Caesars Entertainment Corporation
CAESARS ENTERTAINMENT Corp (Form: 10-Q, Received: 11/14/2014 13:21:12)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
_________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2014
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File No. 1-10410
 _________________________
CAESARS ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)
 _________________________
 
Delaware
 
62-1411755
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
One Caesars Palace Drive, Las Vegas, Nevada
 
89109
(Address of principal executive offices)
 
(Zip Code)
(702) 407-6000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
 _________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x      No   o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
x
 
 
 
 
Non-accelerated filer
o   (Do not check if a smaller reporting company)
Smaller reporting company
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   o     No   x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
Outstanding at November 1, 2014
Common stock, $0.01 par value
144,362,466



CAESARS ENTERTAINMENT CORPORATION
INDEX
 
 
 
Page
Item 1.
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
We have proprietary rights to a number of trademarks used in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 (this "Form 10-Q") that are important to our business, including, without limitation, Caesars, Caesars Entertainment, Caesars Palace, Harrah’s, Total Rewards, Horseshoe, Paris Las Vegas, Flamingo, and Bally's. In addition, Caesars Interactive Entertainment, Inc., which is a majority owned subsidiary of Caesars Growth Partners, LLC, has proprietary rights to World Series of Poker ("WSOP") trademarks. We have omitted the registered trademark (®) and trademark (™) symbols for such trademarks named in this Form 10-Q.

2


PART I—FINANCIAL INFORMATION

Item 1.
Unaudited Financial Statements

CAESARS ENTERTAINMENT CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(In millions, except par value)
 
September 30, 2014

December 31, 2013
Assets
 

 
Current assets
 

 
Cash and cash equivalents ($989.2 and $976.9 attributable to our VIE)
$
3,182.4


$
2,771.2

Restricted cash ($17.1 and $28.8 attributable to our VIE)
61.5

 
87.5

Receivables, net ($99.5 and $54.8 attributable to our VIE)
622.6


619.9

Deferred income taxes ($3.9 and $7.0 attributable to our VIE)
4.6


8.7

Prepayments and other current assets ($23.3 and $15.6 attributable to our VIE)
246.0


237.4

Inventory
44.7


45.6

Total current assets
4,161.8


3,770.3

Property and equipment, net ($2,557.6 and $516.0 attributable to our VIE)
13,484.8


13,237.9

Goodwill ($447.2 and $112.8 attributable to our VIE)
2,772.7


3,063.3

Intangible assets other than goodwill ($299.5 and $180.0 attributable to our VIE)
3,223.4


3,487.7

Investments in and advances to non-consolidated affiliates
168.8


176.8

Restricted cash ($22.5 and $231.6 attributable to our VIE)
42.5


336.8

Deferred income taxes ($23.8 and $0.0 attributable to our VIE)
23.8

 

Deferred charges and other ($59.9 and $11.0 attributable to our VIE)
610.8


604.2

Assets held for sale
2.9

 
11.9

Total assets
$
24,491.5


$
24,688.9

Liabilities and Stockholders’ Deficit
 

 
Current liabilities
 

 
Accounts payable ($126.9 and $54.8 attributable to our VIE)
$
431.1


$
442.7

Accrued expenses and other current liabilities ($205.1 and $126.1 attributable to our VIE)
1,318.4


1,212.3

Interest payable ($49.7 and $5.5 attributable to our VIE)
594.3


389.5

Deferred income taxes ($5.4 and $0.0 attributable to our VIE)
314.1


289.2

Current portion of long-term debt ($18.3 and $47.8 attributable to our VIE)
140.6

 
197.1

Total current liabilities
2,798.5


2,530.8

Long-term debt ($2,300.5 and $673.9 attributable to our VIE)
22,888.9


20,918.4

Deferred income taxes ($8.5 and $3.8 attributable to our VIE)
2,077.4


2,476.0

Deferred credits and other ($89.5 and $67.3 attributable to our VIE)
441.1


667.5

Total liabilities
28,205.9


26,592.7

Commitments and contingencies (Note 15)


 


Stockholders’ deficit
 

 
Common stock, voting: par value $0.01; 146.6 and 139.0 shares
1.5


1.4

Treasury stock: 2.3 and 2.2 shares
(18.9
)
 
(16.3
)
Additional paid-in capital
8,103.9


7,230.5

Accumulated deficit
(12,081.7
)

(10,320.7
)
Accumulated other comprehensive loss
(17.0
)

(16.9
)
Total Caesars stockholders’ deficit
(4,012.2
)

(3,122.0
)
Noncontrolling interests
297.8


1,218.2

Total stockholders' deficit
(3,714.4
)

(1,903.8
)
Total liabilities and stockholders' deficit
$
24,491.5


$
24,688.9

See accompanying Notes to Consolidated Condensed Financial Statements.

3


CAESARS ENTERTAINMENT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In millions, except per share data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Revenues
 
 
 
 
 
 
 
Casino
$
1,395.6

 
$
1,391.5

 
$
4,046.5

 
$
4,178.7

Food and beverage
394.3

 
367.3

 
1,143.8

 
1,103.5

Rooms
301.3

 
302.5

 
915.0

 
887.5

Management fees
16.0

 
14.5

 
44.4

 
42.3

Other
337.6

 
220.2

 
892.3

 
628.3

Reimbursed management costs
62.6

 
72.7

 
196.8

 
203.2

Less: casino promotional allowances
(295.0
)
 
(281.3
)
 
(853.6
)
 
(827.5
)
Net revenues
2,212.4

 
2,087.4

 
6,385.2

 
6,216.0

Operating expenses
 
 
 
 
 
 
 
Direct
 
 
 
 
 
 
 
Casino
833.9

 
760.0

 
2,412.5

 
2,329.6

Food and beverage
183.4

 
163.5

 
516.0

 
488.3

Rooms
81.9

 
74.2

 
241.6

 
225.0

Property, general, administrative, and other
605.6

 
511.3

 
1,680.5

 
1,490.0

Reimbursable management costs
62.6

 
72.7

 
196.8

 
203.2

Depreciation and amortization
131.9

 
124.9

 
371.1

 
410.4

Write-downs, reserves, and project opening costs, net of recoveries
19.2

 
0.5

 
95.1

 
44.7

Impairment of intangible and tangible assets
498.6

 
818.6

 
548.8

 
945.9

Loss on interests in non-consolidated affiliates
6.6

 
4.0

 
9.4

 
20.4

Corporate expense
73.9

 
37.0

 
192.5

 
114.3

Acquisition and integration costs
8.8

 
3.2

 
71.0

 
69.6

Amortization of intangible assets
33.8

 
41.5

 
100.2

 
123.1

Total operating expenses
2,540.2

 
2,611.4

 
6,435.5

 
6,464.5

Loss from operations
(327.8
)
 
(524.0
)
 
(50.3
)
 
(248.5
)
Interest expense
(708.3
)
 
(562.9
)
 
(1,954.1
)
 
(1,677.4
)
Gain/(loss) on early extinguishment of debt
(66.5
)
 
13.0

 
(95.2
)
 
17.5

Gain/(loss) on partial sale of subsidiary

 

 
(3.1
)
 
44.1

Other income, including interest income
1.0

 
0.5

 
5.1

 
8.9

Loss from continuing operations, before income taxes
(1,101.6
)
 
(1,073.4
)
 
(2,097.6
)
 
(1,855.4
)
Income tax benefit
169.9

 
374.2

 
479.3

 
777.9

Loss from continuing operations, net of income taxes
(931.7
)
 
(699.2
)
 
(1,618.3
)
 
(1,077.5
)
Discontinued operations
 
 
 
 
 
 
 
Loss from discontinued operations
(46.1
)
 
(98.7
)
 
(188.4
)
 
(151.5
)
Income tax benefit/(provision)
(2.3
)
 
36.1

 
11.0

 
41.2

Loss from discontinued operations, net of income taxes
(48.4
)
 
(62.6
)
 
(177.4
)
 
(110.3
)
Net loss
(980.1
)
 
(761.8
)
 
(1,795.7
)
 
(1,187.8
)
Net (income)/loss attributable to noncontrolling interests
72.0

 
0.4

 
34.7

 
(3.5
)
Net loss attributable to Caesars
$
(908.1
)
 
$
(761.4
)
 
$
(1,761.0
)
 
$
(1,191.3
)
Loss per share - basic and diluted



 






Loss per share from continuing operations
$
(5.96
)

$
(5.54
)

$
(11.16
)

$
(8.60
)
Loss per share from discontinued operations
(0.33
)

(0.49
)

(1.25
)

(0.87
)
Net loss per share
$
(6.29
)
 
$
(6.03
)
 
$
(12.41
)
 
$
(9.47
)
Weighted-average common shares outstanding - basic and diluted
144.3

 
126.3

 
141.9

 
125.7

See accompanying Notes to Consolidated Condensed Financial Statements. 

