Exhibit 99.1
FINANCIAL INFORMATION AND SUPPLEMENTARY DATA OF SIGNIFICANT EQUITY METHOD INVESTEE
CAESARS GROWTH PARTNERS, LLC
INDEX TO CONSOLIDATED CONDENSED FINANCIAL INFORMATION
EXPLANATORY NOTE
Unconsolidated Significant Subsidiary
Upon the completion of the Transactions described in Caesars Acquisition Company's (the "Company," "CAC," "we," "our" and "us") Annual Report on Form 10-K for the year ended December 31, 2015, our primary asset is our 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.
CAESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(In millions)
|
| | | | | | | |
| | March 31, 2016 | | December 31, 2015 |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | $ | 950.5 |
| | $ | 901.7 |
|
| Restricted cash | 3.9 |
| | 3.6 |
|
Receivables, net of allowance for doubtful accounts of $9.6 and $9.3, respectively | 125.8 |
| | 118.8 |
|
| Prepayments and other current assets | 39.4 |
| | 38.0 |
|
| Total current assets | 1,119.6 |
| | 1,062.1 |
|
| Investment in Caesars Enterprise Services, LLC | 27.2 |
| | 26.5 |
|
| Land, property and equipment, net | 2,551.6 |
| | 2,576.4 |
|
| Goodwill | 302.5 |
| | 302.5 |
|
| Intangible assets other than goodwill, net | 251.5 |
| | 260.7 |
|
| Restricted cash | 8.4 |
| | 8.9 |
|
| Deferred tax assets | 18.8 |
| | 28.3 |
|
| Prepaid management fees to related parties | 203.4 |
| | 206.5 |
|
| Deferred charges and other | 52.9 |
| | 50.7 |
|
| Total assets | $ | 4,535.9 |
| | $ | 4,522.6 |
|
| | | | |
| Liabilities and Equity | | | |
| Current liabilities | | | |
| Accounts payable | $ | 50.0 |
| | $ | 50.4 |
|
| Payables to related parties | 48.5 |
| | 41.5 |
|
| Accrued expenses | 164.8 |
| | 178.2 |
|
| Accrued interest payable | 52.2 |
| | 37.0 |
|
| Foreign tax payable | 5.3 |
| | 2.0 |
|
| Current portion of long-term debt | 38.5 |
| | 69.7 |
|
| Total current liabilities | 359.3 |
| | 378.8 |
|
| Long-term debt | 2,265.0 |
| | 2,267.6 |
|
| Deferred tax liabilities | 2.6 |
| | 7.3 |
|
| Deferred credits and other | 161.9 |
| | 137.2 |
|
| Total liabilities | 2,788.8 |
| | 2,790.9 |
|
| | | | |
| Commitments and contingencies | | | |
| Redeemable non-controlling interests | 0.5 |
| | 0.5 |
|
| Equity | | | |
| Additional paid-in capital | 1,260.1 |
| | 1,277.3 |
|
| Retained earnings | 447.1 |
| | 413.7 |
|
| Total equity attributable to Caesars Growth Partners, LLC | 1,707.2 |
| | 1,691.0 |
|
| Non-controlling interests | 39.4 |
| | 40.2 |
|
| Total equity | 1,746.6 |
| | 1,731.2 |
|
| Total liabilities and equity | $ | 4,535.9 |
| | $ | 4,522.6 |
|
CAESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(In millions)
|
| | | | | | | |
| | Three Months Ended March 31, |
| | 2016 | | 2015 |
| Revenues | | | |
| Interactive Entertainment | | | |
| Social and mobile games | $ | 218.2 |
| | $ | 167.6 |
|
| WSOP and online real money gaming | 9.6 |
| | 9.0 |
|
| | 227.8 |
| | 176.6 |
|
| Casino Properties and Developments | | | |
| Casino | 258.0 |
| | 259.0 |
|
| Food and beverage | 72.3 |
| | 68.3 |
|
| Rooms | 93.0 |
| | 74.3 |
|
| Other | 45.6 |
| | 36.2 |
|
| Less: casino promotional allowances | (53.1 | ) | | (47.9 | ) |
| | 415.8 |
| | 389.9 |
|
| Net revenues | 643.6 |
| | 566.5 |
|
| | | | |
| Operating expenses | | | |
| Interactive Entertainment - Direct | | | |
| Platform fees | 63.6 |
| | 48.7 |
|
| Casino Properties and Developments - Direct | | | |
| Casino | 141.0 |
| | 142.2 |
|
| Food and beverage | 30.8 |
| | 30.6 |
|
| Rooms | 22.4 |
| | 18.7 |
|
| Property, general, administrative and other | 210.3 |
| | 181.4 |
|
| Write-downs, reserves, and project opening costs, net of recoveries | 0.6 |
| | 3.1 |
|
| Management fees to related parties | 12.3 |
| | 13.5 |
|
| Depreciation and amortization | 46.7 |
| | 41.1 |
|
| Change in fair value of contingently issuable non-voting membership units | — |
| | (117.5 | ) |
| Total operating expenses | 527.7 |
| | 361.8 |
|
| Income from operations | 115.9 |
| | 204.7 |
|
| Interest expense, net of interest capitalized | (50.9 | ) | | (48.2 | ) |
| Other expense, net | — |
| | (1.0 | ) |
| Income from operations before provision for income taxes | 65.0 |
| | 155.5 |
|
| Provision for income taxes | (28.1 | ) | | (11.4 | ) |
| Net income | 36.9 |
| | 144.1 |
|
| Other comprehensive income, net of taxes | — |
| | — |
|
| Comprehensive income | 36.9 |
| | 144.1 |
|
| Less: net (income)/loss attributable to non-controlling interests | (3.5 | ) | | 0.1 |
|
| Comprehensive income attributable to Caesars Growth Partners, LLC | $ | 33.4 |
| | $ | 144.2 |
|
CASESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY
(UNAUDITED)
(In millions)
|
| | | | | | | | | | | | | | | |
| | Additional Paid-in Capital | | Retained Earnings | | Non-controlling Interests | | Total Equity |
| Balance at January 1, 2015 | $ | 1,078.0 |
| | $ | 191.9 |
| | $ | 33.9 |
| | $ | 1,303.8 |
|
| Net income | — |
| | 144.2 |
| | 0.3 |
| | 144.5 |
|
| Issuance of Caesars Interactive Entertainment, Inc. common stock | 15.2 |
| | — |
| | 2.9 |
| | 18.1 |
|
| Purchase of Caesars Interactive Entertainment, Inc. common stock | (22.2 | ) | | — |
| | (5.3 | ) | | (27.5 | ) |
| Stock-based compensation | 1.0 |
| | — |
| | — |
| | 1.0 |
|
| Transactions with parents and affiliates, net | (23.1 | ) | | — |
| | — |
| | (23.1 | ) |
| Other | 1.0 |
| | — |
| | — |
| | 1.0 |
|
| Balance at March 31, 2015 | $ | 1,049.9 |
| | $ | 336.1 |
| | $ | 31.8 |
| | $ | 1,417.8 |
|
| | | | | | | | |
| Balance at January 1, 2016 | $ | 1,277.3 |
| | $ | 413.7 |
| | $ | 40.2 |
| | $ | 1,731.2 |
|
| Net income | — |
| | 33.4 |
| | 3.5 |
| | 36.9 |
|
| Issuance of Caesars Interactive Entertainment, Inc. common stock | 9.7 |
| | — |
| | 1.7 |
| | 11.4 |
|
| Purchase of Caesars Interactive Entertainment, Inc. common stock | (22.3 | ) | | — |
| | (6.0 | ) | | (28.3 | ) |
| Stock-based compensation | 1.4 |
| | — |
| | — |
| | 1.4 |
|
| Transactions with parents and affiliates, net | (6.0 | ) | | — |
| | — |
| | (6.0 | ) |
| Balance at March 31, 2016 | $ | 1,260.1 |
| | $ | 447.1 |
| | $ | 39.4 |
| | $ | 1,746.6 |
|
CAESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions)
|
| | | | | | | |
| | Three Months Ended March 31, |
| | 2016 | | 2015 |
| Cash flows from operating activities | | | |
| Net income | $ | 36.9 |
| | $ | 144.1 |
|
| Adjustments to reconcile net income to cash flows provided by operating activities | | | |
| Depreciation and amortization | 46.7 |
| | 41.1 |
|
| Amortization of debt discount and debt issuance costs | 2.8 |
| | 2.6 |
|
| Change in fair value of contingently issuable non-voting membership units | — |
| | (117.5 | ) |
| Stock-based compensation | 29.3 |
| | 14.0 |
|
| Non-cash management fee payable to related parties | 0.7 |
| | 2.0 |
|
| Net change in deferred income taxes | 4.8 |
| | (3.9 | ) |
| Net change in long-term accounts | 1.9 |
| | (2.3 | ) |
| Net change in working capital accounts | 14.4 |
| | (68.7 | ) |
| Cash flows provided by operating activities | 137.5 |
| | 11.4 |
|
| Cash flows from investing activities | | | |
| Land, buildings and equipment additions, net of change in construction payables | (19.3 | ) | | (63.2 | ) |
| Additional investments in Caesars Enterprise Services, LLC | (0.7 | ) | | (0.2 | ) |
| Increase in restricted cash | (0.4 | ) | | (2.4 | ) |
| Decrease in restricted cash | 0.6 |
| | 18.0 |
|
| Cash flows used in investing activities | (19.8 | ) | | (47.8 | ) |
| Cash flows from financing activities | | | |
| Proceeds from issuance of debt | 15.0 |
| | — |
|
| Repayments under lending agreements | (51.0 | ) | | (4.7 | ) |
| Proceeds from issuance of Caesars Interactive Entertainment, Inc. stock | 1.4 |
| | 2.3 |
|
| Repurchase of Caesars Interactive Entertainment, Inc. stock | (28.3 | ) | | (27.5 | ) |
| Sale of partial interest in Maryland joint venture | — |
| | 1.0 |
|
| Distributions to parents, net | (6.0 | ) | | (4.4 | ) |
| Acquisition related contingent consideration payment | — |
| | (29.7 | ) |
| Cash flows used in financing activities | (68.9 | ) | | (63.0 | ) |
| Net increase/(decrease) in cash and cash equivalents | 48.8 |
| | (99.4 | ) |
| Cash and cash equivalents, beginning of period | 901.7 |
| | 944.1 |
|
| Cash and cash equivalents, end of period | $ | 950.5 |
| | $ | 844.7 |
|
OTHER INFORMATION
Subsequent Events
Contingently Issuable Non-voting Membership Units
Pursuant to the terms of the transaction agreement related to the formation of CGP LLC, CGP LLC was obligated to issue additional non-voting membership units to Caesars Entertainment Corporation to the extent that the earnings from a specified portion of Caesars Interactive Entertainment, Inc.'s ("CIE") social and mobile games business exceeded a predetermined threshold amount in 2015. In April 2016, CGP LLC issued approximately 31.9 million Class B non-voting units pursuant to the terms of the October 21, 2013 transactions. As a result, CAC's economic ownership of CGP LLC decreased to approximately 38.8% in April 2016 from approximately 42.6% at March 31, 2016.
Purchase of Caesars Interactive Entertainment, Inc. Common Stock
In April 2016, CIE repurchased shares of its outstanding common stock for a total net consideration of $13.5 million.
