Caesars Entertainment (CZR) 10-Q 2022 Q3 Quarterly report

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

Exhibit. Supplemental Consolidating Financial Information

The following tables present the consolidating condensed balance sheets as of September 30, 2022 and December 31, 2021, consolidating condensed statements of operations for the three and nine months ended September 30, 2022 and 2021, cash flows for the nine months ended September 30, 2022 and 2021, and Adjusted EBITDA for the three and nine months ended September 30, 2022 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.

The consolidating condensed balance sheets as of September 30, 2022 and December 31, 2021 are as follows:

	September 30, 2022						December 31, 2021
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC		Other Operations, Eliminations		CEI Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	443	$	501	$	944	$	508	$	562	$	1,070
Restricted cash and investments	21		115		136		13		306		319
Accounts receivable, net	368		138		506		369		103		472
Inventories	32		14		46		30		12		42
Prepayments and other current assets	196		108		304		189		101		290
Assets held for sale	—		—		—		—		3,771		3,771
Total current assets	1,060		876		1,936		1,109		4,855		5,964
Investments in and advances to unconsolidated affiliates	—		96		96		—		158		158
Property and equipment, net	11,571		3,021		14,592		11,688		2,913		14,601
Gaming rights and other intangibles, net	3,199		1,580		4,779		3,255		1,665		4,920
Goodwill	9,014		2,068		11,082		9,014		2,062		11,076
Other assets, net	1,528		(419)		1,109		1,500		(188)		1,312
Total assets	$	26,372	$	7,222	$	33,594	$	26,566	$	11,465	$	38,031
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	157	$	143	$	300	$	175	$	79	$	254
Accrued interest	104		125		229		118		202		320
Accrued other liabilities	1,031		796		1,827		1,053		920		1,973
Due to affiliates	799		(799)		—		601		(601)		—
Current portion of long-term debt	67		3		70		67		3		70
Liabilities related to assets held for sale	—		—		—		—		2,680		2,680
Total current liabilities	2,158		268		2,426		2,014		3,283		5,297
Long-term financing obligation	11,321		1,244		12,565		11,191		1,233		12,424
Long-term debt	6,068		6,789		12,857		6,861		6,861		13,722
Long-term debt to related party	15		(15)		—		15		(15)		—
Deferred income taxes	1,567		(585)		982		1,555		(444)		1,111
Other long-term liabilities	447		425		872		524		412		936
Total liabilities	21,576		8,126		29,702		22,160		11,330		33,490
STOCKHOLDERS' EQUITY:
Caesars stockholders’ equity	4,783		(945)		3,838		4,395		85		4,480
Noncontrolling interests	13		41		54		11		50		61
Total stockholders’ equity	4,796		(904)		3,892		4,406		135		4,541
Total liabilities and stockholders’ equity	$	26,372	$	7,222	$	33,594	$	26,566	$	11,465	$	38,031

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

The consolidating condensed statements of operations for the three months ended September 30, 2022 and 2021 are as follows:

	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC		Other Operations, Eliminations		CEI Consolidated
REVENUES:
Casino and pari-mutuel commissions	$	1,017	$	588	$	1,605	$	1,042	$	468	$	1,510
Food and beverage	351		60		411		295		52		347
Hotel	457		87		544		423		88		511
Other	282		45		327		283		34		317
Net revenues	2,107		780		2,887		2,043		642		2,685
EXPENSES:
Casino and pari-mutuel commissions	470		368		838		464		366		830
Food and beverage	200		40		240		175		35		210
Hotel	116		26		142		104		26		130
Other	98		7		105		109		5		114
General and administrative	363		166		529		326		160		486
Corporate	62		1		63		70		16		86
Depreciation and amortization	226		78		304		218		58		276
Transaction costs and other operating costs	5		2		7		14		7		21
Total operating expenses	1,540		688		2,228		1,480		673		2,153
Operating income	567		92		659		563		(31)		532
OTHER EXPENSE:
Interest expense, net	(402)		(167)		(569)		(421)		(158)		(579)
Loss on extinguishment of debt	(33)		—		(33)		(107)		(10)		(117)
Other income (loss)	—		4		4		(1)		(152)		(153)
Total other expense	(435)		(163)		(598)		(529)		(320)		(849)
Income (loss) from continuing operations before income taxes	132		(71)		61		34		(351)		(317)
Benefit (provision) for income taxes	(13)		5		(8)		(1)		91		90
Net income (loss) from continuing operations, net of income taxes	119		(66)		53		33		(260)		(227)
Discontinued operations, net of income taxes	—		—		—		10		(14)		(4)
Net income (loss)	119		(66)		53		43		(274)		(231)
Net loss attributable to noncontrolling interests	—		(1)		(1)		(1)		(1)		(2)
Net income (loss) attributable to Caesars	$	119	$	(67)	$	52	$	42	$	(275)	$	(233)

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

The consolidating condensed statements of operations for the nine months ended September 30, 2022 and 2021 are as follows:

	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC		Other Operations, Eliminations		CEI Consolidated
REVENUES:
Casino and pari-mutuel commissions	$	3,000	$	1,446	$	4,446	$	2,979	$	1,329	$	4,308
Food and beverage	987		185		1,172		677		120		797
Hotel	1,241		205		1,446		930		192		1,122
Other	818		118		936		669		83		752
Net revenues	6,046		1,954		8,000		5,255		1,724		6,979
EXPENSES:
Casino and pari-mutuel commissions	1,397		1,330		2,727		1,339		772		2,111
Food and beverage	564		120		684		401		83		484
Hotel	321		70		391		256		61		317
Other	277		21		298		250		12		262
General and administrative	1,034		511		1,545		896		388		1,284
Corporate	204		4		208		171		57		228
Depreciation and amortization	671		239		910		676		166		842
Transaction costs and other operating costs	14		(28)		(14)		51		62		113
Total operating expenses	4,482		2,267		6,749		4,040		1,601		5,641
Operating income	1,564		(313)		1,251		1,215		123		1,338
OTHER EXPENSE:
Interest expense, net	(1,184)		(496)		(1,680)		(1,255)		(479)		(1,734)
Loss on extinguishment of debt	(33)		—		(33)		(107)		(33)		(140)
Other income (loss)	24		29		53		(5)		(171)		(176)
Total other expense	(1,193)		(467)		(1,660)		(1,367)		(683)		(2,050)
Income (loss) from continuing operations before income taxes	371		(780)		(409)		(152)		(560)		(712)
Benefit (provision) for income taxes	(54)		101		47		71		96		167
Net income (loss) from continuing operations, net of income taxes	317		(679)		(362)		(81)		(464)		(545)
Discontinued operations, net of income taxes	(2)		(384)		(386)		(22)		(16)		(38)
Net income (loss)	315		(1,063)		(748)		(103)		(480)		(583)
Net loss attributable to noncontrolling interests	(1)		(2)		(3)		(2)		—		(2)
Net income (loss) attributable to Caesars	$	314	$	(1,065)	$	(751)	$	(105)	$	(480)	$	(585)

Supplemental Consolidating Financial Information

Caesars Resort Collection, LLC

(Unaudited)

The consolidating condensed statements of cash flows for the nine months ended September 30, 2022 and 2021 are as follows:

	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC		Other Operations, Eliminations		CEI Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	1,328	$	(859)	$	469	$	1,729	$	(755)	$	974
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net	(463)		(254)		(717)		(189)		(124)		(313)
Acquisition of William Hill, net of cash acquired	—		—		—		—		(1,551)		(1,551)
Purchase of additional interest in Horseshoe Baltimore, net of cash consolidated	—		—		—		—		(5)		(5)
Acquisition of gaming rights and trademarks	(11)		—		(11)		(262)		(20)		(282)
Proceeds from sale of businesses, property and equipment, net of cash sold	4		17		21		289		420		709
Proceeds from the sale of investments	—		121		121		—		206		206
Proceeds from insurance related to property damage	—		36		36		—		44		44
Investments in unconsolidated affiliates	—		—		—		—		(39)		(39)
Net cash used in investing activities	(470)		(80)		(550)		(162)		(1,069)		(1,231)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt and revolving credit facilities	750		—		750		108		1,200		1,308
Repayments of long-term debt and revolving credit facilities	(1,667)		(94)		(1,761)		(1,048)		(77)		(1,125)
Cash paid to settle convertible notes	—		—		—		—		(367)		(367)
Financing obligation payments	(1)		—		(1)		—		—		—
Transactions with parent	—		—		—		(117)		117		—
Debt issuance and extinguishment costs	—		—		—		—		(42)		(42)
Taxes paid related to net share settlement of equity awards	—		(26)		(26)		—		(33)		(33)
Net cash used in financing activities	(918)		(120)		(1,038)		(1,057)		798		(259)
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by (used in) discontinued operations	—		368		368		(18)		(899)		(917)
Change in cash, cash equivalents, and restricted cash classified as assets held for sale	—		—		—		—		10		10
Effect of foreign currency exchange rates on cash	—		(29)		(29)		—		31		31
Increase (decrease) in cash, cash equivalents and restricted cash	(60)		(720)		(780)		492		(1,884)		(1,392)
Cash, cash equivalents and restricted cash, beginning of period	527		1,494		2,021		411		3,869		4,280
Cash, cash equivalents and restricted cash, end of period	$	467	$	774	$	1,241	$	903	$	1,985	$	2,888

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 nine months ended September 30, 2022 are as follows:

	Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
(In millions)	CRC		Other Operations, Eliminations		CEI Consolidated		CRC		Other Operations, Eliminations		CEI Consolidated
Net income (loss) attributable to Caesars	$	119	$	(67)	$	52	$	314	$	(1,065)	$	(751)
Net income attributable to noncontrolling interests	—		1		1		1		2		3
Discontinued operations, net of income taxes	—		—		—		2		384		386
Provision (benefit) for income tax	13		(5)		8		54		(101)		(47)
Other (income) loss	—		(4)		(4)		(24)		(29)		(53)
Loss on extinguishment of debt	33		—		33		33		—		33
Interest expense	402		167		569		1,184		496		1,680
Depreciation and amortization	226		78		304		671		239		910
Transaction costs and other operating costs	5		2		7		14		(28)		(14)
Stock-based compensation expense	26		—		26		77		—		77
Other items	12		4		16		33		29		62
Adjusted EBITDA	$	836	$	176	$	1,012	$	2,359	$	(73)	$	2,286