4



CAESARS ENTERTAINMENT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(In millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Net loss
$
(980.1
)
 
$
(761.8
)
 
$
(1,795.7
)
 
$
(1,187.8
)
Other comprehensive loss:
 
 
 
 
 
 
 
Benefit plan adjustments
0.4

 
0.2

 
0.9

 
0.6

Foreign currency translation adjustments
0.2

 
(0.8
)
 
(1.4
)
 
(22.1
)
Reclassification of loss on derivative instruments from other comprehensive loss to interest expense

 

 

 
3.9

Unrealized loss on available-for-sale investments
(1.3
)
 
(0.4
)
 
(3.5
)
 
(5.1
)
Total other comprehensive loss, before income taxes
(0.7
)
 
(1.0
)
 
(4.0
)
 
(22.7
)
Income tax provision related to items of other comprehensive loss
(0.3
)
 
(0.9
)
 
(0.4
)
 
(2.1
)
Total other comprehensive loss, net of income taxes
(1.0
)
 
(1.9
)
 
(4.4
)
 
(24.8
)
Total comprehensive loss
(981.1
)
 
(763.7
)
 
(1,800.1
)
 
(1,212.6
)
Comprehensive (income)/loss attributable to noncontrolling interests:
 
 
 
 
 
 
 
Net income
72.0

 
0.4

 
34.7

 
(3.5
)
Foreign currency translation adjustments

 

 

 
0.1

Total comprehensive (income)/loss attributable to noncontrolling interests
72.0

 
0.4

 
34.7

 
(3.4
)
Comprehensive loss attributable to Caesars
$
(909.1
)
 
$
(763.3
)
 
$
(1,765.4
)
 
$
(1,216.0
)

See accompanying Notes to Consolidated Condensed Financial Statements. 

5



CAESARS ENTERTAINMENT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY/(DEFICIT)
(UNAUDITED)
(In millions)
 
Caesars Stockholders
 
 
 
 
 
Common Stock
 
Treasury Stock
 
Additional
Paid-in-
Capital
 

Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income/(Loss)
 
Total
Caesars Stockholders' Equity/(Deficit)
 
Noncontrolling
Interests
 
Total Equity/(Deficit)
 
 
Balance as of December 31, 2012
$
1.3

 
$
(16.3
)
 
$
6,954.4

 
$
(7,372.5
)
 
$
21.4

 
$
(411.7
)
 
$
80.1

 
$
(331.6
)
Net income/(loss)

 

 

 
(1,191.3
)
 

 
(1,191.3
)
 
3.5

 
(1,187.8
)
Share-based compensation

 

 
17.8

 

 

 
17.8

 

 
17.8

Common stock issuances

 

 
15.4

 

 

 
15.4

 

 
15.4

Issuances of common stock under stock incentive plan

 

 
1.1

 

 

 
1.1

 

 
1.1

Increase in treasury shares

 

 
(0.1
)
 

 

 
(0.1
)
 

 
(0.1
)
Contributions from/(distributions to) noncontrolling interest

 

 
24.7

 

 

 
24.7

 
(1.6
)
 
23.1

Other comprehensive loss, net of tax

 

 

 

 
(24.7
)
 
(24.7
)
 
(0.1
)
 
(24.8
)
Purchase of interests in subsidiary

 

 
(9.9
)
 

 

 
(9.9
)
 

 
(9.9
)
Balance as of September 30, 2013
$
1.3

 
$
(16.3
)
 
$
7,003.4

 
$
(8,563.8
)
 
$
(3.3
)
 
$
(1,578.7
)
 
$
81.9

 
$
(1,496.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2013
$
1.4

 
$
(16.3
)
 
$
7,230.5

 
$
(10,320.7
)
 
$
(16.9
)
 
$
(3,122.0
)
 
$
1,218.2

 
$
(1,903.8
)
Net income/(loss)

 

 

 
(1,761.0
)
 

 
(1,761.0
)
 
(34.7
)
 
(1,795.7
)
Share-based compensation

 
(2.6
)
 
31.4

 

 

 
28.8

 

 
28.8

Common stock issuances
0.1

 

 
135.7

 

 

 
135.8

 

 
135.8

Bond distribution to noncontrolling interest owners

 

 

 

 

 

 
(159.7
)
 
(159.7
)
Contribution to noncontrolling interest from retirement of debt

 

 
(45.3
)
 

 

 
(45.3
)
 
45.3

 

Repurchase of subsidiary interest and noncontrolling interest transactions

 

 
(2.2
)
 

 

 
(2.2
)
 
(27.2
)
 
(29.4
)
Other comprehensive loss, net of tax

 

 

 

 
(4.4
)
 
(4.4
)
 

 
(4.4
)
Allocation of noncontrolling interest resulting from sales and conveyances of subsidiary stock

 

 
753.8

 

 
4.3

 
758.1

 
(744.1
)
 
14.0

Balance as of September 30, 2014
$
1.5

 
$
(18.9
)
 
$
8,103.9

 
$
(12,081.7
)
 
$
(17.0
)
 
$
(4,012.2
)
 
$
297.8

 
$
(3,714.4
)


See accompanying Notes to Consolidated Condensed Financial Statements.

6




CAESARS ENTERTAINMENT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions)

 
Nine Months Ended September 30,
 
2014
 
2013
Cash flows from operating activities
$
(422.0
)
 
$
(2.4
)
Cash flows from investing activities
 
 
 
Acquisitions of property and equipment, net of change in related payables
(817.2
)
 
(466.7
)
Change in restricted cash
320.3

 
671.2

Proceeds received from sale of assets
32.4

 

Proceeds from partial sale of subsidiary, net of cash deconsolidated

 
50.4

Payments to acquire businesses, net of transaction costs and cash acquired
(22.5
)
 
(8.6
)
Investments in/advances to non-consolidated affiliates and other
(2.1
)
 
(36.2
)
Purchases of investment securities
(13.0
)
 
(26.7
)
Proceeds from the sale and maturity of investment securities
16.5

 
55.8

Other
12.9

 
(14.1
)
Cash flows from investing activities
(472.7
)
 
225.1

Cash flows from financing activities
 
 
 
Proceeds from the issuance of long-term debt
4,069.9

 
1,808.1

Debt issuance and extension costs and fees
(224.9
)
 
(81.1
)
Borrowings under lending agreements
105.0

 

Repayments under lending agreements
(30.0
)
 

Cash paid for early extinguishments of debt
(1,847.4
)
 
(2,067.8
)
Scheduled debt and capital lease payments
(812.2
)
 
(19.7
)
Purchase of additional interests in subsidiaries

 
(9.9
)
Contributions from noncontrolling interest owners

 
35.3

Issuance of common stock, net of fees
137.8

 
16.2

Distributions to noncontrolling interest owners
(35.6
)
 
(11.0
)
Other
4.0

 

Cash flows from financing activities
1,366.6

 
(329.9
)
Cash flows from discontinued operations
 
 
 
Cash flows from operating activities
(58.5
)
 
(7.9
)
Cash flows from investing activities
(2.2
)
 
65.7

Cash flows from financing activities

 

Net cash from discontinued operations
(60.7
)
 
57.8

Net increase/(decrease) in cash and cash equivalents
411.2

 
(49.4
)
Change in cash classified as assets held for sale

 
(0.2
)
Cash and cash equivalents, beginning of period
2,771.2

 
1,757.5

Cash and cash equivalents, end of period
$
3,182.4

 
$
1,707.9

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Cash paid for interest
$
1,552.3

 
$
1,357.2

Cash paid for income taxes
40.3

 
25.2

Non-cash investing and financing activities:
 
 
 
Change in accrued capital expenditures
(1.3
)
 
12.9


See accompanying Notes to Consolidated Condensed Financial Statements.

7


CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

In these notes, the words "Company," "Caesars," "Caesars Entertainment," "CEC," "we," "our," and "us" refer to Caesars Entertainment Corporation, a Delaware corporation, and its consolidated entities, unless otherwise stated or the context requires otherwise.

