resorts International. On May 1, 2017, we completed our acquisition ofInternational in 2015, Isle of Capri Casinos, Inc. (“Isle” or “Isle of Capri”), adding 13 gaming properties to our portfolio. On August 7, 2018, we acquired the Elgin Riverboat Resort – Riverboat Casino d/b/a in 2017 and Grand Victoria Casino (“Elgin”) (the “Elgin Acquisition”). On October 1, 2018, we completed our acquisition ofand Tropicana Entertainment, Inc. (“Tropicana”), adding seven properties to our portfolio (the “Tropicana Acquisition”).

in 2018.

On January 11, 2019 and March 8, 2019, respectively,July 20, 2020, we completed our sales of Presque Isle Downs & Casino (“Presque”) and Lady Luck Casino Nemacolin (“Nemacolin”), which are both located in Pennsylvania. On December 6, 2019 we closed our sales of Mountaineer Casino, Racetrack and Resort (“Mountaineer”), Isle Casino Cape Girardeau (“Cape Girardeau”) and Lady Luck Casino Caruthersville (“Caruthersville”). Mountaineer is located in West Virginia and Cape Girardeau and Caruthersville are located in Missouri.

On June 24, 2019, we entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, and as it may be further amended from time to time, the “Merger Agreement”)merger with Caesars Entertainment Corporation (“Former Caesars”) pursuant to which aFormer Caesars became our wholly-owned subsidiary of the Company will merge with and into Caesars, with Caesars surviving as a wholly-owned subsidiary of the Company (the “Merger”).In connection

We own, lease or manage an aggregate of 54 domestic properties in 16 states with the executionapproximately 54,600 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 3,200 table games and approximately 47,700 hotel rooms as of March 31, 2021. We also have international operations in five countries outside of the Merger Agreement,U.S. In addition, we have other domestic and international properties that are authorized to use the Company also entered into a Master Transaction Agreement (the “MTA”) withbrands and marks of Caesars Entertainment, Inc., as well as other non-gaming properties. Upon completion of our previously announced sales, or expected sales, of certain gaming properties, we expect that we will continue to own, lease or manage 48 properties. Our primary source of revenue is generated by gaming operations, and we utilize our hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops and other services to attract customers to our properties.
We own 20 of our casinos and lease 28 casinos in the U.S. We lease 20 casinos from VICI Properties L.P., a Delaware limited partnership (“VICI”), pursuant to which, among other things,a regional lease, a Las Vegas lease and a Joliet lease. In addition, we lease seven casinos from GLP Capital, L.P., the Company has agreedoperating partnership of Gaming and Leisure Properties, Inc. (“GLPI”) pursuant to consummate onea Master Lease (as
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34

amended, the “GLPI Master Lease”) and a Lumière lease. Additionally, we lease the Rio All-Suite Hotel & Casino from a separate third party.
We periodically divest of assets in order to raise capital or more saleas a result of a determination that the assets are not core to our business. We also divested certain assets, and leaseback transactionsare required to divest additional assets, in connection with VICI and/or its affiliates with respectregulatory approvals related to certain property described in the MTA. Consummationclosing of the MergerMerger. A summary of recently completed and planned divestitures of our properties as of March 31, 2021 is subject to the satisfaction or waiver of certain conditions, including anti-trust and regulatory approvals. The Company expects that the Merger will be consummated in mid-2020.as follows:
SegmentPropertyDate SoldLocation
RegionalIsle of Capri Casino Kansas City (“Kansas City”)July 1, 2020Missouri
RegionalLady Luck Casino Vicksburg (“Vicksburg”)July 1, 2020Mississippi
RegionalEldorado Resort Casino Shreveport (“Eldorado Shreveport”)
December 23, 2020 (a)
Louisiana
RegionalMontBleu Casino Resort & Spa (“MontBleu”)
April 6, 2021 (a)
Nevada
RegionalTropicana Evansville (“Evansville”)
N/A (b)
Indiana
RegionalBelle of Baton Rouge Casino & Hotel (“Baton Rouge”)
N/A (c)
Louisiana
Discontinued operations(d):
RegionalHarrah’s Louisiana Downs
N/A (e)
Louisiana
RegionalCaesars Southern Indiana
N/A (b)(f)
Indiana
RegionalHorseshoe Hammond
N/A (b)
Indiana
Managed, International, CIEEmerald Resort & CasinoN/ASouth Africa
Managed, International, CIECaesars Entertainment UKN/AUnited Kingdom
___________________
(a)

On July 10, 2019,April 24, 2020, we entered into a definitive purchase agreement to sell the equity interests of Rainbow Casino Vicksburg Partnership, L.P. and IOC-Kansas City, L.L.C., the entities that hold Lady Luck Casino Vicksburg and Isle of Capri Casino Kansas City, towith Bally’s Corporation (formerly Twin River Worldwide Holdings, Inc. (“Twin River”). The definitive agreement provides that the consummation and certain of its affiliates for the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals. The transaction is expected to be consummated in the second quarter of 2020. See Note 4.

On January 13, 2020 and March 9, 2020, respectively, we entered into definitive purchase agreements to sell the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC, the entities that hold Eldorado Shreveport and MontBleu to Maverick Gaming LLC (“Maverick”). On April 24, 2020, the agreements with Maverick were terminated and we entered into a definitive purchase agreement with Twin River and certain of its affiliates for the sale of the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLCfor aggregate consideration of $155 million, subject to a customary working capital adjustment. The definitive agreement provides thatsale of Eldorado Shreveport closed on December 23, 2020 and the consummationsale of MontBleu closed on April 6, 2021. MontBleu met the requirements for presentation as assets held for sale and its results of operations are included in income from continuing operations in the periods presented. As a result of the agreement to sell MontBleu, an impairment charge totaling $45 million was recorded during the three months ended March 31, 2020 due to the carrying value exceeding the estimated net sales proceeds from the sale.

(b)In connection with its review of the Merger, the Indiana Gaming Commission determined on July 16, 2020 that, as a condition to their approval of the Merger, we are required to divest three properties within the state of Indiana in order to avoid undue economic concentration. On October 27, 2020, the Company entered into an agreement to sell Evansville to GLPI and Bally’s Corporation for $480 million in cash, subject to a customary working capital adjustment. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory

approvals and is expected to close in mid-2021. In addition, on December 24, 2020, the Company entered into an agreement to divest of Caesars Southern Indiana (see (f) below). We expect to enter into an agreement to sell Horseshoe Hammond prior to December 31, 2021. Evansville met the requirements for presentation as assets held for sale as of March 31, 2021.

approvals(c), and further provides that our obligationOn December 1, 2020, the Company entered into an agreement to consummatesell the sale is subjectBaton Rouge to CQ Holding Company, Inc. Pursuant to the closingterms of the Merger with CaesarsGLPI Master Lease, Baton Rouge will be removed from the GLPI Master Lease, and the buyer’s obligationrent payments to consummate the sale is subject to receipt of financing sufficient to enable it to pay the consideration due at closing.GLPI will remain unchanged. The transaction is expected to close in the firstthird quarter of 2021.

We own 18 of our casinos2021 and lease five casinos that areis subject to a master lease with GLP Capital, L.P., the operating partnership of Gamingregulatory approvals and Leisure Properties, Inc. (“GLPI”), that we entered into in connection with the Tropicana Acquisition on October 1, 2018 (the “Master Lease”). See full description under “Master Lease”.

Acquisition

other customary closing conditions.

(d)These Former Caesars Entertainment

On June 24, 2019, we entered into the Merger Agreement with Caesars. On the terms and subject to the conditions set forth in the Merger Agreement, the aggregate consideration paid by the Company in respect of outstanding shares of common stock of Caesars will be (a) an amount of cash equal to (i) the sum of (A) $8.40 plus (B) an amount equal to $0.003333properties met held for each day from March 25, 2020 until the closing datesale criteria as of the Merger (such aggregate amount,acquisition date. The sales of these properties have or are expected to close within one year and the “Per Share Cash Merger Consideration”), multiplied by (ii) a number of shares of Caesars common stock equal to (A) 682,161,838 (which includes 8,271,660 shares being held in escrow trust to satisfy unsecured claims pursuant to the Third Amended Joint Plan of Reorganization, filed with the U.S. Bankruptcy Court for the Northern District of Illinois in Chicago on January 13, 2017, at Docket No. 6318, which sharesproperties are not entitled to vote) plus (B) the number of shares of Caesars common stock (the “Aggregate Caesars Share Amount”) issued after June 24, 2019 and prior to the effective time of the Merger pursuant to the exercise of certain equity awards issued under Caesars stock plans or conversion of Caesars’ outstanding convertible notes and (b) a number of shares of ERI common stock equal to 0.0899 multiplied by the Aggregate Caesars Share Amount (such amount per share of Caesars common stock, the “Merger Consideration”). Based on the number of shares of ERI and Caesars outstandingclassified as discontinued operations as of March 31, 2021.

(e)On September 3, 2020, followingwe and VICI entered into agreement with Rubico Acquisition Corp. to sell Harrah’s Louisiana Downs for $22 million, subject to a customary working capital adjustment, where the consummation of the Merger (assuming that all Caesars convertible notes are converted immediately following consummation of the Merger into the Per Share Cash Merger Consideration and 0.0899 shares of common stock of Eldorado for each share of Caesars common stock into which such Caesars convertible notes were convertible immediately prior to the Merger), Eldorado stockholders and former Caesars stockholders will hold approximately 50.2% and 49.8%, respectively, of the combined company's outstanding shares of common stock.

The Merger Agreement contains customary representations and warranties by each of Caesars and Eldorado, and each party has agreed to customary covenants.

The Merger Agreement also contains termination rights for each of Caesars and Eldorado under certain circumstances. If the Merger Agreement is terminated in certain circumstances relating to changes in the recommendation of the board of directors of Caesars in favor of the Merger, entry by Caesars into an alternative transaction or in certain circumstances following the failure of Caesars stockholders to approve the Merger, Caesarsproceeds will be requiredsplit between us and VICI. The sale is subject to pay Eldorado a termination feesatisfaction of approximately $418.4 million. The Merger Agreement provides that if it is terminated in certain circumstances relating to changes in the recommendationcustomary conditions, including receipt of the board of directors of Eldorado in favor of the issuance of shares of Eldorado common stock in the Merger or in certain circumstances following the failure of Eldorado stockholders to approve such issuance, then Eldorado will be required to pay Caesars a termination fee of approximately $154.9 million. It also provides that each party will be obligated to reimburse the other party’s expenses for an amount not to exceed $50.0 million if the Merger Agreement is terminated because of the failure to obtain the required approval of such party’s stockholders (creditable against any termination fee that may subsequently be paid by such party). The Merger Agreement also provides that Eldorado will be obligated to pay a termination fee of approximately $836.8 million to Caesars if the Merger Agreement is terminated (i) due to a law or order relating to gaming or antitrust laws that prohibits or permanently enjoins the consummation of the transactions, (ii) because the required regulatory approvals were not obtained priorand is expected to June 24, 2020 (subject to extension to a date no later thanclose in the third quarter of 2021.

(f)On December 24, 2020, pursuant to the Merger Agreement) or (iii) due to Eldorado willfully and materially breaching certain obligations with respect to the actions required to be taken by Eldorado to obtain required antitrust approvals.

Consummation of the Merger is subject to the satisfaction or waiver of certain conditions, including, among others, (1) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and receipt of required gaming approvals, (2) the absence of any governmental order or law prohibiting the consummation of the Merger, (3) adoption of the Merger Agreement by holders of a majority of the outstanding shares of Caesars common stock, (4) the approval of the issuance of shares of Eldorado common stock in the Merger, (5) the effectiveness of the registration statement for Eldorado common stock to be issued in the Merger and the authorization for listing of those shares on the Nasdaq Stock Market, (6) absence of a material adverse effect on the other party, (7) the accuracy of the other party’s representations and warranties, subject to customary materiality standards, (8) compliance of the other party with its respective covenants under the Merger Agreement in all material respects and (9) conversion or certain amendments of, or another mutually agreed arrangement with respect to, Caesars’ 5.00% convertible


senior notes due 2024.  Caesars’ stockholders adopted the Merger Agreement, and the Company’s stockholders approved the issues of shares of Eldorado common stock in the Merger, at separate special meetings of stockholders on November 15, 2019.  In addition, on November 27, 2019, Caesars entered into certain amendments with respect to Caesars’ 5.00% convertible senior notes due 2024.

In connection with execution of the Merger Agreement, on June 24, 2019, we entered into a debt financing commitment letter (the “Initial Commitment Letter”) and related fee letters with JPMorgan Chase Bank, N.A., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Macquarie Capital (USA) Inc. and Macquarie Capital Funding LLC (the “Initial Commitment Parties”). On July 19, 2019, the Company entered into an amended and restated commitment letter (as amended, the “A&R Commitment Letter”) and related fee letters, which amended and restated the Initial Commitment Letter and related fee letters in their entiretyagreement to among other things, add additional arrangers and lenders, including Bank of America, N.A., BofA Securities, Inc., Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch, Goldman Sachs Bank USA, SunTrust Bank, SunTrust Robinson Humphrey, Inc., U.S. Bank National Association, KeyBank National Association, KeyBanc Capital Markets Inc., Fifth Third Bank, and Citizens Bank, National Association (together with the Initial Commitment Parties, collectively, the “Commitment Parties”). Pursuantsell Caesars Southern Indiana to the A&R Commitment Letter,Eastern Band of Cherokee Indians (“EBCI”) for $250 million, subject to a customary working capital adjustment. Caesar’s annual payments to VICI under the Commitment Parties committed to arrange and provide (i) the Company with: (w) a $1,000.0regional lease will decline by $33 million senior secured revolving credit facility, (x) a $3,000.0 million senior secured term loan B facility, (y) a $3,250.0 million senior secured 364-day bridge facility and (z) a $1,800.0 million senior unsecured bridge loan facility and (ii) Caesars Resort Collection, LLC, a subsidiary of Caesars, with a $2,400.0 million senior secured incremental term loan B facility (collectively, the “Debt Financing”). The proceedsupon closing of the Debt Financing will be used (a) to pay all or a portiontransaction. Additionally, effective as of the cash consideration payable in the Merger, (b) to refinance all of our existing syndicated bank credit facilities and outstanding senior notes, (c) to refinance certain of Caesars’ and its subsidiaries’ existing debt, (d) to pay transaction fees and expenses related to the Merger and related transactions and (e) for working capital and general corporate purposes. The availabilityclosing of the borrowings undertransaction, Caesars and EBCI are expected to enter into a long-term agreement for the Debt Financingcontinued use of the Caesars brand and Caesars Rewards loyalty program at Caesars Southern Indiana. The sale is subject to the satisfaction of certain customary conditions, including receipt of required regulatory approvals and is expected to close in the substantially concurrent closingthird quarter of 2021.

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Merger Related Activities
Merger with Caesars Entertainment Corporation
On July 20, 2020, the Merger was consummated and Former Caesars became a wholly-owned subsidiary of ours. The strategic rationale for the Merger includes, but is not limited to, the following:
•Creation of the Merger.

On July 19, 2019, the Company entered into a commitmentlargest owner, operator and engagement letter (as amended, the “Increase Commitment Letter”) and related fee letters to, if elected by the Company, increase the total sizemanager of domestic gaming assets

•Diversification of the Debt Financing, includingCompany’s domestic footprint
•Access to iconic brands, rewards programs and new gaming opportunities expected to enhance customer experience
•Realization of significant identified synergies
As described above, following the Merger our domestic and international footprint has expanded as we own, lease or manage an increaseaggregate of 54 domestic properties in 16 states and have international operations in five countries outside of the U.S. as of March 31, 2021. We also have other domestic and international properties that are authorized to use the senior secured term loan B facility to be arranged on a commercially reasonable efforts basis by the Commitment Parties in an amount to be agreed upon by the partiesbrands and an increase to the revolving credit facility by $830.0 million, the proceeds of which, if the Company elects to incur such financing, may be used to refinance certain existing indebtednessmarks of Caesars Resort Collection, LLC and its subsidiaries andEntertainment, Inc., as well as other non-gaming properties.
The total purchase consideration for working capital and general corporate purposes upon consummation of the Merger.Former Caesars was $10.9 billion. The Increase Commitment Letter and a related engagement letter also contemplate the possibility of new senior secured and/or senior unsecured notes to be issued by the Company.

In connection with the execution of the Merger Agreement, on June 24, 2019, we entered into the MTA with VICI, pursuant to which, among other things, we have agreed, subject to the consummation of the Merger and the other applicable conditions set forth therein and in any related documents, (i) through one or more of our subsidiaries (after giving effect to the Merger) to consummate one or more sale and leaseback transactions with VICI and/or its affiliates with respect to certain property describedestimated purchase consideration in the MTA, including Harrah’s New Orleans, Harrah’s Laughlinacquisition was determined with reference to its acquisition date fair value.

