CAESARS ACQUISITION COMPANY LAS VEGAS, Aug. 11, 2014 /PRNewswire/ -- Caesars Acquisition Company (NASDAQ: CACQ) today reported the following results for Caesars Growth Partners, LLC ("CGP LLC") for the second 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 another strong quarter in the Interactive Entertainment segment
with revenues and Adjusted EBITDA up 95.4% and 118.9% year over year,
respectively
-- Posted consistent operating results in the Casino Properties and
Development segment with revenues up 13.6% year over year driven
primarily from the opening of the Cromwell in May 2014 and positive
non-gaming trends
-- Applied for a gaming license to develop Caesars New York, an $880
million luxury casino resort in Woodbury, NY
-- Extended the existing portfolio of assets into key destination markets
with the purchase of Bally's Las Vegas, The Cromwell, The Quad Resort &
Casino, and Harrah's New Orleans
-- Announced the conversion of The Quad to The LINQ Hotel & Casino, a
transformation that will complement the entire LINQ experience
Operating Results of CGP LLC and Predecessor Growth Partners
The financial information for the three and six months ending June 30, 2014 reflects the financial statements of CGP LLC on a consolidated basis, giving regard to all impacts of the October 21, 2013 formation transaction.
The financial information for the three and six months ended June 30, 2013 does not reflect the impacts of the 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, as the financial information was derived from the historical accounting records and consolidated financial statements of Caesars Entertainment Corporation.
In May 2014, a subsidiary of CGP LLC acquired Bally's Las Vegas, The Cromwell, The Quad Resort & Casino, and Harrah's New Orleans from Caesars Entertainment Operating Company, Inc. 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 for both years. 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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
(In millions) 2014 2013 2014 2013
---- ---- ---- ----
Interactive
entertainment net
revenues $144.6 $74.0 95.4% $268.8 $142.1 89.2%
Casino properties
and developments
net revenues 294.1 258.9 13.6% 586.1 527.4 11.1%
Total net revenues 438.7 332.9 31.8% 854.9 669.5 27.7%
Income/(loss) from
operations 28.9 51.6 (44.0)% (7.9) 54.2 (114.6)%
Adjusted EBITDA (1) 104.9 88.1 19.1% 206.0 175.3 17.5%
(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 strong second quarter results, with both operating segments delivering growth year over year," said Mitch Garber, chief executive officer of Caesars Acquisition Company. "Looking ahead, we are excited about opening Horseshoe Baltimore on August 26(th) as well as the first phase of room renovations at The Quad later this year. The transformation of The Quad into The LINQ Hotel and Casino will provide a social lifestyle experience through modern offerings and is expected to drive improved performance at the property. We also announced our intent to develop Caesars New York in Woodbury which, if approved, would add another attractive market to our portfolio, further reinforcing our growth strategy. With the Interactive Entertainment segment generating positive cash flow, we remain confident that our strategy to develop new projects and maintain investments to expand our casino and interactive businesses will reap benefits to the asset portfolio."
Financial Results
Net revenues for the second quarter 2014 increased by $105.8 million or 31.8% compared with 2013, driven by strong performance in both operating segments, the opening of Cromwell in May 2014 and by Caesars Interactive Entertainment's ("CIE") first quarter 2014 acquisition of Pacific Interactive. Income from operations for the second quarter 2014 was $28.9 million as compared to income from operations of $51.6 million for the same period in 2013. The decrease in income from operations is primarily attributable to an increase in the fair value of contingent consideration from previous acquisitions and increased expenses at the Quad, primarily due to the O'Sheas lease expense, and increased pre-opening expenses associated with the Horseshoe Baltimore. These adverse impacts on income from operations were partially offset by the income impact of increased revenues. Adjusted EBITDA increased $16.8 million or 19.1% in the second quarter 2014 as compared with the second quarter 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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
(In
millions) 2014 2013 2014 2013
---- ---- ---- ----
Net revenues $144.6 $74.0 95.4% $268.8 $142.1 89.2%
Income/
(loss) from
operations (20.5) 10.8 (289.8)% (16.0) (27.1) (41.0)%
Adjusted
Segment
EBITDA(1) 44.0 20.1 118.9% 74.3 41.3 79.9%
(1) See "Reconciliation of Net
(Loss)/Income to Adjusted EBITDA.