Note 1 - Organization and Basis of Presentation
Organization
We conduct business through our majority owned subsidiary, Caesars Entertainment Operating Company, Inc. ("CEOC"), and our wholly owned subsidiary, Caesars Entertainment Resort Properties, LLC ("CERP"), and their respective subsidiaries. We also consolidate Caesars Growth Partners, LLC ("CGP LLC"), which is a variable interest entity ("VIE") for which we have determined that we are the primary beneficiary (see Note 5 , " Caesars Growth Partners "). As of September 30, 2014 , we owned and operated or managed, through various subsidiaries and CGP LLC, 50 casinos in 14 U.S. states and 5 countries. Of the 50 casinos, 38 are in the United States and primarily consist of land-based and riverboat or dockside casinos. Our 12 international casinos are all land-based casinos, most of which are located in England.
Caesars Interactive Entertainment, Inc. ("CIE"), a majority owned subsidiary of CGP LLC, operates an online gaming business providing for social games on Facebook and other social media websites and mobile application platforms and certain real money games in Nevada and New Jersey; and "play for fun" offerings in other jurisdictions. CIE also owns the WSOP tournaments and brand, and licenses trademarks for a variety of products and businesses related to this brand.
We view each casino property as an operating segment and aggregate such casino properties into one reportable segment.
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements of the Company have been prepared under the rules and regulations of the Securities and Exchange Commission ("SEC") applicable for interim periods and, therefore, do not include all information and footnotes necessary for complete financial statements in conformity with accounting principles generally accepted in the United States ("GAAP"). The results for the interim periods reflect all adjustments (consisting primarily of normal recurring adjustments) that management considers necessary for a fair presentation of financial position, results of operations, and cash flows. The results of operations for our interim periods are not necessarily indicative of the results of operations that may be achieved for the entire 2014 fiscal year.
The financial information for the three and nine months ended September 30, 2013 reflects the results of operations and cash flows of the Golden Nugget, Harrah's Tunica, Showboat Atlantic City casinos as discontinued operations consistent with the current period presentation. See Note 4 , " Dispositions, Divestitures, and Other Property Matters ."
This Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013 (" 2013 10-K").
Note 2 Liquidity Considerations
We are a highly leveraged company primarily resulting from the leverage of CEOC, which had $18,410.9 million in face value of debt outstanding as of September 30, 2014 , out of the total $25,529.3 million face value of our consolidated outstanding indebtedness. As a result, a significant portion of our liquidity needs are for debt service, including significant interest payments. Our consolidated debt service obligation for the remainder of 2014 is $831.3 million , consisting of $93.4 million in principal maturities and $737.9 million in required interest payments. Our consolidated debt service obligation for 2015 is $2,469.8 million , consisting of $140.6 million in principal maturities and $2,329.2 million in required interest payments.
As a result of our debt service requirements and a general decline in our gaming activity since 2007, with Atlantic City properties and our regional markets being more heavily impacted by this trend, we have experienced substantial operating and net losses in recent years, resulting in a total stockholders' deficit of $3,714.4 million as of September 30, 2014 . Further, we expect to experience operating and net losses for the remainder of 2014 and the foreseeable future.

8

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Caesars Entertainment is a holding company, with its holdings consisting of an interest in three primary entities:
Caesars Entertainment Operating Company;
Caesars Entertainment Resort Properties, LLC; and
Caesars Growth Partners, LLC.
CERP and CGP LLC have material amounts of debt; however, we believe their cash and cash equivalents balances, cash flows from operations, and financing available under revolving credit facilities will be sufficient to meet normal operating requirements and to fund planned capital expenditures during the next 12 months. CEOC, which remains heavily levered, is the focus of ongoing efforts designed to position CEOC for significant deleveraging.
See Note 9 , " Debt ," for details of our debt outstanding and related restrictive covenants, including the restrictions on our subsidiaries to pay dividends to CEC or otherwise transfer cash to CEC. This detail includes, among other information, a table presenting details of our individual borrowings outstanding as of September 30, 2014 and December 31, 2013, as well as discussion of recent changes in our debt outstanding, and changes in the terms of existing debt subsequent to December 31, 2013.
CEOC Liquidity Discussion and Analysis
CEOC net revenues were $3,939.1 million for the nine months ended September 30, 2014 , representing 61.7% of consolidated net revenues of CEC for the period. CEOC is highly leveraged, and a significant amount of its liquidity needs are for debt service, including significant interest payments. As of September 30, 2014 , CEOC had $18,410.9 million face value of outstanding indebtedness and its current debt service obligation over the next 12 months is $1,829.5 million , consisting of $82.1 million in principal maturities and $1,747.4 million in required interest payments.
As a result of the CEC consolidated factors described above, CEOC has experienced substantial net losses and operating losses in recent years, resulting in total stockholders' deficit of $7,542.3 million as of September 30, 2014 . Further, CEOC expects to experience operating and net losses for the foreseeable future.
CEOC's cash and cash equivalents, excluding restricted cash, totaling $1,479.9 million at September 30, 2014 , compared with $1,438.7 million at December 31, 2013. CEOC experienced negative operating cash flows of $548.7 million for the nine months ended September 30, 2014 and expects to experience negative operating cash flows for the foreseeable future.
CEOC does not currently expect that its cash flows from operations will be sufficient to repay its indebtedness and will ultimately need to pursue additional debt or equity offerings or seek a refinancing, amendment, private restructuring or a reorganization under Chapter 11 of the Bankruptcy Code.
CEOC has sufficient liquidity at present, including CEOC’s ability to borrow under any of its credit arrangements as described in Note 9, "Debt." However, CEOC estimates that, absent a refinancing, amendment, private restructuring, or a reorganization under Chapter 11 of the Bankruptcy Code, based on its current operating forecasts and the underlying assumptions, that it would require additional sources of liquidity to fund its operations and obligations beginning during the fourth quarter of 2015. These factors raise substantial doubt as to CEOC's ability to continue as a going concern beyond the fourth quarter of 2015. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
During the nine months ended September 30, 2014 , CEC and CEOC have been undertaking a number of actions to mitigate this uncertainty. For more information on these actions and the impact that the related transactions have on CEOC's liquidity and capital structure, see Note 6 , " Property Transaction between CEOC and CGP LLC and Related Financing ," Note 9 , " Debt ," and Note 10 , " Stockholders' Equity and Loss Per Share ."
Also see Note 15 , " Litigation, Contractual Commitments and Contingent Liabilities ", and Note 20 , " Subsequent Events " for more information regarding Noteholder disputes and claims related to these actions and transactions. If a court were to find in favor of the claimants in any of these disputes, such determination could have a material adverse effect on CEOC's business, financial condition, results of operations, and prospects and on the ability of lenders and Noteholders to recover on claims under CEOC's indebtedness.
On September 12, 2014, we announced that CEC and CEOC had executed non-disclosure agreements ("NDAs") with certain First Lien Creditors of CEOC's 1 1.25% senior secured notes due 2017; CEOC's 8.5% senior secured notes due 2020 and CEOC's 9% senior secured notes due 2020 in an effort to restructure CEOC's debt.

9

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

On October 16, 2014, CEOC entered into certain control arrangements with the Collateral Agent in order to provide the first lien secured creditors with a perfected lien on its cash. Such arrangements do not restrict CEOC's ability to utilize cash and are not expected to have an operational impact on CEOC (see Note 9 , " Debt ").
On October 17, 2014, we announced that CEC and CEOC had executed NDAs with certain beneficial holders of debt, including senior secured term loans, issued by CEOC pursuant to the Third Amended and Restated Credit Agreement dated July 25, 2014, by and among CEC, CEOC, the lender parties and Credit Suisse AG, Cayman Islands Branch, as administrative agent, in an effort to restructure CEOC's debt.
On October 29, 2014, we announced that one of the First Lien Creditors that had previously executed an NDA did not extend its NDA. While CEC and CEOC are no longer in discussions with the one First Lien Creditor that did not extend its NDA, and while no agreement has been reached yet on the terms of a restructuring, CEC and CEOC are continuing discussions with the remaining First Lien Creditors all of which have extended their NDAs.
From time to time, depending upon market, pricing, and other conditions, and on CEOC's cash balances and liquidity, CEOC may seek to acquire or exchange notes or other indebtedness through open market purchases, privately negotiated transactions, tender offers, redemption, exchange offers or otherwise, upon such terms and at such prices as CEOC may determine (or as may be provided for in the indentures governing the notes), for cash or other consideration, including CEOC common stock. In addition, CEOC has considered and will continue to evaluate potential transactions to reduce net debt, such as debt for debt exchanges, debt for equity exchanges or restructuring transactions.
CEOC's ability to refinance or restructure its debt, or to issue additional debt or equity, will depend upon, among other things:
the condition of the capital markets at the time, which is beyond CEOC's control;
CEOC's future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond CEOC's control;
CEOC's continued compliance with the terms and covenants in its credit facilities, indentures and loan agreements that govern our debt; and
the results of ongoing discussions with CEOC's Noteholders and lenders.
CERP Liquidity Discussion and Analysis
As of September 30, 2014 , CERP's cash and cash equivalents totaled $200.8 million . Its operating cash inflows are typically used for operating expenses, debt service costs and working capital needs. CERP is highly leveraged and a significant portion of its liquidity needs are for debt service. As of September 30, 2014 , CERP had $4,737.2 million face value of indebtedness outstanding including capital lease indebtedness. See Note 9 , " Debt ," for additional information related to CERP indebtedness and related restrictive covenants. Cash paid for interest for the nine months ended September 30, 2014 , was $243.7 million . Payments of short-term debt obligations and other commitments are expected to be made from operating cash flows.
CERP's estimated interest payments for the remainder of 2014 are $162.8 million , for the years ended December 31, 2015 through 2018 are $390.0 million , $395.3 million , $413.6 million , and $422.7 million , respectively, and thereafter are $933.8 million .
CERP's ability to fund its operations, pay its debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond its control, and disruptions in capital markets and restrictive covenants related to its existing debt could impact CERP's ability to secure additional funds through financing activities. We believe that CERP's cash and cash equivalents balance, its cash flows from operations, and financing available under its revolving credit facility will be sufficient to meet normal operating requirements during the next 12 months and to fund planned capital expenditures.
CGP LLC Liquidity Discussion and Analysis
CGP LLC's primary sources of liquidity include currently available cash and cash equivalents, cash flows generated from its operations and borrowings under CIE's credit facility with Caesars Entertainment. CGP LLC's cash and cash equivalents, excluding restricted cash, totaled $989.2 million as of September 30, 2014 .
Payments of short-term debt obligations and other commitments are expected to be made from operating cash flows. CGP LLC's operating cash inflows are used for operating expenses, debt service costs, working capital needs and capital expenditures in the normal course of business. Long-term obligations are expected to be paid through operating cash flows, refinancing of existing debt or the issuance of new debt, or, if necessary, additional investments from its equity holders. CGP LLC's ability to

