UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 24, 2017 (October 24, 2017)
CAESARS ENTERTAINMENT CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-10410 | 62-1411755 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS 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 or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 7.01 | Regulation FD Disclosure |
On October 24, 2017, members of senior management of Caesars Entertainment Corporation will begin using the investor presentation attached as Exhibit 99.1 (the “Investor Presentation”) to this report in connection with an investor and analyst event in New York City, New York.
The information set forth in this Item 7.01 of this Current Report on Form 8-K is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any of CEC’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing. The filing of this Item 7.01 of this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation FD.
| Item 9.01 | Financial Statements and Exhibits |
| Exhibit No. |
Description | |
| 99.1 | October 24, 2017 Investor Presentation | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CAESARS ENTERTAINMENT CORPORATION | ||||||
| Date: October 24, 2017 | By: | /s/ SCOTT E. WIEGAND | ||||
| Name: | Scott E. Wiegand | |||||
| Title: | Senior Vice President, Deputy General Counsel and Corporate Secretary | |||||
Exhibit 99.1
CAESARS
ENTERTAINMENT
CATSARS
ENTERTAINMENT
2 0 1 7 I N V E S T O R & A N A L Y S T E V E N T
CAESARS
ENTERTAINMENT
Primed for Value Creation
& Growth
I N V E S T O R & A N A L Y S T E V E N T
C A E S A R S E N T E R T A I N M E N T C O R P
O R A T I O N
MARK FRISSORA PRESIDENT & CEO
O C T O B E R 24, 2 0 1 7
Forward Looking Statements
Certain information in this presentation and discussed at the conference which this presentation accompanies constitutes forward-looking information within the
meaning of the Private Securities Litigation Reform Act of 1995. They relate to, among other things, the Company’s plans, strategies and opportunities. These statements can be identified by the fact that they do not relate to strictly
historical and current facts and by the use of words such as “expects”, “plans”, “opportunity” and similar words and variations thereof. This information is based on the Company’s current expectations and actual
results could vary materially depending on risks and uncertainties that may affect the Company’s operations, markets, services, prices and other factors as discussed in the Company’s filings with the Securities and Exchange Commission.
These risks and uncertainties include, but are not limited to, the impact of our new operating structure post-emergence, our ability to realize improvements in our business and results of operations through planned initiatives, industry and economic
conditions, competitive, legal, governmental and technological factors. There is no assurance that the Company’s expectations will be realized.
The
forward-looking information in this presentation and discussed at the conference which this presentation accompanies reflects the opinion of management as of today. Please be advised that developments subsequent to this call are likely to cause this
information to become outdated with the passage of time. The Company assumes no obligation to update any forward-looking information contained in this presentation or discussed at the conference which this presentation accompanies should
circumstances change, except as otherwise required by securities and other applicable laws.
2
Use of Non-GAAP Measures
The following non-GAAP measures will be used in the presentation and discussed at the conference which this presentation accompanies:
• Adjusted EBITDA
• Property EBITDA
• Free Cash Flow
Definitions of these non-GAAP
measures, reconciliations to their nearest GAAP measures, and the reasons management believes these measures provide useful information for investors, can be found on Slide 4 and in the Appendix to this presentation, beginning on Slide 37.
3
Important Information About Presentation of Results
On January 15, 2015, Caesars Entertainment Operating Company, Inc. filed a voluntary bankruptcy petition under Chapter 11 of the United States Bankruptcy Code, resulting in
the deconsolidation of CEOC effective as of such date. As such, amounts presented in this presentation exclude the operating results of CEOC subsequent to January 15, 2015, unless otherwise stated, and analysis of our operating results in this
presentation and as may be discussed at the conference which this presentation accompanies include those components that remain in the consolidated CEC entity subsequent to the deconsolidation of CEOC. “CEC” represents CERP, CGP and
associated parent company and elimination adjustments that represent the current CEC consolidated structure.