We recognized acquisition-related transaction costs of $12 million and Harrah’s Atlantic City, (ii) through one or more of our subsidiaries (after giving effect to$9 million for the Merger) to amend the CPLV Lease, the Non-CPLV Leasethree months ended March 31, 2021 and the Joliet Lease (each as defined in the MTA) in accordance with the terms of the MTA and receive certain consideration from VICI or its affiliates in respect thereof, (iii) to provide a guaranty in respect of each of the CPLV Lease, the Non-CPLV Lease and the Joliet Lease in accordance with the terms of the MTA, (iv) to enter into (or cause our subsidiaries (after giving effect to the Merger) to enter into) certain right of first refusal agreements and a put-call right agreement in accordance with the terms of the MTA and (v) to undertake certain related transactions in connection with or related to the foregoing.  We expect to apply the proceeds of the VICI transactions to pay a portion of the cash consideration payable in the Merger and transaction expenses associated with the Merger and related transactions.

On September 26, 2019, the Company and VICI entered into definitive Purchase and Sale Agreements to effect the purchase and sale of Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City in connection with the transactions described in clause (i) of the preceding paragraph.

We expect that the Merger and related transactions will be consummated in mid-2020.

2020, respectively.

Partnerships and DevelopmentAcquisition Opportunities

William Hill

In September 2018, we

We entered into a 25-year agreement, which became effective January 29, 2019, with William Hill PLC and William Hill US,U.S. Holdco, Inc. (“William Hill US”), its U.S. subsidiary (together, “William Hill”) pursuant to which we (i) granted to William Hill the


right to conduct betting activities, including operating certain of our sportsbooks, in retail channels and under our first skin and third skincertain skins for online channels with respect to our current and future properties, located in the United States and the territories and possessions of the United States, including Puerto Rico and the U.S. Virgin Islands and (ii) agreed that William Hill will have the right to conduct real money online gaming activities utilizing our second skin available with respect to properties in such territory.  Pursuant to the terms of the agreement, weactivities. We received a 20% ownership interest in William Hill US initially valued at approximately $128.9 million as well as 13.4$129 million. We also received 13 million ordinary shares of William Hill PLC, valued atwhich were subject to restrictions on timing of sale, with an initial value of approximately $27.3$27 million upon closing of the transaction in January 2019. The Company’s initial equitytime restrictions on approximately 6 million shares expire within the next twelve months and theare classified as current. Our profit and losses attributable to William Hill US are in included in income (loss) from unconsolidated affiliatesTransaction costs and other operating costs on the Consolidated Statements of Operations. We granted William Hill the right to the use of certain skins in exchange for an equity method investment. The fair value of the William Hill US and William Hill PLC shares received has been deferred and is recognized as revenue on a straight-line basis over the 25-year agreement term. The amortization of deferred revenues associated with the Company’sour equity interests is included in corporateother revenue within our Corporate and other revenues and operating income.Other segment. Additionally, we receive a profit share from the operations of sports betting and other gaming activities associated with our properties.

On September 30, 2020, we announced that we had reached an agreement with William Hill PLC on the Company’s properties,terms of a recommended cash acquisition pursuant to which we would acquire the entire issued and to be issued share capital (other than shares owned by us or held in treasury) of William Hill PLC, in an all-cash transaction of approximately £2.9 billion (the “William Hill Acquisition”).In order to manage the risk of appreciation of the GBP denominated purchase price the Company entered into foreign exchange forward contracts. On March 25, 2021, the remaining outstanding forward contract was settled, for which the Company received $41 million in proceeds and recorded a net gain of $1 million during the three months ended March 31, 2021.
On September 29, 2020, the Company entered into a debt financing commitment letter pursuant to which the lenders party thereto committed to arrange and provide a newly formed subsidiary of the Company with (a) a £1.0 billion senior secured 540-day bridge loan facility, (b) a £116 million senior secured 540-day revolving credit facility and (c) a £503 million senior secured 60-day bridge loan facility (collectively, the “Debt Financing”), which commitment letter was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
Pending negotiation of the definitive loan agreement for the Debt Financing, on October 6, 2020, a newly formed subsidiary of the Company entered into a £1.5 billion Interim Facilities Agreement (the “Interim Facilities Agreement”) with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A. to provide: (a) a 90-day £1.0 billion interim asset sale bridge facility and (b) a 90-day £503 million interim cash confirmation bridge facility, which Interim Facilities Agreement was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
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On April 20, 2021, a UK Court sanctioned the William Hill Acquisition and on April 22, 2021, the Company completed the acquisition for approximately £2.9 billion, or approximately $4.0 billion.
In connection with the William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Company entered into a Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing. The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility. The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the acquisition and related transactions. The proceeds of the revolving credit facility under the Bridge Credit Agreement will be used for working capital and general corporate purposes. The Interim Facilities Agreement was terminated upon the execution of the Bridge Credit Agreement for the Debt Financing. The Bridge Credit Agreement is included within William Hill’s non-U.S. operations which is included in other property revenues and operating income.expected to be divested.

The Stars Group

Group/Flutter Entertainment

In November 2018, we entered into a 20-year agreement with The Stars Group Inc., which was subsequently acquired by Flutter Entertainment PLC (“TSG”Flutter”) pursuant to which we agreed to provide TSG with options to obtain access to our second skin for online sports wagering and third skin for real money online gaming and poker in each case with respect to our properties in the United States.U.S. Under the terms of the agreement, we will receivereceived common shares, as a revenue share from the operationcertain operations of the applicable verticals by TSGFlutter under our licenses. Pursuant to the termsThe fair value of the TSG agreement, we received 1.1 million TSG common shares valued at approximately $18.6 million and an additional $5.0 million in TSG common shares became payable to us upon TSG’s exercise of its first option, which shares we received in the fourth quarter of 2019. In December 2019, we sold approximately 0.5 million of our TSG common shares at the request of William Hill and remitted the proceeds to them in accordance with the terms of our William Hill agreement. We may also receive additional TSG common shares in the future based on TSG net gaming revenue generated in our markets. Upon the entry into the TSG agreement, the Company also recorded deferred revenue associated with the shares received has been deferred and recognizesis recognized as revenue whichon a straight-line basis over the 20-year agreement term.
As of March 31, 2021 and December 31, 2020, the fair value of shares held was $10 million and is included in corporatePrepayments and other revenuescurrent assets on the Balance Sheets. The Company recorded an unrealized gain of less than a million during the three months ended March 31, 2021, and operating income.

an unrealized loss of $3 million during the three months ended March 31, 2020, which were included in Other income (loss) on the Statements of Operations.

Pompano Joint Venture

In April 2018, we entered into a joint venture with Cordish Companies (“Cordish”) to master plan and develop a mixed-use entertainment and hospitality destination expected to be located on unused land adjacent to the casino and racetrack at our Pompano property. As the managing member, Cordish will operate the business and manage the development, construction, financing, marketing, leasing, maintenance and day-to-day operation of the various phases of the project. Additionally, Cordish will be responsible for the development of the master plan for the project with our input and will submit it for our review and approval. We and Cordish have made cash contributions of $500,000 eachtotaling $1 million and could be required to makehave contributed land. On February 12, 2021, we contributed an additional contributions to a maximum of $2.0 million ($1.0 million per member) at the request of the managing member. We have agreed to contribute approximately 130 to 200186 acres of land to the joint venture for the project. Asa fair value of $61 million. Total contributions of approximately 206 acres of land have been made with a fair value of approximately $69 million and we have no further obligation to contribute additional real estate or cash as of March 31, 2020 and December 31, 2019, we have contributed approximately 23 acres2021. We entered into a lease agreement in February 2021 to lease back a portion of the land from the joint venture at an approximate fair value of $6.6 million. venture.
While we hold a 50% variable interest in the joint venture, we are not the primary beneficiary; asbeneficiary. As such the investment in the joint venture is accounted for using the equity method. We participate evenly with Cordish in the profits and losses of the joint venture, which isare included in income (loss) fromTransaction costs and other operating costs on the Statements of Operations. Our investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates on the Consolidated StatementsBalance Sheets.
Table of Operations.

Divestitures

Presque and Nemacolin

On February 28, 2018, we entered into definitive agreements to sell substantially all of the assets and liabilities of Presque and Vicksburg to Churchill Downs Incorporated (“CDI”). Under the terms of the agreements, CDI agreed to purchase Presque for cash consideration of approximately $178.9 million and Vicksburg for cash consideration of approximately $50.6 million, in each case subject to a customary working capital adjustment.

The definitive agreements provided that the divestitures were subject to receipt of required regulatory approvals, termination of the waiting period under the HSR Act and other customary closing conditions, including, in the case of Presque, the prior closing of the sale of Vicksburg or the entry into an agreement to acquire another asset of ours. On May 7, 2018, we and CDI each received a Request for Additional Information and Documentary Materials, often referred to as a “Second Request,” from the Federal Trade Commission in connection with its review of the Vicksburg acquisition.

On July 6, 2018, in consideration of the time and expense needed to reply to the Second Request, the Company and CDI entered into a termination agreement and release pursuant to which the parties agreed to terminate the asset purchase agreement with respect to Vicksburg and to enter into an asset purchase agreement pursuant to On August 10, 2018, we

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entered into a definitive agreement to sell substantially all of the assets and liabilities of Nemacolin to CDI.  Under the terms of the agreement, CDI agreed to purchase Nemacolin for cash consideration of approximately $0.1 million, subject to a customary working capital adjustment. We completed the sale of Presque on January 11, 2019 and the sale of Nemacolin on March 8, 2019.

Mountaineer, Cape Girardeau and Caruthersville

On June 17, 2019, the Company entered into definitive agreements to sell the real property relating to Mountaineer, Cape Girardeau, and Caruthersville to VICI for approximately $278 million and, immediately following the consummation of the sale such real property, sell all of the outstanding equity interests of Mountaineer, Caruthersville and Cape Girardeau to Century Casinos, Inc. for approximately $107 million, subject to a finalized working capital adjustment. The sales were consummated on December 6, 2019.

Prior to the closing date, the divestitures Mountaineer, Cape Girardeau and Caruthersville met the requirements for presentation as assets held for sale. However, they did not meet the requirements for presentation as discontinued operations. Mountaineer was reported in the East segment and Cape Girardeau and Caruthersville were reported in Midwest segment.

Vicksburg and Kansas City

On July 10, 2019, we entered into a definitive agreement to sell the equity interests of Rainbow Casino Vicksburg Partnership, L.P. and IOC-Kansas City, L.L.C., the entities that hold Lady Luck Casino Vicksburg and Isle of Capri Casino Kansas City, to Twin River Worldwide Holdings, Inc. (“Twin River”) for cash consideration of approximately $230 million, subject to a working capital adjustment.

The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals. The transaction is expected to close in the second quarter of 2020.

Vicksburg andKansas City met the requirements for presentation as assets held for sale as of December 31, 2019. However, they did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations.

Eldorado Shreveport and MontBleu

On January 13, 2020 and March 9, 2020, respectively, we entered into definitive purchase agreements to sell the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC, the entities that hold Eldorado Shreveport and MontBleu, to Maverick. On April 24, 2020, the agreements with Maverick were terminated and we entered into a definitive purchase agreement with Twin River and certain of its affiliates for the sale of the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC for aggregate consideration of $155 million, subject to a working capital adjustment. The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals, and further provides that our obligation to consummate the sale is subject to the closing of the Merger with Caesars and the buyer’s obligation to consummate the sale is subject to receipt of financing sufficient to enable it to pay the consideration due at closing. The transaction is expected to close in the first quarter of 2021.

Eldorado Shreveport and MontBleu met the requirements for presentation as assets held for sale under generally accepted accounting principles as of March 31, 2020. However, none of the pending divestitures met the requirements for presentation as discontinued operations and are included in income from continuing operations in the periods presented.

In conjunction with the classification of MontBleu’s operations as assets held for sale as a result of the announced sale, an impairment charge totaling $45.6 million was recorded during the three months ended March 31, 2020 due to the carrying value exceeding the estimated net sales proceeds.   


Reportable Segments

The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of March 31, 2020:

2021:

Segment

Las Vegas

Property

Regional

Date Acquired

State

Managed, International, CIE

West

Bally’s Las Vegas (a)

Eldorado Resort Casino Reno ("Eldorado Reno")

Harrah’s Atlantic City (a)

Nevada

Managed

Caesars Palace Las Vegas (a)

Silver Legacy Resort Casino ("Silver Legacy")

Harrah’s Laughlin (a)

Nevada

Harrah’s Ak-Chin (a)

The Cromwell (a)

Circus Circus Reno ("Circus Reno")

Harrah’s New Orleans (a)

Nevada

Harrah’s Cherokee (a)

Flamingo Las Vegas (a)

MontBleu Casino Resort & Spa ("MontBleu")

(c)

October 1, 2018 (c)

Hoosier Park (a)

Nevada

Harrah’s Cherokee Valley River (a)

Harrah’s Las Vegas (a)

Tropicana Laughlin Hotel & Casino ("Laughlin")

October 1, 2018

Indiana Grand (a)

Nevada

Harrah’s Resort Southern California (a)

The LINQ Hotel & Casino (a)

Isle Casino Hotel - Blackhawk ("Isle Black Hawk")

Hawk

May 1, 2017

Caesars Atlantic City (a)

Colorado

Horseshoe Baltimore (a)(h)

Paris Las Vegas (a)

Lady Luck Casino - Black Hawk ("Lady Luck Black Hawk")

May 1, 2017

Caesars Southern Indiana (a)(b)(e)

Colorado

Caesars Windsor (a)

Planet Hollywood Resort & Casino (a)

Midwest (b)

Isle Casino Waterloo ("Waterloo")

May 1, 2017

Harrah’s Council Bluffs (a)

Iowa

Kings & Queens Casino (a)

Rio All-Suite Hotel & Casino (a)

Isle Casino Bettendorf ("Bettendorf")

May 1, 2017

Harrah’s Gulf Coast (a)

Iowa

Caesars Dubai (a)

Isle of Capri Casino Boonville ("Boonville")

May 1, 2017

Harrah’s Joliet (a)

Missouri

International

Isle of Capri Casino Kansas City ("Kansas City")

May 1, 2017 (c)

Missouri

South

Isle Casino Racing Pompano Park ("Pompano")

May 1, 2017

Harrah’s Lake Tahoe (a)

Florida

Caesars Cairo (a)(b)

Eldorado Resort Casino Shreveport ("Eldorado Shreveport")

(a) (c)

Louisiana

Isle of Capri Casino Hotel Lake Charles ("Lake Charles")

May 1, 2017

Harrah’s Louisiana Downs (a)(b)(g)

Louisiana

Ramses Casino (a)(b)

Belle of Baton Rouge Casino & Hotel ("Baton Rouge")

(i)

October 1, 2018

Harrah’s Metropolis (a)

Louisiana

Emerald Casino Resort (a)(b)

Isle of Capri Casino Lula ("Lula")

May 1, 2017

Harrah’s North Kansas City (a)

Mississippi

Alea Glasgow (a)(b)

Lady Luck Casino Vicksburg ("Vicksburg")

May 1, 2017 (c)

Mississippi

Trop Casino Greenville ("Greenville")

October 1, 2018

Harrah’s Philadelphia (a)

Mississippi

Alea Nottingham (a)(b)

East (b)

Eldorado Gaming Scioto Downs ("Scioto Downs")

Harveys Lake Tahoe (a)

Ohio

The Empire Casino (a)(b)

Tropicana Casino and Resort, Atlantic City ("Trop AC")

October 1, 2018

Horseshoe Bossier City (a)

New Jersey

Manchester235 (a)(b)

Central

Grand Victoria Casino ("Elgin")

August 7, 2018

Horseshoe Council Bluffs (a)

Illinois

Playboy Club London (a)(b)

Lumière Place Casino ("Lumière")

October 1, 2018

Horseshoe Hammond (a)(b)(f)

Missouri

Rendezvous Brighton (a)(b)

Tropicana Evansville ("Evansville")

(d)

October 1, 2018

Horseshoe Tunica (a)

Indiana

The Sportsman (a)(b)

a)

Property was owned or acquired prior to 2017.CIE

Caesars Interactive Entertainment (a)

b)

Presque was sold on January 11, 2019, Nemacolin was sold on March 8, 2019 and Mountaineer was sold on December 6, 2019. All three properties were previously reported in the East segment. Cape Girardeau and Caruthersville were sold on December 6, 2019. Both properties were previously reported in the Midwest segment.

___________________

c)(a)These properties were acquired from the Merger on July 20, 2020.

We have entered into agreements to sell Kansas City, Vicksburg, Eldorado Shreveport and MontBleu. The Kansas City and Vicksburg sales are expected to close in the first half of 2020. The Eldorado Shreveport and MontBleu sales are expected to close in the first quarter of 2021.

(b)As a result of the Merger, these properties met the requirements for presentation as discontinued operations as of March 31, 2021.
(c)In April 2020, the Company entered into an agreement to sell MontBleu. The sale of MontBleu closed on April 6, 2021.
(d)On October 27, 2020, the Company entered into an agreement to sell Evansville, which is expected to close mid-2021.
(e)On December 24, 2020, the Company entered into an agreement to sell Caesars Southern Indiana, which is expected to close in the third quarter of 2021.
(f)The Company plans to enter into an agreement to sell Horseshoe Hammond prior to December 31, 2021.
(g)On September 3, 2020, the Company entered into an agreement to sell Harrah’s Louisiana Downs, which is expected to close in the third quarter of 2021.
(h)As of March 31, 2021, Horseshoe Baltimore was 44.3% owned by us and held as an equity-method investment.
(i)On December 1, 2020, the Company entered into an agreement to sell Belle of Baton Rouge, which is expected to close in the third quarter of 2021.
The executive decision maker of ourthe Company reviews operating results, assesses performance and makes decisions on a “significant market” basis. Management views each of our casinos as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, and their management and reporting structure. OurPrior to the Merger, our principal operating activities occuroccurred in five geographic regions and reportable segments.segments: West, Midwest, South, East and Central, in addition to Corporate and Other. Following the Merger, our principal operating activities occur in three regionally-focused reportable segments: (1) Las Vegas, (2) Regional, and (3) Managed, International, CIE, in addition to Corporate and Other. The reportable segments are based on the similar characteristics of the operating segments with the way management assesses these results and allocates resources, which is a consolidated view that adjusts for the effect of certain transactions between these reportable segments within the regions in which they operate: West, Midwest, South, East, and Central. See the table above for a listingCaesars.
Table of properties included in each segment.