10

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

refinance debt will depend upon numerous factors such as market conditions, our financial performance, and the limitations applicable to such transactions under CGP LLC's and its subsidiaries' financing documents. Additionally, CGP LLC's ability to fund operations, pay debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond CGP LLC's control, and disruptions in capital markets and restrictive covenants related to CGP LLC's existing debt could impact CGP LLC's ability to fund liquidity needs, pay indebtedness and secure additional funds through financing activities.
CGP LLC believes that its cash and cash equivalents and its cash flows from operations will be sufficient to meet its normal operating and debt service requirements during the next 12 months and the foreseeable future and to fund capital expenditures expected to be incurred in the normal course of business.
Consolidated Liquidity Discussion and Analysis
Consolidated cash and cash equivalents, excluding restricted cash, totaled $3,182.4 million as of September 30, 2014 . Cash and cash equivalents as of September 30, 2014 , includes $989.2 million held by our consolidated VIE, CGP LLC, which is not available for our use to fund operations or satisfy our obligations unrelated to CGP LLC.
In addition to cash flows from operations, available sources of cash include amounts available under our current revolving credit facilities. CEOC's revolving credit facility provides for up to $106.1 million , of which $7.8 million remained as available borrowing capacity for CEOC as of September 30, 2014 . CERP's revolving credit facility provides for up to $269.5 million , of which $194.5 million remained as available borrowing capacity for CERP as of September 30, 2014 . CGP LLC's revolving credit facility provides for up to $150.0 million , of which $149.9 million remained as available borrowing capacity for CGP LLC as of September 30, 2014 .
The following summarizes our liquidity:
 
September 30, 2014
(In millions)
CEOC
 
CERP
 
CGP LLC
 
Parent
Cash and cash equivalents
$
1,479.9

 
$
200.8

 
$
989.2

 
$
512.5

Revolver capacity
106.1

 
269.5

 
150.0

 

Revolver capacity drawn or committed to letters of credit
(98.3
)
 
(75.0
)
 
(0.1
)
 

Total Liquidity
$
1,487.7

 
$
395.3

 
$
1,139.1

 
$
512.5

We experienced negative consolidated operating cash flows of $422.0 million for the nine months ended September 30, 2014 , including negative operating cash flows of $548.7 million from CEOC, and expect to experience negative consolidated operating cash flows for the remainder of 2014 and the foreseeable future.
As previously noted, CEOC does not currently expect that its cash flows from operations will be sufficient to repay its indebtedness and it will ultimately need to pursue additional debt or equity offerings or seek a refinancing, amendment, private restructuring or a reorganization under Chapter 11 of the Bankruptcy Code.
Although CEOC does not believe that its cash flows from operations combined with existing liquidity sources will be sufficient to repay its indebtedness when it comes due, because of the absence of cross-default provisions in the indebtedness due within the next 15 months and the absence of any parent guarantee (as discussed in Note 9 , " Debt ”), we do not believe that the impact of any default that CEOC could experience in the next 15 months would materially impact the liquidity of CEC and its consolidated operating subsidiaries other than CEOC.
Prior to October 1, 2014, our properties, including properties held in our CERP and CGP subsidiaries, were managed by CEOC. We therefore have historically been reliant on CEOC and its employees to support these operations and enable us to generate cash flows in our other operating subsidiaries.
As described in Note 18 , " Caesars Enterprise Services ," CEC, CEOC, CERP, and CGPH (collectively, the "CES Members") entered into a services joint venture, Caesars Enterprise Services ("CES"). Effective October 1, 2014, substantially all our properties are managed by Caesars Enterprise Services (and the remaining properties will be transitioned upon regulatory approval). Under the terms of the joint venture and the Omnibus License and Enterprise Services Agreement we believe that CEC and its other operating subsidiaries will continue to have access to the services historically provided to us by CEOC and its employees, its trademarks and its programs.

11

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

We believe that, other than as disclosed above with respect to CEOC, CEC and its other consolidated operating subsidiaries' cash and cash equivalents balances, cash flows from operations, and financing available under revolving credit facilities will be sufficient to fund their operations and obligations during the next 12 months and to fund planned capital expenditures.
The foregoing are forward-looking statements based on assumptions as of the date of this filing that may or may not prove to be correct. Actual results may differ materially from CEOC's present expectations. Factors that may cause actual results to differ materially from present expectations include, without limitation, the results of ongoing discussions with CEOC's lenders and Noteholders and the positive or negative changes in the operational and other matters assumed in preparing the CEOC forecasts that would have an impact on CEOC's ability to continue as a going concern.
Note 3 Recently Issued Accounting Pronouncements
In April 2014, the Financial Accounting Standards Board ("FASB") issued authoritative guidance amending existing requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting will be limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. Public entities will apply the amended guidance prospectively to all disposals occurring within annual periods beginning on or after December 15, 2014, and interim periods within those years. We will adopt this standard effective January 1, 2015. Due to the change in requirements for reporting discontinued operations described above, presentation and disclosures of future transactions after adoption may be different than under current standards.
In May 2014, the FASB issued authoritative guidance amending the FASB Accounting Standards Codification and creating a new Topic 606, Revenue from Contracts with Customers. The new guidance is expected to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP applicable to revenue transactions. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Existing industry guidance, including revenue recognition guidance specific to the gaming industry will be eliminated. In addition, interim and annual disclosures will be substantially revised. The amendments in this guidance are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. We will adopt this standard effective January 1, 2017. We are currently assessing the impact the adoption of this standard will have on our disclosures and results of operations.
In August 2014, the FASB issued authoritative guidance amending the existing requirements for disclosing information about an entity's ability to continue as a going concern. The new guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosure in certain circumstances. The amendments in this guidance are effective for annual reporting periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. We are currently assessing the impact the adoption of this standard will have on our disclosures and results of operations and are evaluating the date of adoption.
Note 4 Dispositions, Divestitures, and Other Property Matters
Dispositions and Divestitures
Showboat Atlantic City
Showboat Atlantic City casino permanently closed effective August 31, 2014. As a result of our decision to close this property, we recorded a $4.8 million charge in the second quarter of 2014 for accrued severance costs and an additional $15.8 million charge related to accrued exit costs in the third quarter of 2014. We have presented the operations of Showboat Atlantic City as discontinued operations in the Consolidated Condensed Statements of Operations.
CIE RMG BEL, LLC
In June 2014, CIE concluded that, effective August 2014, it would suspend operations of CIE RMG BEL, LLC, an indirectly wholly owned subsidiary in Minsk, Belarus. As a result, CIE recorded a $15.5 million impairment in the second quarter of 2014. In the third quarter of 2014, CIE settled its accrued contingent consideration for $4.5 million and recognized a gain of $1.4 million on the final disposition of the entity. We have presented the operations of CIE RMG BEL, LLC as discontinued operations in the Consolidated Condensed Statements of Operations.