However, we are also providing certain supplemental
information as if we had continued to consolidate CEOC throughout the second quarter of 2017. This information includes both stand-alone CEOC financials and key metrics for the second quarter of 2017, and certain financial information for CEC as if
CEOC remained a consolidated entity during the quarter. This information within this presentation may be different from CEOC’s standalone results separately provided due to immaterial adjustments, rounding, and basis of presentation
differences. CEC will reacquired CEOC’s operations upon CEOC’s emergence from bankruptcy. As a result, we believe this supplemental information is useful to investors who are trying to understand the results of the entire
“Caesars” enterprise, including CEOC and consistent with the management services provided across the system’s properties. As a result of the deconsolidation of CEOC during CEOC’s bankruptcy, CEC generated no direct economic
benefits from CEOC’s results. This supplemental information is non-GAAP. It is not preferable to GAAP results provided elsewhere in this presentation or discussed on the conference this presentation
accompanies, but is used by management as an analytical tool to assess the results of all properties owned, managed or branded by a Caesars entity, regardless of consolidation. Additionally, the results are not necessarily indicative of future
performance or of the results that will be reported now that the reorganization of CEOC has been completed. Supplemental materials have been posted on the Caesars Entertainment Investor Relations website at 4
http://investor.caesars.com/financials.cfm
4
I N V E S T O R & A N A L Y S T E V E
N T
Agenda
Solid Foundation
Focusing on the Core
Expansion Opportunities
5
5
I N V E S T O R & A N A L Y S T E V E
N T S O LID F O U N D A T I O N
A Simpler Operating Structure
Caesars
Entertainment
100%
MANAGED, INTERNATIONAL, LAS VEGAS REGIONAL
CORPORATE & OTHER
6
I N V E S T O R & A N A L Y S T E V E
N T S O LID F O U N D A T I O N
Significantly Reduced Cost of Capital REDUCED ANNUAL INTEREST
OBLIGATIONS
$ 290 MILLION BY
7
7
I N V E S T O R & A N A L Y S T E V E
N T S O L I D F O U N D A T I O N
Delivering Strong Performance
Gaming Hotel
F&B Entertainment
Leveraging #1 Renovated Rolling out new #3 in live Gaming Position >10,000 rooms celebrity chef entertainment Domestically enterprise
wide1 concepts bookings
EXPANDING MARGIN ON THE CORE,
WHILE FOCUSING ON
CUSTOMER AND EMPLOYEE ENGAGEMENT
8
1. Since 2014
I N V E S T O R & A N A L Y S T E V E
N T S O LID F O U N D A T I O N
Leading Gaming Position In The U.S.
Testing
new technologies and platforms to enhance relationships with our existing customer base while engaging a new generation of gamers
Multiple new side bets Piloting
skills-based gambling
SKILLS-BASED
Record-breaking year for GAMBLING ONLINE
WORLD
MACHINES SERIES OF POKER
World Series of Poker eSports leader on The
Strip with Microsoft and Amazon events
INTERNET ESPORTS GAMBLING EVENTS
9
I N V E S T O R & A N A L Y S T E V E
N T S O LID F O U N D A T I O N
~50% Room Product Renovated Over Two and a Half Years
Planet Hollywood Imperial Palace to The LINQ
10
I N V E S T O R & A N A L Y S T E V E
N T S O LID F O U N D A T I O N
Unique Food & Beverage Concepts
Average 210% increase in revenue for restaurant location when introducing celebrity chef concept
NOBU MR GORDON GIADA DE MATSUHISA CHOW RAMSAY LAURENTIIS
BOBBY GUY STEVE
GUY FLAY FIERI MARTORANO
SAVOY
11
I N V E S T O R & A N A L Y S T E V E
N T S O LID F O U N D A T I O N
First-Class Entertainment Offerings
TOP-RATED VENUES AND HEADLINER RESIDENCIES
#3 live entertainment promoter worldwide The AXIS is #1 theater venue
Jennifer Lopez: second-highest average ticket price worldwide Backstreet Boys: one of the fastest-selling shows in Las Vegas history
12
I N V E S T O R & A N A L Y S T E V E
N T S O LID F O U N D A T I O N
Engaged Customers & Employees
Rewards &
25 Caesars
Recognition Caesars Palace Entertainment Company of the and Cromwell resorts earned Year, first runner up ranked among the TripAdvisor’s 2017 in the Enterprise top US Casinos
by Certificate of Engagement USA Today Excellence Category
13
I N V E S T O R & A N A L Y S T E V E
N T
Agenda
Investor Value Proposition
Proven Management Solid Execution
Foundation
Significant Presence in Focusing Growing Las Vegas on the Core Strongest Loyalty Program in the Gaming Industry Expansion Strong Free Cash Flow
Opportunities Profile
Network Expansion
14 Opportunities
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Proven Management Execution1
+$718 M
+773bps $1.6 B
REDUCTION IN ADJUSTED EBITDA ADJUSTED ANNUAL FIXED
IMPROVEMENT
EBITDA MARGIN CHARGES
~$10 B >$2 B
REDUCTION AGGREGATE IN DEBT 2 CAPITAL
DEPLOYED
Note: All information is displayed on an enterprise wide basis,
which is defined as CEC + CEOC; Reflects sale of CIE SMG business.
