Caesars Entertainment (CZR) 10-Q 2021 Q2 Quarterly report

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

Exhibit. Supplemental Consolidating Financial Information

The following tables present the balance sheets as of June 30, 2021 and December 31, 2020, statements of operations and cash flows for the three and six months ended June 30, 2021 and 2020, and Adjusted EBITDA for the three and six months ended June 30, 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 tables have been recast for all periods presented as Horseshoe Hammond no longer met the held for sale criteria in June 2021. See further discussion in Note 1 - Basis of Presentation, of Caesars Entertainment, Inc.’s quarterly report for the quarter ended June 30, 2021 on Form 10-Q. Additionally, reclassifications to Discontinued operations have not been presented for periods prior to the Merger.

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

The consolidating condensed balance sheets as of June 30, 2021 and December 31, 2020 are as follows:

	June 30, 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	$	593	$	535	$	1,128	$	392	$	1,384	$	1,776
Restricted cash and investments	26		211		237		9		2,012		2,021
Accounts receivable, net	315		80		395		267		75		342
Due from affiliates	292		(267)		25		613		(569)		44
Inventories	29		12		41		30		14		44
Prepayments and other current assets	146		96		242		159		94		253
Assets held for sale	826		3,422		4,248		871		712		1,583
Total current assets	2,227		4,089		6,316		2,341		3,722		6,063
Investments in and advances to unconsolidated affiliates	—		526		526		—		173		173
Property and equipment, net	11,841		2,552		14,393		12,165		2,570		14,735
Gaming rights and other intangibles, net	3,388		1,785		5,173		3,181		1,102		4,283
Goodwill	9,014		2,224		11,238		9,013		851		9,864
Other assets, net	1,459		(289)		1,170		1,443		(176)		1,267
Total assets	$	27,929	$	10,887	$	38,816	$	28,143	$	8,242	$	36,385
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	139	$	78	$	217	$	112	$	55	$	167
Accrued interest	134		183		317		46		183		229
Accrued other liabilities	961		652		1,613		851		412		1,263
Due to affiliates	30		(30)		—		12		(12)		—
Current portion of long-term debt	67		—		67		67		—		67
Liabilities related to assets held for sale	548		2,690		3,238		548		239		787
Total current liabilities	1,879		3,573		5,452		1,636		877		2,513
Long-term financing obligation	11,137		1,237		12,374		11,064		1,231		12,295
Long-term debt	8,346		5,492		13,838		8,304		5,769		14,073
Long-term debt to related party	15		(15)		—		15		(15)		—
Deferred income taxes	1,498		(354)		1,144		1,223		(57)		1,166
Other long-term liabilities	600		246		846		682		622		1,304
Total liabilities	23,475		10,179		33,654		22,924		8,427		31,351
STOCKHOLDERS' EQUITY:
Caesars stockholders’ equity	4,436		698		5,134		5,202		(186)		5,016
Noncontrolling interests	18		10		28		17		1		18
Total stockholders’ equity	4,454		708		5,162		5,219		(185)		5,034
Total liabilities and stockholders’ equity	$	27,929	$	10,887	$	38,816	$	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 June 30, 2021 and 2020 are as follows:

	Three Months Ended June 30, 2021						Three Months Ended June 30, 2020
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC (a)		Other Operations, Eliminations		CEI Consolidated
REVENUES:
Casino and pari-mutuel commissions	$	1,091	$	480	$	1,571	$	206	$	(105)	$	101
Food and beverage	242		39		281		24		(17)		7
Hotel	332		64		396		31		(22)		9
Other	227		27		254		74		(64)		10
Net revenues	1,892		610		2,502		335		(208)		127
EXPENSES:
Casino and pari-mutuel commissions	469		225		694		193		(148)		45
Food and beverage	139		27		166		40		(31)		9
Hotel	86		20		106		24		(18)		6
Other	75		4		79		40		(39)		1
General and administrative	291		127		418		146		(79)		67
Corporate	53		23		76		48		(34)		14
Impairment charges	—		—		—		—		—		—
Depreciation and amortization	241		60		301		244		(195)		49
Transaction costs and other operating costs	27		45		72		24		(9)		15
Total operating expenses	1,381		531		1,912		759		(553)		206
Operating income (loss)	511		79		590		(424)		345		(79)
OTHER EXPENSE:
Interest expense, net	(417)		(159)		(576)		(320)		252		(68)
Loss on extinguishment of debt	—		(23)		(23)		—		—		—
Other income (loss)	—		110		110		(19)		32		13
Total other expense	(417)		(72)		(489)		(339)		284		(55)
Income (loss) from continuing operations before income taxes	94		7		101		(763)		629		(134)
Benefit (provision) for income taxes	7		(6)		1		114		(80)		34
Net income (loss) from continuing operations, net of income taxes	101		1		102		(649)		549		(100)
Discontinued operations, net of income taxes	(28)		(2)		(30)		—		—		—
Net income (loss)	73		(1)		72		(649)		549		(100)
Net (income) loss attributable to noncontrolling interests	(1)		—		(1)		3		(3)		—
Net income (loss) attributable to Caesars	$	72	$	(1)	$	71	$	(646)	$	546	$	(100)

____________________

(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 operations for the six months ended June 30, 2021 and 2020 are as follows:

	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC (a)		Other Operations, Eliminations		CEI Consolidated
REVENUES:
Casino and pari-mutuel commissions	$	1,937	$	861	$	2,798	$	1,151	$	(710)	$	441
Food and beverage	382		68		450		353		(290)		63
Hotel	507		104		611		348		(291)		57
Other	386		49		435		310		(271)		39
Net revenues	3,212		1,082		4,294		2,162		(1,562)		600
EXPENSES:
Casino and pari-mutuel commissions	875		406		1,281		774		(550)		224
Food and beverage	226		48		274		301		(239)		62
Hotel	152		35		187		139		(111)		28
Other	141		7		148		173		(163)		10
General and administrative	570		228		798		559		(394)		165
Corporate	101		41		142		97		(67)		30
Impairment charges	—		—		—		65		96		161
Depreciation and amortization	458		108		566		499		(400)		99
Transaction costs and other operating costs	37		55		92		37		(14)		23
Total operating expenses	2,560		928		3,488		2,644		(1,842)		802
Operating income (loss)	652		154		806		(482)		280		(202)
OTHER EXPENSE:
Interest expense, net	(834)		(321)		(1,155)		(636)		501		(135)
Loss on extinguishment of debt	—		(23)		(23)		—		—		—
Other loss	(4)		(19)		(23)		(6)		(4)		(10)
Total other expense	(838)		(363)		(1,201)		(642)		497		(145)
Income (loss) from continuing operations before income taxes	(186)		(209)		(395)		(1,124)		777		(347)
Benefit (provision) for income taxes	72		5		77		185		(114)		71
Net income (loss) from continuing operations, net of income taxes	(114)		(204)		(318)		(939)		663		(276)
Discontinued operations, net of income taxes	(32)		(2)		(34)		—		—		—
Net income (loss)	(146)		(206)		(352)		(939)		663		(276)
Net (income) loss attributable to noncontrolling interests	(1)		1		—		4		(4)		—
Net income (loss) attributable to Caesars	$	(147)	$	(205)	$	(352)	$	(935)	$	659	$	(276)

____________________

(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 six months ended June 30, 2021 and 2020 are as follows:

	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC (a)		Other Operations, Eliminations		CEI Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	711	$	(39)	$	672	$	(1,072)	$	991	$	(81)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net	(105)		(72)		(177)		(192)		151		(41)
Acquisition of William Hill, net of cash acquired	—		(2,042)		(2,042)		—		—		—
Acquisition of gaming rights and trademarks	(252)		(20)		(272)		(15)		15		—
Proceeds from sale of businesses, property and equipment, net of cash sold	3		457		460		—		—		—
Proceeds from the sale of investments	—		44		44		—		—		—
Proceeds from insurance related to property damage	—		40		40		—		—		—
Investments in unconsolidated affiliates	—		(33)		(33)		—		(1)		(1)
Net cash used in investing activities	(354)		(1,626)		(1,980)		(207)		165		(42)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt and revolving credit facilities	—		—		—		1,138		(673)		465
Repayments of long-term debt and revolving credit facilities	(34)		(1)		(35)		(28)		(339)		(367)
Financing obligation payments	—		—		—		(9)		9		—
Transactions with parent	(117)		117		—		(215)		215		—
Proceeds from issuance of common stock	—		—		—		—		772		772
Cash paid to settle convertible notes	—		(367)		(367)		—		—		—
Taxes paid related to net share settlement of equity awards	—		(27)		(27)		—		(7)		(7)
Net cash (used in) provided by financing activities	(151)		(278)		(429)		886		(23)		863
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Cash flows from operating activities	12		(79)		(67)		—		—		—
Cash flows from investing activities	(1)		(915)		(916)		—		—		—
Cash flow from financing activities	—		591		591		—		—		—
Net cash from (used in) discontinued operations	11		(403)		(392)		—		—		—
Change in cash, cash equivalents, and restricted cash classified as assets held for sale	—		—		—		(5)		5		—
Effect of foreign currency exchange rates on cash	—		19		19		—		—		—
Increase (decrease) in cash, cash equivalents and restricted cash	217		(2,327)		(2,110)		(398)		1,138		740
Cash, cash equivalents and restricted cash, beginning of period	411		3,869		4,280		1,422		(1,205)		217
Cash, cash equivalents and restricted cash, end of period	$	628	$	1,542	$	2,170	$	1,024	$	(67)	$	957

____________________

(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 and six months ended June 30, 2021 are as follows:

	Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC		Other Operations, Eliminations		CEI Consolidated
Net income (loss) attributable to Caesars	$	72	$	(1)	$	71	$	(147)	$	(205)	$	(352)
Net income attributable to noncontrolling interests	1		—		1		1		(1)		—
Discontinued operations, net of income taxes	28		2		30		32		2		34
Benefit for income tax	(7)		6		(1)		(72)		(5)		(77)
Other (income) loss	—		(110)		(110)		4		19		23
Loss on extinguishment of debt	—		23		23		—		23		23
Interest expense	417		159		576		834		321		1,155
Depreciation and amortization	241		60		301		458		108		566
Transaction costs and other operating costs	27		45		72		37		55		92
Stock-based compensation expense	9		11		20		19		24		43
Other items	13		8		21		22		10		32
Adjusted EBITDA	$	801	$	203	$	1,004	$	1,188	$	351	$	1,539