| Item 7.01 | Regulation FD Disclosure. |
On July 20, 2020, Caesars Entertainment, Inc., a Delaware corporation (the “Company” or “New Caesars”), formerly known as Eldorado Resorts, Inc., a Nevada corporation (“Eldorado”), completed its acquisition of Caesars Entertainment Corporation, a Delaware corporation (“Former Caesars”), with Former Caesars continuing as the surviving corporation and a wholly owned subsidiary of the Company (the “Merger”).
The executive decision maker of the Company reviews operating results, assesses performance and makes decisions on a “significant market” basis. Management views each of the 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. Prior to the completion of the Merger, the Company’s principal operating activities occurred in five geographic regions and reportable segments. Following the closing of the Merger, the Company’s principal operating activities occur in three geographic regions and reportable segments, in addition to its Corporate and other activities. The reportable segments are based on the similar characteristics of the operating segments within the regions in which they operate.
The following tables set forth Eldorado’s and Former Caesar’s unaudited consolidated historical net revenues, net income (loss) and Adjusted EBITDA (defined below) as previously reported for the fiscal quarters ended March 31, June 30, September 30 and December 31, 2019 and the fiscal quarters ended March 31 and June 30, 2020. Such information has been prepared by the Company to reflect Eldorado’s and Former Caesar’s unaudited consolidated historical net revenues, net income (loss) and Adjusted EBITDA for such quarterly periods.
Tables below with the heading “Combined Eldorado and Former Caesars” present the non-GAAP combined financial information of the Company and Former Caesars for periods prior to the Merger. Additionally, tables with the heading “Combined Eldorado and Former Caesars” present non-GAAP information that excludes the historical results of the following properties which the Company divested prior to the Merger, which together are referred to as the “Divestitures.” Adjustments to operating metrics below are made following the disposal of a property; therefore, such adjustments may not agree to previously reported schedules as new properties are included in the divestiture group. Excluded results are for:
| • | | Presque Isle Downs & Casino (“Presque”) for the period of January 1, 2019 through January 11, 2019; |
| • | | Lady Luck Casino Nemacolin (“Nemacolin”) for the period of January 1, 2019 through March 8, 2019; |
| • | | Mountaineer Casino, Racetrack & Resort (“Mountaineer”) for the period of January 1, 2019 through December 6, 2019; |
| • | | Isle Casino Cape Girardeau (“Cape Girardeau”) for the period of January 1, 2019 through December 6, 2019; and |
| • | | Lady Luck Casino Caruthersville (“Caruthersville”) for the period of January 1, 2019 through December 6, 2019. |
These non-GAAP adjustments are provided in order to present the historical operations of the reporting units which will continue to operate as part of the combined company. In addition, the operating results of Former Caesars have been adjusted to conform to New Caesars’ methodology of allocating certain corporate expenses between segments.
Such non-GAAP information is based on unaudited internal financial statements and has not been reviewed by the Company’s auditors. Such presentation does not conform with accounting principles generally accepted in the United States (“GAAP”) or the Securities and Exchange Commission rules for proforma presentation; however, we believe that the additional financial information will be helpful to users in comparing current results with results of prior periods. The properties identified as Divestitures may change. This non-GAAP data should not be considered as a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.
Adjusted EBITDA, 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 our 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 net 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, (gain) loss related to divestitures, professional and consulting services, sign-on and retention bonuses, business optimization expenses and transformation expenses, litigation awards and settlements, losses on inventory associated with properties temporarily closed as a result of the COVID-19 public health emergency, changes in the fair value of certain derivatives, contract exit or termination
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