1. Metrics measure change from 2014 to Q2 2017 TTM.
15 2. Reduction in financial debt is enterprise wide total $25.6 billion less $9.6 billion upon emergence, adjusted for capitalized lease obligation.
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Proven Management Execution
Maintaining
Forward Momentum
Executing hundreds of initiatives to improve efficiency and increase revenue, led by the new Office of Continuous Improvement
-9.9% +10.5%
ROOM DEEP CLEANING COSTS RECORD BUFFET COVER
THROUGH OPTIMIZED THROUGH LEAN PROCESSES SCHEDULING AND PROCESSES AND NEW TECHNOLOGY
Focus on
projects that increase employee and customer satisfaction Led by Brent Lessing, Senior Vice President of Continuous Improvement Targeting to at least offset inflationary pressures
16
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Proven Management Execution
Leveraging
Technology as a Catalyst
Deploying best-in-class, secure, cloud-based solutions
NEW MARKETING SYSTEM NEW FINANCE SYSTEM REPLACES ENHANCES CUSTOMER SATISFACTION 30+ YEAR OLD SYSTEM
AND LIFTS REVENUE
NEW NEW SYSTEM SYSTEM
IMPLEMENTATION STARTED; ROLL PHASE 1 ROLL EXPECT COMPLETION IN ROLLED-OUT TO
OUT MID-2018 OUT >1,600 EMPLOYEES
VALUE VALUE $10
MILLION COST
>$80 MILLION IN EBITDA ADDED REDUCTION
ADDED
17
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Significant Presence in Growing Las Vegas With 63% EBITDA
Exposure
18
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Significant Presence in Growing Las Vegas
Compelling Las Vegas Position
LAS VEGAS FUNDAMENTALS CZR HAS SIGNIFICANT LAS
VEGAS
ARE STRONG EXPOSURE
2 0 1 4 – 2 Q 1
7 L T M Q 2 2 0 1 7 L T M PROPERTY EBITDA
A D J U S T E D F O R E X P E C T E
D F U L L—Y E A R L E A S E P A Y M E N T T O REI T1
+4% +13% +12%
+23% 9%
OTHER4
VISITATION ROOM TOTAL CONVENTION
TO 42.7M REVENUE DEPLANED ATTENDEES 28%
AIR REGIONAL
PASSENGERS
63%
LAS VEGAS 2
NOTE: Las Vegas market growth data sourced from the Las Vegas Convention and
Visitor Authority “LVCVA”.
1. Caesars pro-forma EBITDA post expected annual property lease/rent payments totaling
$640 mm to the REIT in the year following emergence.
2. Las Vegas property EBITDA is less Caesars Palace Las Vegas expected annual rent of $165 million in the
year following emergence.
3. Regional property EBITDA is less expected annual rent of $465 million in the year following emergence.
4. Other property EBITDA is less expected annual rent payment of $10 million for golf courses in the year following emergence.