12

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Harrah's Tunica
Harrah’s Tunica casino permanently closed effective June 2, 2014. We recorded intangible and tangible asset impairment charges totaling $68.0 million during the first quarter of 2014 as a result of our impairment testing. In the second quarter of 2014, as a result of our decision to close this property, we recorded a charge for approximately $10.9 million related to accrued exit costs associated with the closure of this casino. In the third quarter of 2013, we recorded a tangible asset impairment charge of $112.3 million related to Harrah's Tunica as a result of completing an assessment for impairment for certain of our properties. We have presented the operations of the Harrah's Tunica casino as discontinued operations in the Consolidated Condensed Statements of Operations.
Golden Nugget
In February 2014, we permanently closed the Golden Nugget casino in London. As a result, in the first quarter of 2014, we recorded charges of $1.7 million related to the impairment of intangible and tangible assets and $13.1 million related to accrued exit costs. As of September 30, 2014, $10.2 million remains accrued for exit-related costs. We have presented the operations of the Golden Nugget casino as discontinued operations in the Consolidated Condensed Statements of Operations.
Claridge Hotel Tower
In October 2013, we entered into an agreement to sell the Claridge Hotel Tower, which was part of the Bally's Atlantic City asset group, for $12.5 million , less customary closing adjustments. We received these proceeds in February 2014 upon the transaction closing. The Claridge Hotel Tower assets of $11.9 million were classified as assets held for sale as of December 31, 2013 .
Other Property Matters
Iowa Dog Racing Legislation
As a result of new legislation passed in May 2014 in the State of Iowa, we are required to cease our greyhound racing activities at our Horseshoe Council Bluffs casino in Council Bluffs, Iowa, effective December 31, 2015. The new legislation ("Iowa Dog Racing Legislation") requires that we pay a total of $65.0 million to the Iowa Racing and Gaming Commission over a seven-year period, beginning in January 2016. These exit costs were recorded at the present value of the future liability and will be accreted over the term of the payments. The liability related to the exit costs was $41.4 million as of September 30, 2014 .
AC Conference Center
On July 1, 2014, AC Conference Holdco, LLC, a direct wholly owned subsidiary of CEC, and its direct, wholly owned subsidiary, AC Conference Newco, LLC, were contributed to CERP. The total net book value of both entities contributed was $81.7 million . The assets are primarily comprised of real estate and development costs for a new meeting and conference center, which will be connected to CERP's Harrah's Atlantic City casino. There was no impact on CEC's consolidated financial statements.

13

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Discontinued Operations
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2014
 
2013
 
2014
 
2013
Net revenues
 
 
 
 
 
 
 
Showboat Atlantic City
$
33.5

 
$
58.3

 
$
115.4

 
$
157.8

Harrah's Tunica

 
31.9

 
46.4

 
99.9

Other

 
3.1

 
1.3

 
10.8

Total net revenues
$
33.5

 
$
93.3

 
$
163.1

 
$
268.5

 
 
 
 
 
 
 
 
Pre-tax income/(loss) from operations
 
 
 
 
 
 
 
Showboat Atlantic City
$
(23.8
)
 
$
7.9

 
$
(36.2
)
 
$
10.0

Harrah's Tunica
(22.7
)
 
(120.8
)
 
(119.1
)
 
(130.4
)
Other
0.4

 
14.2

 
(33.1
)
 
(31.1
)
Total pre-tax loss from discontinued operations
$
(46.1
)
 
$
(98.7
)
 
$
(188.4
)
 
$
(151.5
)
 
 
 
 
 
 
 
 
Income/(loss), net of income taxes
 
 
 
 
 
 
 
Showboat Atlantic City
$
(26.1
)
 
$
4.6

 
$
(25.2
)
 
$
5.6

Harrah's Tunica
(22.7
)
 
(78.3
)
 
(119.1
)
 
(84.5
)
Other
0.4

 
11.1

 
(33.1
)
 
(31.4
)
Total loss from discontinued operations, net of income taxes
$
(48.4
)
 
$
(62.6
)
 
$
(177.4
)
 
$
(110.3
)
Note 5 Caesars Growth Partners
Consolidation as a Variable Interest Entity
CEC owns non-voting membership units of CGP LLC and is also party to management services agreements between CGP LLC and CEOC that constitute variable interests in CGP LLC. Because the equity holders in CGP LLC receive returns disproportionate to their voting interests and substantially all the activities of CGP LLC are related to Caesars, CGP LLC has been determined to be a variable interest entity.
Because substantially all the activities of CGP LLC are related to Caesars and due to the factors set forth below, we have concluded that we are required to consolidate CGP LLC. We have reached this conclusion based upon the weighting of a number of items, including the following: (i) the close association that CGP LLC has with Caesars, including the fact that all of the assets and businesses owned by CGP LLC were acquired from Caesars; (ii) Caesars, through CEOC, has ongoing asset and management services agreements with each of the properties owned by CGP LLC; and (iii) Caesars has the obligation to absorb losses and the right to receive residual returns that could potentially be significant to CGP LLC. CGP LLC generated net revenues of $485.8 million and $1,064.6 million for the three and nine months ended September 30, 2014 , respectively. Net loss attributable to Caesars related to CGP LLC was $32.0 million and $119.0 million for the three and nine months ended September 30, 2014 , respectively.
Contingently Issuable Non-Voting Membership Units
CGP LLC is obligated to issue additional non-voting membership units to Caesars Entertainment to the extent that the earnings from CIE's social and mobile games business exceed a specified threshold amount in 2015. The number of units to be received is capped at a value of $225.0 million divided by the value of the non-voting units at the date of the CGP LLC formation transaction.
CGP LLC maintains a liability equal to the fair value of the additional non-voting membership units contingently issuable to Caesars Entertainment during 2016 as described above. The contingently issuable membership units' fair value is based upon a multiple of EBITDA for the calendar year 2015 in excess of a specified minimum threshold and includes a maximum payout threshold. The fair value of the contingently issuable non-voting membership units was $298.6 million on the CGP LLC balance sheet as of September 30, 2014 and $306.5 million as of December 31, 2013 . This liability is eliminated in our consolidation of CGP LLC.

14

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)


Distribution of CEOC Notes
On August 6, 2014, CGP LLC effectuated a distribution of 100% of its remaining investment in certain CEOC notes as a dividend to its members, CEC and Caesars Acquisition Company ("CAC"), pro rata based upon each member’s ownership percentage in CGP LLC (the "Notes Distribution"). In connection with the Notes Distribution, CEC received $187.0 million in aggregate principal amount of the 6.50% Senior Notes and $206.1 million in aggregate principal amount of the 5.75% Senior Notes and CAC received $137.5 million in aggregate principal amount of the 6.50% Senior Notes and $151.4 million in aggregate principal amount of the 5.75% Senior Notes.
CGP LLC is a consolidated VIE, accordingly, the CEOC notes held by CGP LLC prior to the Notes Distribution were eliminated in consolidation and were not reflected as part of CEOC's outstanding debt disclosed in Note 9 , " Debt ." The CEOC notes received by CEC were subsequently contributed to CEOC for cancellation, as described in Note 9 , " Debt - Note Purchase and Support Agreement ," which resulted in no impact on the consolidated financial statements of CEC. The CEOC notes received by CAC resulted in an increase in the face value and book value reported for CEOC debt because CAC is not a consolidated entity. In addition, the Notes Distribution resulted in a $159.7 million decrease in noncontrolling interest (which represents the fair value of the CEOC notes) and an $88.9 million increase to the discount on long-term debt as of September 30, 2014 . The decrease in noncontrolling interest represents CGP LLC's reported fair value of the CEOC notes at the time of the Notes Distribution, while the increase to the discount represents the difference between CGP LLC's fair value for the CEOC notes and the book value reported by CEOC. The Notes Distribution to CAC is being accounted for as a new issuance of debt by CEC for accounting purposes. As a result of this transaction, CEC now reflects the $288.9 million in face value of notes distributed by CGP LLC to CAC as outstanding, with a total discount of $129.2 million , resulting in an increase to net book value of debt outstanding equal to the fair value of the related notes, which was $159.7 million .
Note 6 Property Transaction between CEOC and CGP LLC and Related Financing
Property Transaction between CEOC and CGP LLC
In May 2014, CEOC sold to CGP LLC (hereafter collectively referred to as the " CEOC-CGP LLC Property Transaction "):
(i)
its subsidiaries that own the assets comprising The Cromwell, The LINQ Hotel, Bally’s Las Vegas, and Harrah's New Orleans (collectively the "Properties");
(ii)
50% of the ongoing management fees and any termination fees payable under property management agreements to be entered between a CEOC subsidiary and the owners of each of the Properties; and
(iii)
certain intellectual property that is specific to each of the Properties.
In May 2014, CEOC completed the CEOC-CGP LLC Property Transaction for an aggregate purchase price of $2,000.0 million , minus assumed debt and other customary closing adjustments. The debt assumed consisted of the $185.0 million Cromwell Credit Facility described in Note 9 , " Debt ." Consistent with the 2013 sale of Planet Hollywood Las Vegas from CEOC to CGP LLC, this transaction was accounted for as a reorganization of entities under common control, with CEOC results being reflective of the sold properties through the date of the sale. CGP LLC results are reflective of CGP LLC as consolidated into CEC results; accordingly the results of the four properties that CGP LLC acquired from CEOC are included in CGP LLC only after the date of acquisition.
Under the terms of the agreements governing the CEOC-CGP LLC Property Transaction , each property is managed by CEOC. In addition, each property licenses enterprise-wide intellectual property from Caesars Licensing Company, LLC ("CLC"). Upon implementation of the services joint venture described in Note 18 , " Caesars Enterprise Services ," CEOC assigned the management agreements to CES, and CLC granted to CES licenses with respect to the enterprise-wide intellectual property. CEOC receives ongoing management fees during the term of the related property management agreement consisting of a (i) base management fee of 2% of monthly net operating revenues and (ii) an incentive management fee in an amount equal to 5% of EBITDA for each operating year.
In addition to the above, the agreements governing the CEOC-CGP LLC Property Transaction also provide that CEC and CEOC will indemnify CGP LLC for certain obligations, including:
(i)
the failure of CEC and CEOC to perform or fulfill any of their covenants or breach any of their representations and warranties under the agreements;
(ii)
new construction and renovation of The LINQ Hotel of up to 15% of amounts in excess of $223.1 million ; and