Interactive Entertainment net revenues increased by $70.6 million for second quarter 2014 compared to the same period in 2013, as a result of the combination of the first quarter 2014 acquisition of Pacific Interactive and overall strong performance in the social and mobile games business. Loss from operations for the three months ended June 30, 2014 was $20.5 million, compared with an income from operations of $10.8 million for the three months ended June 30, 2013. Loss from operations for the three months ended June 30, 2014 includes an expense of $31.9 million associated with the increase in fair value of contingent consideration and an impairment charge of $15.5 million associated with the impairment of intangible assets related to the anticipated closure of one of CIE's development studios. Absent these charges, income from operations would have increased, primarily attributable to the income impact of increased revenues. Adjusted Segment EBITDA increased in the second quarter 2014 as compared with the second quarter of 2013, driven by the income impact of increased revenues, partially offset by increased marketing expenses.
Performance Metrics - Interactive Entertainment Social and Mobile Games
The table below shows the results of CIE's social and mobile games business using financial and operating metrics for the periods indicated. User statistics are presented in thousands of users, and average revenues per user is presented in dollars.
Jun. 30, Mar. 31, Dec. 31, Sept. 30, 2013 Jun. 30, Mar. 31,
2014 2014(1) 2013(2) 2013 2013
--------- --------- --------- -------------- --------- ---------
Average
Daily
Active
Users(3) 5,681 5,704 4,639 4,803 4,952 5,259
Average
Monthly
Active
Users(3) 18,575 19,597 15,914 16,354 16,962 17,695
Average
Monthly
Unique
Users(3) 16,794 17,370 13,908 14,615 14,941 16,052
Average
Monthly
Unique
Payers(3) 539 511 322 293 279 292
$
Average
Revenue
Per User $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 second quarter of 2014, CIE's social and mobile games business had approximately 539 thousand average Monthly Unique Payers, or 3.2% of the total number of average Monthly Unique Users on the social and mobile platforms purchase virtual goods during this period, which was approximately a 140 basis point increase year over year.
Casino Properties and Developments
CGP LLC Predecessor Growth Partners Percent Favorable/(Unfavorable) CGP LLC Predecessor Growth Partners Percent Favorable/(Unfavorable)
------------------------------- -------------------------------
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
(In
millions) 2014 2013 2014 2013
---- ---- ---- ----
Net revenues
(1) $294.1 $258.9 13.6% $586.1 $527.4 11.1%
Income from
operations
(1) 31.7 40.8 (22.3)% 67.5 81.3 (17.0)%
Adjusted
Segment
EBITDA(1)(2) 66.6 68.0 (2.1)% 138.2 134.0 3.1%
(1) The financial information herein
includes the financial results for
Bally's Las Vegas, The Cromwell,
The Quad Resort & Casino, and
Harrah's New Orleans as if those
business were combined into the
Predecessor Growth Partners and
CGP LLC reporting entities for all
periods presented.
(2) See Reconciliation of Net
(Loss)/Income to Adjusted EBITDA
later in this release.
Casino Properties and Developments net revenues for second quarter of 2014 increased by $35.2 million when compared with 2013. Gaming revenues increased to $175.7 million in the second quarter 2014 from $161.1 million in the second quarter 2013 due to the opening of Cromwell in May 2014 and stronger organic results in both slot and table win.
Rooms revenues for the three months ended June 30, 2014 and 2013 were $64.9 million and $64.3 million, respectively. Cash average daily room rates for the three months ended June 30, 2014 increased to $108, or approximately 22.7%, when compared to $88 for the same period in 2013 due primarily to the new tower that opened in the fourth quarter of 2013 at Bally's Las Vegas. Average daily occupancy was 92.8% in the second quarter of 2014 and 91.4% in the second quarter of 2013. Revenue per available room ("RevPar") for the three months ended June 30, 2014 and 2013 was $102 and $86, 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 Quad.
Food and beverage revenues for the three months ended June 30, 2014 and 2013 were $57.1 million and $49.6 million, respectively. This increase in revenues was driven largely by new offerings that opened in 2014 such as Giada at The Cromwell, O'Sheas at The Quad and Pinup Pizza at Planet Hollywood.
Other revenues increased 65.7% in second quarter 2014 when compared to 2013 primarily due to the opening of Drai's at The Cromwell and enhanced entertainment options at the new Axis Theater at Planet Hollywood.