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Presentation of Financial Information

The financial information included in this Item 2 for the period after our acquisition of Former Caesars on July 20, 2020 is not fully comparable to the periods prior to the acquisition. In addition, the presentation of financial information herein for the periods after ourthe Company’s sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, and our sales of Mountaineer, Cape Girardeau and Caruthersville on December 6, 2019various properties are not fully comparable to the periods prior to their respective sale dates. See Note 4.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“

MD&A”)&A is intended to provide information to assist in better understanding and evaluating our financial condition and results of operations. Our historical operating results may not be indicative of our future results of operations because of these factors and the changing competitive landscape in each of our markets, as well as by factors discussed elsewhere herein. We recommend that you read this MD&A in conjunction with our unaudited consolidated condensed financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q.


Reclassifications

Certain reclassifications of prior year presentations have been made to conform to the current period presentation. Marketing and promotions expense previously disclosed for the three months ended March 31, 2020 has been reclassified to Casino and pari-mutuel commissions expense and General and administrative expense based on the nature of the expense.
Key Performance Metrics

Our primary source of revenue is generated by our gaming operations, but we use our hotels, restaurants, bars, entertainment venues, retail shops, racing and sportsbook offerings and other services to attract customers to our properties. Our operating results are highly dependent on the volume and quality of customers visiting and staying at our properties. Key performance metrics include volume indicators such as table games drop and slot handle, which refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controllable by us, is recognized as casino revenues and is referred to as our win or hold. In addition, hotel occupancy and price per room designated by average daily rate (“ADR”) are key indicators for our hotel business. Our calculation of ADR consists of the average price of occupied rooms per day including the impact of resort fees and complimentary rooms. Complimentary room rates are determined based on an analysis of retail or cash rates for each customer segment and each type of room product to estimate complimentary rates which are consistent with retail rates. Complimentary rates are reviewed at least annually and on an interim basis if there are significant changes in market conditions. Complimentary rooms are treated as occupied rooms in our calculation of hotel occupancy.

Recent

Developments and Significant Factors Impacting Financial Results

The following summary highlights recent developments and significant factors impacting our financial results for the three months ended March 31, 2021 and 2020.
•COVID-19 Public Health Emergency – In January 2020, an outbreak of a new strain of coronavirus (“COVID-19”) was identified and has since spread throughout much of the world, including the U.S. All of our casino properties were temporarily closed for the period from mid-March 2020 through mid-May 2020 due to orders issued by various government agencies and tribal bodies as part of certain precautionary measures intended to help slow the spread of the COVID-19 public health emergency. We have resumed certain operations at substantially all of our properties as of March 31, 2021, with the exception of Isle of Capri Casino Hotel Lake Charles (“Lake Charles”) which was severely damaged by Hurricane Laura (as described below), and many of our international properties.
We continued to pay our full-time employees through April 10, 2020, including tips and tokens. Effective April 11, 2020, we furloughed approximately 90% of our employees, implemented salary reductions and committed to continue to provide benefits to our employees during their furloughed period. A portion of our workforce has returned to service as the properties have resumed with limited capacities and in compliance with operating restrictions imposed by governmental or tribal orders, directives, and guidelines. Due to a triggering event resulting from the COVID-19 public health emergency, we recognized impairment charges of $116 million related to goodwill and trade names (described below) during the three months ended March 31, 2020.
The COVID-19 public health emergency has had, and continues to have, a material adverse effect on the Company’s business, financial condition and results of operations for the three months ended March 31, 2021 and 2020. As a result, the terms of our debt arrangements provide that the financial covenant measurement period is not effective through September 30, 2021, so long as we comply with a minimum liquidity requirement. In addition, on March 19, 2021, the Company filed a lawsuit against its insurance carriers for losses attributed to the COVID-19 public health emergency.
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The extent of the ongoing and future effects of the COVID-19 public health emergency on our business and the casino resort industry generally is uncertain, but we expect that it will continue to have a significant impact on our business, results of operations and financial condition. The extent and duration of the impact of the COVID-19 public health emergency will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, restrictions on operations imposed by governmental authorities, the potential for authorities reimposing stay at home orders or additional restrictions in response to continued developments with the COVID-19 public health emergency, our ability to adapt to evolving operating procedures, the impact on consumer demand and discretionary spending, the length of time it takes for demand to return, the efficacy and availability of vaccines, and our ability to adjust our cost structures for the duration of the outbreak’s effect on our operations.
•Caesars Acquisition – The Merger closed on July 20, 2020 and, 2019.

•as a result, we own, lease or manage an aggregate of 54 domestic properties in 16 states and have international operations in five countries outside of the U.S. as of March 31, 2021. We also have other domestic and international properties that are authorized to use the brands and marks of Caesars Entertainment, Inc., as well as other non-gaming properties. See “Reportable Segments” above for a description of our revised segments following the Merger. Transaction costs related to our acquisition of Former Caesars totaled $12 million and $9 million for the three months ended March 31, 2021 and 2020, respectively.

COVID-19 Pandemic – In January 2020, an outbreak of a new strain of coronavirus was identified and has since spread throughout much of the world, including the United States. All of our casino properties have been temporarily closed since March 18, 2020 due to orders issued by various state government agencies in connection with the COVID-19 pandemic.  As a result of these closures, the COVID-19 pandemic has had an adverse effect on our business, financial condition and results of operations for the three months ended March 31, 2020 despite a strong start to the first quarter with positive year over year results for January and February. We continued to pay our full-time employees through April 10, 2020, including tips and tokes. Effective April 11, 2020, we furloughed approximately 90% of our employees, implemented salary reductions and committed to continue to provide benefits to our employees through June 30, 2020. As a result of these payroll changes combined with other cost saving measures, our daily operating expenses reduced significantly. In an effort to maintain liquidity and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets, we borrowed $465 million under our revolving credit facility on March 16, 2020. The extent of the ongoing and future effects of the COVID-19 pandemic on our business and the casino resort industry generally is uncertain, but we expect that it will continue to have a significant impact on our business, results of operations and financial condition. As a result of the continuation of closures for a significant portion of the second quarter of 2020 and the protective measures expected to be put into place upon re-opening, we anticipate that our results of operations for the second quarter of 2020 will be lower than those for the first quarter of 2020, and operating results may be negatively impacted for the remainder of the year and potentially thereafter.  The extent and duration of the impact of COVID-19 will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, the length of time that our casinos remain closed, our ability to adapt to new operating procedures upon re-opening of our casinos, the impact on consumer demand and discretionary spending, the length of time it takes for demand to return and our ability to adjust our cost structures for the duration of the outbreak’s impact on our operations.

•Discontinued Operations – As result of the Merger, Former Caesars properties, including Harrah’s Louisiana Downs, Caesars Southern Indiana, Horseshoe Hammond, and the Caesars UK group, including Emerald Resort & Casino, have met held for sale criteria as of the date of the closing of the Merger. The sales of these properties are expected to close within one year and the properties are classified as discontinued operations.

Caesars Acquisition – Transaction costs related to our pending acquisition of Caesars announced in June 2019 totaled $9.3 million for the three months ended March 31, 2020. Pursuant to the MTA with VICI, we are required to reimburse VICI for 50% of any prepayment penalties in connection with VICI’s payoff related to its CPLV loan, regardless of whether the Merger closing occurs. As of December 31, 2019 and March 31, 2020, our proportionate share of VICI’s prepayment penalty paid in 2019 was accrued and totaled approximately $55.4 million.

•William Hill Acquisition – On April 22, 2021, the Company consummated its previously announced acquisition of the entire issued and to be issued share capital (other than shares owned by the Company or held in treasury) of William Hill PLC, in an all-cash transaction of approximately £2.9 billion or approximately $4.0 billion (the “William Hill Acquisition”). We recognized acquisition-related transaction costs of approximately $5 million for the three months ended March 31, 2021.

Presque and Nemacolin Divestitures - The sales of Presque and Nemacolin did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations for the periods prior to their respective closing dates for the three months ended March 31, 2019. We closed the sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, and recorded a net gain of $22.2 million.

•

Mountaineer, Cape Girardeau and Caruthersville Divestitures – The sales of Mountaineer, Cape Girardeau and Caruthersville did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations for the periods prior to their closing date for the three months ended March 31, 2019. We closed the sales of these properties on December 6, 2019 and recorded a net gain of $28.6 million during the fourth quarter of 2019.


•Divestitures – In the previous twelve months we completed several divestitures including the sales of Kansas City and Vicksburg, Eldorado Shreveport, and discontinued operations of Harrah’s Reno and Bally’s Atlantic City. The divestituresproperties that have been sold as of Presque, Nemacolin and Mountaineer, Cape Girardeau and Caruthersville in January, March and December 2019, respectively,31, 2021, are collectively referred to as “Divestitures.” The results of operations of the “Divestitures.”divested entities, other than those identified as discontinued operations, are included in income from continuing operations for the periods prior to their respective closing dates.

•

Eldorado Shreveport and MontBleu Divestitures - The sales of Eldorado Shreveport and MontBleu did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations. In conjunction with the classification of MontBleu’s operations as assets held for sale as a result of the announced sale, an impairment charge totaling $45.6 million was recorded during the three months ended March 31, 2020 due to the carrying value exceeding the estimated net sales proceeds.

•Impairment Charges – As a result of declines in recent performance and the expected impact on future cash flows as a result of the COVID-19 public health emergency, we recognized impairment charges in our Regional segment related to goodwill and trade names totaling $100 million and $16 million, respectively, during the three months ended March 31, 2020. In addition, as a result of entering the agreement to sell MontBleu in our Regional segment, impairment charges totaling $45 million were recorded during the three months ended March 31, 2020 due to the carrying value exceeding the estimated net sales proceeds. No impairment charge was recorded during the three months ended March 31, 2021.

William Hill and TSG – The amortization of deferred revenues associated with the William Hill and TSG agreements totaled $1.9 million and $1.4 million for the three months ended March 31, 2020 and 2019, respectively, and is included in corporate and other revenues and operating income. In addition, we recorded a $23.0 million unrealized loss associated with our investments in William Hill and TSG for the three months ended March 31, 2020.

•Weather and Construction Disruption– In late August 2020, our Regional segment was negatively impacted by Hurricane Laura, causing severe damage to Lake Charles, which will remain closed until 2022 when construction of a new land-based casino is expected to be complete. During the three months ended March 31, 2021, we received insurance proceeds of approximately $26 million related to damaged fixed assets and remediation costs. The Company also recorded a gain of approximately $8 million as proceeds received were in excess of the losses incurred and the net book value of the damaged property.

Impairment Charges – As a result of declines in recent performance and the expected impact on future cash flows as a result of COVID-19, we recognized impairment charges related to trade names and goodwill during the three months ended March 31, 2020 totaling $15.6 million and $99.5 million, respectively.

•Post-Merger Synergies –We continue to identify operating and cost efficiencies, including savings from the purchasing power of the combined Caesars organization and targeted integrated marketing strategies, as well as the elimination of redundant costs such as accounting and professional expenses, certain payroll costs, and other corporate costs. As a result, we have seen margin improvements in our results of operations, throughout our segments.

Weather and Construction Disruption - All of our segments were negatively impacted by severe weather, including flooding, during the first quarter of 2019 compared to the same prior year period. Additionally, our West segment was negatively impacted by disruption to our casino floor and hotel availability associated with renovation projects at our Black Hawk property during the construction period from January to June 2019.

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40

Results of Operations

The following table highlights the results of our operations (dollarsoperations:
Three Months Ended March 31,
(Dollars in millions)20212020
Net revenues:
Las Vegas$497 $— 
Regional1,108 471 
Managed, International, CIE90 — 
Corporate and Other (a)
4 2 
Total$1,699 $473 
Net loss$(424)$(176)
Adjusted EBITDA (b):
Las Vegas$162 $— 
Regional367 111 
Managed, International, CIE15 — 
Corporate and Other (a)
(39)(8)
Total$505 $103 
Net income (loss) margin(25.0)%(37.2)%
Adjusted EBITDA margin29.7 %21.8 %
___________________
(a)Corporate and Other includes revenues related to certain licensing arrangements and various revenue sharing agreements. Corporate and Other Adjusted EBITDA includes corporate overhead costs, which consist of certain expenses, such as: payroll, professional fees and other general and administrative expenses.
(b)See the “Supplemental Unaudited Presentation of Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)” discussion later in thousands):

this MD&A for a definition of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.

 

 

Three Months Ended

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

Net revenues

 

$

 

473,069

 

 

$

 

635,823

 

 

 

(25.6

)

%

Operating (loss) income

 

 

 

(123,180

)

 

 

 

123,604

 

 

 

(199.7

)

%

Net (loss) income

 

 

 

(175,638

)

 

 

 

38,229

 

 

 

(559.4

)

%

Consolidated comparison of the three months ended March 31, 2021 and 2020

Operating Results.  

Net Revenues
Net revenues declined $162.9 million, or 25.6%,were as follows:
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Casino and pari-mutuel commissions$1,140 $340 $800 *
Food and beverage166 56 110 196.4 %
Hotel215 48 167 *
Other178 29 149 *
Net Revenues$1,699 $473 $1,226 *
___________________
*    Not meaningful.
Consolidated revenues increased for the three months ended March 31, 2021 as a result of the Merger on July 20, 2020. This was offset by a decline in revenues associated with the COVID-19 public health emergency and, to a lesser extent, divestitures of certain properties discussed earlier. All of our properties were temporarily closed for the period from mid-March 2020 comparedthrough mid-May 2020 due to orders issued by various government agencies and tribal bodies as part of certain precautionary measures intended to help slow the same prior year period. Excludingspread of the COVID-19 public health emergency. As of March 31, 2021, substantially all of our properties have resumed certain operations, with the exception of Lake Charles which was severely damaged by Hurricane Laura, and many of our international properties. Due to the impact of the Divestitures, netCOVID-19 public health emergency, including local and state regulations and the implementation of social distancing and health and safety protocols, our properties are subject to reduced gaming capacity and hotel occupancy, limited operation of food and beverage outlets, live entertainment events and conventions.
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41

Our diversified portfolio has yielded mixed results as the properties have reopened under the conditions noted above. Net revenues decreased $100.2 million,for properties which have historically relied on a local customer base, not dependent on air travel or 17.5%,convention business, showed an increase as compared to the three months ended March 31, 2020 results. These properties’ gaming and hotel revenues have historically been the largest portion of their total revenue. Net revenues for properties in destination markets such as Las Vegas, Atlantic City and New Orleans, which have historically relied on a broader regional and national customer base or convention business have declined from the prior year period. These properties have historically relied on a broader mix of revenue sources including conventions, entertainment, and food and beverage offerings. As a result of reduced visitation, an overall reduction in air travel, state and local restrictions on capacity, and social distancing, safety and health protocols, these sources of revenue have been materially reduced as compared to prior periods.
Operating Expenses
Operating expenses were as follows:
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Casino and pari-mutuel commissions$541 $179 $362 *
Food and beverage106 53 53 100.0 %
Hotel81 22 59 *
Other68 9 59 *
General and administrative366 98 268 *
Corporate66 16 50 *
Impairment charges— 161 (161)(100.0)%
Depreciation and amortization265 50 215 *
Transaction costs and other operating costs20 8 12 150.0 %
Total operating expenses$1,513 $596 $917 153.9 %
___________________
*    Not meaningful.
Casino and pari-mutuel commissions expense consists primarily of salaries and wages associated with our gaming operations, marketing and promotions and gaming taxes. Food and beverage expense consists principally of salaries and wages and costs of goods sold associated with our food and beverage operations. Hotel expense consists principally of salaries, wages and supplies associated with our hotel operations. Other expenses consist principally of salaries and wages and costs of goods sold associated with our retail, entertainment and other operations.
Casino and pari-mutuel commissions, food and beverage, hotel, and other expenses for the three months ended March 31, 2020 compared to2021 increased year over year as a result of the same prior year period primarily due toMerger. This was partially offset by reopening with restrictions under the negative impactpublic health guidelines of COVID-19reduced gaming and the resulting closure ofhotel capacity and limited food and beverage options. As such, our properties are operating with a reduced workforce, which resulted in March 2020.

Operating income declined $246.8 million, or 199.7%,decreased salaries and wages. In addition, our properties have reduced marketing and promotional spend, resulting in further declines in gaming expenses.

