CAESARS ACQUISITION COMPANY LAS VEGAS, Nov. 10, 2014 /PRNewswire/ -- Caesars Acquisition Company (NASDAQ: CACQ) today reported the following results for Caesars Growth Partners, LLC ("CGP LLC") for the third quarter 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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-- Achieved strong results in the Interactive Entertainment segment with
revenues and Adjusted EBITDA up 104.8% and 74.5% year over year,
respectively
-- Posted meaningful growth in the Casino Properties and Development
segment with revenues and Adjusted EBITDA up 31.3% and 17.0% year over
year, respectively, driven primarily from the opening of Horseshoe
Baltimore in August 2014, the addition of Cromwell in the second
quarter, and positive hospitality and entertainment trends
-- Opened Horseshoe Baltimore on August 26, 2014 to an enthusiastic
customer base
-- Completed Phase I of The Quad renovation and commenced operations as of
October 30, 2014 as The LINQ Hotel & Casino
Operating Results of CGP LLC and Predecessor Growth Partners
The financial information for the three and nine months ended September 30, 2014 reflects the financial results of CGP LLC on a combined and consolidated basis.
The financial information for the three and nine months ended September 30, 2013 does not reflect the impacts of the October 21, 2013 formation transaction, including the recording of non-controlling interest or the determination of taxes in accordance with the LLC structure of CGP LLC. Instead, this financial information, 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.
In May 2014, subsidiaries of CGP LLC acquired Bally's Las Vegas, Cromwell, The LINQ Hotel & Casino and Harrah's New Orleans from 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 reporting entity for all periods presented. Therefore, the financial information contained herein provides comparable results for all periods presented.
CGP LLC Predecessor Growth Partners Percent Favorable/ CGP LLC Predecessor Growth Partners Percent Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- --------------------------
(In millions) 2014 2013 2014 2013
---- ---- ---- ----
Interactive
entertainment net
revenues $161.6 $78.9 104.8% $430.4 $221.0 94.8%
Casino properties
and developments
net revenues 324.2 246.9 31.3% 910.3 774.3 17.6%
Total net revenues 485.8 325.8 49.1% 1,340.7 995.3 34.7%
Income from
operations 82.1 46.0 78.5% 91.1 100.2 (9.1)%
Net income from
continuing
operations 70.7 46.8 51.1% 67.6 116.2 (41.8)%
Net loss from
discontinued
operations (14.6) - N/A (15.6) - N/A
Adjusted EBITDA (1) 105.4 78.7 33.9% 312.8 254.0 23.1%
( )
(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 another solid quarter of results driven by year over year growth in both of our operating segments," said Mitch Garber, chief executive officer of Caesars Acquisition Company. "Our Interactive Entertainment business continues to deliver impressive results, primarily from our market leading social and mobile games business. We successfully opened Horseshoe Baltimore during the quarter to a welcoming crowd and are excited about the results to date. Most recently, we completed the first phase of renovations at The LINQ Hotel & Casino. We are excited about the transformation of this asset, which complements the entire LINQ retail and dining experience. We expect these enhancements to generate improved performance at the property over time. Overall, we are confident that our strategy of developing new projects in key markets and investing capital to expand and enhance our existing casino and interactive portfolio will drive growth and solid operating results for CGP."
Financial Results
Net revenues for the third quarter 2014 increased by $160.0 million, or 49.1%, compared with same period in 2013, driven by strong performance in both operating segments, including Caesars Interactive Entertainment's ("Interactive Entertainment" or "CIE") first quarter 2014 acquisition of Pacific Interactive, the opening of Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014. Income from operations for the third quarter 2014 was $82.1 million as compared to $46.0 million for the same period in 2013. The increase in income from operations is primarily attributable to a decrease in the fair value of contingently issuable non-voting membership units. Adjusted EBITDA increased $26.7 million or 33.9% in the third quarter 2014 as compared with the third quarter of 2013, primarily driven by the income impact of increased revenues.
Reportable Segments Operating Results
Interactive Entertainment
CGP LLC Predecessor Growth Partners Percent Favorable/ CGP LLC Predecessor Growth Partners Percent Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- --------------------------
(In millions) 2014 2013 2014 2013
---- ---- ---- ----
Net revenues $161.6 $78.9 104.8% $430.4 $221.0 94.8%
Income/(loss)
from operations 20.1 22.7 (11.5)% 21.0 (4.4) 577.3%
Net income/
(loss) from
continuing
operations (2.9) 16.2 (117.9)% (2.2) 1.3 (269.2)%
Net loss from
discontinued
operations (14.6) - N/A (15.6) - N/A
Adjusted
EBITDA(1) 53.4 30.6 74.5% 129.1 71.9 79.6%
(1) See Reconciliation of Net Income/
(Loss) from Continuing Operations
to Adjusted EBITDA.
