CAESARS ENTERTAINMENT, INC. LAS VEGAS, March 2, 2015 /PRNewswire/ -- Caesars Acquisition Company (NASDAQ: CACQ) today reported the following results for Caesars Growth Partners, LLC ("CGP LLC") for the fourth quarter and full-year 2014. Caesars Acquisition Company ("CAC") was formed to make an investment in CGP LLC, owns 100% of the voting membership units and accounts for its investment under the equity method.
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Fourth Quarter 2014 Highlights
-- Generated strong results in the Interactive Entertainment business unit
with net revenues and Adjusted EBITDA up 63.6% and 87.1% year over year,
respectively
-- Recorded consistent growth in the Casino Properties and Development
business unit with revenues up 40.1% year over year, primarily from the
openings of The Cromwell in Q2 2014 and Horseshoe Baltimore in Q3 2014
-- Commenced operations for The LINQ Hotel & Casino post completion of
Phase 1 of the renovations
Full-Year 2014 Highlights
-- Posted a record year in the Interactive Entertainment business unit with
net revenues and Adjusted EBITDA up 85.3% and 81.5% year over year,
respectively
-- Delivered impressive growth in the Casino Properties and Development
business unit with revenues and Adjusted EBITDA up 23.3% and 4.4% year
over year, respectively
-- Closed on the acquisition of Pacific Interactive, creator of House of
Fun Slots, CIE's fourth social game acquisition over a four year period
-- Successfully opened The Cromwell in Q2 2014 and Horseshoe Baltimore in
Q3 2014
Operating Results of CGP LLC and Predecessor Growth Partners
The consolidated financial information for the periods subsequent to October 21, 2013 reflects the impacts of the October 21, 2013 formation transaction, including the recording of non-controlling interest and the determination of taxes in accordance with the LLC structure of CGP LLC. Financial information for the period through October 21, 2013 referred to herein as Predecessor Growth Partners, presents the combination of those assets and entities that were purchased by or contributed to CGP LLC with financial information derived from the historical accounting records and consolidated financial statements of Caesars Entertainment Corporation ("Caesars Entertainment").
In May 2014, subsidiaries of CGP LLC acquired Bally's Las Vegas, The Cromwell, The LINQ Hotel & Casino and Harrah's New Orleans from subsidiaries of Caesars Entertainment Operating Company, Inc. ("CEOC"). Because these acquisitions were accounted for as transactions among entities under common control, the financial information herein includes the financial results for these properties as if those businesses were combined into the CGP LLC and Predecessor Growth Partners reporting entities for all periods presented. Therefore, the financial information contained herein provides comparable results for all periods presented.
Quarter Year
------- ----
(In millions) Three Months Ended October 22, 2013 October 1, Year Ended October 22, January 1, 2013
December 31, 2014 through December 2013 through December 31, 2013 through through
31, 2013 October 21, 2014 December 31, October 21,
2013 2013 2013
------------ ------------------- ----------------- ------------- ------------- ------------ ---------------
Interactive
entertainment net
revenues $156.4 $74.0 $21.6 $586.8 $74.0 $242.6
Casino properties
and developments
net revenues 370.5 203.2 61.3 1,280.8 203.2 835.6
Total net revenues 526.9 277.2 82.9 1,867.6 277.2 1,078.2
Income/(loss) from
operations (199.1) (135.8) 12.3 (108.0) (135.8) 112.5
Net income/(loss)
from continuing
operations (265.2) (124.3) 5.6 (197.6) (124.3) 121.8
Net loss from
discontinued
operations - (0.4) - (15.6) (0.4) -
Adjusted EBITDA (1) 103.4 64.0 21.1 416.2 64.0 275.1
(1) Adjusted
Earnings before
Interest
Income/
Expense, Income
Taxes,
Depreciation
and
Amortization
("EBITDA") is a
non-GAAP
financial
measure that is
reconciled to
its most
comparable GAAP
measure later
in this
release.
Adjusted EBITDA
is included
because
management
believes that
Adjusted EBITDA
provides
investors with
additional
information
that allows a
better
understanding
of the results
of operational
activities
separate from
the financial
impact of
capital
investment
decisions made
for the long-
term benefit of
CGP LLC and
Predecessor
Growth
Partners.
Management Commentary
"Caesars Growth Partners, LLC reported solid quarter and full-year results driven by growth in both of our business units," said Mitch Garber, chief executive officer of Caesars Acquisition Company. "Our Interactive Entertainment business continues to yield remarkable results, primarily from our leading social and mobile games business. During the fourth quarter, we completed the first phase of renovations at The LINQ Hotel & Casino. We are excited about the transformation of this asset and the successful opening of The Cromwell and Horseshoe Baltimore. We remain encouraged by the performance of the assets this year and will continue to focus on these businesses to deliver operating growth."
Financial Results
Fourth Quarter 2014 results compared with Fourth Quarter 2013
Net revenues for the fourth quarter of 2014 increased by $166.8 million, or 46.3%, compared with same period in 2013, driven by strong performance in both business units, including organic growth at Caesars Interactive Entertainment ("Interactive Entertainment" or "CIE") and its first quarter 2014 acquisition of Pacific Interactive, the opening of The Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014.