Income from operations decreased to $31.7 million in second quarter 2014, compared with $40.8 million in 2013 as the income impact of increased revenues was more than offset by the combination of increased expenses at the Quad, primarily due to the O'Sheas lease expense, and increased pre-opening expenses associated with Horseshoe Baltimore.
Liquidity and Capital Resources
As of June 30, 2014, third-party debt outstanding at CGP LLC was $2,262.7 million. This amount includes debt of the consolidated subsidiary, Caesars Growth Properties Holdings, LLC, of $2,007.0 million. Debt payable to related parties was $39.8 million. Cash and cash equivalents totaled $495.6 million at June 30, 2014. Subsequent to the end of the quarter, we received $451.9 million in connection with the Caesars Entertainment Operating Company notes purchase transaction.
Recent Developments and Subsequent Events
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.
Proposed Development of Woodbury Casino, LLC
On June 30, 2014, CGP submitted its application to the New York State Gaming Facility Location Board for a gaming license to develop Caesars New York, an $880.0 million casino resort in Woodbury, NY. The property will be managed by Caesars Entertainment and its affiliates. The proposed resort will include approximately 300 hotel rooms, suites and villas, 2,560 slot machines, 190 table games and 50 poker tables. Caesars New York will also include entertainment space, suited for business meetings, celebrations, entertainment and WSOP circuit events. In addition, the resort will feature various food and beverage options that are similar to those at existing Caesars properties.
Caesars Interactive Entertainment, Inc. Liquidity Plan
On July 30, 2014, the Committee approved the repurchase of approximately $13.2 million in shares underlying stock options and owned shares. The offer to purchase shares/vested options of CIE is expected to close in August 2014.
Purchase of Bonds by CEOC
On May 5, 2014 CGP LLC entered into a note purchase agreement to sell certain bonds held by a subsidiary of CGP LLC. On July 29, 2014, CGP LLC received $451.9 million of consideration (including accrued and unpaid interest) in connection with the CEOC notes purchase transaction.
Dividend Distribution
On August 6, 2014, Growth Partners effectuated a distribution of 100% of the Senior Notes as a dividend to its members, pro rata based upon each member's ownership percentage in Growth Partners (the "Notes Distribution"). CAC, as a member of Growth Partners and the holder of 42.4% of the economic interests in Growth Partners, received in connection with the Notes Distribution $137,457,000 in aggregate principal amount of the 6.50% Senior Notes and $151,443,000 in aggregate principal amount of the 5.75% Senior Notes.
Conference Call Information
Caesars Acquisition Company will host a conference call at 5:30 a.m. Pacific Time Monday, August 11, 2014, to review its second-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 (844) 231-6441, or (832) 412-1752 for international callers, and enter Conference ID 55918372 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 CAC and Caesars Entertainment Corporation (NASDAQ: CZR), the world's most diversified casino entertainment provider and the most geographically diverse U.S. casino-entertainment company. CAC is Caesars Growth Partners, 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, The Cromwell, The Quad Resort & Casino, Harrah's New Orleans and Horseshoe Baltimore (currently being developed by a joint venture). 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 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 Quad;
-- 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, 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
our Las Vegas assets face from other hotel casino resorts in Las Vegas
and the competition Horseshoe Baltimore will face 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;
-- CGP LLC'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 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 real money online poker is
not legalized in states other than Delaware, Nevada or New Jersey in the
United States or is legalized in an unfavorable manner; 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 OPERATIONS