Interactive Entertainment net revenues increased by 104.8% in the third quarter of 2014 as compared to the same period in 2013 as a result of the first quarter 2014 acquisition of Pacific Interactive and organic growth in the social and mobile games business. Income from operations for the three months ended September 30, 2014 was $20.1 million, compared with income from operations of $22.7 million for the same period in 2013. Adjusted EBITDA increased in the third quarter 2014 as compared with the third quarter of 2013, driven by the income impact of increased revenues, partially offset by increased marketing and operating expenses associated with real money online gaming.
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
--------------------------
(In
millions) Sept. 30, 2014 Jun. 30, 2014(2) Mar. 31, 2014(2) Dec. 31, 2013(1) Sept. 30, 2013 Jun. 30, 2013 Mar. 31, 2013
-------------- --------------- --------------- --------------- -------------- ------------- -------------
Revenues
Social and
mobile
games $151.3 $134.4 $115.7 $90.7 $74.7 $70.7 $66.6
WSOP and
online real
money
gaming 10.3 10.2 8.5 4.9 4.2 3.3 1.5
Total $161.6 $144.6 $124.2 $95.6 $78.9 $74.0 $68.1
====== ====== ====== ===== ===== ===== =====
Adjusted
EBITDA $53.4 $44.6 $31.1 $25.2 $30.6 $20.1 $21.2
===== ===== ===== ===== ===== ===== =====
(1) 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.
(2) Adjusted EBITDA has been
recasted to reflect
discontinued operations related
to CIE.
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.
Sept. 30, 2014 Jun. 30, 2014 Mar. 31, 2014(1) Dec. 31, 2013(2) Sept. 30, 2013 Jun. 30, 2013 Mar. 31, 2013
-------------- ------------- --------------- --------------- -------------- ------------- -------------
Average
Daily
Active
Users(3) 5,640 5,681 5,704 4,639 4,803 4,952 5,259
Average
Monthly
Active
Users(3) 17,767 18,575 19,597 15,914 16,354 16,962 17,695
Average
Monthly
Unique
Users(3) 16,472 16,794 17,370 13,908 14,615 14,941 16,052
Average
Monthly
Unique
Payers(3) 595 539 511 322 293 279 292
Average
Revenue
Per User $0.29 $0.26 $0.24 $0.21 $0.17 $0.16 $0.14
( )
(1) Operating metrics include numbers
from Pacific Interactive only
after its February 2014
acquisition 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 third quarter of 2014, CIE's social and mobile games business had approximately 595 thousand Average Monthly Unique Payers, or 3.6% of Average Monthly Unique Users on the social and mobile platforms, purchase virtual goods, which was an increase of approximately 160 basis points year over year.
Casino Properties and Developments
CGP LLC Predecessor Growth Partners Percent Favorable/ CGP LLC Predecessor Growth Partners Percent Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- --------------------------
(In
millions) 2014 2013 2014 2013
---- ---- ---- ----
Net revenues
(1) $324.2 $246.9 31.3% $910.3 $774.3 17.6%
Income from
operations
(1) 10.8 23.3 (53.6)% 74.0 104.6 (29.3)%
Adjusted
Segment
EBITDA(1)(2) 56.3 48.1 17.0% 194.6 182.1 6.9%
(1) The financial information herein
includes the financial results
for Bally's Las Vegas, 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.
(2) See Reconciliation of Net Income/
(Loss) from Continuing Operations
to Adjusted EBITDA later in this
release.
Casino Properties and Developments net revenues for the three months ended September 30, 2014 increased by 31.3% when compared to the same period in 2013. Gaming revenues increased to $196.9 million in the third quarter 2014 from $156.0 million for the same period in 2013 due primarily to the opening of Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014.