Loss from operations for the fourth quarter of 2014 was $199.1 million as compared to $123.5 million for the same period in 2013. The increase in loss from operations is primarily attributable to an impairment of goodwill for Bally's Las Vegas partially offset by a decrease in the fair value of contingently issuable non-voting membership units.
Adjusted EBITDA increased by $18.3 million, or 21.5%, in the fourth quarter of 2014 as compared with the fourth quarter of 2013, primarily driven by the income impact of increased revenues.
Year ended December 31, 2014 results compared with December 31, 2013
Net revenues for 2014 increased by $512.2 million, or 37.8%, compared with 2013, driven by strong performance in both business units, including organic growth at Interactive Entertainment and its first quarter 2014 acquisition of Pacific Interactive, the opening of The Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014.
Loss from operations for 2014 was $108.0 million as compared to $23.3 million in 2013. The increase in loss from operations is primarily attributable to an impairment of goodwill for Bally's Las Vegas partially offset by a decrease in the fair value of contingently issuable non-voting membership units.
Adjusted EBITDA increased by $77.1 million, or 22.7%, in 2014 as compared with 2013, primarily driven by the income impact of increased revenues.
Business Units Operating Results
Interactive Entertainment
Quarter Year
------- ----
(In millions) Three Months October 22, October 1, Year Ended October 22, January 1, 2013
Ended December 2013 through 2013 through December 31, 2013 through through
31, 2014 December 31, October 21, 2014 December 31, October 21,
2013 2013 2013 2013
------------ --------------- ------------ ------------- ------------- ------------ ---------------
Net revenues $156.4 $74.0 $21.6 $586.8 $74.0 $242.6
Income/(loss)
from operations 0.3 (5.7) 3.1 21.3 (5.7) (1.3)
Net loss from
continuing
operations (18.7) (8.8) (1.7) (20.9) (8.8) (0.4)
Net loss from
discontinued
operations - (0.4) - (15.6) (0.4) -
Adjusted
EBITDA(1) 47.9 19.1 6.5 177.0 19.1 78.4
See
Reconciliation
of Net
Income/
(Loss) from
Continuing
Operations to
Adjusted
(1) EBITDA.
Fourth Quarter 2014 results compared with Fourth Quarter 2013
Interactive Entertainment net revenues increased by $60.8 million, or 63.6%, in the fourth quarter of 2014 as compared to the same period in 2013 as a result of the first quarter 2014 acquisition of Pacific Interactive, organic growth in the social and mobile games business and the full-year impact of online real money gaming in Nevada and New Jersey. Income from operations for the fourth quarter of 2014 was $0.3 million, compared with loss from operations of $2.6 million for the same period in 2013. Adjusted EBITDA increased by $22.3 million, or 87.1%, in the fourth quarter of 2014 as compared with the fourth quarter of 2013, driven by the income impact of increased social and mobile games revenues, partially offset by foreign currency transaction losses of $2.8 million.
Year ended December 31, 2014 results compared with December 31, 2013
Interactive Entertainment net revenues increased by $270.2 million, or 85.3%, in 2014 as compared to 2013 as a result of the first quarter 2014 acquisition of Pacific Interactive, organic growth in the social and mobile games business, and improved monetization and Average Revenue per User. Income from operations for 2014 was $21.3 million, compared with loss in operations of $7.0 million for the same period in 2013. Net loss from discontinued operations was $15.6 million in 2014 compared to $0.4 million in 2013, as CIE decided, effective August 2014, it would suspend operations of a studio in Minsk, Belarus, which was subsequently disposed of in the fourth quarter of 2014. Adjusted EBITDA increased by $79.5 million, or 81.5%, in 2014 as compared with 2013, driven by the income impact of increased revenues, partially offset by increases in marketing expenses associated with online real money gaming, operating expenses due to the business growth of social and mobile games and foreign currency transaction losses of $5.4 million.
Performance Metrics - Interactive Entertainment
The tables below show the results of CIE's business based upon our financial metrics for the periods indicated.
For the Three Months Ended
--------------------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31,
(In
millions)
----------
2014 2014 2014(1) 2014(1) 2013(1) (2) 2013 2013 2013
---- ---- ------ ------ ---------- ---- ---- ----
Revenues
Social and
mobile
games $147.7 $151.3 $134.4 $115.7 $90.7 $74.7 $70.7 $66.6
WSOP and
online real
money
gaming 8.7 10.3 10.2 8.5 4.9 4.2 3.3 1.5
--- ---- --- --- --- --- ---
Total $156.4 $161.6 $144.6 $124.2 $95.6 $78.9 $74.0 $68.1
====== ====== ====== ====== ===== ===== ===== =====
Adjusted
EBITDA $47.9 $53.4 $44.6 $31.1 $25.6 $30.6 $20.1 $21.2
===== ===== ===== ===== ===== ===== ===== =====
Adjusted
EBITDA has
been recasted
to reflect
discontinued
operations
related to
(1) CIE.