15

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

(iii)
certain other agreed upon matters.
Related Financing Agreement
As disclosed in greater detail in Note 9 , " Debt ," in April 2014, CGP LLC entered into a First Lien Credit Agreement providing for a $1,175.0 million term loan and a $150.0 million revolving facility, and completed the offering of $675.0 million aggregate principal amount of their 9.375% second-priority senior secured notes due May 2022.
Note 7 Property and Equipment, Net
(In millions)
September 30, 2014
 
December 31, 2013
Land and land improvements
$
6,231.3

 
$
6,266.8

Buildings, riverboats, and improvements
7,574.1

 
6,668.1

Furniture, fixtures, and equipment
2,558.7

 
2,297.7

Construction in progress
251.1

 
824.6

 
16,615.2

 
16,057.2

Less: accumulated depreciation
(3,130.4
)
 
(2,819.3
)
 
$
13,484.8

 
$
13,237.9

Depreciation expense is included in depreciation and amortization, corporate expense, and loss from discontinued operations, and was as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2014
 
2013
 
2014
 
2013
Depreciation expense
$
167.9

 
$
131.7

 
$
434.8

 
$
438.1

Tangible Asset Impairments
We recorded tangible asset impairment charges related to continuing operations totaling $53.2 million and $60.9 million for the three and nine months ended September 30, 2014 , respectively. In the third quarter of 2014, due to a decline in recent performance and downward adjustments to expectations of future performance, we determined it was necessary to perform an assessment for impairment for certain of our properties, which resulted in an impairment charge of $50.4 million .
We recorded tangible asset impairment charges related to continuing operations totaling $498.7 million and $603.0 million for the three and nine months ended September 30, 2013 , respectively. As a result of deteriorating gaming volumes in certain of our markets, we determined it was necessary to complete an assessment for impairment for certain of our properties, which resulted in these impairment charges. The impairment charges primarily included $104.3 million in the second quarter of 2013 related to our land holdings in Biloxi, Mississippi, and a real estate project in Atlantic City, New Jersey, and $498.7 million in the third quarter of 2013 related to certain properties in Atlantic City.
We recorded tangible asset impairment charges of $66.8 million in the first quarter of 2014, as a result of our decision to close Harrah's Tunica. In the third quarter of 2013, we recorded a tangible asset impairment charge of $112.3 million related to Harrah's Tunica as a result of completing an assessment for impairment for certain of our properties. We have presented the operations of the Harrah's Tunica casino as discontinued operations in the Consolidated Condensed Statements of Operations.

16

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Note 8 Goodwill and Other Intangible Assets
Changes in Carrying Value of Goodwill and other Intangible Assets
 
Amortizing Intangible Assets
 
Non-Amortizing Intangible Assets
(In millions)
 
Goodwill
 
Other
Balance as of December 31, 2013
$
730.0

 
$
3,063.3

 
$
2,757.7

Additions
49.9

 
14.1

 

Impairments
(1.9
)
 
(304.2
)
 
(199.2
)
Amortization
(101.1
)
 

 

Other
(7.9
)
 
(0.5
)
 
(4.1
)
Balance as of September 30, 2014
$
669.0

 
$
2,772.7

 
$
2,554.4

As summarized below, we recorded intangible asset impairment charges related to continuing operations totaling $445.4 million and $487.9 million for the three and nine months ended September 30, 2014 . We recorded intangible asset impairment charges totaling $319.9 million and $342.9 million for the three and nine months ended September 30, 2013 .
Intangible Asset Impairment Charges - Continuing Operations
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2014
 
2013
 
2014
 
2013
Goodwill
$
288.9

 
$
133.3

 
$
288.9

 
$
133.3

Trademarks

 
98.0

 
13.4

 
98.0

Gaming Rights and other
156.5

 
88.6

 
185.6

 
111.6

Total
$
445.4

 
$
319.9

 
$
487.9

 
$
342.9

During the third quarter of 2014, as a result of a decline in recent performance and downward adjustments to expectations of future performance in certain of our markets, we performed an interim impairment assessment of goodwill related to certain of our properties, which resulted in preliminary impairment charges shown above. We are not able to finalize our impairment assessment until such time as we finalize fair value determinations, which we expect to complete during the fourth quarter of 2014, at which time we will record any necessary adjustments to our preliminary impairment charges recorded in the third quarter. For our preliminary assessment, we determined the estimated fair value of each reporting unit as a function, or multiple, of earnings before interest, taxes, depreciation and amortization ("EBITDA"), combined with estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the casino industry in general. We also evaluated the aggregate fair value of our reporting units and other non-operating assets in comparison to our aggregate debt and equity market capitalization as of September 30, 2014 . Both EBITDA multiples and discounted cash flows are common measures used to value and buy or sell businesses in our industry.
During the third quarter of 2014, due to the factors described above, we determined it was necessary to perform an assessment for impairment for certain of our non-amortizing intangible assets, which resulted in the impairment charges shown above related to gaming rights. During the first and second quarters of 2014, as a result of declining financial results in certain of our markets, we also recorded impairment charges related to certain gaming rights and trademarks. We determine the estimated fair values of our non-amortizing intangible assets by primarily using the Relief From Royalty Method and Excess Earnings Method under the income approach.
As described in Note 4 , " Dispositions, Divestitures, and Other Property Matters ," we also recorded an intangible asset impairment charge of $15.5 million , primarily related to goodwill, due to our decision to suspend operations of CIE RMG BEL, LLC, which is presented in discontinued operations.
During the three and nine months ended September 30, 2013 , we recorded impairment charges related to goodwill, trademarks, and gaming rights as a result of reduced projections within our long-term operating plan.
In 2013, we performed our annual goodwill impairment assessment as of September 30 and subsequently changed our annual impairment testing date to October 1. We believe this change, which represented a change in the method of applying an accounting

17

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

principle, is preferable in the circumstances as it provides additional time for us to quantify the fair value of our operating divisions and meet reporting requirements.
Gross Carrying Value and Accumulated Amortization of Intangible Assets Other Than Goodwill
 
September 30, 2014
 
December 31, 2013
(Dollars in millions)
Weighted
Average
Remaining
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Amortizing intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
6.6
 
$
1,265.1

 
$
(712.9
)
 
$
552.2

 
$
1,268.1

 
$
(645.5
)
 
$
622.6

Contract rights
3.2
 
85.2

 
(80.9
)
 
4.3

 
97.6

 
(79.4
)
 
18.2

Developed technology
2.7
 
188.0

 
(100.9
)
 
87.1

 
138.3

 
(76.5
)
 
61.8

Gaming rights
9.7
 
42.8

 
(17.4
)
 
25.4

 
42.8

 
(15.4
)
 
27.4

Trademarks
0.0
 
3.8

 
(3.8
)
 

 

 

 

 
 
 
$
1,584.9

 
$
(915.9
)
 
669.0

 
$
1,546.8

 
$
(816.8
)
 
730.0

Non-amortizing intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
Gaming rights
 
 
 
 
 
 
974.1

 
 
 
 
 
1,159.5

Trademarks
 
 
 
 
 
 
1,580.3

 
 
 
 
 
1,598.2

 
 
 
 
 
 
 
2,554.4

 
 
 
 
 
2,757.7

Total intangible assets other than goodwill
 
 
 
 
 
$
3,223.4

 
 
 
 