19
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Significant Presence in Growing Las Vegas
Outpacing Peers in Las Vegas
LAS VEGAS STRIP GAMING REVENUES CAESARS LAS
VEGAS GROSS REVENUE
2 0 1 4 – 2 Q 1 7 L T M $ M I L L I O N S
INDEXED 2014 = 100
+9%
110 GROWTH
+9% 1,631 +23% 1,068
GROWTH GROWTH
105
1,501
100 866
-1%
GROWTH
95
2014 2015 2016 Q2 2017
LTM GAMING HOTEL
Caesars Peers 2014 2Q17 LTM 2014 2Q17 LTM
20
Note: Peer data is LVCVA revenues for the LV Strip, less Caesars gross gaming revenue.
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Significant Presence in Growing Las Vegas
Additional Hotel Revenue Upside
Renovating >15K rooms in our Las Vegas
Room updates underway at properties as part of our five year plan our Las Vegas properties
LAS VEGAS RENOVATION TIMELINE
C U M U L A T I V E R O O M S
25,000
20,000
15,000
10,000 89% 80% 71% 50%
5,000 32%
2016 2017E 2018E 2019E 2020E Opened newly redesigned meeting space at the Flamingo on July 31st
RENOVATED NON-RENOVATED1
21
1. Non-renovated defined as rooms not renovated since 2014.
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Strongest Loyalty Program in the Gaming Industry
50+ MILLION TOTAL REWARDS MEMBERS
+7%
GAMING VIP POSITION MEMBER GROWTH IN U.S.
Note: VIP represents $400+ players
22
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Strongest Loyalty Program in the Gaming Industry
Enhancing Revenue & Engagement
Total Rewards properties capture more than Driving
engagement and their fair share of gaming revenues revenue with Play by TR app
“FAIR SHARE” ANALYSIS OF KEY LOCATIONS PLAY BY TR APP GROWTH
A C T U A L V S . “ E X P E C T E D ” R E V E N U E , Q 2 2 0 1 7 D O W N L O A D S & R E V E N U
E, M I L L I O N S
149% 144% $12.3 137% 121% 119% 118% 117% QUARTERLY
108% CAGR:
“Fair 95% +56% 1.1
Share” 0.8 100% 85%
$7.1 0.4
QUARTERLY CAGR:
0.1 +59%
LAS CITY/ $2.0 OTHER NEVADA TUNICA NEW ORLEANS KANSAS CITY NW ILLINOIS GULF COAST VEGAS IOWA
LOUISIANA INDIANA/ 2013 2014 2015 2016 2Q17 ATLANTIC PHILADELPHIA CUMULATIVE DOWNLOADS CUMULATIVE REVENUES
23
Note: “Fair Share” is defined as expected share of revenue based on number of
units in the location; Data for Iowa, Indiana/Illinois, Kansas City, New Orleans and NW Louisiana are based on gross gaming revenue; all other markets are based on net gaming revenue.
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Strongest Loyalty Program in the Gaming Industry
New Features & Partnerships
Expanded Total Rewards offerings and partnerships give
members more benefits and drive increased engagement
INCREMENTAL TOUCH POINTS DRIVE EXPANDING OUR PARTNERSHIPS INCREASED GUEST VALUE
Total Rewards partnerships generate incremental gaming and total spend at Gaming Revenue Over 12 Month Period our properties Pre & Post Action New Wyndham Rewards
partnership is expected to add thousands of room +11% +26% +18% night bookings at Total Rewards properties
DOWNLOAD SIGN UP ENGAGE PLAY FOR WITH BY TR APP CREDIT
CARD EMAIL
24
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Strong Free Cash Flow Profile
25
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Strong Organic Free Cash Flow Profile Enables Investment in Future Growth
ENTERPRISE WIDE (CEC + CEOC) ILLUSTRATIVE FREE Improved operating
CASH FLOW performance plus $
M I L L I O N S refinancings have driven significant free
Q2 2017 LTM Enterprise
Wide Adjusted EBITDA1 $2,180 cash flow growth
Less Steady State Capital Expenditure2 425
Strong organic free
cash flows enable us to
Less Expected Lease Expense3 640
invest in network Less Expected Interest Expense4 420 expansion opportunities
Steady State Potential Discretionary Free Cash Flow $695
Note: All information is displayed on an enterprise wide basis.