(2) Presents the
aggregate of
Predecessor
Growth
Partners for
the period
from October
1 through
October 21,
2013, and CGP
LLC for the
period from
October 22
through
December 31,
2013.
The table below shows the results of CIE's social and mobile games business using operating metrics for the periods indicated. User statistics are presented in thousands of users and average revenues per user is presented in dollars.
Dec. 31, 2014 Sept. 30, Jun. 30, 2014 Mar. 31, Dec. 31, Sept. 30,
2014 2014(1) 2013(2) 2013 Jun. 30, 2013 Mar. 31, 2013
------------- ---------- ------------- --------- --------- ---------- ------------- -------------
Average
Daily
Active
Users(3) 5,706 5,640 5,681 5,704 4,639 4,803 4,952 5,259
Average
Monthly
Active
Users(3) 17,863 17,767 18,575 19,597 15,914 16,354 16,962 17,695
Average
Monthly
Unique
Users(3) 16,508 16,472 16,794 17,370 13,908 14,615 14,941 16,052
Average
Monthly
Unique
Payers(3) 657 595 539 511 322 293 279 292
Average
Revenue
Per User $0.28 $0.29 $0.26 $0.24 $0.21 $0.17 $0.16 $0.14
Operating
metrics
include
numbers from
Pacific
Interactive
only after
its February
2014
acquisition
(1) by CIE.
(2) Presents the
aggregate of
Predecessor
Growth
Partners for
the period
from October
1 through
October 21,
2013, and CGP
LLC for the
period from
October 22
through
December 31,
2013.
(3) CIE systems
cannot always
distinguish
unique
individuals
playing games
in multiple
sessions in
the same day
or in a
30-day period
ending with
the
measurement
date, playing
the same game
across
multiple
platforms, or
playing
different
titles
offered by
CIE. Thus,
users who
play multiple
titles or
multiple
platforms may
be counted as
more than one
user within
the
respective
operating
metrics.
During the fourth quarter of 2014, CIE's social and mobile games business had approximately 657 thousand Average Monthly Unique Payers, or 4.0% of Average Monthly Unique Users on the social and mobile platforms, purchase virtual goods, which was an increase of approximately 170 basis points year over year.
Casino Properties and Developments
Quarter Year
------- ----
(In Three Months October 22, October 1, Year Ended October 22, January 1, 2013
millions) Ended December 2013 through 2013 through December 31, 2013 through through
31, 2014 December 31, October 21, 2014 December 31, October 21,
2013 2013 2013 2013
---------- --------------- ------------ ------------- ------------- ------------ ---------------
Net revenues
(1) $370.5 $203.2 $61.3 $1,280.8 $203.2 $835.6
Income/
(loss) from
operations
(1) (148.5) 25.3 9.2 (74.5) 25.3 113.8
Adjusted
EBITDA(1)(2) 59.8 47.0 14.6 254.4 47.0 196.7
(1) The financial
information
herein
includes the
financial
results for
Bally's Las
Vegas, The
Cromwell, The
LINQ Hotel &
Casino and
Harrah's New
Orleans as if
those
businesses
were combined
into the
Predecessor
Growth
Partners and
CGP LLC
reporting
entities for
all periods
presented.
See
Reconciliation
of Net
Income/
(Loss) from
Continuing
Operations to
Adjusted
EBITDA later
in this
(2) release.
Fourth Quarter 2014 results compared with Fourth Quarter 2013
Casino Properties and Developments net revenues for the fourth quarter of 2014 increased by $106.0 million, or 40.1%, when compared to the same period in 2013, due primarily to the opening of The Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014. Loss from operations for the fourth quarter of 2014 was $148.5 million, compared with income from operations of $34.5 million for the same period in 2013. Income impact of increased revenues was more than offset by the combination of an impairment of goodwill for Bally's Las Vegas, increased expenses at The LINQ Hotel & Casino primarily due to its strip-front lease, and increased pre-opening expenses associated with Horseshoe Baltimore. Adjusted EBITDA decreased by $1.8 million, or 2.9%, in the fourth quarter of 2014 as compared with the fourth quarter of 2013 as the income impact of increased revenues was more than offset by the combination of increased expenses at The LINQ Hotel & Casino due to its strip-front lease which began in 2014, management fee expenses incurred after the May 2014 acquisitions and opening of Horseshoe Baltimore in August 2014.
Room revenues for the fourth quarter of 2014 and 2013 were $64.6 million and $60.5 million, respectively. Cash average daily room rates for the fourth quarter of 2014 increased to approximately $114, or by 25.3%, when compared to approximately $91 for the same period in 2013, primarily due to the opening of The Cromwell, the refurbished tower that opened in the fourth quarter of 2013 at Bally's Las Vegas, and refurbished rooms at The LINQ Hotel & Casino. Average daily occupancy was 86.3% for the fourth quarter of 2014 and 85.2% in the fourth quarter of 2013. Revenue per available room ("RevPar") for the fourth quarter of 2014 and 2013 was $99 and $81, respectively. The revenue impact of favorable trends in room metrics was mostly offset by a lower number of rooms available due to room renovations at The LINQ Hotel & Casino.