General and administrative expenses include items such as information technology, facility maintenance, utilities, property and liability insurance, expenses for administrative departments such as accounting, compliance, purchasing, human resources, legal and internal audit, and property taxes. Property, general and administrative expenses also include stock-based compensation expense for certain property executives, sports sponsorships and other marketing expenses not directly related to our gaming and non-gaming operations.
General and administrative expenses for the three months ended March 31, 2020 compared2021 increased year over year as the result of the Merger. This was offset by the actions taken to the same prior year period. Excludingreduce our cost structure while our properties were temporarily closed and reduced operations due to the impact of the Divestitures, operating income decreased $237.5 million, or 207.7%, for the three months ended March 31, 2020 mainly due to the negative impact of COVID-19 in addition to transaction costs associated with the acquisition of Caesars and the previously discussed impairment charges totaling $160.8 million. The year-over-year decrease in operating income was also driven by a $22.2 million gain recorded for the three months ended March 31, 2019 due to the sale of Presque and Nemacolin.

Net income decreased $213.9 million, or 559.4%, for the three months ended March 31, 2020 compared to the same prior year period principally due to the same factors impacting operating income offset by the benefit for income taxes totaling $37.2 million. Net income for the three months ended March 31, 2020 compared to the same prior year period was also impacted by a $23.0 million unrealized loss associated with declines in our investments and marketable securities.

public health emergency.

Net Revenues and Operating Income (Loss)

The following tables highlight our net revenues and operating income (loss) by reportable segment (dollars in thousands):

 

 

Net Revenues for the

Three Months Ended March 31,

 

 

Operating Income (Loss) for the

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

West

 

$

 

105,490

 

 

$

 

118,095

 

 

$

 

(97,457

)

 

$

 

10,801

 

Midwest

 

 

 

60,793

 

 

 

 

96,787

 

 

 

 

(19,354

)

 

 

 

27,833

 

South

 

 

 

97,052

 

 

 

 

132,714

 

 

 

 

(11,194

)

 

 

 

27,515

 

East

 

 

 

108,056

 

 

 

 

166,233

 

 

 

 

11,016

 

 

 

 

27,161

 

Central

 

 

 

99,705

 

 

 

 

120,472

 

 

 

 

18,114

 

 

 

 

27,070

 

Corporate

 

 

 

1,973

 

 

 

 

1,522

 

 

 

 

(24,305

)

 

 

 

3,224

 

Total

 

$

 

473,069

 

 

$

 

635,823

 

 

$

 

(123,180

)

 

$

 

123,604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019

Net revenues and operating expenses were as follows (dollars in thousands):

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

Percent

 

 

 

 

2020

 

 

2019

 

 

Variance

 

 

Change

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gaming and Pari-Mutuel Commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

$

 

44,977

 

 

$

 

53,406

 

 

$

 

(8,429

)

 

 

(15.8

)

%

Midwest

 

 

 

53,313

 

 

 

 

85,169

 

 

 

 

(31,856

)

 

 

(37.4

)

%

South

 

 

 

79,652

 

 

 

 

109,350

 

 

 

 

(29,698

)

 

 

(27.2

)

%

East

 

 

 

79,931

 

 

 

 

124,951

 

 

 

 

(45,020

)

 

 

(36.0

)

%

Central

 

 

 

81,876

 

 

 

 

97,810

 

 

 

 

(15,934

)

 

 

(16.3

)

%

Total Gaming and Pari-Mutuel Commissions

 

 

 

339,749

 

 

 

 

470,686

 

 

 

 

(130,937

)

 

 

(27.8

)

%

Non-gaming:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

 

 

60,513

 

 

 

 

64,689

 

 

 

 

(4,176

)

 

 

(6.5

)

%

Midwest

 

 

 

7,480

 

 

 

 

11,618

 

 

 

 

(4,138

)

 

 

(35.6

)

%

South

 

 

 

17,399

 

 

 

 

23,364

 

 

 

 

(5,965

)

 

 

(25.5

)

%

East

 

 

 

28,125

 

 

 

 

41,282

 

 

 

 

(13,157

)

 

 

(31.9

)

%

Central

 

 

 

17,828

 

 

 

 

22,662

 

 

 

 

(4,834

)

 

 

(21.3

)

%

Corporate

 

 

 

1,975

 

 

 

 

1,522

 

 

 

 

453

 

 

 

29.8

 

%

Total Non-gaming

 

 

 

133,320

 

 

 

 

165,137

 

 

 

 

(31,817

)

 

 

(19.3

)

%

Total Net Revenues

 

 

 

473,069

 

 

 

 

635,823

 

 

 

 

(162,754

)

 

 

(25.6

)

%

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gaming and Pari-Mutuel Commissions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

 

 

20,409

 

 

 

 

21,048

 

 

 

 

(639

)

 

 

(3.0

)

%

Midwest

 

 

 

22,906

 

 

 

 

34,480

 

 

 

 

(11,574

)

 

 

(33.6

)

%

South

 

 

 

41,747

 

 

 

 

49,941

 

 

 

 

(8,194

)

 

 

(16.4

)

%

East

 

 

 

37,036

 

 

 

 

61,286

 

 

 

 

(24,250

)

 

 

(39.6

)

%

Central

 

 

 

37,058

 

 

 

 

43,551

 

 

 

 

(6,493

)

 

 

(14.9

)

%

Total Gaming and Pari-Mutuel Commissions

 

 

 

159,156

 

 

 

 

210,306

 

 

 

 

(51,150

)

 

 

(24.3

)

%

Non-gaming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

 

 

37,133

 

 

 

 

39,163

 

 

 

 

(2,030

)

 

 

(5.2

)

%

Midwest

 

 

 

4,763

 

 

 

 

6,504

 

 

 

 

(1,741

)

 

 

(26.8

)

%

South

 

 

 

12,822

 

 

 

 

14,476

 

 

 

 

(1,654

)

 

 

(11.4

)

%

East

 

 

 

18,362

 

 

 

 

22,474

 

 

 

 

(4,112

)

 

 

(18.3

)

%

Central

 

 

 

11,624

 

 

 

 

12,667

 

 

 

 

(1,043

)

 

 

(8.2

)

%

Total Non-gaming

 

 

 

84,704

 

 

 

 

95,284

 

 

 

 

(10,580

)

 

 

(11.1

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and promotions

 

 

 

24,953

 

 

 

 

32,301

 

 

 

 

(7,348

)

 

 

(22.7

)

%

General and administrative

 

 

 

91,675

 

 

 

 

119,888

 

 

 

 

(28,213

)

 

 

(23.5

)

%

Corporate

 

 

 

16,482

 

 

 

 

16,754

 

 

 

 

(272

)

 

 

(1.6

)

%

Impairment charges

 

 

 

160,758

 

 

 

 

958

 

 

 

 

159,800

 

 

 

16,680.6

 

%

Depreciation and amortization

 

 

 

50,433

 

 

 

 

57,757

 

 

 

 

(7,324

)

 

 

(12.7

)

%

Total Operating Expenses

 

$

 

588,161

 

 

$

 

533,248

 

 

$

 

54,913

 

 

 

10.3

 

%

Gaming Revenues and Pari-Mutuel Commissions.For the three months ended March 31, 2020 compared to the same prior year period, gaming revenues and pari-mutuel commissions declined 27.8%. Excluding the impact of the Divestitures, gaming revenues and pari-mutuel commissions decreased 18.3% for the three months ended March 31, 2020 compared to the same prior year period mainly due to reductions in casino volume associated with the impact of COVID-19 and the related closures of our properties in March 2020.

Non-gaming Revenues.  Non-gaming revenues decreased 19.3% for the three months ended March 31, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, non-gaming revenues declined 15.4% for the three months ended March 31, 2020 compared to the same prior year periods mainly due to the impact of COVID-19 and the related closures of our properties, included hotels, restaurants and entertainment venues, in March 2020.


Gaming Expenses and Pari-Mutuel Commissions. Gaming expenses and pari-mutuel commissions declined 24.3% for the three months ended March 31, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, gaming expenses and pari-mutuel commissions decreased 10.8% for the three months ended March 31, 2020 compared to the same prior year period in conjunction with the previously discussed decrease in gaming revenues and pari-mutuel commissions.

Non-gaming Expenses.  Non-gaming expenses declined 11.1% for the three months ended March 31, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, non-gaming expenses decreased 6.3% for the three months ended March 31, 2020 compared to the same prior year period in conjunction with previously discussed decrease in non-gaming expenses.

Marketing and Promotions Expenses.  Marketing and promotions expenses declined 22.7% for the three months ended March 31, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, marketing and promotions expense decreased 16.4% for the three months ended March 31, 2020 compared to the same prior year period. This decline was primarily due to savings achieved via the termination of certain marketing contracts, reductions in direct mail costs and continued company-wide changes in marketing and promotional activity. Additionally, to the extent possible, marketing and promotions expenses were reduced or eliminated following the closure of our properties in March 2020.

General and Administrative Expenses.  General and administrative expenses declined 23.5% for the three months ended March 31, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, general and administrative expenses decreased 16.6% for the three months ended March 31, 2020 compared to the same prior year period mainly due to the centralization of certain services provided to our properties and realized savings achieved through the continued consolidation of purchasing programs. Additionally, general and administrative expenses, including utilities, were reduced following the closure of our properties in March 2020.

Corporate Expenses.  For the three months ended March 31, 20202021 compared to the same prior year period, corporate expenses decreased 1.6%increased primarily due to the Merger, and have been offset by reductions in salaries and wages due to reductions in corporate bonus expense, captive insurance expense, certain professional fees and travel costsworkforce implemented as a result of the impact of the COVID-19 public health emergency.

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42

As described above, we recorded impairment charges of $116 million due to the effects of the COVID-19 impact forpublic health emergency during the three months ended March 31, 2020 compared2020. In addition, $45 million of additional impairment charges related to the same prior year period.

Depreciation and Amortization Expense.  sale of MontBleu were recorded during the three months ended March 31, 2020. No impairment charges were recorded during the three months ended March 31, 2021.

For the three months ended March 31, 20202021 compared to the same prior year period, depreciation and amortization expense declined 12.7%increased mainly due to the Merger, offset by ceasing depreciation and amortization expense on certain assets held for sale. Excludingsale and the impactDivestitures.
For the three months ended March 31, 2021 compared to the same prior year period, transaction costs and other operating costs increased primarily due to the acquisition of Former Caesars, as well as, costs or fees incurred related to the William Hill Acquisition, various project exit fees and related write offs, and higher severance expense related to the Merger.
Other income (expenses)
Other income (expenses) were as follows:
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Interest expense, net$(563)$(67)$(496)*
Other loss(133)(23)(110)*
Benefit for income taxes79 37 42 113.5 %
___________________
*    Not meaningful.
For the three months ended March 31, 2021, interest expense, net increased year over year as a result of the Divestitures, depreciationMerger. Outstanding debt assumed, additional debt raised, and amortizationassumed financing obligations resulted in the increase in interest expense.
For the three months ended March 31, 2021, other loss increased year over year due to an unrealized loss on the change in fair value of the derivative liability related to the 5% Convertible Notes, offset by a gain on the foreign currency exchange rate associated with restricted cash held in GBP.
The income tax expense decreased 5.8%for the three months ended March 31, 2021 differed from the expected income tax benefit based on the federal tax rate of 21% primarily due to nondeductible expenses related to the convertible notes liability. The income tax expense for the three months ended March 31, 2020 differed from the expected income tax expense based on the federal tax rate of 21% primarily due to goodwill impairments and changes in the valuation allowance, offset by the true-up of certain state tax benefits and state and local income taxes.
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43

Segment comparison of the three months ended March 31, 2021 and 2020
Las Vegas Segment
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Revenues:
Casino and pari-mutuel commissions$226 $— $226 *
Food and beverage84 — 84 *
Hotel115 — 115 *
Other72 — 72 *
Net Revenues$497 $— $497 *
Adjusted EBITDA$162 $— $162 *
Adjusted EBITDA margin32.6 %— %32.6 pts
Net loss attributable to Caesars$(67)$— $(67)*
___________________
*    Not meaningful.
Las Vegas segment’s net revenues and Adjusted EBITDA increased as a result of the Merger. As of March 31, 2021, all of our Las Vegas properties reopened with reduced gaming and hotel capacity with limited food and beverage and entertainment offerings. As of March 31, 2021, convention venues have not reopened due to capacity limitations.
During the three months ended March 31, 2021, all of our reopened properties in the Las Vegas segment experienced a decline in net revenues and Adjusted EBITDA compared to Former Caesars’ prior year results for the same properties due to the general weakness in the economic environment resulting from reduced visitation and travel to Las Vegas resulting from the COVID-19 public health emergency. Adjusted EBITDA margins for our Las Vegas properties were negatively impacted by greater declines in revenue than our Regional segment as well as rent expense associated with our Rio lease in our Las Vegas segment. As restrictions related to the COVID-19 public health emergency have begun to ease, net revenues, net income and Adjusted EBITDA have shown positive trends during the three months ended March 31, 2021.
Regional Segment
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Revenues:
Casino and pari-mutuel commissions$890 $340 $550 161.8 %
Food and beverage81 56 25 44.6 %
Hotel100 48 52 108.3 %
Other37 27 10 37.0 %
Net Revenues$1,108 $471 $637 135.2 %
Adjusted EBITDA$367 $111 $256 *
Adjusted EBITDA margin33.1 %23.6 %9.5 pts
Net income (loss) attributable to Caesars$65 $(135)$200 148.1 %
___________________
*    Not meaningful.
Regional segment’s net revenues, Adjusted EBITDA and margin increased for the three months ended March 31, 2021 compared to the same prior year period mainlyas a result of the acquisition of Former Caesars. As of March 31, 2021, all of our properties in our Regional segment have reopened, with the exception of Lake Charles due to the closures from the weather disruption described above. However, all of our properties within the Regional segment are subject to reduced capacities and limited food and beverage offerings.
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44

In our Regional segment, net revenues were flat compared to the prior year across all properties, including Former Caesars’. Similarly, Adjusted EBITDA and Adjusted EBITDA margin for these properties were also higher as compared to prior year due to reductions in workforce and marketing costs, synergies from the purchasing power of the combined Caesars organization, and limitations on certain lower margin food and beverage offerings.
Managed, International & CIE Segment
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Revenues:
Casino and pari-mutuel commissions$24 $— $24 *
Food and beverage1 — 1 *
Other65 — 65 *
Net Revenues$90 $— $90 *
Adjusted EBITDA$15 $— $15 *
Adjusted EBITDA margin16.7 %— %16.7 pts
Net income attributable to Caesars$3 $— $3 *
___________________
*    Not meaningful.
Managed, International, CIE segment’s net revenues and Adjusted EBITDA increased as a result of the acquisition of Former Caesars. All of our managed properties have reopened as of March 31, 2021 except for many assets becoming fully depreciatedof our international properties.
For the three months ended March 31, 2021, net revenues for Managed, International and CIE declined as compared to Former Caesars’ prior period due to the absence of reimbursed management costs related to Caesars Windsor remaining closed throughout the quarter. Excluding that, net revenues increased primarily related to increased revenue in 2019.our CIE business. Adjusted EBITDA for Managed, International and CIE increased as compared to Former Caesars’ prior period.
Corporate & Other
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Revenues:
Other$4 $2 $2 100.0 %
Net Revenues$4 $2 $2 100.0 %
Adjusted EBITDA$(39)$(8)$(31)*
___________________
*    

Not meaningful.


Supplemental Unaudited Presentation of Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) and Adjusted EBITDA for the Three Months Ended March 31, 20202021 and 2019

2020

Adjusted EBITDA (defined(described below), a non-GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non-GAAP supplemental information will be helpful in understanding the Company’sour ongoing operating results. Management has historically used Adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results. Adjusted EBITDA represents operatingnet income (loss) before interest expense, (benefit) provision for income taxes, unrealized (gain) loss on investments and marketable securities, depreciation and amortization, stock-based compensation, impairment charges, transaction expenses, severance expense, selling costs associated with the divestitures of properties, equity in income (loss) of unconsolidated affiliates, (gain) loss on the sale or disposal of property and equipment, and (gain) loss related to divestitures.divestitures, changes in the fair value of certain derivatives and certain non-recurring expenses such as
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sign-on and retention bonuses, business optimization expenses and transformation expenses, certain litigation awards and settlements, losses on inventory associated with properties temporarily closed as a result of the COVID-19 public health emergency, contract exit or termination costs, and certain regulatory settlements. Adjusted EBITDA also excludes the expense associated with certain of our Master Lease with GLPIleases as the transaction wasthese transactions were accounted for as a financing obligationobligations and the associated expense is included in interest expense. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with accounting principles generally accepted in the United States (“US GAAP”),GAAP. It is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments, payments under our Master Leaseleases with affiliates of GLPI and VICI Properties, Inc. and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide EBITDA information may calculate Adjusted EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.