 
$
3,487.7


18

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Note 9 Debt
The following table presents our outstanding debt from a consolidated viewpoint. Accordingly, debt owed between consolidated entities is eliminated, and thus, is not considered outstanding. Therefore, it is excluded from the table below. See footnotes 6 and 8 to this table for greater detail.
Detail of Debt (Dollars in millions)
 
Final
Maturity
 
Rate(s)
 
Face Value
 
Book Value
 
Book Value
 
 
 
 
September 30, 2014
 
December 31, 2013
CEOC Debt
 
 
 
 
 
 
 
 
 
 
Credit Facilities (1)
 
 
 
 
 
 
 
 
 
 
Term Loans B1 - B3 (2)
 
2015
 
 
$

 
$

 
$
29.0

Term Loan B4
 
2016
 
10.50%
 
376.7

 
359.6

 
948.1

Term Loan B5
 
2017
 
5.95%
 
937.6

 
917.0

 
989.3

Term Loan B6
 
2017
 
6.95%
 
2,298.8

 
2,227.0

 
2,399.9

Term Loan B7 (3)
 
2017
 
9.75%
 
1,745.6

 
1,641.3

 

Secured Debt
 
 
 
 
 
 
 
 
 
 
Senior Secured Notes
 
2017
 
11.25%
 
2,095.0

 
2,071.5

 
2,066.4

Senior Secured Notes
 
2020
 
8.50%
 
1,250.0

 
1,250.0

 
1,250.0

Senior Secured Notes
 
2020
 
9.00%
 
3,000.0

 
2,958.8

 
2,954.5

Second-Priority Senior Secured Notes
 
2018
 
12.75%
 
750.0

 
744.7

 
743.9

Second-Priority Senior Secured Notes
 
2018
 
10.00%
 
4,502.1

 
2,572.4

 
2,433.2

Second-Priority Senior Secured Notes
 
2015
 
10.00%
 
3.8

 
3.4

 
187.7

Chester Downs Senior Secured Notes
 
2020
 
9.25%
 
330.0

 
330.0

 
330.0

Capitalized Lease Obligations
 
to 2017
 
various
 
20.0

 
20.0

 
14.7

Subsidiary-Guaranteed Debt (4)
 
 
 
 
 
 
 
 
 
 
Senior Notes
 
2016
 
10.75%
 
478.6

 
478.6

 
478.6

Senior PIK Toggle Notes
 
2018
 
10.75%/11.50%
 
12.2

 
12.2

 
10.9

Unsecured Senior Debt
 
 
 
 
 
 
 
 
 
 
5.625%  (2)
 
2015
 
5.625%
 

 

 
328.3

6.5%
 
2016
 
6.50%
 
296.7

 
265.6

 
212.6

5.75%
 
2017
 
5.75%
 
233.3

 
189.9

 
115.0

Floating Rate Contingent Convertible
Senior Notes
 
2024
 
0.24%
 

 

 
0.2

Other Unsecured Borrowings
 
 
 
 
 
 
 
 
 
 
Special Improvement District Bonds
 
2037
 
5.30%
 
46.9

 
46.9

 
48.1

Other
 
2016 - 2021
 
0.00% - 6.00%
 
33.6

 
33.6

 
39.3

Total CEOC Debt
 
 
 
 
 
18,410.9

 
16,122.5

 
15,579.7

Additional Debt Discount (5)
 
 
 
 
 

 
(88.9
)
 

Total CEOC Debt, as consolidated (6)
 
 
 
 
 
18,410.9

 
16,033.6

 
15,579.7

 
 
 
 
 
 
 
 
 
 
 
CERP Debt
 
 
 
 
 
 
 
 
 
 
Secured Debt
 
 
 
 
 
 
 
 
 
 
CERP Senior Secured Loan  (7)
 
2020
 
7.00%
 
2,481.3

 
2,435.5

 
2,449.7

CERP Revolver  (7)
 
2018
 
8.25%
 
75.0

 
75.0

 

CERP First Lien Notes  (7)
 
2020
 
8.00%
 
1,000.0

 
994.2

 
993.7

CERP Second Lien Notes  (7)
 
2021
 
11.00%
 
1,150.0

 
1,141.5

 
1,140.8

Capitalized Lease Obligations
 
to 2017
 
various
 
14.7

 
14.7

 
5.4

Other Unsecured Borrowings (11)
 
 
 
 
 
 
 
 
 
 
Other
 
2016
 
0.00% - 6.00%
 
16.2

 
16.2

 
21.3

Total CERP Debt
 
 
 
 
 
4,737.2

 
4,677.1

 
4,610.9


19

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

 
 
 
 
 
 
 
 
 
 
 
Detail of Debt (continued)
(Dollars in millions)
 
Final
Maturity
 
Rate(s)
 
Face Value
 
Book Value
 
Book Value
 
 
 
 
September 30, 2014
 
December 31, 2013
CGP LLC Debt   (8)
 
 
 
 
 
 
 
 
 
 
Secured Debt
 
 
 
 
 
 
 
 
 
 
CGP Term Loan (9)
 
2021
 
6.25%
 
1,172.1

 
1,139.9

 

Second-Priority Senior Secured Notes (9)
 
2022
 
9.375%
 
675.0

 
660.4

 

PHW Las Vegas Senior Secured Loan
 

 
 

 

 
456.1

Baltimore Credit Facility
 
2020
 
8.25%
 
272.5

 
262.9

 
214.5

Cromwell Credit Facility (10)
 
2019
 
11.00%
 
185.0

 
180.2

 
179.8

Capitalized Lease Obligations
 
to 2016
 
various
 
4.6

 
4.6

 
2.1

Other Unsecured Borrowing (11)
 
 
 
 
 
 
 
 
 
 
Other
 
2014 - 2018
 
0.00% - 6.00%
 
57.5

 
56.3

 
57.6

Special Improvement District Bonds
 
2037
 
5.30%
 
14.5

 
14.5

 
14.8

Total CGP LLC Debt
 
 
 
 
 
2,381.2

 
2,318.8

 
924.9

 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
 
 
 
 
25,529.3

 
23,029.5

 
21,115.5

Current Portion of Long-Term Debt
 
 
 
 
 
(140.6
)
 
(140.6
)
 
(197.1
)
Long-Term Debt
 
 
 
 
 
$
25,388.7

 
$
22,888.9

 
$
20,918.4

___________________
(1)  
Guaranteed by Caesars Entertainment.
(2)  
Repaid in the third quarter 2014.
(3)  
The Term B7 Loans have a springing maturity to 90 days prior to March 1, 2017, if more than $500.0 million of CEOC's Term B5 Loan and Term B6 Loan remain outstanding on such date.
(4)  
Guaranteed by certain wholly owned subsidiaries of CEOC.
(5)  
Increase in discount on long-term debt due to distribution of CEOC notes through a dividend to a non-consolidated affiliate. See Note 5 , " Caesars Growth Partners ."
(6)  
$4.3 million face value of debt issued by CEOC is held by other consolidated entities.
(7)  
Guaranteed by Caesars Entertainment Resort Properties and its subsidiaries.
(8)  
As of September 30, 2014 and December 31, 2013 , under the CGP LLC debt structure, CIE had $39.8 million drawn under an arrangement with Caesars Entertainment. Accordingly, such debt is eliminated in consolidation.
(9)  
Guaranteed by an indirect subsidiary of Caesars Growth Partners, LLC and certain wholly owned subsidiaries of it.
(10)  
The property that secured this debt was sold to CGP LLC in May 2014. The debt was formerly "Bill's Credit Facility." See Note 6 , " Property Transaction between CEOC and CGP LLC and Related Financing ."
(11)  
The December 31, 2013 value of this debt was reclassified. The property that secured this debt was sold to CGP LLC in May 2014. See Note 6 , " Property Transaction between CEOC and CGP LLC and Related Financing ."
As of September 30, 2014 and December 31, 2013 , book values of debt are presented net of unamortized discounts of $2,499.8 million and $2,473.8 million , respectively.
As of September 30, 2014 , our outstanding debt had a fair value of $18,644.8 million and a carrying value of $23,029.5 million . We calculated the fair value of the debt based on borrowing rates available as of September 30, 2014 , for debt with similar terms and maturities, and based on market quotes of our publicly traded debt. We classify the fair value of debt within level 1 and level 2 in the fair value hierarchy.
Current Portion of Long-Term Debt
The current portion of long-term debt as of September 30, 2014 is $140.6 million . For CEOC, the current portion of long-term debt primarily includes $35.9 million of payments due on the 10.0% Second-Priority Senior Secured Notes due 2018; current capitalized lease and other obligations of $27.3 million ; quarterly payments totaling $17.5 million on the Term Loan B7; and $1.2 million on the Special Improvement District Bonds. For CERP, the current portion of long-term debt includes required annual principal payments of $25.0 million on its senior secured loan and interim principal payments on other unsecured borrowings and capitalized lease obligations. For CGP LLC, the current portion of long-term debt includes a total of $18.3 million of payments due related to Term Loans, Special Improvement District Bonds, and various capitalized lease obligations.