Food and beverage revenues for the fourth quarter of 2014 and 2013 were $67.8 million and $49.5 million respectively. This increase in food and beverage revenues was driven largely by new offerings that opened in 2014 across the portfolio such as various new venues from the openings of Horseshoe Baltimore and The Cromwell in 2014.
Other revenues for the fourth quarter of 2014 and 2013 were $38.1 million and $26.6 million, respectively. This increase is primarily due to the opening of Drai's at The Cromwell and enhanced entertainment options at the new Axis Theater at Planet Hollywood.
Year ended December 31, 2014 results compared with December 31, 2013
Casino Properties and Developments net revenues for 2014 increased by $242.0 million, or 23.3%, when compared to the same period in 2013, primarily due to the opening of The Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014. Loss from operations was $74.5 million for 2014, as compared to income of $139.1 million in 2013. Income impact of increased revenues was more than offset by the combination of an impairment of goodwill for Bally's Las Vegas, increased expenses at The LINQ Hotel & Casino, primarily due to its strip-front lease, and increased pre-opening expenses associated with Horseshoe Baltimore. Adjusted EBITDA increased by $10.7 million, or 4.4%, for 2014 when compared with 2013 primarily driven by the income impact of increased revenues.
Room revenues for 2014 and 2013 were $258.4 million and $241.0 million, respectively. Cash average daily room rates for 2014 increased to approximately $108, or 25.6%, when compared to approximately $86 for 2013, primarily due to upgraded rooms at Bally's Las Vegas and the introduction of resort fees and upgraded rooms at The LINQ Hotel & Casino. Average daily occupancy was 89.7% for 2014 and 89.5% for 2013. RevPar for 2014 and 2013 was $98 and $82, respectively. The revenue impact of favorable trends in room metrics was mostly offset by a lower number of rooms available due to room renovations at The LINQ Hotel & Casino.
Food and beverage revenues for 2014 and 2013 were $245.5 million and $200.6 million, respectively. This increase in food and beverage revenues was driven largely by new offerings at various new venues from the openings of Horseshoe Baltimore and The Cromwell in 2014.
Other revenues for 2014 and 2013 were $156.6 million and $94.0 million, respectively. This increase is primarily due to the opening of Drai's at The Cromwell and enhanced entertainment options at the new Axis Theater at Planet Hollywood.
Liquidity and Capital Resources
CGP LLC's primary sources of liquidity include currently available cash and cash equivalents, cash flows generated from its operations and borrowings under the CGPH term loan.
On May 8, 2014, Caesars Growth Properties Holdings, LLC ("CGPH", an indirect, wholly-owned subsidiary of CGP LLC) closed on $1.175 billion of term loans pursuant to a credit agreement. In connection with the "Acquired Properties" acquisitions of Harrah's New Orleans, The LINQ Hotel & Casino, Bally's Las Vegas and The Cromwell, and the contribution of Planet Hollywood to subsidiaries of CGPH, CGPH and Caesars Growth Properties Finance, Inc. issued a second-priority senior secured notes due 2022.
At December 31, 2014, cash and cash equivalents totaled $944.1 million. Third-party debt outstanding at CGP LLC was $2,325.8 million as of December 31, 2014. This amount includes debt of the consolidated subsidiary CGPH of $2,001.4 million. Related party debt outstanding includes Long-term debt payable to related parties of $39.8 million.
About Caesars Acquisition Company
Caesars Acquisition Company was formed to make an equity investment in Caesars Growth Partners, LLC, a joint venture between CACQ and Caesars Entertainment Corporation (NASDAQ: CZR), the world's most diversified casino entertainment provider and the most geographically diverse U.S. casino-entertainment company. CACQ is CGP LLC's managing member and sole holder of all of its outstanding voting units. For more information, please visit www.caesarsacquisitioncompany.com.
About Caesars Growth Partners, LLC
Caesars Growth Partners, LLC is a casino asset and entertainment company focused on acquiring and developing a portfolio of high-growth operating assets and equity and debt investments in the gaming and interactive entertainment industries. Through its two businesses-Interactive Entertainment and Casino Properties and Developments-CGP LLC focuses on acquiring or developing assets with strong value creation potential and leveraging interactive technology with its well-known online and mobile game portfolio and leading brands. Assets include Caesars Interactive Entertainment (with its social and mobile games, the World Series of Poker and regulated online real money gaming businesses), Planet Hollywood, Bally's Las Vegas, The Cromwell, The LINQ Hotel & Casino, Harrah's New Orleans and Horseshoe Baltimore. Through its relationship with Caesars Entertainment, CGP LLC has the ability to access Caesars Entertainment's proven management expertise, brand equity, Total Rewards loyalty program and structural synergies. For more information, please visit www.caesarsacquisitioncompany.com.
Forward Looking Information
This release contains or may contain "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue," or "pursue," or the negative of these words or other words or expressions of similar meaning that may identify forward-looking statements and are found at various places throughout this release. These forward-looking statements, including, without limitation, those relating to future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings, and future financial results, wherever they occur in this release, are based on our current expectations about future events and are estimates reflecting the best judgment of CAC and CGP LLC's management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.
Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified, and, consequently, the actual performance of CAC and CGP LLC may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in CAC's reports filed with the Securities and Exchange Commission (including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein):
-- CAC and CGP LLC's dependence on Caesars Entertainment and its
subsidiaries to provide support and services, as well as CGP LLC's
dependence on Caesars Entertainment's senior management's expertise and
its participation in Caesars Entertainment's Total Rewards loyalty
program;
-- the effects of a default by Caesars Entertainment or CEOC on certain
debt obligations;
-- Caesars Entertainment's interests may conflict with CAC and CGP LLC's
interests and may possibly keep all potential development opportunities
for itself;
-- the adverse effects due to the bankruptcy filing of CEOC and certain of
its subsidiaries;
-- the effects if a third-party successfully challenges Caesars
Entertainment or its affiliates ownership of, or right to use, the
intellectual property owned or used by subsidiaries of Caesars
Entertainment, which CIE and CGP LLC license for use in its businesses;
-- CIE's reliance on subsidiaries of Caesars Entertainment to obtain online
gaming licenses in certain jurisdictions, such as New Jersey;
-- the difficulty of operating CGP LLC's business separately from Caesars
Entertainment and managing that process effectively could take up a
significant amount of management's time;
-- CGP LLC's business model and short operating history;
-- CGP LLC's ability to realize the anticipated benefits of current or
potential future acquisitions, including the transactions associated
with the October 21, 2013 joint venture between subsidiaries of Caesars
Entertainment and CAC, and the ability to timely and cost-effectively
integrate assets, including the properties being acquired in connection
with the May 2014 asset purchase transactions, and companies that CGP
LLC acquires into its operations;
-- the effect of any lawsuits against CAC, CGP LLC or CGPH related to the
October 21, 2013 transactions, the proposed CAC and Caesars
Entertainment merger transaction and the May 2014 asset purchase
transactions;
-- the merger between CAC and Caesars Entertainment may not be consummated
on the terms contemplated or at all;
-- the adverse effects of extensive governmental regulation and taxation
policies, which are applicable to CGP LLC, are enforced;
-- the effects of local and national economic, credit and capital market
conditions on the economy in general, and on the gaming industry in
particular;
-- the sensitivity of CGP LLC's business to reductions in discretionary
consumer spending;
-- the rapidly growing and changing industry in which CGP LLC operates,
such as CIE's social and mobile games business and internet gaming
business;
-- any failure to protect CGP LLC's trademarks or other intellectual
property, such as CIE's ownership of the WSOP trademark;
-- abnormal gaming holds ("gaming hold" is the amount of money that is
retained by the casino from wagers by customers);
-- the effects of competition, including locations of competitors and
operating and market competition, particularly the intense competition
CGP LLC's casino properties face in their respective markets;
-- the uncertainty surrounding whether CIE's games, such as Slotomania,
will retain their popularity;
-- CIE's reliance on a small portion of its total players for nearly all of
its revenue from its social and mobile games;
-- CAC's ability to expand into international markets in light of
additional business, regulatory, operational, financial and economic
risks associated with such expansion;
-- evolving regulations concerning the social and mobile games industry as
well as data privacy, including, but not limited to, the effect of U.S.
and foreign laws, some of which are unsettled and still developing;
-- the low barriers to entry and intense competition of the social and
mobile games industry could have adverse effect on CIE and CGP LLC;
-- evolving U.S. and foreign laws could subject CIE to claims and prevent
CIE from providing its current games to players or to modify its games;
-- the effect on CGP LLC's business strategy if online real money gaming is
not legalized in states other than Delaware, Nevada or New Jersey in the
United States, is legalized in an unfavorable manner or is banned in the
United States;
-- construction factors, including delays, increased costs of labor and
materials, availability of labor and materials, zoning issues,
environmental restrictions, soil and water conditions, weather and other
hazards, site access matters and building permit issues; and
-- political and economic uncertainty created by terrorist attacks and
other acts of war or hostility.
Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. CAC and CGP LLC disclaim any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated or, if no date is stated, as of the date of this release.