The following table summarizes our Adjusted EBITDA for our operating segmentsthe three months ended March 31, 2021 and 2020, respectively, in addition to reconciling net income (loss) to Adjusted EBITDA in accordance with GAAP (unaudited):

Three Months Ended March 31, 2021
(In millions)CEI
Add:
Disc. Ops (d)
Total (f)
Net loss attributable to Caesars$(423)$— $(423)
Net loss attributable to noncontrolling interests(1)— (1)
Discontinued operations, net of income taxes(7)7 — 
(Benefit) provision for income taxes(79)4 (75)
Other loss (a)
133 — 133 
Interest expense, net563 32 595 
Depreciation and amortization265 — 265 
Transaction costs and other operating costs (b)
20 — 20 
Stock-based compensation expense23 — 23 
Other items (c)
11 — 11 
Adjusted EBITDA$505 $43 $548 

Three Months Ended March 31, 2020
(In millions)CEI
Less: Divestitures (g)
Pre-Acq.
CEC (e)
Total (h)
Net income (loss) attributable to Caesars$(176)$48 $189 $61 
Net loss attributable to noncontrolling interests— — (1)(1)
(Benefit) provision for income taxes(37)— 54 17 
Other (income) loss (a)
23 — (641)(618)
Interest expense, net67 (4)333 396 
Depreciation and amortization50 (3)256 303 
Impairment charges161 (33)65 193 
Transaction costs and other operating costs (b)
8 — 21 29 
Stock-based compensation expense6 — 10 16 
Other items (c)
1 — 13 14 
Adjusted EBITDA$103 $8 $299 $410 
____________________
(a)Other loss for the three months ended March 31, 2021 primarily represents a loss on the change in fair value of the derivative liability related to the 5% Convertible Notes slightly offset by gains on foreign currency exchange and investments held. Other (income) loss for the three months ended March 31, 2020 primarily represents a gain on the change in fair value of the of the derivative liability related to the 5% Convertible Notes and 2019,losses on investments.
(b)Transaction costs and other operating costs for the three months ended March 31, 2021 and 2020primarily represent costs related to the William Hill Acquisition and the Merger, various contract or license termination exit costs, professional services, other acquisition costs and severance costs.
(c)Other items primarily represent certain consulting and legal fees, rent for non-operating assets, relocation expenses, and business optimization expenses.
(d)Discontinued operations include Horseshoe Hammond, Caesars Southern Indiana, Harrah’s Louisiana Downs, and the Caesars UK group, including Emerald Resorts & Casino. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and do not conform to GAAP.
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46

(e)Pre-acquisition CEC represents results of operations for Former Caesars prior to the Merger. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and, for the 2020 periods, do not conform to GAAP.
(f)Includes results of operations from discontinued operations. Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to reconciling Adjusted EBITDAthe results of operations reported by the Company.
(g)Divestitures for the three months ended March 31, 2020 include results of operations for Eldorado Shreveport, Kansas City, Vicksburg and discontinued operations of Harrah’s Reno and Bally’s Atlantic City. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and do not conform to operating income (loss)GAAP.
(h)Excludes results of operations from divestitures as detailed in (g) and includes results of operations of Former Caesars, including discontinued operations. Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with US GAAP, (unaudited,but should be viewed in thousands):addition to our reported results of operations.

 

 

Three Months Ended March 31, 2020

 

 

 

Operating

Income (Loss)

 

 

Depreciation and

Amortization

 

 

Stock-Based

Compensation

 

 

Transaction

Expenses (1)

 

 

Other (2)

 

 

Adjusted

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

$

 

(97,457

)

 

$

 

13,938

 

 

$

 

—

 

 

$

 

—

 

 

$

 

103,144

 

 

$

 

19,625

 

Midwest

 

 

 

(19,354

)

 

 

 

4,522

 

 

 

 

2

 

 

 

 

—

 

 

 

 

36,617

 

 

 

 

21,787

 

South

 

 

 

(11,194

)

 

 

 

7,120

 

 

 

 

2

 

 

 

 

—

 

 

 

 

21,776

 

 

 

 

17,704

 

East

 

 

 

11,016

 

 

 

 

11,241

 

 

 

 

—

 

 

 

 

—

 

 

 

 

28

 

 

 

 

22,285

 

Central

 

 

 

18,114

 

 

 

 

11,763

 

 

 

 

—

 

 

 

 

—

 

 

 

 

20

 

 

 

 

29,897

 

Corporate and Other

 

 

 

(24,305

)

 

 

 

1,849

 

 

 

 

5,738

 

 

 

 

9,294

 

 

 

 

(1,327

)

 

 

 

(8,751

)

Total

 

$

 

(123,180

)

 

$

 

50,433

 

 

$

 

5,742

 

 

$

 

9,294

 

 

$

 

160,258

 

 

$

 

102,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2019

 

 

 

Operating

Income (Loss)

 

 

Depreciation and

Amortization

 

 

Stock-Based

Compensation

 

 

Transaction

Expenses (1)

 

 

Other (5)

 

 

Adjusted

EBITDA

 

Including Divestitures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

$

 

10,801

 

 

$

 

13,143

 

 

$

 

—

 

 

$

 

—

 

 

$

 

99

 

 

$

 

24,043

 

Midwest

 

 

 

27,833

 

 

 

 

8,421

 

 

 

 

15

 

 

 

 

—

 

 

 

 

55

 

 

 

 

36,324

 

South

 

 

 

27,515

 

 

 

 

11,015

 

 

 

 

9

 

 

 

 

—

 

 

 

 

132

 

 

 

 

38,671

 

East

 

 

 

27,161

 

 

 

 

12,149

 

 

 

 

7

 

 

 

 

—

 

 

 

 

187

 

 

 

 

39,504

 

Central

 

 

 

27,070

 

 

 

 

11,210

 

 

 

 

—

 

 

 

 

—

 

 

 

 

43

 

 

 

 

38,323

 

Corporate and Other

 

 

 

3,224

 

 

 

 

1,819

 

 

 

 

4,917

 

 

 

 

1,894

 

 

 

 

(22,067

)

 

 

 

(10,213

)

Total

 

$

 

123,604

 

 

$

 

57,757

 

 

$

 

4,948

 

 

$

 

1,894

 

 

$

 

(21,551

)

 

$

 

166,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Divestitures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midwest

 

$

 

6,525

 

 

$

 

2,190

 

 

$

 

7

 

 

$

 

—

 

 

$

 

—

 

 

$

 

8,722

 

East

 

 

 

2,719

 

 

 

 

2,027

 

 

 

 

7

 

 

 

 

—

 

 

 

 

80

 

 

 

 

4,833

 

Total Divestitures (3)

 

$

 

9,244

 

 

$

 

4,217

 

 

$

 

14

 

 

$

 

—

 

 

$

 

80

 

 

$

 

13,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding Divestitures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

$

 

10,801

 

 

$

 

13,143

 

 

$

 

—

 

 

$

 

—

 

 

$

 

99

 

 

$

 

24,043

 

Midwest

 

 

 

21,308

 

 

 

 

6,231

 

 

 

 

8

 

 

 

 

—

 

 

 

 

55

 

 

 

 

27,602

 

South

 

 

 

27,515

 

 

 

 

11,015

 

 

 

 

9

 

 

 

 

—

 

 

 

 

132

 

 

 

 

38,671

 

East

 

 

 

24,442

 

 

 

 

10,122

 

 

 

 

—

 

 

 

 

—

 

 

 

 

107

 

 

 

 

34,671

 

Central

 

 

 

27,070

 

 

 

 

11,210

 

 

 

 

—

 

 

 

 

—

 

 

 

 

43

 

 

 

 

38,323

 

Corporate and Other

 

 

 

3,224

 

 

 

 

1,819

 

 

 

 

4,917

 

 

 

 

1,894

 

 

 

 

(22,067

)

 

 

 

(10,213

)

Total Excluding Divestitures (4)

 

$

 

114,360

 

 

$

 

53,540

 

 

$

 

4,934

 

 

$

 

1,894

 

 

$

 

(21,631

)

 

$

 

153,097

 

(1)

Transaction expenses primarily represent costs related to the pending acquisition of Caesars for the three months ended March 31, 2020, and costs related to the acquisitions of Elgin and Tropicana for the three months ended March 31, 2019.

(2)

Other, for the three months ended March 31, 2020, is comprised of severance expense, (gain) loss on the sale or disposal of property and equipment, equity in income (loss) of unconsolidated affiliate, impairment charges, and selling costs associated with the pending divestitures of Kansas City, Vicksburg, Shreveport, and MontBleu.

(3)

Figures are for Presque for the period beginning January 1, 2019 and ending January 11, 2019, Nemacolin for the period beginning January 1, 2019 and ending March 8, 2019, and Mountaineer, Cape Girardeau and Caruthersville for the three months ended March 31, 2019.

(4)

Total figures for the three months ended March 31, 2019 exclude the results of operations for Presque for the period beginning January 1, 2019 and ending January 11, 2019, Nemacolin for the period beginning January 1, 2019 and ending March 8, 2019, and Mountaineer, Cape Girardeau and Caruthersville for the three months ended March 31, 2019. Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.

(5)

Other for the three months ended March 31, 2019 is comprised of severance expense, (gain) loss related to divestitures, (gain) loss on the sale of disposal of property and equipment, equity in income (loss) of an unconsolidated affiliate, impairment charges, and selling costs associated with the divestiture of Presque and Nemacolin.


Liquidity and Capital Resources

We are a holding company and our only significant assets are ownership interests in our subsidiaries. Our ability to fund our obligations depends on existing cash on hand, contracted asset sales, and cash flowflows from our subsidiaries.

subsidiaries and our ability to raise capital. Our primary sources of liquidity and capital resources have beenare existing cash on hand, cash flowflows from operations, availability of borrowings under our revolving credit facility,facilities, proceeds from the issuance of debt and equity securities and proceeds from completed asset sales. As of March 31, 2020, we had $465.0 million outstanding and $16.8 million of available borrowing capacity, after consideration of $18.2 million in outstanding letters of credit, under our Revolving Credit Facility. We utilized $360.0 million and $150.0 million of net proceeds from the sales of Mountaineer, Cape Girardeau and Caruthersville in December 2019 and Presque in January 2019, respectively, to repay a portion of amounts outstanding under the Term Loan.

Our cash requirements canmay fluctuate significantly depending on our decisions with respect to business acquisitions or divestitures and strategic capital investments to maintain the quality of our properties. Our cash requirements have also been impacted by the ongoing impacts of government required closures of our casinos. We expect that our primary capital requirements going forward will relate to the re-opening and operation and maintenance of our properties, taxes, servicing our outstanding indebtedness, rent payments under our Master Lease and other leases and funding the Caesars acquisition.

Pursuant to the A&R Commitment Letter, the Commitment Parties committed to arrange and provide the Company with: (w) a $1,000.0 million senior secured revolving credit facility, (x) a $3,000.0 million senior secured term loan B facility, (y) a $3,250.0 million senior secured 364-day bridge facility and (z) a $1,800.0 million senior unsecured bridge loan facility and (ii) Caesars Resort Collection, LLC, a subsidiary of Caesars, with a $2,400.0 million senior secured incremental term loan B facility (collectively, the “Debt Financing”). We expect to fund the anticipated Caesars acquisition with a combination of proceeds from the Debt Financing, the sale-leaseback transactions with VICI with respect to Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City, the consideration received from VICI received in connection with amendments to the CPLV Lease and Non-CPLV Lease contemplated by the MTA, asset divestitures, existing cash on hand and cash flow generated by the Company and Caesars prior to the acquisition.

As a result of state government orders made in MarchDuring 2020, in an effort to contain the spread of COVID-19, our casino properties located across the United States were ordered to temporarily close and remained shut down through the remainder of the first quarter. In an effort to mitigate the impacts of the COVID-19 public health emergency on our business and maintain liquidity,and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets, we borrowed $465 million under our Revolving Credit Facility on March 16, 2020 and furloughed approximately 90% of our employees beginning on April 11, 2020. DuringWe have resumed operations at all of our properties, with the periodexception of Lake Charles which was severely damaged by Hurricane Laura, and many of our international properties. A portion of the workforce has returned to service as our properties have resumed operations with limited capacities and in compliance with operating restrictions imposed by governmental or tribal orders, directives and guidelines. As a result of these payroll changes combined with other cost saving measures, our operating expenses were reduced significantly.

As of March 31, 2021, our cash on hand and revolving borrowing capacity was as follows:
(In millions)March 31, 2021
Cash and cash equivalents$1,794 
Revolver capacity2,210 
Revolver capacity committed to letters of credit(82)
Available revolver capacity committed as regulatory requirement(48)
Total$3,874 
On September 30, 2020, we announced that our casinos are closed, we expect that our mainhad reached an agreement with William Hill PLC on the terms of a recommended cash acquisition pursuant to which we would acquire the entire issued and to be issued share capital requirements, other(other than shares owned by us or held in treasury) of William Hill PLC, in an all-cash transaction of approximately £2.9 billion. The William Hill Acquisition was consummated on April 22, 2021, for approximately $4.0 billion, based on the GBP:USD exchange rate on the closing date. As of March 31, 2021, we had restricted cash of approximately $2.1 billion which we applied to pay a portion of the purchase price of the acquisition. We entered into a foreign exchange forward contract to hedge the risk of appreciation of the GBP denominated purchase price for the William Hill Acquisition. On March 25, 2021, the forward contract was settled, for which the Company received $41 million in proceeds.
On September 29, 2020, the Company entered into a debt financing commitment letter pursuant to which the lenders party thereto committed to arrange and provide a newly formed subsidiary of the Company with respect(a) a £1.0 billion senior secured 540-day bridge loan facility, (b) a £116 million senior secured 540-day revolving credit facility and (c) a £503 million senior secured 60-day bridge loan facility (collectively, the “Debt Financing”), which was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
Pending negotiations of the definitive loan agreement for the Debt Financing, on October 6, 2020, we entered into a £1.5 billion interim facilities agreement (the “Interim Facilities Agreement”) with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A. to provide: (a) a 90-day £1.0 billion interim asset sale bridge facility and (b) a 90-day £503 million interim cash confirmation bridge facility, which Interim Facilities Agreement was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
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47

In connection with the William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Company entered into a Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing. The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility. The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the Caesars acquisition and related transactions. The proceeds of the revolving credit facility under the Bridge Credit Agreement will be servicing our outstanding indebtedness, rent payments under our Master Leaseused for working capital and other leases, taxes and obligations with respectgeneral corporate purposes. The Interim Facilities Agreement was terminated upon the execution of the Bridge Credit Agreement for the Debt Financing. The Bridge Credit Agreement is included within William Hill’s non-U.S. operations which is expected to fixed and variable costs that we continue to incur while our casinos are closed.  

be divested.

We expect that our primary capital requirements following the re-opening of our properties, other than with respect to the Caesars acquisition,going forward will relate to the operation and maintenance of our properties, taxes, servicing our outstanding indebtedness, and rent payments under our GLPI Master Lease.  WhileLease, the VICI leases and other leases. We make capital expenditures and perform continuing refurbishment and maintenance at our properties to maintain our quality standards. Our capital expenditure requirements for 2021 are expected to significantly increase as a result of the additional properties acquired in the Merger and new development projects. We funded $400 million to escrow as of the closing of the Merger and have begun to utilize those funds in accordance with a three year capital expenditure plan in the state of New Jersey. This amount is currently included in restricted cash. As of March 31, 2021, our restricted cash balance in the escrow account was $376 million for future capital expenditures in New Jersey.
As a condition of the extension of the casino operating contract and ground lease for Harrah’s New Orleans, we are also required to make a capital investment of $325 million in Harrah’s New Orleans by July 15, 2024.
On August 27, 2020, will dependHurricane Laura made landfall on Lake Charles as a Category 4 storm. The hurricane severely damaged Lake Charles and the timingCompany has begun to receive insurance proceeds related to, in part, estimated damages and repairs that have been incurred to the property. A portion of re-openingthe proceeds received is expected to be utilized for the construction of a new land-based casino which is expected to be completed in 2022.
Cash spent for capital expenditures totaled $65 million and $23 million for the three months ended March 31, 2021 and 2020, respectively. The following table summarizes our capital expenditures for the three months ended March 31, 2021, and an estimated range of capital expenditures for the remainder of 2021:
Three Months Ended
March 31, 2021		Estimate of Remaining
Capital Expenditures for 2021
(In millions)ActualLowHigh
Atlantic City$12 $165 $215 
Indiana racing operations2 5 15 
Total estimated capital expenditures from restricted cash14 170 230 
Lake Charles12 65 115 
New Orleans3 25 50 
Other growth and maintenance projects36 335 360 
Total estimated capital expenditures from unrestricted cash and insurance proceeds51 425 525 
Total$65 $595 $755 
A significant portion of our casinosliquidity needs are for debt service and the timing of closing the Caesars acquisition, we plan to spendpayments associated with our leases. Our estimated debt service (including principal and interest) is approximately $40.0$610 million on capital expenditures duringfor the remainder of 2020.2021. We also lease certain real property assets from third parties, including GLPI and VICI. We estimate our lease payments to be approximately $900 million for the remainder of 2021.
The 5% Convertible Notes are convertible at any time at the option of the holders thereof or the Company. We do not intend to exercise our option to cause the conversion of the 5% Convertible Notes prior to maturity. During the three months ended March 31, 2021, conversions have been negligible. At such time as the holders of the 5% Convertible Notes elect to cause conversion, we estimate using cash of $379 million and issuing 4.5 million shares to settle the remaining outstanding 5% Convertible Notes as of March 31, 2021.
The Company periodically divests assets that it does not consider core to its business to raise capital or, in some cases, to comply with conditions, terms, obligations or restrictions imposed by antitrust, gaming and other regulatory entities.
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48

On April 6, 2021, the Company consummated the sale of the equity interests of MontBleu for $15 million, subject to a customary working capital adjustment, resulting in a loss of approximately $2 million. The purchase price is due no later than the first anniversary of the closing of the sale.
On September 3, 2020, the Company and VICI entered into agreement to sell Harrah’s Louisiana Downs with Rubico Acquisition Corp. for $22 million, subject to a customary working capital adjustment, where the proceeds will be split between the Company and VICI. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
On October 27, 2020, the Company entered into an agreement to sell Evansville to GLPI and Bally’s Corporation for $480 million in cash, subject to a customary working capital adjustment. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in mid-2021.
On December 1, 2020, the Company entered into a definitive agreement with CQ Holding Company, Inc. to sell the equity interests of Baton Rouge. The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
On December 24, 2020, the Company entered into an agreement to sell the equity interests of Caesars Southern Indiana to the EBCI for $250 million, subject to a customary working capital adjustment. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
In addition to the agreements above, we also expect to useenter into additional agreements to divest of Horseshoe Hammond prior to December 31, 2021. Further, we expect to divest of several other non-core properties including our international properties within our Caesars UK group, which includes Emerald Resorts Casino.
If the agreed upon selling price for future divestitures does not exceed the carrying value of the assets, we may be required to record additional impairment charges in future periods which may be material.
We expect that our current liquidity, cash on hand and cash generatedflows from operations, to meet such obligations.  