Rooms revenues for the three months ended September 30, 2014 and 2013 were $59.2 million and $56.5 million, respectively. Cash average daily room rates for the three months ended September 30, 2014 increased to approximately $103, or by 21%, when compared to approximately $85 for the same period in 2013, primarily due to the opening of Cromwell, fewer rooms available due to the renovations at The LINQ Hotel & Casino, and the renovated Jubilee Tower which opened in the fourth quarter of 2013 at Bally's Las Vegas. Average daily occupancy was 89.5% for the three months ended September 30, 2014 and 89.7% in the three months ended September 30, 2013. Revenue per available room ("RevPar") for the three months ended September 30, 2014 and 2013 was $93 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 three months ended September 30, 2014 and 2013 were $63.7 million and $48.8 million, respectively. This increase in food and beverage revenues was driven largely by new offerings that opened in 2014 such as various new venues by celebrity chefs at Horseshoe Baltimore and Giada at Cromwell.
Other revenues for the three months ended September 30, 2014 and 2013 were $49.6 million and $23.0 million, respectively. This increase is primarily due to the opening of Drai's at Cromwell and enhanced entertainment options at the new Axis Theater at Planet Hollywood.
Income from operations decreased to $10.8 million in the three months ended September 30, 2014, from $23.3 million in the same period of 2013 as the income impact of increased revenues was more than offset by the combination of increased expenses at The LINQ Hotel & Casino, primarily due to its strip-front lease, and increased pre-opening expenses associated with Horseshoe Baltimore. Certain pre-opening expenses associated with Horseshoe Baltimore are not a component of Adjusted EBITDA, therefore Adjusted EBITDA increased for the three months ended September 30, 2014 when compared with the same period in 2013.
Liquidity and Capital Resources
Cash and cash equivalents totaled $989.2 million at September 30, 2014. As of September 30, 2014, third-party debt outstanding at CGP LLC was $2,271.0 million. This amount includes debt of the consolidated subsidiary, Caesars Growth Properties Holdings, LLC ("CGPH"), of $2,004.6 million. Related party debt outstanding includes Long-term debt payable to related parties of $39.8 million and Convertible notes issued to related party of $47.7 million.
Recent Developments for CGP LLC
Because significant recent developments and subsequent events related to our equity method investee could be impactful to our financial performance, we have elected to include disclosure of such items herein.
Gain on Sale of Investment in Notes from Related Party
On May 5, 2014, CGP LLC entered into a note purchase agreement to sell its 5.625% face value aggregate principal amount of notes back to CEOC. On July 29, 2014, CGP LLC received $451.9 million of consideration (including accrued and unpaid interest) in connection with this transaction and recognized a gain of $99.4 million.
Distribution of CEOC Notes
On August 6, 2014, CGP LLC effectuated a distribution of its 5.75% and 6.50% face value aggregate principal amount of notes previously issued by CEOC ("CEOC Notes") as a dividend to its members, pro-rata based upon each member's ownership percentage in CGP LLC (the "Notes Distribution"). At the date of distribution, the fair value of CGP LLC's investment in the CEOC Notes was below its amortized cost basis. As a result, CGP LLC recorded an impairment charge of $63.5 million immediately prior to the distribution to release losses that had been accumulated in equity, given that CGP LLC would not recover its amortized cost basis in the CEOC Notes. In connection with the Notes Distribution, CAC, as a member of CGP LLC, received $137.5 million in aggregate principal amount of 6.50% CEOC Notes, maturing June 1, 2016, and $151.4 million in aggregate principal amount of 5.75% CEOC Notes, maturing October 1, 2017.
Implementation of Caesars Enterprise Services, LLC
Caesars Enterprise Services, LLC ("CES") was launched in certain jurisdictions, and on October 1, 2014, CGP LLC transferred $22.5 million of cash to CES on behalf of CGPH. Expenses related to services from CES commenced at the beginning of the third quarter of 2014 and are included in the earnings results.
Conference Call Information
Caesars Acquisition Company will host a conference call at 5:30 a.m. Pacific Time Monday, November 10, 2014, to review its third-quarter results. The call will be accessible in the Investor Relations section of www.caesarsacquisitioncompany.com.
If you would like to ask questions and be an active participant in the call, you may dial (877) 637-3723, or (832) 412-1752 for international callers, and enter Conference ID 20791791 approximately 10 minutes before the call start time. A recording of the live call will be available on the Company's website for 90 days after the event.