CAESARS ACQUISITION COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In millions, except per share data)
Three Months Ended Three Months Ended Year Ended February 25,
2013 Through
December 31, 2014 December 31,
2013
December 31, 2013 December 31, 2014
---
Revenues $ - $ - $ - $ -
Operating expenses 9.2 0.4 25.4 0.4
--- --- ---- ---
Loss from operations (9.2) (0.4) (25.4) (0.4)
Income from equity method
investment in Caesars
Growth Partners, LLC 23.9 7.3 79.4 7.3
---- --- ---- ---
Income before provision for
income taxes 14.7 6.9 54.0 6.9
Provision for income taxes (13.5) (2.4) (39.4) (2.4)
----- ---- ----- ----
Net income 1.2 4.5 14.6 4.5
Other comprehensive income,
net of income taxes - - - -
Comprehensive income $1.2 $4.5 $14.6 $4.5
==== ==== ===== ====
Earnings per share
Basic $0.01 $0.06 $0.11 $0.19
Diluted $0.01 $0.06 $0.11 $0.19
Weighted average common shares outstanding
Basic 136.3 79.9 135.9 23.5
Diluted 136.7 79.9 136.0 23.5
CAESARS GROWTH PARTNERS, LLC
COMBINED AND CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In millions)
Year Ended Three Months Ended October 22, 2013
Through
December 31, 2014 December 31, 2014 December 31, 2013
----------------- ----------------- -----------------
Revenues
Interactive Entertainment
Social and mobile games $549.1 $147.7 $70.4
WSOP and online real
money gaming 37.7 8.7 3.6
---- --- ---
586.8 156.4 74.0
----- ----- ----
Casino Properties and Developments
Casino 799.9 249.1 132.8
Food and beverage 245.5 67.8 37.7
Rooms 258.4 64.6 45.0
Other 156.6 38.1 21.3
Less: casino
promotional allowances (179.6) (49.1) (33.6)
------ ----- -----
1,280.8 370.5 203.2
Net revenues 1,867.6 526.9 277.2
------- ----- -----
Operating expenses
Interactive Entertainment - Direct
Platform fees 166.1 44.1 22.3
Casino Properties and Developments -
Direct
Casino 448.3 147.3 69.8
Food and beverage 118.0 34.0 15.9
Rooms 72.0 17.2 12.1
Property, general,
administrative and
other 719.2 214.0 124.1
Write-downs, reserves
and project opening
costs, net of
recoveries 53.1 18.8 3.9
Management fees to
related parties 37.0 12.3 2.2
Depreciation and
amortization 143.0 44.2 21.1
Impairment of goodwill 147.5 147.5 -
Change in fair value of
contingently issuable
non-voting membership
units 38.7 46.6 138.7
Change in fair value of
contingent
consideration 32.7 - 2.9
---- --- ---
Total operating
expenses 1,975.6 726.0 413.0
------- ----- -----
Loss from operations (108.0) (199.1) (135.8)
Interest expense, net
of interest
capitalized (172.9) (49.1) (16.3)
Interest income 1.0 - -
Interest income -
related party 119.2 - 35.8
Impairment of
investment in notes
from related party (63.5) - -
Gain on sale of
investment in notes
from related party 99.4 - -
Loss on extinguishment
of debt (23.8) - (0.9)
Other expense, net (0.1) - -
---- --- ---
Loss from continuing
operations before
provision for income
taxes (148.7) (248.2) (117.2)
Provision for income
taxes (48.9) (17.0) (7.1)
----- ----- ----
Net loss from
continuing operations (197.6) (265.2) (124.3)
Discontinued operations
Loss from discontinued
operations, including
$1.4 million of gain
on disposal for the
year ended December
31, 2014 (15.7) - (0.4)
Benefit from income
taxes related to
discontinued
operations 0.1 - -
Net loss from
discontinued
operations (15.6) - (0.4)
----- --- ----
Net loss (213.2) (265.2) (124.7)
Net loss attributable
to non-controlling
interests 33.0 18.5 4.6
---- ---- ---
Net loss attributable
to Caesars Growth
Partners, LLC $(180.2) $(246.7) $(120.1)
======= ======= =======
PREDECESSOR GROWTH PARTNERS
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In millions)
October 1,
2013 January 1, 2013
Through Through
October 21, October 21,
2013 2013
------------ ------------
Revenues
Interactive Entertainment
Social and mobile games $20.3 $232.3
WSOP and online real money
gaming 1.3 10.3
--- ----
21.6 242.6
---- -----
Casino Properties and Developments
Casino 37.5 530.7
Food and beverage 11.8 162.9
Rooms 15.5 196.0
Other 5.3 72.7
Less: casino promotional
allowances (8.8) (126.7)
---- ------
61.3 835.6
---- -----
Net revenues 82.9 1,078.2
---- -------
Operating expenses
Interactive Entertainment - Direct
Platform fees 6.1 72.5
Casino Properties and Developments - Direct
Casino 19.4 271.2
Food and beverage 5.7 73.8
Rooms 4.5 54.8
Property, general,
administrative and other 26.3 333.1
Write-downs, reserves and
project opening costs, net of
recoveries (0.2) 15.6
Management fees to related
parties 1.0 14.2
Depreciation and amortization 6.7 80.5
Change in fair value of
contingent consideration 1.1 50.0
--- ----
Total operating expenses 70.6 965.7
---- -----
Income from operations 12.3 112.5
Interest expense, net of
interest capitalized (4.8) (61.0)
Interest income - related party 10.5 138.5
Loss on extinguishment of debt (0.2) (0.7)
Other (expenses)/income, net (0.1) 0.5
---- ---
Income from operations before
provision for income taxes 17.7 189.8
Provision for income taxes (12.1) (68.0)
----- -----
Net income 5.6 121.8
Net loss attributable to non-
controlling interests 0.2 5.1
--- ---
Net income attributable to
Predecessor Growth Partners $5.8 $126.9
==== ======
CAESARS GROWTH PARTNERS, LLC AND PREDECESSOR GROWTH PARTNERS
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA
(UNAUDITED)
Adjusted Earnings before Interest income/expense, Income Taxes, Depreciation and Amortization ("EBITDA") is a non-GAAP financial measure that is included because management believes that Adjusted EBITDA
provides investors with additional information that allows a better understanding of the results of operational activities separate from the financial impact of capital decisions made for the long-term
benefit of CGP LLC and Predecessor Growth Partners. Because not all companies use identical calculations, the presentation of CGP LLC's and Predecessor Growth Partners' EBITDA and Adjusted EBITDA may not be
comparable to other similarly titled measures of other companies.