We expect that borrowings incurred under our Revolving Credit Facility, cash generated from operations,availability of borrowings under the Debt Financingcommitted credit facilities and proceeds from the transactions contemplated by the MTA and the announced asset sales net of associated taxes, will be sufficient to fund our operations, and capital requirements consummate the Caesars acquisition and service our outstanding indebtedness for the next twelve months. However, the COVID-19 pandemicpublic health emergency has had, and is expected to continue to have, an adverse effect on our business, financial condition and results of operations and has caused, and may continue to cause, disruption in the financial markets. While we have undertaken efforts to mitigate the impacts of the COVID-19 public health emergency on our business and maintain liquidity, the extent of the ongoing and future effects of the COVID-19 pandemicpublic health emergency on our business, results of operations and financial condition is uncertain and may adversely impact our liquidity in the future. Our ability to access additional capital may be adversely affected by the disruption in the financial markets caused by the COVID-19 pandemic,public health emergency, restrictions on incurring additional indebtedness contained in the agreements governing our indebtedness and the impact of the pandemicpublic health emergency on our business, results of operations and financial condition.

At March 31, 2020, we had consolidated cash and cash equivalents of $671.7 million, excluding restricted cash. At December 31, 2019, we had consolidated cash and cash equivalents of $231.8 million, including restricted cash. This increase in cash was primarily due to borrowings under our Revolving Credit Facility, which were partially offset by cash used in operations following the closure of our properties in March 2020.


Operating Cash Flows.  For the three months ended March 31, 2020, cash flows provided by operating activities totaled $30.5 million compared to $65.4 million for the same prior year period. Our operating cash flows generally follow trends in operating income, excluding non-cash charges. Changes in the balance sheet accounts and the timing of significant payments, including interest, rent and tax payments will impact our operating cash flows. The decrease in operating cash flows compared to the same prior year period was primarily due to cash used to continue to pay operating expenses, including rent and interest payments, following the closure of our properties as a result of the COVID-19 pandemic.

Investing Cash Flow and Capital Expenditures.  Net cash flows used in investing activities totaled $13.1 million for the three months ended March 31, 2020 compared to $129.5 million provided by investing activities in the same prior year period. Our investing cash flows generally fluctuate depending upon the timing of strategic and maintenance capital expenditures in addition to business acquisitions or dispositions. Net cash used in investing activities for the three months ended March 31, 2020 was primarily due to $23.2 cash used for capital expenditures for various property enhancement and maintenance projects along with equipment purchases offset by $10.5 million in deposits associated with our agreement to sell Eldorado Shreveport and MontBleu to Maverick. Following the termination of this agreement, the deposits were refunded to Maverick in April 2020. Net cash flows provided by investing activities for the three months ended March 31, 2019 was primarily due to $177.1 million in net proceeds from the sales of Presque and Nemacolin, partially offset by cash used totaling $38.4 million for capital expenditures.

Financing Cash Flow.  Net cash provided by financing activities for the three months ended March 31, 2020 totaled $447.7 million compared to $209.8 million used in financing activities for the same prior year period. The cash provided by financing activities for the three months ended March 31, 2020 was principally due to $465.0 million of borrowings under the Revolving Credit Facility offset by $10.0 million of payments under the Term Loan. The cash used in financing activities for the three months ended March 31, 2019 was principally due to net payments under the Revolving Credit Facility partially funded by the proceeds from the sales of Presque and Nemacolin.

Debt and Master Lease Covenant Compliance

The Caesars Resort Collection (“CRC”) Credit Agreement, the CEI Revolving Credit Facility, and the indentures related to the CEI Senior Secured Notes, the CEI Senior Notes, the CRC Senior Secured Notes and the CRC Notes contain covenants which are standard and customary for these types of agreements. These include negative covenants, which, subject to certain exceptions and baskets, limit our ability to (among other items) incur additional indebtedness, make investments, make restricted payments, including dividends, grant liens, sell assets and make acquisitions. The indenture for the 5% Convertible Notes contains limited covenants as a result of amendments that became effective in connection with the consummation of the Merger.
The CRC Revolving Credit Facility and CEI Revolving Credit Facility include a maximum first-priority net senior secured leverage ratio financial covenant of 6.35:1, which is applicable solely to the extent that certain testing conditions are satisfied. Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness outstanding under the relevant debt document. Due to the effects of the COVID-19 public health emergency, the current terms of the CRC Credit Agreement and the CEI Revolving Credit Facility provide that the financial covenant measurement period is not effective through September 30, 2021 so long as CRC and the Company, respectively, comply with a minimum liquidity requirement, which includes any such availability under the applicable revolving credit facilities.
The GLPI Master Lease and VICI leases contain certain operating, capital expenditure and financial covenants, including minimum capital improvement expenditures and a rent coverage ratio.
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49

As of March 31, 2020,2021, we were in compliance with all of the applicable financial covenants under the 7% Senior Notes due 2023, 6% Senior Notes due 2025, 6% Senior Notes due 2026, the Credit Facility, the Lumière Loan and the Master Lease. However, our ability to remain in compliance with the quarterly maintenance covenants under our Credit Agreement and the Master Lease may be negatively impacted if the period of casino closures is prolonged or if the COVID-19 pandemic, measures implemented to curtail its spread or changes in the economy, discretionary spending and consumer confidence have a protracted negative effect on our business.

Failure to satisfy the quarterly maintenance covenants contained in the Credit Agreement and Master Lease would require us to seek waivers or amendments of the maintenance covenants. There can be no assurance that we will be able to obtain required waivers or amendments, as such matters depend, in part, on factors outside of our control. If we fail to satisfy the quarterly maintenance covenants and are unable to obtain such waivers or amendments, our creditors could exercise remedies under the applicable documents governing such indebtedness, including acceleration of such indebtedness, and the lessor under the Master Lease could terminate the Master Lease. The acceleration of indebtedness outstanding under the Credit Agreement or the termination of the Master Lease as a result of failure to satisfy the covenants applicable to such obligations would give rise to an event of default under our outstanding senior notes entitling the holders thereof to accelerate the obligations thereunder.

described above.

Share Repurchase Program

On

In November 8, 2018, the Company issued a press release announcing that itsour Board of Directors has authorized a $150 million common stock repurchase program (the “Share Repurchase Program”) pursuant to which the Companywe may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The Share Repurchase Program has no time limit and may be suspended or discontinued at any time without notice. There is no minimum number of shares of common stock that the Company iswe are required to repurchase under the Share Repurchase Program.

The Company

As of March 31, 2021, we acquired 223,823 shares of common stock under the program at an aggregate value of $9.1$9 million and an average of $40.80 per share during the year ended December 31, 2018.share. No shares were repurchased during 2019 or the three months ended March 31, 2020.


Debt Obligations and Master Lease

Term Loan and Revolving Credit Facility

We are party to a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto dated as of April 17, 2017 (as amended, the “Credit Facility”), consisting of a $1.45 billion term loan facility (the “Term Loan Facility” or “Term Loan”) and a $500.0 million revolving credit facility (the “Revolving Credit Facility”). Our obligations under the Revolving Credit Facility will mature on October 1, 2023. Our obligations under the Term Loan Facility will mature on April 17, 2024. We were required to make quarterly principal payments of $3.6 million on the Term Loan Facility on the last day of each fiscal quarter beginning on June 30, 2017 but satisfied this requirement as a result of the principal prepayment of $444.5 million on September 13, 2017 in conjunction with the issuance of the additional 6% Senior Notes due 2025. In addition, we are required to make mandatory payments of amounts outstanding under the Credit Facility with the proceeds of certain casualty events, debt issuances, and asset sales and, depending on the Company’s consolidated total leverage ratio, we may be required to apply a portion of our excess cash flow to repay amounts outstanding under the Credit Facility.

As of March 31, 2020, we had $488.8 million outstanding on the Term Loan and $465.0 outstanding under the Revolving Credit Facility. During the three months ended March 31, 2020, we elected to draw down availability under the Revolving Credit Facility2021 and 2020.

Contractual Obligations
The Company assumed various long-term debt arrangements, financing obligations and leases, previously described, associated with Former Caesars as a precautionary measure to enhance our liquidity and provide financial flexibility as the effectsresult of COVID-19 continue to evolve and impact global financial markets. We had $16.8 million of available borrowing capacity, after consideration of $18.2 million in outstanding letters of credit under our Revolving Credit Facility, as of March 31, 2020.

The interest rate per annum applicable to loans under the Revolving Credit Facility are, at our option, either LIBOR plus a margin ranging from 1.75% to 2.50% or a base rate plus a margin from 0.75% to 1.50%, the margin is based on our total leverage ratio. The interest rate per annum applicable to the loans under the Term Loan Facility is, at our option, either LIBOR plus 2.25% or a base rate plus 1.25%; provided, however, that in no event will LIBOR be less than zero or the base rate be less than 1.00%. Additionally, we pay a commitment fee on the unused portion of the Revolving Credit Facility of 0.50% per annum. As of March 31, 2020, the weighted average interest rates on the Term Loan and Revolving Credit Facility were 3.25% and 2.81%, respectively.

Senior Notes

6% Senior Notes due 2026

On September 20, 2018, Delta Merger Sub, Inc. (“Escrow Issuer”), a Delaware corporation and a wholly-owned subsidiary of the Company, issued $600 million aggregate principal amount of 6.0% senior notes due 2026 (the “6% Senior Notes due 2026”) pursuant to an indenture, dated as of September 20, 2018 (the “2026 Indenture”), between Escrow Issuer and U.S. Bank, National Association, as Trustee. Interest on the 6% Senior Notes due 2026 will be paid every semi-annually in arrears on March 15 and September 15.

The 6% Senior Notes due 2026 were general unsecured obligations of Escrow Issuer’s upon issuance and, upon the assumption of such obligations by the Company and the subsidiary guarantors (the “Guarantors”) upon consummation of the Tropicana Acquisition, became general unsecured obligations of the Company and the Guarantors, ranking senior in right of payment to all of the Company’s existing and future debt that is expressly subordinated in right of payment to the 6% Senior Notes due 2026 and the guarantees, ranking equally in right of payment with all of the applicable obligor’s existing and future senior liabilities, including the obligations under the Company’s existing 7% Senior Notes due 2023 and 6% Senior Notes due 2025, and are effectively subordinated to all of the applicable obligor’s existing and future secured debt, including indebtedness under the Company’s Term Loan and Revolving Credit Facility and the Lumière Note (as defined in the 2026 Indenture), in each case, to the extent of the value of the collateral securing such debt. In addition, the 6% Senior Notes due 2026 and the related guarantees are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries and other entities in which the Company has an equity interest that do not guarantee the 6% Senior Notes due 2026 (other than indebtedness and liabilities owed to the Company or the Guarantors).


6% Senior Notes due 2025

On March 29, 2017, Eagle II issued at par $375.0 million aggregate principal amount of 6.0% senior notes due 2025 (the “6% Senior Notes due 2025”) pursuant to an indenture, dated as of March 29, 2017 (the “2025 Indenture”), between Eagle II and U.S. Bank, National Association, as Trustee. The 6% Senior Notes due 2025 will mature on April 1, 2025, with interest payable semi-annually in arrears on April 1 and October 1. In connection with the consummation of the Isle Acquisition on May 1, 2017,Merger. See Note 2 for a description of the Company assumed Eagle II’s obligations under the 6% Senior Notes due 2025Merger and the 2025 Indenturerelated obligations assumed and certain of the Company’s subsidiaries (including Isle and certain of its subsidiaries) executed guarantees of the Company’s obligations under the 6% Senior Notes due 2025.

On September 13, 2017, the Company issued an additional $500.0 million principal amount of its 6% Senior Notes due 2025 at an issue price equal to 105.5% of the principal amount of the 6% Senior Notes due 2025. The additional notes were issued pursuant to the 2025 Indenture that governs the 6% Senior Notes due 2025. The Company used the proceeds of the offering to repay $78.0 million of outstanding borrowings under the previous revolving credit facility and used the remainder to repay $444.5 million outstanding borrowings under the previous term loan facility and related accrued interest.

7% Senior Notes due 2023

On July 23, 2015, the Company issued at par $375.0 million in aggregate principal amount of 7.0% senior notes due 2023 (“7% Senior Notes due 2023”) pursuant to an indenture, dated as of July 23, 2015 (the “2023 Indenture”), between the Company and U.S. Bank, National Association, as Trustee. The 7% Senior Notes due 2023 will mature on August 1, 2023, with interest payable semi-annually in arrears on February 1 and August 1 of each year.

Lumière Loan

We borrowed $246 million from GLPI to fund the purchase price of the real estate underlying Lumière. The Lumière Loan bears interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until October 1, 2020, and matures on October 1, 2020. The Lumière Loan was secured by a first priority mortgage on the Lumière real property that was released pursuant to its terms on October 1, 2019. In connection with the issuance of the Lumière Loan, we agreed to use our commercially reasonable efforts to transfer one or more of the Grand Victoria Casino, Isle Casino Bettendorf, Isle Casino Hotel Waterloo, Isle of Capri Lula, Lady Luck Casino Vicksburg and Mountaineer Casino, Racetrack and Resort or such other property or properties mutually acceptable to us and GLPI, provided that the aggregate value of such property, individually or collectively, is at least $246 million (the “Replacement Property”), to GLPI with a simultaneous leaseback to us of such Replacement Property. In connection with such Replacement Property sale, (i) we and GLPI will enter into an amendment to the Master Lease to revise the economic terms to include the Replacement Property, (ii) GLPI, or one of its affiliates, will assume the Lumière Loan and Tropicana St. Louis RE’s obligations under the Lumière Loan in consideration of the acquisition of the Replacement Property and our obligations under the Lumière Loan will be deemed to have been satisfied and (iii) in the event the value of the Replacement Property is greater than the our outstanding obligations under the Lumière Loan, GLPI will pay us the difference between the value of the Replacement Property and the amount of outstanding obligations under the Lumière Loan. If such Replacement Property transaction is not consummated prior to the maturity date of the Lumière Loan, other than as a result of certain failures to perform by GLPI, then the amounts outstanding will be paid in full and the rent under the Master Lease will automatically increase, subject to certain escalations.

Master Lease

Our Master Lease is accounted for as a financing obligation and totaled $968.0 million as of March 31, 2020. The Master Lease contains certain covenants, including minimum capital improvement expenditures and a rent coverage ratio. As of March 31, 2020, we were in compliance with all of the covenants under the Master Lease. See Note 9 to our Consolidated Financial Statements8 for additional information about our Master Lease and related matters.

Contractual Obligations

contractual obligations. There have been no material changes forduring the three months ended March 31, 20202021 to our contractual obligations as disclosed in Part II, Item 7 of our Annual Report on Form 10‑K10-K for the year ended December 31, 2019.

Summarized Information of Guarantors

Certain of our wholly-owned subsidiaries have fully and unconditionally guaranteed on a joint and several basis, the payment of all obligations under our 7% Senior Notes due 2023, 6% Senior Notes due 2025, 6% Senior Notes due 2026 and Credit Facility. There were no changes in the wholly-owned subsidiaries of the Company serving as guarantors, on a joint and several basis during the quarter ended March 31, 2020.


The consolidating condensed balance sheet as of March 31, 2020 is as follows:

Balance Sheet

 

Obligor Group

 

 

Non-Obligors

 

 

Consolidating

and Eliminating

Entries

 

 

Eldorado

Resorts, Inc.

Consolidated

 

 

 

(in thousands)

 

Current assets

 

$

 

1,220,065

 

 

$

 

22,341

 

 

$

 

—

 

 

$

 

1,242,406

 

Intercompany receivables (payables)

 

$

 

2,933

 

 

$

 

(2,933

)

 

$

 

—

 

 

$

 

—

 

Other non-current asset

 

$

 

8,361,398

 

 

$

 

13,836

 

 

$

 

(3,726,468

)

 

$

 

4,648,766

 

Current liabilities

 

$

 

758,331

 

 

$

 

12,677

 

 

$

 

—

 

 

$

 

771,008

 

Non-current liabilities

 

$

 

4,181,823

 

 

$

 

(1,868

)

 

$

 

—

 

 

$

 

4,179,955

 

The consolidating condensed balance sheet as of December 31, 2019 is as follows:

Balance Sheet

 

Obligor Group

 

 

Non-Obligors

 

 

Consolidating

and Eliminating

Entries

 

 

Eldorado

Resorts, Inc.