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-Caesars Growth Partners 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, Cromwell, The LINQ Hotel & Casino, Harrah's New Orleans and Horseshoe Baltimore. Through its relationship with Caesars Entertainment, Caesars Growth Partners 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 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 necessarily estimates reflecting the best judgment of 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 the Company'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 herein and therein):
-- 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, including the
renovation of The LINQ Hotel & Casino;
-- 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 adverse effects if Caesars Entertainment or any of its subsidiaries
were to default on certain debt obligations;
-- the adverse effects if Caesars Entertainment or any of its subsidiaries
were to file for bankruptcy or be subjected to an involuntary bankruptcy
by its creditors;
-- Caesars Entertainment's interests may conflict with CGP LLC's interests
and Caesars Entertainment may possibly keep all potential development
opportunities for itself;
-- 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 licenses for use in its businesses;
-- CIE's reliance on its affiliate relationship with subsidiaries of
Caesars Entertainment to obtain and/or maintain online gaming licenses
by virtue of such subsidiaries ownership of a physical gaming facility
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 and the ability to timely and
cost-effectively integrate assets and companies that CGP LLC acquires
into its operations;
-- the adverse effects of extensive governmental regulation and taxation
policies, which are applicable to CGP LLC;
-- the effects of local and national economic, credit and capital market
conditions on the economy in general, and on the gaming and interactive
gaming industries 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
our Las Vegas assets face from other hotel casino resorts in Las Vegas
and the competition Horseshoe Baltimore faces from other regional
casinos and resorts;
-- the uncertainty surrounding whether CIE's games, such as Slotomania,
will retain their popularity;
-- CIE's ability to launch new games on new and emerging platforms;
-- CIE's reliance on a small portion of its total players for nearly all of
its revenue from its social and mobile games;
-- 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 social and mobile
games industry could have adverse effect on CIE and CGP LLC;
-- the effect on CGP LLC's business strategy if real money online poker is
not legalized in states other than Delaware, Nevada or New Jersey in the
United States; 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 disclaims 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 September 30, Nine Months Ended September 30,
2014 2014
-------------------------------- --------------------------------
Revenues $ - $ -
Operating expenses 2.1 16.2
--- ----
Loss from operations (2.1) (16.2)
Income from equity
method investment in
Caesars Growth
Partners, LLC 24.9 55.5
Income before
provision for income
taxes 22.8 39.3
Provision for income
taxes (20.0) (25.9)
----- -----
Net income 2.8 13.4
Other comprehensive
income, net of income
taxes - -
Comprehensive income $2.8 $13.4
==== =====
Earnings per share -
basic and diluted $0.02 $0.10
Weighted average
common shares
outstanding -basic
and diluted 135.8 135.8
CAESARS GROWTH PARTNERS, LLC
COMBINED AND CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In millions)
Three Months Ended September 30, Nine Months Ended September 30,
2014 2014
-------------------------------- --------------------------------
Revenues
Interactive Entertainment
Social and mobile
games $151.3 $401.4
WSOP and online real
money gaming 10.3 29.0
161.6 430.4
----- -----
Casino Properties and Developments
Casino 196.9 550.8
Food and beverage 63.7 177.7
Rooms 59.2 193.8
Other 49.6 118.5
Less: casino
promotional
allowances (45.2) (130.5)
324.2 910.3
----- -----
Net Revenues 485.8 1,340.7
----- -------
Operating expenses
Interactive Entertainment - Direct
Platform fees 45.7 122.0
Casino Properties and Developments - Direct
Casino 116.7 301.0
Food and beverage 31.8 84.0
Rooms 18.4 54.8
Property, general,
administrative and
other 184.2 505.2
Write-downs,
reserves, and project
opening costs, net of
recoveries 12.3 34.3
Management fees
payable to related
parties 13.1 24.7
Depreciation and
amortization 37.8 98.8
Change in fair value
of contingently
issuable non-voting
membership units (56.4) (7.9)
Change in fair value
of contingent
consideration 0.1 32.7
Total operating
expenses 403.7 1,249.6
----- -------
Income from operations 82.1 91.1
Interest expense, net
of interest
capitalized (44.2) (123.8)
Interest income - 1.0