20

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

CEOC Debt
Amended and Restated Credit Agreement with Caesars Entertainment
CEOC has a credit facility with CEC pursuant to which CEC will make one or more unsecured loans to CEOC in a maximum principal amount not to exceed $1.0 billion outstanding at any time. The entire outstanding amount, plus any accrued and unpaid interest, matures November 2017, and bears interest at a rate per annum equal to LIBOR, as defined in the credit agreement, plus 3.0%. Interest is payable quarterly in arrears or, at CEOC's election, such interest may be added to the loan balance owed to CEC. During the second quarter of 2014, CEOC entered into an amended and restated credit agreement with CEC, pursuant to which CEOC repaid the then outstanding balance under the credit agreement of $260.4 million ("Repayment Amount"). Under the terms of the amended and restated credit agreement, upon request and without constraint, CEOC can re-borrow from CEC a maximum principal amount not to exceed the Repayment Amount outstanding at any time. Additionally, loans in excess of the Repayment Amount but not to exceed a cumulative $1.0 billion outstanding at any time may be made to CEOC at the sole discretion of CEC.
There were no amounts outstanding under the agreement as of September 30, 2014 . There was $285.4 million outstanding under the agreement as of December 31, 2013.
2014 Activity
In June 2014, CEOC completed the offering of $1,750.0 million of incremental term loans ("Incremental Term Loans" or "Term Loan B7") due March 1, 2017, with a springing maturity to 90 days prior to March 1, 2017, if more than $500.0 million of CEOC's Term Loan B5 or Term Loan B6 remain outstanding on such date. The Incremental Term Loans were incorporated into the Credit Facilities, as amended. We used the net cash proceeds from the Incremental Term Loans to complete the repayment of 2015 maturities and reducing certain outstanding term loans, as described below.
The CEOC Term Loan B7 requires scheduled quarterly repayments of $4.4 million that began in the third quarter of 2014.
Repayment of 2015 Maturities
In July 2014, CEOC completed a cash tender offer for the $791.8 million aggregate principal amount outstanding of its 5.625% Senior Notes due 2015. CEOC received tenders from the holders of $44.4 million aggregate principal amount of the 5.625% Notes. In addition, pursuant to note purchase agreements and a redemption, CEOC purchased an additional $747.4 million in aggregate principal amount of the 5.625% Notes. Consideration for the purchase of these notes was $830.3 million . As a result of these repayments, we recognized a loss on early extinguishment of debt of $5.6 million on the 5.625% Senior Notes.
CEOC also completed a cash tender offer for the $190.0 million aggregate principal amount outstanding of its 10.00% Second-Priority Senior Secured Notes due 2015. CEOC received tenders from the holders of $103.0 million aggregate principal amount of the 10.00% Notes. In addition, CEOC purchased an additional $83.2 million in aggregate principal amount of the 10.00% Notes. Consideration for the purchase of these notes was $190.9 million . As a result of these repayments, we recognized a loss on early extinguishment of debt of $13.5 million on the 10.00% Senior Notes.
As a result of the tender offers, the note purchases, and a redemption, CEOC retired and redeemed 100.0% of the outstanding amount of the 5.625% Notes and approximately 98.0% of the outstanding amount of the 10.00% Notes.
Repayments of Certain Term Loans
In connection with the assumption of the Incremental Term Loans and the consummation of the amendment to the Credit Facilities, CEOC repaid $794.6 million in certain term loans as follows: $16.4 million in aggregate principal of the Term Loan B1; $12.6 million in aggregate principal of the Term Loan B3; $578.2 million in aggregate principal of the Term Loan B4; $54.3 million in aggregate principal of the Term Loan B5; and $133.1 million in aggregate principal of the Term Loan B6 held by consenting lenders at par under the existing Credit Facilities. As a result of these repayments, we recognized a loss on early extinguishment of debt of $22.2 million .
CEOC Credit Facilities Activity
As of September 30, 2014 , CEOC's Credit Facilities provide for senior secured financing of up to $5,464.8 million , consisting of (i) senior secured term loan facilities in an aggregate principal amount of $5,358.7 million and (ii) a senior secured revolving credit facility in an aggregate principal amount of up to $106.1 million , including both a letter of credit sub-facility and a swingline loan sub-facility. There were no amounts outstanding under the revolving credit facility as of September 30, 2014 or during the year ended December 31, 2013. The Term Loan B7, under the Credit Facilities, requires scheduled quarterly payments of $4.4

21

CAESARS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

million , with the balance due at maturity in March 2017. As of September 30, 2014 , the senior secured term loans are comprised of $376.7 million  maturing October 2016, and $4,942.6 million maturing March 2017. As of September 30, 2014 $106.1 million of the revolving credit facility matures January 2017 and $98.3 million is committed to outstanding letters of credit. After consideration of the letter of credit commitments, $7.8 million of additional borrowing capacity was available to CEOC under its revolving credit facility as of September 30, 2014 .
CEOC Notes Activity
CEOC's Senior Secured Notes, including the Second-Priority Senior Secured Notes, and its unsecured debt, which is fixed-rate debt, have semi-annual interest payments.
Restrictive Covenants and Other Matters
Under CEOC's Credit Facilities as amended by the Bank Amendment, we are required to satisfy and maintain specified financial ratios. Failure to comply with these covenants can result in limiting our long-term growth prospects by hindering our ability to incur future indebtedness or grow through acquisitions, or cause an event of default.
In July 2014, CEOC closed on amendments to its senior secured credit facilities that, upon their closing, provided for the following (collectively, the "Bank Amendment"):
(i)
a modification of the financial maintenance covenant to increase the SSLR from a ratio of 4.75 to 1.0 to a ratio of 7.25 to 1.0 on a retroactive basis to 2008, accordingly this change is effective for our September 30, 2014 covenant compliance determination;
(ii)
an exclusion of the Incremental Term Loans incurred after March 31, 2014, from the definition of SSLR for purposes of such covenant, which increased the maximum amount of senior notes excluded for CEOC SSLR covenant purposes from $3,700.0 million to $5,450.0 million ;
(iii)
a modification of CEC’s guarantee under the senior secured credit facilities such that CEC’s guarantee will be limited to a guarantee of collection with respect to obligations owed to the lenders who consent to the Bank Amendment; and
(iv)
a modification of certain other provisions of the senior secured credit facilities.
As of September 30, 2014 , we were in compliance with the terms and conditions of all of our loan agreements, including CEOC’s Credit Facilities and indentures, as described above, after giving effect to the Bank Amendment, which increased the allowable SSLR to 7.25 to 1.0 from 4.75 to 1.0. The SSLR is the ratio of CEOC's senior first priority secured debt to LTM Adjusted EBITDA - Pro Forma - CEOC Restricted. Subsequent to the Bank Amendment described above, this ratio excludes up to $5,450.0 million of first priority senior secured notes and up to $350.0 million aggregate principal amount of consolidated debt of subsidiaries that are not wholly owned. This ratio also reduces the amount of senior first priority secured debt by the amount of unrestricted CEOC cash on hand, which was $1,479.9 million as of September 30, 2014 . As of September 30, 2014 , CEOC's SSLR was 4.88 to 1.0.
If CEOC were to exceed the SSLR, which could be an event of default under CEOC's Credit Facilities, as amended, under certain circumstances, CEOC is allowed to apply any cash contributions received from CEC as an increase to LTM Adjusted EBITDA - Pro Forma - CEOC Restricted, in order to cure any breach.
Based upon the effects of the Bank Amendment and our current operating forecast, including CEOC's ability to cure a breach of the SSLR, in certain circumstances, with cash contributions from CEC, we believe that we will have sufficient liquidity to fund our operations and meet our debt service obligations and that we will continue to be in compliance with the SSLR during the foreseeable future.
In addition to requiring compliance with a maximum net senior secured first lien debt leverage test, the CEOC Credit Facilities include negative covenants, subject to certain exceptions, restricting or limiting CEOC’s ability and the ability of its restricted subsidiaries to, among other things: (i) incur additional debt; (ii) create liens on certain assets; (iii) enter into sale and lease-back transactions; (iv) make certain investments, loans, and advances; (v) consolidate, merge, sell, or otherwise dispose of all or any part of its assets or to purchase, lease, or otherwise acquire all or any substantial part of assets of any other person; (vi) pay dividends or make distributions or make other restricted payments; (vii) enter into certain transactions with its affiliates; (viii) engage in any business other than the business activity conducted at the closing date of the loan or business activities incidental or related thereto;