Consolidated

 

 

 

(in thousands)

 

Current assets

 

$

 

582,918

 

 

$

 

21,725

 

 

$

 

—

 

 

$

 

604,643

 

Intercompany receivables (payables)

 

$

 

1,790

 

 

$

 

(1,790

)

 

$

 

—

 

 

$

 

—

 

Other non-current asset

 

$

 

8,876,547

 

 

$

 

13,768

 

 

$

 

(3,854,405

)

 

$

 

5,035,910

 

Current liabilities

 

$

 

673,403

 

 

$

 

15,043

 

 

$

 

—

 

 

$

 

688,446

 

Non-current liabilities

 

$

 

3,836,939

 

 

$

 

(2,089

)

 

$

 

—

 

 

$

 

3,834,850

 

The consolidating condensed statement of operations for the three months ended March 31, 2020 is as follows:

 

Obligor Group

 

 

Non-Obligors

 

 

Consolidating

and Eliminating

Entries

 

 

Eldorado

Resorts, Inc.

Consolidated

 

 

 

(in thousands)

 

Net revenues

 

$

 

471,859

 

 

$

 

1,210

 

 

$

 

—

 

 

$

 

473,069

 

Operating (loss) income

 

$

 

(124,872

)

 

$

 

1,692

 

 

$

 

—

 

 

$

 

(123,180

)

Interest expense, net

 

$

 

(66,674

)

 

$

 

210

 

 

$

 

—

 

 

$

 

(66,464

)

Net (loss) income

 

$

 

(175,638

)

 

$

 

1,683

 

 

$

 

(1,683

)

 

$

 

(175,638

)

The consolidating condensed statement of operations for the three months ended March 31, 2019 is as follows:

 

Obligor Group

 

 

Non-Obligors

 

 

Consolidating

and Eliminating

Entries

 

 

Eldorado

Resorts, Inc.

Consolidated

 

 

 

(in thousands)

 

Net revenues

 

$

 

2,015,262

 

 

$

 

40,745

 

 

$

 

—

 

 

$

 

2,056,007

 

Operating income

 

$

 

307,629

 

 

$

 

2,474

 

 

$

 

—

 

 

$

 

310,103

 

Interest expense, net

 

$

 

(169,971

)

 

$

 

(1,761

)

 

$

 

—

 

 

$

 

(171,732

)

Net income (loss)

 

$

 

95,235

 

 

$

 

1,285

 

 

$

 

(1,285

)

 

$

 

95,235

 

Other Liquidity Matters

We are faced with certain contingencies involving litigation and environmental remediation and compliance. These commitments and contingencies are discussed in “Part II, Item 1. Legal Proceedings” and Note 118 to our unaudited consolidated condensed financial statements, both of which are included elsewhere in this report. In addition, new competition may have a material adverse effect on our revenues, and could have a similar adverse effect on our liquidity. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business” which is included in our Annual Report on Form 10-K for the year ended December 31, 2019 and “Part II, Item IA. Risk Factors” which is included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Critical Accounting Policies

Our critical accounting policies disclosures are included in our Annual Report on Form 10‑K10-K for the year ended December 31, 2019. Except as described in Note 1 to the accompanying condensed notes of these consolidated financial statements, we believe there2020. There have been no material changes since December 31, 2019.2020. We have not substantively changed the application of our policies and there have been no material changes in assumptions or estimation techniques used as compared to prior periods.

those described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Off‑BalanceOff-Balance Sheet Arrangements

We do not currently have any off‑balanceoff-balance sheet arrangements.

Cautionary Statement Regarding Forward‑Looking Information

This report includes “forward‑looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward‑looking statements include statements regarding our strategies, objectives and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results and other information that is not historical information. When used in this report, the terms or phrases such as “anticipates,” “believes,” “projects,” “plans,” “intends,” “expects,” “might,” “may,” “estimates,” “could,” “should,” “would,” “will likely continue,” and variations of such words or similar expressions are intended to identify forward‑looking statements. Specifically, forward-looking statements may include, among others, statements concerning:

•

the impact of COVID-19 on our business and financial condition;

•

projections of future results of operations or financial condition;

•

our ability to consummate the acquisition of Caesars, the related real estate transactions with VICI and the disposition of MontBleu and our properties located in Shreveport, Kansas City and Vicksburg;

•

expectations regarding our business and results of operations of our existing casino properties and prospects for future development;

•

expectations regarding trends that will affect our market and the gaming industry generally and the impact of those trends on our business and results of operations;

•

our ability to comply with the covenants in the agreements governing our outstanding indebtedness;

•

our ability to meet our projected debt service obligations, operating expenses, and maintenance capital expenditures;

•

expectations regarding availability of capital resources;

•

our intention to pursue development opportunities, including the development of a mixed-use entertainment and hospitality destination expected to be located on unused land adjacent to the Pompano casino and racetrack, and additional acquisitions and divestitures;

•

our ability to obtain financing for, and realize the anticipated benefits, of the acquisition of Caesars and future development and acquisition opportunities; and

•

the impact of regulation on our business and our ability to receive and maintain necessary approvals for our existing properties and future projects and operation of online sportsbook, poker and gaming

Any forward‑looking statements are based upon underlying assumptions, including any assumptions mentioned with the specific statements, as of the date such statements were made. Such assumptions are in turn based upon internal estimates and analyses of market conditions and trends, management plans and strategies, economic conditions and other factors. Such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control, and are subject to change. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend upon future circumstances that may not occur. Actual results may differ materially from any future results, performance or achievements expressed or implied by such statements. Forward‑looking statements speak only as of the date they are made, and we assume no duty to update forward-looking statements. Forward-looking statements should not be regarded as a representation by us or any other person that the forward‑looking statements will be achieved. Undue reliance should not be placed on any forward‑looking statements. Some of the contingencies and uncertainties to which any forward‑looking statement contained herein are subject include, but are not limited to, the following:

•

the extent and duration of the impact of the global COVID-19 pandemic on the Company’s business, financial results and liquidity;

•

the duration of closure of our properties, which we cannot predict at this time;

•

the impact and cost of new operating procedures expected to be implemented upon re-opening of the Company’s casinos;

•

the impact of actions we have undertaken to reduce costs and improve efficiencies to mitigate losses as a result of the COVID-19 pandemic, which could negatively impact guest loyalty and our ability to attract and retain our employees;

•

the impact of the COVID-19 pandemic and resulting unemployment and changes in general economic conditions on discretionary consumer spending and customer demand;


•

our substantial indebtedness and significant financial commitments, including our obligations under the Master Lease, could adversely affect our results of operations and our ability to service such obligations, react to changes in our markets and pursue development and acquisition opportunities;

•

restrictions and limitations in agreements governing our debt could significantly affect our ability to operate our business and our liquidity;

•

risks relating to payment of a significant portion of our cash flow as debt service and rent under the Master Lease;

•

financial, operational, regulatory or other potential challenges that may arise as a result of leasing of a number of our properties from a single lessor;

•

our facilities operate in very competitive environments and we face increasing competition including through legalization of online betting and gaming;

•

uncertainty regarding legalization of betting and online gaming in the jurisdictions in which we operate and conditions applicable to obtaining the licenses required to enable our betting and online gaming partners to conduct betting and gaming activities;

•

the ability to identify suitable acquisition opportunities and realize growth and cost synergies from any future acquisitions;

•

future maintenance, development or expansion projects will be subject to significant development and construction risks;

•

our gaming operations are highly regulated by governmental authorities and the cost of complying or the impact of failing to comply with such regulations;

•

changes in gaming taxes and fees in jurisdictions in which we operate;

•

risks relating to pending claims or future claims that may be brought against us;

•

changes in interest rates and capital and credit markets;

•

our ability to comply with certain covenants in our debt documents and the Master Lease;

•

the effect of disruptions to our information technology and other systems and infrastructure;

•

our ability to attract and retain customers;

•

weather or road conditions limiting access to our properties;

•

the effect of war, terrorist activity, acts of violence, natural disasters and other catastrophic events;

•

the intense competition to attract and retain management and key employees in the gaming industry; and

•

other factors described in Part II, Item 1A. “Risk Factors” contained herein and our reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.

In addition, the acquisition of Caesars, the related real estate transactions with VICI and the disposition of MontBleu and our properties located in Shreveport, Kansas City and Vicksburg and the provisions of the related acquisition agreements create additional risks, uncertainties and other important factors, including but not limited to:

•

the possibility that the proposed transactions are not consummated when expected or at all because required regulatory or other approvals are not received or other conditions to the consummation thereof are not satisfied on a timely basis, including as a result of delays arising from the COVID-19 pandemic, or at all;

•

the possibility that one or more of such transactions do not close on the terms described herein or that we are required to modify aspects of one or more of such transactions to obtain, or otherwise take action to satisfy conditions imposed in connection with, required regulatory approvals;

•

the risk that the financing required to fund the Merger and related transactions is not obtained on the terms anticipated or at all;


•

uncertainties in the global economy and credit markets, including as a result of the COVID-19 pandemic, and the potential impact on ERI’s ability to finance the acquisition of Caesars and related transactions;

•

risks associated with increased leverage and increased lease payments as a result of the proposed transactions;

•

the possibility that the anticipated benefits of the proposed transactions, including cost savings and expected synergies, are not realized when expected, or at all, including as a result of the impact of, or issues arising from, the COVID-19 pandemic, implementation of our operating strategies and integration of our business and Caesars’ business;

•

the incurrence of significant transaction and merger-related costs and the possibility that the transactions may be more expensive to complete than expected, including as a result of delays arising as a result of the COVID-19 pandemic or other unexpected factors or events;

•

competitive responses to the proposed transactions;

•

legislative, regulatory and economic developments;

•

the possibility that our business or Caesars’ business may suffer as a result of the announcement of the acquisition;    

•

the ability to retain certain of our key employees and Caesars’ key employees;

•

the outcome of legal proceedings that may be instituted as a result of the proposed transactions;

•

the impact of the proposed transactions, or the failure to consummate the proposed transactions, on our stock price;

•

diversion of management’s attention from our ongoing operations;

•

the impact of provisions of the Merger Agreement limiting the operation of our business prior to the closing of the Merger;

•

the impact of the announcement or consummation of the proposed transactions on the Company’s relationships with third parties, which may make it more difficult to maintain business relationships; and

•

other risks and uncertainties described in Part II, Item 1A. “Risk Factors” contained herein and our reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.

In light of these and other risks, uncertainties and assumptions, the forward‑looking events discussed in this report might not occur. These forward‑looking statements speak only as of the date on which this statement is made, even if subsequently made available on our website or otherwise, and we do not intend to update publicly any forward‑looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as may be required by law.

You should also be aware that while we from time to time communicate with securities analysts, we do not disclose to them any material non‑public information, internal forecasts or other confidential business information. Therefore, you should not assume that we agree with any statement or report issued by any analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain projections, forecasts or opinions, those reports are not our responsibility and are not endorsed by us.


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. We are exposed to changes in interest rates primarily from variable rate long‑termlong-term variable-rate debt arrangements.
As of March 31, 2020, interest on borrowings under2021, our Credit Facility was subject to fluctuation based on changes in short-term interest rates.

As of March 31, 2020, our long‑term variable‑ratelong-term variable-rate borrowings totaled $488.8 million$6.3 billion under the Term LoanCRC term loans and $465.0 million wasno amounts were outstanding under the CEI Revolving Credit Facility and CRC Revolving Credit Facility. Long‑term variable‑rateLong-term variable-rate borrowings under the Term Loan and the Revolving Credit FacilityCRC term loans represented approximately 31%42% of our long‑termlong-term debt as of March 31, 2020.2021. Of our $15.0 billion face value of debt, as of March 31, 2021, we have entered into seven interest rate swap agreements to fix the interest rate on $2.3 billion of variable rate debt, and $4.0 billion of debt remains subject to variable interest rates for the term of the agreement. During the three months ended March 31, 2020,2021, the weighted average interest rates on our variable and fixed rate debt were 3.04%3.36% and 6.56%6.40%, respectively.

LIBOR

The London Inter-bank Offered Rate (“LIBOR”) is expected to be discontinued after 2021. The interest rate per annum applicable to loans under our Credit Facilitycredit facilities is, at our option, either LIBOR plus a margin or a base rate plus a margin. The Credit Facility permits the administrative agent to select, in its reasonable discretion, an alternative base rate in the event that LIBOR is discontinued, but there can be no assurances as to what alternative base rates may be and whether such base rate will be more or less favorable than LIBOR and any other unforeseen impacts of the potential discontinuation of LIBOR. We intend to continue monitoring the developments with respect to the potential phasing out of LIBOR after 2021 and work with our lenders to ensure any transition away from LIBOR will have minimal impact on our financial condition, but can provide no assurances regarding the impact of the discontinuation of LIBOR.

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On October 9, 2020, the Company entered into a foreign exchange forward contract to hedge the risk of appreciation of the GBP denominated purchase price related to William Hill PLC, pursuant to which the Company agreed to purchase £536 million at a contracted exchange rate. On March 25, 2021, the forward contract was settled, for which the Company received $41 million in proceeds.
Subsequent to March 31, 2021, the Company entered into foreign exchange swap agreements in order to mitigate the risk of changes in foreign currency exchange rates. We are contracted to purchase £237 million at a contracted rate which we expect to settle in June 2021. We have also contracted to sell £487 million that we expect to settle in December 2021. We may elect to enter into additional such agreements as we continue to mitigate our exposure to changes in foreign currency exchange rates.
We evaluate our exposure to market risk by monitoring interest rates in the marketplace and has,have, on occasion, utilized derivative financial instruments to help manage this risk. We do not utilize derivative financial instruments for trading purposes. There were no other material quantitative changes in our market risk exposure, or how such risks are managed, for the three months ended March 31, 2020.

2021.

ITEM 4.

CONTROLS AND PROCEDURES.

Item 4.     Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, evaluated and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officerprincipal executive officer and Chief Financial Officer,principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.


We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e)13a-15(e) and 15d‑15(e)15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10‑Q.10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10‑Q10-Q are effective to ensure that the information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized, evaluated and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

(b)Changes in Internal Controls

Changes in Internal Controls

The Company continues to integrate our internal controls over financial reporting following the Merger. As a result of these integration activities, certain controls will be evaluated and may be changed.
There were no changes in our internal control over financial reporting during the three months ended March 31, 20202021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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PART II

- OTHER INFORMATION

ITEM 1.

Item 1.     Legal Proceedings

(a)

Material pending litigation, other than lawsuits arising in the normal course of our business, to which we became party during the quarter ended March 31, 2020, are summarized below:

Merger Litigation

In SeptemberFor a discussion of our “Legal Proceedings,” refer to Note 8 to our consolidated condensed financial statements located elsewhere in this Quarterly Report on Form 10-Q and October of 2019, eight putative class action lawsuits were filed against Eldorado and/or CaesarsNote 11 to our Consolidated Financial Statements included in connection with the Merger.  The Company was named as a party in three of such actions: Cazer v. Caesars Entertainment Corp., et al, Civil Action No. A-19-801900-C, Eighth Judicial District Court Clark County, Nevada (9/13/2019), Gershman v. Caesars Entertainment Corp., et al, Civil Action No 1:19-cv-01720-UNA, United States District Courtour Annual Report on Form 10-K for the Districtyear ended December 31, 2020.

