Exhibit 99.1
FINANCIAL INFORMATION OF CAESARS GROWTH PARTNERS, LLC
A SIGNIFICANT EQUITY METHOD INVESTEE OF CAESARS ACQUISITION COMPANY
EXPLANATORY NOTE
Unconsolidated Significant Subsidiary
Upon the completion of the Transactions described in our Annual Report on Form 10-K for the year ended December 31, 2013, Caesars Acquisition Company’s (the "Company," "CAC," "we," "our" and "us") sole material asset is its interest in Caesars Growth Partners, LLC ("CGP LLC"), which is accounted for using the equity method. As our investment in CGP LLC is considered to be significant for the period subsequent to the Transactions, CGP LLC's annual financial statements are required to be included as an exhibit to each CAC Annual Report on Form 10-K in accordance with SEC Rule 3-09 of Regulation S-X. Given the significance of this investment to the financial position and results of operations of CAC, we have elected to include selected financial information of CGP LLC in this Quarterly Report on Form 10-Q.
For a discussion of the results of operations for CGP LLC for the first quarter 2014 in comparison to the first quarter 2013 results of operations derived from the assets and entities that were acquired by or contributed to CGP LLC in connection with the Transactions (referred to in the aggregate as Predecessor Growth Partners), please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations for Caesars Acquisition Company in Item 2 of its quarterly report on Form 10-Q for the quarter ended March 31, 2014.
CAESARS GROWTH PARTNERS, LLC
INDEX TO CONSOLIDATED CONDENSED FINANCIAL INFORMATION
CAESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(In millions)
|
| | | | | | | |
| | March 31, 2014 | | December 31, 2013 |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | $ | 972.6 |
| | $ | 976.9 |
|
| Short-term investments | — |
| | 15.0 |
|
| Receivables, net of allowance for doubtful accounts of $3.9 and $3.9, respectively | 65.2 |
| | 53.7 |
|
| Interest receivable from related party | 25.3 |
| | 8.9 |
|
| Deferred tax assets | 3.3 |
| | 7.0 |
|
| Restricted cash | 22.8 |
| | 28.8 |
|
| Prepayments and other current assets | 12.0 |
| | 13.2 |
|
| Total current assets | 1,101.2 |
| | 1,103.5 |
|
| Investment in notes from related party | 973.2 |
| | 931.6 |
|
| Land, property and equipment, net | 596.8 |
| | 516.0 |
|
| Goodwill | 126.6 |
| | 112.8 |
|
| Intangible assets other than goodwill, net | 213.1 |
| | 168.2 |
|
| Restricted cash | 203.6 |
| | 231.6 |
|
| Deferred tax assets | 9.5 |
| | — |
|
| Deferred charges and other | 115.1 |
| | 114.8 |
|
| Total assets | $ | 3,339.1 |
| | $ | 3,178.5 |
|
| | | | |
| Liabilities and Equity | | | |
| Current liabilities | | | |
| Accounts payable | $ | 92.7 |
| | $ | 54.8 |
|
| Payables to related party | 47.1 |
| | 49.4 |
|
| Accrued expenses | 169.0 |
| | 126.4 |
|
| Foreign tax payable | 0.9 |
| | 1.8 |
|
| Deferred tax liabilities | 0.4 |
| | — |
|
| Current portion of long-term debt | 0.1 |
| | 0.1 |
|
| Total current liabilities | 310.2 |
| | 232.5 |
|
| Long-term debt | 677.6 |
| | 680.2 |
|
| Long-term debt to related party | 39.8 |
| | 39.8 |
|
| Convertible notes issued to related party | 47.7 |
| | 47.7 |
|
| Deferred tax liabilities | 10.1 |
| | 3.8 |
|
| Contingently issuable non-voting membership units | 382.6 |
| | 306.5 |
|
| Deferred credits and other | 80.2 |
| | 69.6 |
|
| Total liabilities | 1,548.2 |
| | 1,380.1 |
|
| | | | |
| Commitments and contingencies | | | |
| Redeemable non-controlling interests | 3.3 |
| | 3.9 |
|
| Equity | | | |
| Additional paid-in capital | 751.2 |
| | 749.6 |
|
| Retained earnings | 746.8 |
| | 766.5 |
|
| Accumulated other comprehensive income | 242.8 |
| | 233.6 |
|
| Total equity attributable to Caesars Growth Partners, LLC | 1,740.8 |
| | 1,749.7 |
|
| Non-controlling interests | 46.8 |
| | 44.8 |
|
| Total equity | 1,787.6 |
| | 1,794.5 |
|
| Total liabilities and equity | $ | 3,339.1 |
| | $ | 3,178.5 |
|
CAESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
(In millions)
|
| | | |
| | Quarter Ended
March 31, 2014 |
| Revenues | |
| Interactive Entertainment | |
| Social and mobile games | $ | 115.7 |
|
| WSOP and online real money gaming | 8.5 |
|
| | 124.2 |
|
| Casino Properties and Developments | |
| Casino | 46.9 |
|
| Food and beverage | 24.9 |
|
| Rooms | 27.8 |
|
| Other | 16.2 |
|
| Less: casino promotional allowances | (13.7 | ) |
| | 102.1 |
|
| Net revenues | 226.3 |
|
| | |
| Operating expenses | |
| Interactive Entertainment - Direct | |
| Platform fees | 35.3 |
|
| Casino Properties and Developments - Direct | |
| Casino | 20.9 |
|
| Food and beverage | 12.0 |
|
| Rooms | 7.7 |
|
| Property, general, administrative and other | 121.8 |
|