For the Quarter Ended December 31, 2014
---------------------------------------
(In millions) Interactive Casino
Entertainment Properties and
Developments Other Total
------------ -------------- --------------- ----- -----
Net loss from
continuing
operations $(18.7) $(196.4) $(50.1) $(265.2)
Provision for income
taxes 17.0 - - 17.0
---- --- --- ----
Loss from continuing
operations before
income taxes (1.7) (196.4) (50.1) (248.2)
Interest expense, net
of interest
capitalized 2.0 47.9 (0.8) 49.1
Depreciation and
amortization 7.6 36.6 - 44.2
--- ---- --- ----
EBITDA 7.9 (111.9) (50.9) (154.9)
Write-downs,
reserves and project
opening costs, net
of recoveries (a) - 18.8 - 18.8
Change in fair value
of contingently
issuable non-voting
membership units (b) - - 46.6 46.6
Impairment of
goodwill - 147.5 - 147.5
Acquisition and
integration costs
(d) 1.1 4.8 - 5.9
Stock-based
compensation (e) 38.3 0.7 - 39.0
Other (f) 0.6 (0.1) - 0.5
Adjusted EBITDA $47.9 $59.8 $(4.3) $103.4
===== ===== ===== ======
For the Period From October 22 Through December 31, 2013
--------------------------------------------------------
(In millions) Interactive Casino
Entertainment Properties and
Developments Other Total
------------ -------------- --------------- ----- -----
Net income/(loss)
from continuing
operations $(8.8) $4.1 $(119.6) $(124.3)
Provision for income
taxes 2.6 4.5 - 7.1
--- --- --- ---
Income/(loss) from
continuing
operations before
income taxes (6.2) 8.6 (119.6) (117.2)
Interest expense, net
of interest
capitalized 0.5 15.8 - 16.3
Interest income,
including related
party - - (35.8) (35.8)
Depreciation and
amortization 3.6 17.5 - 21.1
--- ---- --- ----
EBITDA (2.1) 41.9 (155.4) (115.6)
Loss on
extinguishment of
debt - 0.9 - 0.9
Write-downs,
reserves and project
opening costs, net
of recoveries (a) - 3.9 - 3.9
Change in fair value
of contingently
issuable non-voting
membership units (b) - - 138.7 138.7
Change in fair value
of contingent
consideration (c) 2.9 - - 2.9
Acquisition and
integration costs
(d) 0.1 - 14.6 14.7
Stock-based
compensation (e) 17.8 0.2 - 18.0
Other (f) 0.4 0.1 - 0.5
---
Adjusted EBITDA $19.1 $47.0 $(2.1) $64.0
===== ===== ===== =====
For the Period From October 1 Through October 21, 2013
------------------------------------------------------
(In millions) Interactive Casino
Entertainment Properties and
Developments Other Total
------------ -------------- --------------- ----- -----
Net income/(loss) $(1.7) $0.5 $6.8 $5.6
Provision for income
taxes 4.5 3.9 3.7 12.1
--- --- --- ----
Income before income
taxes 2.8 4.4 10.5 17.7
Interest expense, net
of interest
capitalized 0.3 4.5 - 4.8
Interest income,
including related
party - - (10.5) (10.5)
Depreciation and
amortization 1.1 5.6 - 6.7
--- --- --- ---
EBITDA 4.2 14.5 - 18.7
Other expense, net - 0.1 - 0.1
Loss on
extinguishment of
debt - 0.2 - 0.2
Write-downs,
reserves and project
opening costs, net
of recoveries (a) - (0.2) - (0.2)
Change in fair value
of contingent
consideration (c) 1.1 - - 1.1
Stock-based
compensation (e) 1.0 - - 1.0
Other (f) 0.2 - - 0.2
--- ---
Adjusted EBITDA $6.5 $14.6 $ - $21.1
==== ===== === === =====
For the Year Ended December 31, 2014
------------------------------------
(In millions) Interactive Casino
Entertainment Properties and
Developments Other Total
------------ -------------- --------------- ----- -----
Net income/(loss)
from continuing
operations $(20.9) $(280.4) $103.7 $(197.6)
Provision for income
taxes 36.3 12.6 - 48.9
---- ---- --- ----
Income/(loss) from
continuing
operations before
income taxes 15.4 (267.8) 103.7 (148.7)
Interest expense, net
of interest
capitalized 5.8 169.5 (2.4) 172.9
Interest income,
including related
party - - (120.2) (120.2)
Depreciation and
amortization 28.5 114.5 - 143.0
---- ----- --- -----
EBITDA 49.7 16.2 (18.9) 47.0
Other expense, net 0.1 - - 0.1
Loss on
extinguishment of
debt - 23.8 - 23.8
Write-downs,
reserves and project
opening costs, net
of recoveries (a) 2.5 50.6 - 53.1
Change in fair value
of contingently
