Caesars Entertainment (CZR) 10-Q2021 Q1 Quarterly report

Filed: 5 May 21, 12:00am

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New words: anytime, ascertain, assignment, authoritative, await, Band, begun, bettor, book, broad, Caesar, CAUTIONARY, certificate, Codification, concentration, consulting, CQ, digital, dividend, ease, eased, Eastern, EBCI, efficacy, expanded, explanation, flat, Fly, footprint, growing, investor, join, narrative, negligible, noncurrent, nondeductible, overturned, past, Petition, petitioned, proceed, promenade, rebrand, recipient, reclassification, rejected, relocation, remeasured, Roller, sanctioned, shorter, statistical, step, Strip, suit, Supreme, target, targeted, thousand, trial, unallocated, unchanged, upheld, variety, wheel, WSOP, Zipline

Removed: AC, accelerated, affiliate, aggressive, Aid, amend, amendment, announcing, authority, bargaining, began, Blackhawk, borrowed, bring, buyer, cancellation, Cape, capitalizing, carry, carryback, Caruthersville, classification, closure, cloud, collective, Colorado, computed, confidence, consent, consisting, CPLV, dated, declared, deduction, deferment, delay, detail, discount, dollar, downturn, economy, element, eliminate, employer, employment, enacted, ERI, evolve, exacerbating, executed, exercisable, expensed, expiration, exporting, extend, extended, failed, flexibility, flooding, floor, Florida, fluctuation, foregoing, fourth, free, furlough, furloughing, Girardeau, healthcare, horsemen, hosting, IA, implement, importing, imputed, inflation, Iowa, issuer, jackpot, leaseback, leasehold, mitigation, month, mortgage, Mountaineer, MTA, nasdaq, Nemacolin, offering, par, participant, predetermined, predict, premium, prepayment, Presque, priority, profitability, Progressive, protracted, Puerto, qualified, quarantine, race, recognizing, reconfiguration, redeemed, refundable, Registrant, release, released, remained, renegotiation, renew, renewal, renovation, repay, reputation, require, restrictive, resume, retained, retroactive, Rico, security, sensitive, sentiment, Simplifying, simulcast, technical, temporary, thereunder, thoroughbred, threshold, trustee, TSG, ultimate, Virgin, Virginia, waiting, widespread, worsen

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Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

Exhibit. Supplemental Consolidating Financial Information

The following tables present the balance sheets as of March 31, 2021 and December 31, 2020, statements of operations and cash flows for the three months ended March 31, 2021 and 2020, and Adjusted EBITDA for the three months ended March 31, 2021 of Caesars Resort Collection, LLC (“CRC”), as it consolidates into CEI as a wholly-owned subsidiary. “Other Operations, Eliminations” presents the operations of CEI’s other subsidiaries, including eliminations of intercompany transactions. CEI consolidated balances do not include CRC until the period starting from July 20, 2020.

The consolidating condensed balance sheets as of March 31, 2021 and December 31, 2020 are as follows:


	March 31, 2021						December 31, 2020
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC		Other Operations, Eliminations		CEI Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	475	$	1,319	$	1,794	$	374	$	1,384	$	1,758
Restricted cash and investments	20		2,053		2,073		9		2,012		2,021
Accounts receivable, net	267		57		324		262		76		338
Due from affiliates	357		(309)		48		613		(569)		44
Inventories	28		13		41		30		14		44
Prepayments and other current assets	145		91		236		157		93		250
Assets held for sale	1,479		567		2,046		1,500		712		2,212
Total current assets	2,771		3,791		6,562		2,945		3,722		6,667
Investments in and advances to unconsolidated affiliates	—		263		263		—		173		173
Property and equipment, net	11,586		2,497		14,083		11,763		2,570		14,333
Gaming rights and other intangibles, net	3,136		1,099		4,235		3,151		1,102		4,253
Goodwill	8,878		851		9,729		8,872		851		9,723
Other assets, net	1,412		(265)		1,147		1,412		(176)		1,236

Total assets	$	27,783	$	8,236	$	36,019	$	28,143	$	8,242	$	36,385
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	112	$	36	$	148	$	110	$	55	$	165
Accrued interest	138		100		238		46		183		229

Accrued other liabilities	878		429		1,307		827		412		1,239
Due to affiliates	20		(20)		—		12		(12)		—
Current portion of long-term debt	67		—		67		67		—		67
Liabilities related to assets held for sale	645		99		744		646		239		885
Total current liabilities	1,860		644		2,504		1,708		877		2,585
Long-term financing obligation	11,100		1,234		12,334		11,064		1,231		12,295
Long-term debt	8,325		5,778		14,103		8,304		5,769		14,073
Long-term debt to related party	15		(15)		—		15		(15)		—
Deferred income taxes	1,586		(495)		1,091		1,223		(57)		1,166
Other long-term liabilities	558		799		1,357		610		622		1,232
Total liabilities	23,444		7,945		31,389		22,924		8,427		31,351
STOCKHOLDERS' EQUITY:





Caesars stockholders’ equity	4,322		291		4,613		5,202		(186)		5,016
Noncontrolling interests	17		—		17		17		1		18
Total stockholders’ equity	4,339		291		4,630		5,219		(185)		5,034
Total liabilities and stockholders’ equity	$	27,783	$	8,236	$	36,019	$	28,143	$	8,242	$	36,385

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

The consolidating condensed statements of operations for the three months ended March 31, 2021 and 2020 are as follows:


	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC (a)		Other Operations, Eliminations		CEI Consolidated
REVENUES:
Casino and pari-mutuel commissions	$	759	$	381	$	1,140	$	945	$	(605)	340
Food and beverage	137		29		166		329		(273)		56
Hotel	175		40		215		317		(269)		48
Other	156		22		178		236		(207)		29
Net revenues	1,227		472		1,699		1,827		(1,354)		473
EXPENSES:
Casino and pari-mutuel commissions	360		181		541		581		(402)		179
Food and beverage	85		21		106		261		(208)		53
Hotel	66		15		81		115		(93)		22
Other	65		3		68		133		(124)		9
General and administrative	265		101		366		413		(315)		98
Corporate	48		18		66		49		(33)		16
Impairment charges	—		—		—		65		96		161
Depreciation and amortization	217		48		265		255		(205)		50
Transaction costs and other operating costs	10		10		20		13		(5)		8
Total operating expenses	1,116		397		1,513		1,885		(1,289)		596
Operating (loss) income	111		75		186		(58)		(65)		(123)
OTHER EXPENSE:
Interest expense, net	(401)		(162)		(563)		(316)		249		(67)

Other income (loss)	(4)		(129)		(133)		13		(36)		(23)
Total other expense	(405)		(291)		(696)		(303)		213		(90)
Income (loss) from continuing operations before income taxes	(294)		(216)		(510)		(361)		148		(213)
Benefit (provision) for income taxes	70		9		79		71		(34)		37
Net income (loss) from continuing operations, net of income taxes	(224)		(207)		(431)		(290)		114		(176)
Discontinued operations, net of income taxes	7		—		7		—		—		—
Net income (loss)	(217)		(207)		(424)		(290)		114		(176)
Net income (loss) attributable to noncontrolling interests	—		1		1		1		(1)		—
Net income (loss) attributable to Caesars	$	(217)	$	(206)	$	(423)	$	(289)	$	113	$	(176)

____________________

(a)In connection with the Merger, CEOC, LLC has been contributed to CRC and the results for the periods presented have been recast as the contribution was between entities under common control.

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

The consolidating condensed statements of cash flows for the three months ended March 31, 2021 and 2020 are as follows:


	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC (a)		Other Operations, Eliminations		CEI Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
























Net cash (used in) provided by operating activities	$	134	$	(89)	$	45	$	(102)	$	132	$	30

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net	(38)		(27)		(65)		(111)		88		(23)


Acquisition of gaming rights	—		(2)		(2)		—		—		—
Proceeds from sale of businesses, property and equipment, net of cash sold	3		1		4		—		10		10
Proceeds from the sale of investments	—		42		42		—		—		—
Proceeds from insurance	—		26		26		—		—		—
Investments in unconsolidated affiliates	—		(30)		(30)		—		—		—

Net cash (used in) provided by investing activities	(35)		10		(25)		(111)		98		(13)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt and revolving credit facilities	—		—		—		1,137		(672)		465
Repayments of long-term debt and revolving credit facilities	(16)		—		(16)		(16)		6		(10)


Financing obligation payments	—		—		—		(2)		2		—
Transactions with parent	—		—		—		(5)		5		—



Taxes paid related to net share settlement of equity awards	—		(14)		(14)		—		(7)		(7)


Net cash (used in) provided by financing activities	(16)		(14)		(30)		1,114		(666)		448

CASH FLOWS FROM DISCONTINUED OPERATIONS:
Cash flows from operating activities	26		1		27		—		—		—

Net cash from discontinued operations	26		1		27		—		—		—

Effect of foreign currency exchange rates on cash	—		21		21		—		—		—
Increase (decrease) in cash, cash equivalents and restricted cash	109		(71)		38		901		(436)		465
Cash, cash equivalents and restricted cash, beginning of period	393		3,823		4,216		1,422		(1,205)		217
Cash, cash equivalents and restricted cash, end of period	$	502	$	3,752	$	4,254	$	2,323	$	(1,641)	$	682

____________________

(a)In connection with the Merger, CEOC, LLC has been contributed to CRC and the results for the periods presented have been recast as the contribution was between entities under common control.

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

The reconciliations of net income (loss) attributable to Caesars to Adjusted EBITDA for the three months ended March 31, 2021 are as follows:


	Three Months Ended March 31, 2021
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated
Net loss attributable to Caesars	$	(217)	$	(206)	$	(423)
Net loss attributable to noncontrolling interests	—		(1)		(1)
Net income from discontinued operations	(7)		—		(7)
Income tax benefit	(70)		(9)		(79)
Other loss	4		129		133
Interest expense	401		162		563
Depreciation and amortization	217		48		265

Transaction costs and other operating costs	10		10		20
Stock-based compensation expense	10		13		23
Other items	8		3		11
Adjusted EBITDA	$	356	$	149	$	505

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