(UNAUDITED)
(In millions, except per share data)
Three Months Ended June Six Months Ended June
30, 2014 30, 2014
------------------------ ----------------------
Revenues $ - $ -
Operating
expenses (8.2) (14.1)
Income
from
equity
method
investment
in
Caesars
Growth
Partners,
LLC 21.3 30.6
---- ----
Income
before
provision
for
income
taxes 13.1 16.5
Provision
for
income
taxes (4.7) (5.9)
Net
income $8.4 $10.6
==== =====
Earnings
per
share
-
basic
and
diluted $0.06 $0.08
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 June 30, 2014 Six Months Ended June 30, 2014
-------------------------------- ------------------------------
Revenues
Interactive Entertainment
Social and mobile
games $134.4 $250.1
WSOP and online real
money gaming 10.2 18.7
144.6 268.8
----- -----
Casino Properties and Developments
Casino 175.7 353.9
Food and beverage 57.1 114.0
Rooms 64.9 134.6
Other 38.6 68.9
Less: casino
promotional
allowances (42.2) (85.3)
294.1 586.1
----- -----
Net Revenues 438.7 854.9
----- -----
Operating expenses
Interactive Entertainment - Direct
Platform fees 41.0 76.3
Casino Properties and Developments - Direct
Casino 92.8 184.3
Food and beverage 27.7 52.2
Rooms 17.6 36.4
Property, general,
administrative and
other 161.0 322.4
Write-downs,
reserves, and project
opening costs, net of
recoveries 8.4 22.0
Management fees
payable to related
parties 8.7 11.6
Impairment of goodwill
and intangible assets 15.5 15.5
Depreciation and
amortization 32.8 61.0
Change in fair value
of contingently
issuable non-voting
membership units (27.6) 48.5
Change in fair value
of contingent
consideration 31.9 32.6
Total operating
expenses 409.8 862.8
----- -----
Income/(loss) from
operations 28.9 (7.9)
Interest expense, net
of interest
capitalized (62.4) (79.6)
Interest income - 1.0
Interest income -
related party 51.3 100.1
Loss on extinguishment
of debt (23.2) (23.8)
Loss before benefit
from income taxes (5.4) (10.2)
Benefit from income
taxes 15.3 6.1
---- ---
Net income/(loss) 9.9 (4.1)
Net loss attributable
to non-controlling
interests 2.9 9.4
Net income
attributable to
Caesars Growth
Partners, LLC $12.8 $5.3
===== ====
PREDECESSOR GROWTH PARTNERS
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In millions)
Three Months Ended June 30, 2013 Six Months Ended June 30, 2013
-------------------------------- ------------------------------
Revenues
Interactive Entertainment
Social and mobile games $70.7 $137.3
WSOP and online real
money gaming 3.3 4.8
74.0 142.1
---- -----
Casino Properties and Developments
Casino 161.1 337.2
Food and beverage 49.6 102.3
Rooms 64.3 124.0
Other 23.3 44.4
Less: casino promotional
allowances (39.4) (80.5)
258.9 527.4
----- -----
Net revenues 332.9 669.5
----- -----
Operating expenses
Interactive Entertainment - Direct
Platform fees 22.0 43.1
Casino Properties and Developments - Direct
Casino 80.1 170.4
Food and beverage 21.9 45.0
Rooms 17.6 34.4
Property, general,
administrative and other 107.8 204.4
Write-downs, reserves,
and project opening
costs, net of recoveries 6.4 11.0
Management fees payable
to related parties 4.4 8.9
Depreciation and
amortization 24.6 49.2
Change in fair value of
contingent consideration (3.5) 48.9
Total operating expenses 281.3 615.3
----- -----
Income from operations 51.6 54.2
Interest expense, net of
interest capitalized (17.1) (34.6)
Interest income -related
party 42.5 83.1
Loss on extinguishment of
debt (0.2) (0.2)
Other income, net 0.2 0.5
Income before provision
for income taxes 77.0 103.0
Provision for income
taxes (24.3) (33.6)
----- -----
Net income 52.7 69.4
Net (income)/loss
attributable to non-
controlling interests (0.6) 1.2
---- ---
Net income attributable
to Predecessor Growth
Partners $52.1 $70.6
===== =====
CAESARS GROWTH PARTNERS, LLC AND PREDECESSOR GROWTH PARTNERS
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET (LOSS)/INCOME 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 June 30, 2014
----------------------------------------
(In millions) Interactive Entertainment Casino Properties and Developments Other Total
------------------------- ---------------------------------- ----- -----
Net (loss)/income (2.4) (4.2) 16.5 9.9
(Benefit from)/provision
for income taxes (19.4) 4.1 - (15.3)
----- --- --- -----
(Loss)/income before
income taxes (21.8) (0.1) 16.5 (5.4)