Interest income -
related party 19.1 119.2
Impairment of
investment in notes
from related party (63.5) (63.5)
Gain on sale of
investment in notes
from related party 99.4 99.4
Loss on extinguishment
of debt - (23.8)
Other expense, net (0.1) (0.1)
---- ----
Income from continuing
operations before
provision for income
taxes 92.8 99.5
Provision for income
taxes (22.1) (31.9)
Net income from
continuing operations 70.7 67.6
---- ----
Discontinued operations
Income/(loss) from
discontinued
operations, including
$1.4 million of gain
on disposal 1.2 (15.7)
(Provision
for)/benefit from
income taxes related
to discontinued
operations (15.8) 0.1
Net loss from
discontinued
operations (14.6) (15.6)
----- -----
Net income 56.1 52.0
Net loss attributable
to non-controlling
interests 5.1 14.5
Net income
attributable to
Caesars Growth
Partners, LLC $61.2 $66.5
===== =====
PREDECESSOR GROWTH PARTNERS
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In millions)
Three Months Ended September 30, Nine Months Ended September 30,
2014 2014
-------------------------------- --------------------------------
Revenues
Interactive Entertainment
Social and mobile games $74.7 $212.0
WSOP and online real
money gaming 4.2 9.0
78.9 221.0
---- -----
Casino Properties and Developments
Casino 156.0 493.2
Food and beverage 48.8 151.1
Rooms 56.5 180.5
Other 23.0 67.4
Less: casino promotional
allowances (37.4) (117.9)
246.9 774.3
----- -----
Net revenues 325.8 995.3
----- -----
Operating expenses
Interactive Entertainment - Direct
Platform fees 23.3 66.4
Casino Properties and Developments - Direct
Casino 81.4 251.8
Food and beverage 23.1 68.1
Rooms 15.9 50.3
Property, general,
administrative and other 102.4 306.8
Write-downs, reserves
and project opening
costs, net of recoveries 4.8 15.8
Management fees payable
to related parties 4.3 13.2
Depreciation and
amortization 24.6 73.8
Change in fair value of
contingent consideration - 48.9
Total operating expenses 279.8 895.1
----- -----
Income from operations 46.0 100.2
Interest expense, net of
interest capitalized (21.6) (56.2)
Interest income -related
party 44.9 128.0
Loss on extinguishment of
debt (0.3) (0.5)
Other income, net 0.1 0.6
Income from continuing
operations before
provision for income
taxes 69.1 172.1
Provision for income
taxes (22.3) (55.9)
----- -----
Net income from
continuing operations 46.8 116.2
Net loss attributable to
non-controlling
interests 3.7 4.9
--- ---
Net income attributable
to Predecessor Growth
Partners $50.5 $121.1
===== ======
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 Three Months Ended September 30, 2014
---------------------------------------------
(In millions) Interactive Entertainment Casino Properties and Developments Other Total
------------------------- ---------------------------------- ----- -----
Net income/(loss)
from continuing
operations $(2.9) $(33.3) $106.9 $70.7
Provision for income
taxes 21.1 1.0 - 22.1
---- --- --- ----
Income/(loss) from
continuing operations
before income taxes 18.2 (32.3) 106.9 92.8
Interest expense, net
of interest
capitalized 1.8 43.1 (0.7) 44.2
Interest income,
including related
party - - (19.1) (19.1)
Depreciation and
amortization 7.3 30.5 - 37.8
--- ---- --- ----
EBITDA 27.3 41.3 87.1 155.7
Other expense, net 0.1 - - 0.1
Write-downs, reserves
and project opening
costs, net of
recoveries (b) 2.5 9.8 - 12.3
Change in fair value
of contingently
issuable non-voting
membership units (c) - - (56.4) (56.4)
Change in fair value
of contingent
consideration (d) 0.1 - - 0.1
Acquisition and
integration costs 0.3 4.3 0.9 5.5
Gain on sale of
investment in notes
from related party - - (99.4) (99.4)
Impairment of
investment in notes
from related party - - 63.5 63.5
Stock-based
compensation (e) 22.0 0.6 - 22.6
Other (f) 1.1 0.3 - 1.4
Adjusted EBITDA $53.4 $56.3 $(4.3) $105.4
===== ===== ===== ======
For the Three Months Ended September 30, 2013
---------------------------------------------
(In millions) Interactive Entertainment Casino Properties and Developments Other Total
------------------------- ---------------------------------- ----- -----
Net income from
continuing operations $16.2 $1.4 $29.2 $46.8
Provision for income
taxes 5.7 0.9 15.7 22.3
--- --- ---- ----
Income from continuing
operations before
income taxes 21.9 2.3 44.9 69.1
Interest expense, net
of interest
capitalized 0.8 20.8 - 21.6
Interest income,
including related
party - - (44.9) (44.9)
Depreciation and
amortization 4.8 19.8 - 24.6
--- ---- --- ----
EBITDA 27.5 42.9 - 70.4
Other income, net - (0.1) - (0.1)
Loss on extinguishment
of debt (a) - 0.3 - 0.3
Write-downs, reserves
and project opening
costs, net of
recoveries (b) - 4.8 - 4.8
Acquisition and
integration costs 0.3 - - 0.3
Stock-based
compensation (e) 1.8 0.2 - 2.0
Other (f) 1.0 - - 1.0
Adjusted EBITDA $30.6 $48.1 $ - $78.7
===== ===== =========== =====
(a) - (f) See footnotes on next page.