issuable non-voting
membership units (b) - - 38.7 38.7
Change in fair value
of contingent
consideration (c) 32.7 - - 32.7
Impairment of
goodwill - 147.5 - 147.5
Acquisition and
integration costs
(d) 2.0 14.5 0.9 17.4
Gain on sale of
investment in notes
from related party - - (99.4) (99.4)
Impairment on
investment in notes
from related party - - 63.5 63.5
Stock-based
compensation (e) 86.7 1.3 - 88.0
Other (f) 3.3 0.5 - 3.8
--- --- --- ---
Adjusted EBITDA $177.0 $254.4 $(15.2) $416.2
====== ====== ====== ======
For the Period From October 22 Through December 31, 2013
--------------------------------------------------------
(In millions) Interactive Casino
Entertainment Properties and
Developments Other Total
------------ -------------- --------------- ----- -----
Net income/(loss)
from continuing
operations $(8.8) $4.1 $(119.6) $(124.3)
Provision for income
taxes 2.6 4.5 - 7.1
--- --- --- ---
Income/(loss) from
continuing
operations before
income taxes (6.2) 8.6 (119.6) (117.2)
Interest expense, net
of interest
capitalized 0.5 15.8 - 16.3
Interest income,
including related
party - - (35.8) (35.8)
Depreciation and
amortization 3.6 17.5 - 21.1
--- ---- --- ----
EBITDA (2.1) 41.9 (155.4) (115.6)
Loss on
extinguishment of
debt - 0.9 - 0.9
Write-downs,
reserves and project
opening costs, net
of recoveries (a) - 3.9 - 3.9
Change in fair value
of contingently
issuable non-voting
membership units (b) - - 138.7 138.7
Change in fair value
of contingent
consideration (c) 2.9 - - 2.9
Acquisition and
integration costs
(d) 0.1 - 14.6 14.7
Stock-based
compensation (e) 17.8 0.2 - 18.0
Other (f) 0.4 0.1 - 0.5
--- --- --- ---
Adjusted EBITDA $19.1 $47.0 $(2.1) $64.0
===== ===== ===== =====
For the Period From January 1 Through October 21, 2013
------------------------------------------------------
(In millions) Interactive Casino
Entertainment Properties and
Developments Other Total
------------ -------------- --------------- ----- -----
Net income/(loss) $(0.4) $32.2 $90.0 $121.8
Provision for income
taxes (3.0) 22.5 48.5 68.0
---- ---- ---- ----
Income/(loss) before
income taxes (3.4) 54.7 138.5 189.8
Interest expense, net
of interest
capitalized 2.2 58.8 - 61.0
Interest income,
including related
party - - (138.5) (138.5)
Depreciation and
amortization 13.7 66.8 - 80.5
---- ---- --- ----
EBITDA 12.5 180.3 - 192.8
Other expense, net (0.1) (0.4) - (0.5)
Loss on
extinguishment of
debt - 0.7 - 0.7
Write-downs,
reserves and project
opening costs, net
of recoveries (a) - 15.6 - 15.6
Change in fair value
of contingent
consideration (c) 50.0 - - 50.0
Acquisition and
integration costs
(d) 0.5 - - 0.5
Stock-based
compensation (e) 13.2 0.3 - 13.5
Other (f) 2.3 0.2 - 2.5
--- --- --- ---
Adjusted EBITDA $78.4 $196.7 $ - $275.1
===== ====== === === ======
(a) Amounts
primarily
represent
development
costs related
to the
construction
of Horseshoe
Baltimore,
The Cromwell
and The LINQ
Hotel &
Casino.
Amounts
represent the
change in
fair value of
contingently
issuable
membership
units
associated
with the CIE
earn-out
calculation
related to
the
transactions
establishing
CGP LLC. The
total
liability
represents
the estimated
fair value of
CGP LLC non-
voting
membership
units to be
issued to a
subsidiary of
Caesars
(b) Entertainment.
Amount
represents
the change in
fair value of
contingent
consideration
for CIE
(c) acquisitions.
For 2014,
amounts
primarily
include costs
incurred in
connection
with the May
2014
acquisitions
of Bally's
Las Vegas,
The Cromwell,
The LINQ
Hotel &
Casino and
Harrah's New
Orleans. For
2013, amounts
primarily
include
transaction
costs related
to the
October 2013
formation
(d) transaction.
Amounts
represent
non-cash
stock-based
compensation
expense
related to
stock
options,
restricted
shares and
restricted
(e) stock units.
Amounts
represent
other add-
backs and
deductions to
arrive at
Adjusted
EBITDA but
not
separately
identified,
such as
lobbying
(f) expenses.
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SOURCE Caesars Acquisition Company