Cautionary Statement Regarding Forward-Looking Information
This report includes “forward-looking statements” within the meaning of Delaware (9/12/2019),Section 27A of the Securities Act of 1933, as amended, and Palkon v. Caesars Entertainment Corp., et al, Civil Action No. 1:19-cv-01679-UNA, United States District Court for the District of Delaware (9/9/2019).  In general, those complaints asserted claims under sections 14(a), 20(a) and Rule 14a-9Section 21E of the Securities Exchange Act of 1934, challengingas amended. Forward-looking statements include statements regarding our strategies, objectives and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results and other information that is not historical information. When used in this report, the adequacyterms or phrases such as “anticipates,” “believes,” “projects,” “plans,” “intends,” “expects,” “might,” “may,” “estimates,” “could,” “should,” “would,” “will likely continue,” and variations of such words or similar expressions are intended to identify forward-looking statements. Specifically, forward-looking statements may include, among others, statements concerning:
•the impact of the COVID-19 public health emergency on our business and financial condition;
•projections of future results of operations or financial condition;
•our ability to consummate the disposition of certain disclosuresof our properties, including the planned sale of William Hill’s non-U.S. operations and the required divestitures of certain properties located in Indiana;
•expectations regarding our business and results of operations of our existing casino properties and prospects for future development;
•expectations regarding trends that will affect our market and the gaming industry generally and the impact of those trends on our business and results of operations;
•our ability to comply with the covenants in the joint proxy statement/prospectusagreements governing our outstanding indebtedness and leases;
•our ability to meet our projected debt service obligations, operating expenses, and maintenance capital expenditures;
•expectations regarding availability of capital resources;
•our intention to pursue development opportunities, including the development of a mixed-use entertainment and hospitality destination expected to be located on unused land adjacent to the Pompano casino and racetrack, and additional acquisitions and divestitures;
•our ability to realize the anticipated benefits of the Merger, William Hill Acquisition and future development and acquisition opportunities; and
•the impact of regulation on our business and our ability to receive and maintain necessary approvals for our existing properties and future projects and operation of online sportsbook, poker and gaming
Any forward-looking statements are based upon underlying assumptions, including any assumptions mentioned with the specific statements, as of the date such statements were made. Such assumptions are in turn based upon internal estimates and analyses of market conditions and trends, management plans and strategies, economic conditions and other factors. Such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control, and are subject to change. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend upon future circumstances that may not occur. Actual results may differ materially from any future results, performance or achievements expressed or implied by such statements. Forward-looking statements speak only as of the date they are made, and we assume no duty to update forward-looking statements. Forward-looking statements should not be regarded as a representation by us or any other person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements. Some of the contingencies and uncertainties to which any forward-looking statement contained herein are subject include, but are not limited to, the following:
•the extent and duration of the impact of the global COVID-19 public health emergency on the Company’s business, financial results and liquidity;
•the impact of actions we have undertaken to reduce costs and improve efficiencies to mitigate losses as a result of the COVID-19 public health emergency, which could negatively impact guest loyalty and our ability to attract and retain our employees;
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•the impact of the COVID-19 public health emergency and resulting unemployment and changes in general economic conditions on discretionary consumer spending and customer demand;
•our substantial indebtedness and significant financial commitments, including our obligations under our lease arrangements, could adversely affect our results of operations and our ability to service such obligations, react to changes in our markets and pursue development and acquisition opportunities;
•restrictions and limitations in agreements governing our debt and leased properties could significantly affect our ability to operate our business and our liquidity;
•risks relating to payment of a significant portion of our cash flow as debt service and rent under the leases of our casino properties with VICI and GLPI;
•financial, operational, regulatory or other potential challenges that may arise as a result of leasing of a number of our properties;
•our facilities operate in very competitive environments and we face increasing competition including through legalization of online betting and gaming;
•uncertainty regarding legalization of betting and online gaming in the jurisdictions in which we operate and conditions applicable to obtaining the licenses required to enable us to conduct betting and online gaming activities;
•the ability to identify suitable acquisition opportunities and realize growth and cost synergies from any future acquisitions;
•future maintenance, development or expansion projects will be subject to significant development and construction risks;
•our gaming operations are highly regulated by governmental authorities and the cost of complying or the impact of failing to comply with such regulations;
•changes in gaming taxes and fees in jurisdictions in which we operate;
•risks relating to pending claims or future claims that may be brought against us;
•changes in interest rates and capital and credit markets;
•our ability to comply with certain covenants in our debt documents and lease arrangements;
•the effect of disruptions to our information technology and other systems and infrastructure;
•our ability to attract and retain customers;
•weather or road conditions limiting access to our properties;
•the effect of war, terrorist activity, acts of violence, natural disasters, public health emergencies and other catastrophic events;
•the intense competition to attract and retain management and key employees in the gaming industry; and
•other factors described in Part II, Item 1A. “Risk Factors” contained herein and our reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
In addition, the acquisition of William Hill and the disposition of Evansville, Southern Indiana, Baton Rouge, Harrah’s Louisiana Downs and certain of our other properties, including the planned sale of William Hill’s non-U.S. operations and the required divestitures of certain properties located in Indiana, create additional risks, uncertainties and other important factors, including but not limited to:
•the possibility that we are not able to enter into agreements to sell assets that we intend to divest on terms that are acceptable to us;
•the possibility that post-closing regulatory approvals of the acquisition of William Hill PLC impose conditions or are not obtained;
•the possibility that the proposed transactions are not consummated when expected or at all because required regulatory or other approvals are not received or other conditions to the consummation thereof are not satisfied on a timely basis or at all;
•the possibility that one or more of such transactions do not close on the terms described herein or that we are required to modify aspects of one or more of such transactions to obtain, or otherwise take action to satisfy conditions imposed in connection with, the Merger.  In addition, one of the complaints alleges state law breach of fiduciary duty claims against the Caesars directors. In March 2020, the Company and Caesars reached an agreementrequired regulatory approvals;
•risks associated with the plaintiffs in those actions to settle those claims in exchange for payment of certain fees to attorneys for the plaintiffs. Asincreased leverage as a result of the William Hill Acquisition;
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•the possibility that settlement, in March 2020, all eight suits were dismissed. These mattersthe anticipated benefits of the proposed transactions are now concluded.   

Securities Action

On September 23, 2019, not realized when expected or at all;

•the Companyincurrence of significant transaction and acquisition-related costs and the possibility that the transactions may be more expensive to complete than expected;
•competitive responses to the proposed transactions;
•legislative, regulatory and economic developments;
•the possibility that our business or William Hill’s business may suffer as a result of the announcement of the acquisition;
•the ability to retain certain of its officers were namedour key employees and William Hills’ key employees;
•the outcome of legal proceedings that may be instituted as defendants in a putative class action complaint filed in the United States District Court for the District of New Jersey and captioned as Elberts v. Eldorado Resorts, Inc., Case No. 2:19-cv-18230-SRC-CLW.  The complaint asserted violations of Sections 10(b) and 20(a)result of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated under proposed transactions;
•the Securities Exchange Act of 1934.  The complaint alleged that the Company made material misstatements and/or omissions during the period from March 1, 2019 through September 2, 2019.  The allegations related to disclosure concerning the subpoenas that certainimpact of the proposed transactions, or the failure to consummate the proposed transactions, on our stock price;
•diversion of management’s attention from our ongoing operations; and
•the impact of the announcement or consummation of the proposed transactions on the Company’s directorsrelationships with third parties, which may make it more difficult to maintain business relationships.
In light of these and officers received fromother risks, uncertainties and assumptions, the SEC, which have been previously disclosed in the proxy statement/prospectus filed by the Company relating to the pending transaction with Caesars.  The SEC Investigation is ongoing. In March 2020, the lead plaintiff decided not to pursue the claims any longer. As a result, this action was voluntarily dismissed by the lead plaintiff on March 17, 2020. This matter is now concluded.

(a)

We are also a party to various lawsuits, which have arisen in the normal course of our business. Estimated losses are accrued for these lawsuits and claims when the loss is probable and can be estimated. The current liability for the estimated losses associated with those lawsuits is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of operations.

Legal matters areforward-looking events discussed in greater detail in “Part I, Item 3. Legal Proceedings”this report might not occur. These forward-looking statements speak only as of the date on which this statement is made, even if subsequently made available on our website or otherwise, and Note 17we do not intend to update publicly any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as may be required by law.

You should also be aware that while we from time to time communicate with securities analysts, we do not disclose to them any material non-public information, internal forecasts or other confidential business information. Therefore, you should not assume that we agree with any statement or report issued by any analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain projections, forecasts or opinions, those reports are not our Consolidated Financial statements included in our Annual Report on Form 10‑K for the year ended December 31, 2019.


responsibility and are not endorsed by us.

ITEM 1A.

RISK FACTORS

Item 1A. Risk Factors

A description of our risk factors can be found in “Part I, Item 1A. Risk Factors” included in our Annual Report on Form 10‑K10-K for the year ended December 31, 2019.2020. There have been no material changes to those risk factors during the three months ended March 31, 2020, except for the following additional risk factors related to the impact of COVID-19 and the Merger.

The outbreak of COVID-19 has resulted in the temporary closure of our casino properties and has caused an economic downturn, widespread unemployment and an adverse impact on consumer sentiment. Such negative impacts could continue for an extended period of time and may worsen.

On March 13, 2020, in response to the coronavirus pandemic the U.S. government declared a national state of emergency. In an effort to help control the spread of COVID-19, public health officials imposed or recommended various measures, including social distancing, quarantine and stay-at- home or shelter-in-place directives, limitations on the size of gatherings, closures of work facilities, schools, public buildings and businesses, and cancellation of events, including sporting events, concerts, conferences and meetings.  As a result of orders issued by governmental authorities in the states in which our properties, all of our properties have been temporarily closed since March 18, 2020 and we furloughed approximately 90% of our employees beginning on April 11, 2020.  

While the closure of our properties is expected to be temporary, we cannot estimate the impact of the COVID-19 pandemic on our future financial results or cash flows, in part due to our inability to reasonably estimate the duration of the closure of our properties and the range of factors that will influence our operations once our properties are permitted to re-open. Our future operations, financial results and cash flows will be impacted by a number of factors that we cannot predict and are beyond our control, including the duration and extent of shelter-in-place and social distancing measures and the impact of such measures on our ability to re-open and operate our casinos profitably.  Government and health authorities may implement new or extend existing restrictions, impose restrictions on travel and business operations and advise or require individuals to limit time spent outside of their homes, further delaying or interrupting our business.  In addition, we anticipate that social distancing measures will result in new restrictions on our operations following the time that our casinos re-open, which may result in reduced gaming operations arising from the reconfiguration of our gaming floor, limitations on the number of customers present in our facilities, implementation of additional health and safety measures, restrictions on hotel, food and beverage outlets and limits on concerts, conventions or special events that would otherwise attract customers to our properties.  In addition, future outbreaks of COVID-19 or other public health emergencies may result in the implementation of stay-at-home or additional social distancing and mitigation measures that could cause future closures of all or a portion of our properties and disruption to our business.

COVID-19 has materially adversely affected the economy and financial markets of the United States and the world and has resulted in widespread unemployment in the United States. Consumer demand for casino hotel and racetrack properties such as ours is particularly sensitive to downturns in the economy, unemployment and the associated impact on discretionary spending on leisure activities which bring demand for casino hotel properties such as ours.  We anticipate that there may be a reduced consumer demand following the re-opening of our casinos due to reduced consumer confidence and consumer fear, which is expected to lead to lower occupancy rates, reduced visitation and additional disruptions in our casino business.  The extent of changes in customer demand resulting from the economic downturn, widespread unemployment, reduced consumer confidence and consumer fears on our properties cannot reasonably be determined, but the impact of such factors may be significant and protracted.

As a result of the foregoing, we cannot predict the ultimate scope, duration and impact of the COVID-19 pandemic, but we expect that it will continue to have a material impact on our business, financial condition, liquidity, results of operations (including revenues and profitability) and stock price for an extended period of time.  The impact of the COVID-19 pandemic may also have the effect of exacerbating many of the other risks described in our Annual Report on Form 10-K for the year ended December 31, 2019.

2021.

We have undertaken aggressive actions to reduce costs and improve efficiencies to mitigate losses as a result of the COVID-19 pandemic, which could negatively impact guest loyalty and our ability to attract and retain employees.

As a result of the closure of all of our properties and the continued uncertainty regarding the duration and severity of this pandemic, we have taken steps to reduce operating costs and improve efficiencies, including furloughing approximately 90% our employees. Such steps, and further changes we may make in the future to reduce costs, may negatively impact guest loyalty or our ability to attract and retain employees, and our reputation may suffer as a result. For example, if our furloughed employees do not return to work with us when the COVID-19 pandemic subsides, including because they find new employment during the furlough, we may experience operational challenges that may impact our ability to resume operations in full. We may also face demands or requests from labor unions that represent our employees, whether in the course of our periodic renegotiation of our collective bargaining agreements, through effects bargaining relating to the shut down and/or re-opening of our operations, or otherwise, for additional compensation, healthcare benefits or other terms as a result of COVID-19 that could increase costs, and we could experience labor disputes or disruptions as we continue to implement our COVID-19 mitigation plans.

Our ability to remain in compliance with our covenants contained in the agreements governing our indebtedness and Master Lease, and our liquidity, may be negatively impacted by the COVID-19 pandemic, measures implemented to curtail its spread, and changes in the economy, discretionary spending and consumer confidence.

Our casino operations are a primary source of income and operating cash flows which we rely upon to remain in compliance with covenants contained in the agreements governing our outstanding indebtedness and the Master Lease. In an effort to mitigate the impacts of COVID-19 on our business and provide sufficient liquidity and capital resources during the period that our casinos are closed and thereafter, on March 16, 2020 we borrowed $465 million under our revolving credit facility, constituting substantially all of our remaining borrowing capacity under our revolving credit facility. As a result, as of March 31, 2020, we had an aggregate of $953.8 million of borrowings outstanding under our credit facility and $1,850.0 million in outstanding principal amount of senior notes. While we were in compliance with the covenants under our Master Lease and the agreements governing our outstanding indebtedness as of March 31, 2020, our ability to remain in compliance with the quarterly maintenance covenants contained in such agreements would be negatively impacted by a prolonged period of closure of our properties or if the COVID-19 pandemic, measures implemented to curtail its spread or changes in the economy, discretionary spending and consumer confidence have a protracted negative effect on our business. Failure to satisfy such quarterly maintenance covenants would require us to seek waivers or amendments of such covenants. If we are unable to obtain such waivers or amendments, our creditors and the lessor under the Master Lease would be entitled to exercise remedies under the documents governing such obligations, including acceleration of the outstanding principal amount of such indebtedness or termination of the Master Lease.  In addition, while we believe that our cash on hand will be sufficient to provide liquidity to meet our obligations during the period that our properties remain closed, a protracted period of closure of our casinos could impact our ability to make required payments under our outstanding indebtedness, Master Lease or other obligations. Our ability to raise additional financing may be restricted by the covenants and restrictions contained in the agreements governing our indebtedness and could be adversely affected by disruptions in the financing markets and changes to the economy caused by the COVID-19 pandemic.

Delay in consummating the Merger has resulted in an increase in the Merger Consideration. The disruption caused by the COVID-19 pandemic may cause further delay that increases costs associated with the Merger.

Pursuant to the terms of the Merger Agreement, the amount of cash payable by the Company as Merger Consideration per share of Caesars common stock began to increase on by $0.003333 daily beginning on March 25, 2020 and will increase by such amount until the closing date of the Merger.  As a result, delay in consummating the Merger, including a delay in receipt of regulatory approvals resulting from disruption caused by the COVID-19 pandemic, will increase the cash portion of the Merger Consideration. In addition, such delay may increase the costs of the transaction.In particular, the Company has incurred and will continue to incur significant costs relating to the Merger, such as debt commitment, legal, accounting and financial advisor fees, and, to the extent that the Debt Financing is incurred prior to consummation of the Merger, interest expense, in each case, that may increase in the event that the consummation of the Merger is delayed and will be payable in the event that the Merger is not consummated.

The COVID-19 pandemic may exacerbate the risks associated with the Merger.

As a result of the COVID-19 pandemic, all Caesars’ properties have been temporarily closed and a significant majority of Caesars’ employees have been furloughed.  COVID-19 has had an adverse impact on Caesars’ business and results of operations.  We cannot predict the scope, duration and impact of COVID-19 on Caesars’ business or on the ability of the Company to recognize the benefits of the Merger but we expect that impact of the COVID-19 pandemic may have the effect of exacerbating many of the risks related to the Merger described in our Annual Report on Form 10-K for the year ended December 31, 2019.  The combination of two independent businesses is a complex, costly and time-consuming process and we expect that the impacts of COVID-19 will make such combination more challenging.  Further, the Company and its subsidiaries will have a significant amount of additional indebtedness outstanding following the consummation of the Merger and will have significant obligations to pay rent and make capital expenditures under its leases with GPLI and VICI. The


Company and its subsidiaries expect to satisfy such obligations with cash flows from operations, which may be impacted by COVID-19, cash on hand, borrowings under committed credit facilities, additional financing and proceeds from asset sales.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

During the quarter ended March 31, 2021, we issued 196 shares of unregistered Company Common Stock to holders of 5% Convertible Notes due 2024 upon conversion of $14 thousand in aggregate principal amount of such notes. For further information regarding such transactions, see Note 7, Fair Value Measurements, of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The shares of common stock were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

Item 3. Defaults Upon Senior Securities

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

Item 4. Mine Safety Disclosures

Not applicable.

ITEM 5.

OTHER INFORMATION.

Item 5. Other Information

None.


54

Item 6. Exhibits

ITEM 6.

EXHIBITS.

Exhibit

Number

Description of Exhibit

Method of Filing

  31.1

3.1

Previously filed on Form 8-K filed on July 21, 2020.
3.2Previously filed on Form 8-K filed on July 21, 2020.
†10.1Filed herewith.
31.1

Filed herewith.

31.2

Filed herewith.

32.1

Filed herewith.

32.2

Filed herewith.

101.1

99.1

Filed herewith.
101.1Inline XBRL Instance Document

Filed herewith.

101.2

Inline XBRL Taxonomy Extension Schema Document

Filed herewith.

101.3

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith.

101.4

Inline XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith.

101.5

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith.

101.6

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

Filed herewith

herewith.

†

Denotes a management contract or compensatory plan or arrangement.


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55

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ELDORADO RESORTS, INC.

CAESARS ENTERTAINMENT, INC.

Date: May 11, 2020

4, 2021

/s/ Thomas R. Reeg

Thomas R. Reeg

Chief Executive Officer (Principal Executive Officer)

Date: May 11, 2020

4, 2021

/s/ Bret Yunker

Bret Yunker

Chief Financial Officer (Principal Financial Officer)

55

56