Interest expense, net of
interest capitalized 1.3 8.6 52.5 62.4
Interest income,
including related party - - (51.3) (51.3)
Depreciation and
amortization 7.5 25.2 0.1 32.8
--- ---- --- ----
Segment EBITDA (13.0) 33.7 17.8 38.5
Other income, net - - - -
Loss on early
extinguishments of debt
(a) - 23.2 - 23.2
Write-downs, reserves,
and project opening
costs, net of recoveries
(b) - 8.4 - 8.4
Change in fair value of
contingently issuable
non-voting membership
units (c) - - (27.6) (27.6)
Change in fair value of
contingent consideration
(d) 31.9 - - 31.9
Acquisition and
integration costs 0.6 1.1 4.1 5.8
Impairment of goodwill
and intangible assets 15.5 - - 15.5
Stock-based compensation
(e) 8.1 - - 8.1
Other (f) 0.9 0.2 - 1.1
Adjusted EBITDA 44.0 66.6 (5.7) 104.9
==== ==== ==== =====
For the Three Months Ended June 30, 2013
----------------------------------------
(In millions) Interactive Entertainment Casino Properties and Developments Other Total
------------------------- ---------------------------------- ----- -----
Net income 9.5 15.6 27.6 52.7
Provision for income
taxes 0.8 8.6 14.9 24.3
--- --- ---- ----
Income before income
taxes 10.3 24.2 42.5 77.0
Interest expense, net of
interest capitalized 0.5 16.6 - 17.1
Interest income,
including related party - - (42.5) (42.5)
Depreciation and
amortization 3.9 20.7 - 24.6
--- ---- --- ----
Segment EBITDA 14.7 61.5 - 76.2
Other income, net - (0.2) - (0.2)
Loss on early
extinguishments of debt
(a) - 0.2 - 0.2
Write-downs, reserves,
and project opening
costs, net of recoveries
(b) - 6.4 - 6.4
Change in fair value of
contingent consideration
(d) (3.5) - - (3.5)
Acquisition and
integration costs 0.2 - - 0.2
Stock-based compensation
(e) 7.9 - - 7.9
Other (f) 0.8 0.1 - 0.9
Adjusted EBITDA 20.1 68.0 - 88.1
==== ==== === ====
(a) - (f) See footnotes on next page
For the Six Months Ended June 30, 2014
--------------------------------------
(In millions) Interactive Entertainment Casino Properties and Developments Other Total
------------------------- ---------------------------------- ----- -----
Net (loss)/income (0.3) 7.0 (10.8) (4.1)
(Benefit from)/provision
for income taxes (17.7) 11.6 - (6.1)
----- ---- --- ----
(Loss)/income before
income taxes (18.0) 18.6 (10.8) (10.2)
Interest expense, net of
interest capitalized 2.0 25.1 52.5 79.6
Interest income,
including related party - - (101.1) (101.1)
Depreciation and
amortization 13.6 47.3 0.1 61.0
---- ---- --- ----
Segment EBITDA (2.4) 91.0 (59.3) 29.3
Other income, net - - - -
Loss on early
extinguishments of debt
(a) - 23.8 - 23.8
Write-downs, reserves,
and project opening
costs, net of recoveries
(b) - 22.0 - 22.0
Change in fair value of
contingently issuable
non-voting membership
units (c) - - 48.5 48.5
Change in fair value of
contingent consideration
(d) 32.6 - - 32.6
Acquisition and
integration costs 0.6 1.1 4.3 6.0
Impairment of goodwill
and intangible assets 15.5 - - 15.5
Stock-based compensation
(e) 26.4 - - 26.4
Other (f) 1.6 0.3 - 1.9
Adjusted EBITDA 74.3 138.2 (6.5) 206.0
==== ===== ==== =====
For the Six Months Ended June 30, 2013
--------------------------------------
(In millions) Interactive Entertainment Casino Properties and Developments Other Total
------------------------- ---------------------------------- ----- -----
Net (loss)/income (14.9) 30.3 54.0 69.4
(Benefit from)/provision
for income taxes (13.2) 17.7 29.1 33.6
----- ---- ---- ----
(Loss)/income before
income taxes (28.1) 48.0 83.1 103.0
Interest expense, net of
interest capitalized 1.1 33.5 - 34.6
Interest income,
including related party - - (83.1) (83.1)
Depreciation and
amortization 7.8 41.4 - 49.2
--- ---- --- ----
Segment EBITDA (19.2) 122.9 - 103.7
Other income, net (0.1) (0.4) - (0.5)
Loss on early
extinguishments of debt
(a) - 0.2 - 0.2
Write-downs, reserves,
and project opening
costs, net of recoveries
(b) - 11.0 - 11.0
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 0.2 - - 0.2
Stock-based compensation
(e) 10.4 0.1 - 10.5
Other (f) 1.1 0.2 - 1.3
Adjusted EBITDA 41.3 134.0 - 175.3
==== ===== === =====
(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
and the construction of Cromwell.
(c) Amount represents 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 and restricted
stock units.
(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