| Depreciation and amortization | 13.6 |
|
| Change in fair value of contingently issuable non-voting membership units | 76.1 |
|
| Change in fair value of contingent consideration | 0.7 |
|
| Total operating expenses | 288.1 |
|
| Loss from operations | (61.8 | ) |
| Interest expense, net of interest capitalized | (11.9 | ) |
| Interest income | 1.0 |
|
| Interest income - related party | 48.8 |
|
| Loss on extinguishment of debt | (0.6 | ) |
| Loss before provision for income taxes | (24.5 | ) |
| Provision for income taxes | (1.7 | ) |
| Net loss | (26.2 | ) |
| Less: net loss attributable to non-controlling interests | 6.5 |
|
| Net loss attributable to Caesars Growth Partners, LLC | $ | (19.7 | ) |
CAESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE LOSS
(UNAUDITED)
(In millions)
|
| | | |
| | Quarter Ended
March 31, 2014 |
| Net loss | $ | (26.2 | ) |
| Other comprehensive income, net of income taxes: | |
| Unrealized gain on investments in notes from related party | 9.2 |
|
| Total other comprehensive income | 9.2 |
|
| Comprehensive loss | (17.0 | ) |
| Less: net loss attributable to non-controlling interests | 6.5 |
|
| Comprehensive loss attributable to Caesars Growth Partners, LLC | $ | (10.5 | ) |
CASESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(In millions)
|
| | | | | | | | | | | | | | | | | | | |
| | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income | | Non-controlling Interests | | Total Equity |
| Balance at December 31, 2013, as previously reported | $ | 734.0 |
| | $ | 782.1 |
| | $ | 233.6 |
| | $ | 44.8 |
| | $ | 1,794.5 |
|
Prior-period adjustment (1) | 15.6 |
| | (15.6 | ) | | — |
| | — |
| | — |
|
| Balance at December 31, 2013, as restated | 749.6 |
| | 766.5 |
| | 233.6 |
| | 44.8 |
| | 1,794.5 |
|
| Net loss | — |
| | (19.7 | ) | | — |
| | (5.9 | ) | | (25.6 | ) |
| Issuance of Caesars Interactive common stock | 13.7 |
| | — |
| | — |
| | 1.5 |
| | 15.2 |
|
| Purchase of Caesars Interactive common stock | (17.2 | ) | | — |
| | — |
| | (1.9 | ) | | (19.1 | ) |
| Stock-based compensation | 1.9 |
| | — |
| | — |
| | — |
| | 1.9 |
|
| Sale of partial interest in Baltimore joint venture | 3.4 |
| | — |
| | — |
| | 8.3 |
| | 11.7 |
|
| Unrealized gain on investments in notes from related party, net of tax | — |
| | — |
| | 9.2 |
| | — |
| | 9.2 |
|
| Distributions to parent | (0.2 | ) | | — |
| | — |
| | — |
| | (0.2 | ) |
| Balance at March 31, 2014 | $ | 751.2 |
| | $ | 746.8 |
| | $ | 242.8 |
| | $ | 46.8 |
| | $ | 1,787.6 |
|
| |
(1) | Represents a distribution from CGP LLC to its parent entities recorded against Additional paid-in capital during the year ended December 31, 2013. Because the amount did not exceed cumulative earnings, the distribution should have been recorded as a distribution from Retained earnings rather than from Additional paid-in capital. |
CAESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In millions)
|
| | | |
| | Quarter Ended
March 31, 2014 |
| Cash flows from operating activities | |
| Net loss | $ | (26.2 | ) |
| Adjustments to reconcile net loss to cash flows provided by operating activities | |
| Depreciation and amortization | 13.6 |
|
| Amortization of debt discount | 6.5 |
|
| Loss on early extinguishments of debt | 0.6 |
|
| Change in fair value of contingently issuable non-voting membership units | 76.1 |
|
| Change in fair value of contingent consideration | 0.7 |
|
| Accretion of discount on investments in notes from related party | (32.4 | ) |
| Stock-based compensation expense | 18.3 |
|
| Net change in deferred income taxes | (9.2 | ) |
| Net change in long-term accounts | 3.6 |
|
| Net change in working capital accounts | (38.0 | ) |
| Cash flows provided by operating activities | 13.6 |
|
| Cash flows from investing activities | |
| Land, buildings and equipment additions, net of change in construction payables | (29.6 | ) |
| Payments to acquire business, net of cash acquired | (22.5 | ) |
| Purchase of equity method investment | (1.3 | ) |
| Sale of short-term investments | 15.0 |
|
| Increase in restricted cash | (74.3 | ) |
| Decrease in restricted cash | 108.3 |
|
| Cash flows used in investing activities | (4.4 | ) |
| Cash flows from financing activities | |
| Purchase of Caesars Interactive common stock | (19.1 | ) |
| Sale of partial interest in Baltimore joint venture | 11.7 |
|
| Proceeds from exercise of options | 3.8 |
|
| Repayments under lending agreements | (9.7 | ) |
| Distributions to parents | (0.2 | ) |
| Cash flows used in financing activities | (13.5 | ) |
| Net decrease in cash and cash equivalents | (4.3 | ) |
| Cash and cash equivalents, beginning of period | 976.9 |
|
| Cash and cash equivalents, end of period | $ | 972.6 |
|