For the Nine Months Ended September 30, 2014
--------------------------------------------
(In millions) Interactive Entertainment Casino Properties and Developments Other Total
------------------------- ---------------------------------- ----- -----
Net income/(loss)
from continuing
operations $(2.2) $(84.0) $153.8 $67.6
Provision for income
taxes 19.3 12.6 - 31.9
---- ---- --- ----
Income/(loss) from
continuing operations
before income taxes 17.1 (71.4) 153.8 99.5
Interest expense, net
of interest
capitalized 3.8 121.6 (1.6) 123.8
Interest income,
including related
party - - (120.2) (120.2)
Depreciation and
amortization 20.9 77.9 - 98.8
---- ---- --- ----
EBITDA 41.8 128.1 32.0 201.9
Other expense, net 0.1 - - 0.1
Loss on extinguishment
of debt (a) - 23.8 - 23.8
Write-downs, reserves
and project opening
costs, net of
recoveries (b) 2.5 31.8 - 34.3
Change in fair value
of contingently
issuable non-voting
membership units (c) - - (7.9) (7.9)
Change in fair value
of contingent
consideration (d) 32.7 - - 32.7
Acquisition and
integration costs 0.9 9.7 0.9 11.5
Gain on sale of
investment in notes
from related party - - (99.4) (99.4)
Impairment of
investment in notes
from related party - - 63.5 63.5
Stock-based
compensation (e) 48.4 0.6 - 49.0
Other (f) 2.7 0.6 - 3.3
Adjusted EBITDA $129.1 $194.6 $(10.9) $312.8
====== ====== ====== ======
For the Nine Months Ended September 30, 2013
--------------------------------------------
(In millions) Interactive Entertainment Casino Properties and Developments Other Total
------------------------- ---------------------------------- ----- -----
Net income from
continuing operations $1.3 $31.7 $83.2 $116.2
(Benefit
from)/provision for
income taxes (7.5) 18.6 44.8 55.9
---- ---- ---- ----
Income/(loss) from
continuing operations
before income taxes (6.2) 50.3 128.0 172.1
Interest expense, net
of interest
capitalized 1.9 54.3 - 56.2
Interest income,
including related
party - - (128.0) (128.0)
Depreciation and
amortization 12.6 61.2 - 73.8
---- ---- --- ----
EBITDA 8.3 165.8 - 174.1
Other income, net (0.1) (0.5) - (0.6)
Loss on extinguishment
of debt (a) - 0.5 - 0.5
Write-downs, reserves
and project opening
costs, net of
recoveries (b) - 15.8 - 15.8
Change in fair value
of contingently
issuable non-voting
membership units (c) - - - -
Change in fair value
of contingent
consideration (d) 48.9 - - 48.9
Acquisition and
integration costs 0.5 - - 0.5
Stock-based
compensation (e) 12.2 0.3 - 12.5
Other (f) 2.1 0.2 - 2.3
Adjusted EBITDA $71.9 $182.1 $ - $254.0
===== ====== =========== ======
(a) Amounts represent the difference
between the fair value of
consideration paid and the book
value, net of deferred financing
costs, of debt retired through debt
extinguishment transactions, which
are capital structure-related,
rather than operational-type
costs.
(b) Amounts primarily represent
development costs related to the
construction and planned casino
operations of Horseshoe Baltimore,
the construction of Cromwell and
The LINQ Hotel & Casino.
(c) 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
Entertainment.
(d) Amounts represent the change in fair
value of contingent consideration
for CIE acquisitions.
(e) Amounts represent non-cash stock-
based compensation expense related
to stock options, restricted shares
and restricted stock units.
Stock?based compensation expense
for the three months ended
September 30, 2014 includes $19.6
million of expense related to
earlier quarters of 2014.
(f) Amounts represent other add-backs
and deductions to arrive at
Adjusted EBITDA but not separately
identified, such as lobbying
expenses.
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SOURCE Caesars Acquisition Company