1. Enterprise wide Adjusted
EBITDA figures exclude CIE SMG Business. See Appendix for Adjusted EBITDA reconciliation.
2. We plan to spend ~$670 million this year, and in the next few
years that will drop to $500-580 million as we continue to capture the ADR upside opportunity still available across some of properties. Over the longer-term, we estimate steady state capex for the
enterprise to be ~$425 million.
3. Expected lease expense which assumes $640 million rent payment to the REIT in the year following emergence.
26
4. Reflects capital structure post emergence, newly priced refinancing of
CRC and repayment of Philadelphia debt.
I N V E S T O R & A N A L Y S T E V E
N T F OCU SI N G O N T H E C O R E
Reduced Leverage & Cost of Capital
New CEC Emergence Credit Statistics
DEBT1 NET LEVERAGE 1, 2 FIXED CHARGES 4
$ B I L L I O N S D E B T / A D J U S T E D E B I T D A R $ M I L L I O N S
$23.5 $2,670 $1.6B 14.0x
REDUCTION
$8.5
BASE DEBT 4.2x $1,060
BASE LEVERAGE3 RENT $640 INTEREST
EXPENSE $420
2014 EMERGENCE 2014 EMERGENCE 2014 EMERGENCE
1. Reflects sale of CIE SMG business.
2. 2014 leverage based on debt as of December 31, 2014 and 2014 Adjusted EBITDA.
3. Base
net leverage at emergence (before convert and capitalized lease obligation) based on debt of $8.5 bn and 2Q FY17 LTM Adjusted EBITDA, less projected annual rent payment of $640 mm to REIT in the year following emergence.
27
4. Fixed charges at emergence assumes newly priced refinancing of CRC.
I N V E S T O R & A N A L Y S T E V E
N T
Agenda
Investor Value Proposition
Proven Management Solid Execution
Foundation
Significant Presence in Growing Las Vegas
Focusing
on the Core Strongest Loyalty Program in the Gaming Industry Expansion Strong Free Cash Flow
Opportunities Profile
Network Expansion
28
Opportunities
I N V E S T O R & A N A L Y S T E V E
N T EX PA N SI ON O P P O R T U N I T I E S
Pursuing a Broad Range of Options
LAS VEGAS DEVELOPMENT GLOBAL TRADITIONAL BRANDING DEVELOPMENT REAL ESTATE M&A AND
LICENSING
29
I N V E S T O R & A N A L Y S T E V E
N T EX PA N SI ON O P P O R T U N I T I E S
Las Vegas Real Estate Development
Developing and monetizing large underutilized commercial scale properties adjacent to the Las Vegas strip in our real estate portfolio
CAESARS ENTERTAINMENT STUDIOS
~7 acres ~39 acres ~50 acres
IN FRONT OF ADJACENT TO ADJACENT TO BALLY’S, PARIS
CAESARS PALACE THE LINQ &
PLANET HOLLYWOOD CONVENTION CENTER
30
I N V E S T O R & A N A L Y S T E V E
N T EX PA N SI ON O P P O R T U N I T I E
Global Development Opportunities
SOUTH KOREA JAPAN BRAZIL
Preliminary Bidding Considering approval for
environment gaming legislation foreigners-only values integrity, destination collaboration Experience working received and partnerships, in South America all CZR strengths via Punta del Este joint venture
31
I N V E S T O R & A N A L Y S T E V E
N T EX PA N SI ON O P P O R T U N I T I E S
Evaluating M&A Options
Resolution of bankruptcy and improved capital structure will enhance flexibility for M&A
VALUE CREATION OPPORTUNITY FROM IMPACTS OF PARTICIPATING POTENTIAL FUTURE M&A IN TOTAL REWARDS
1 2 M O N T H S P R I O R V S . 1 2 M O N T H S P O S T
â–º Immediate synergies through
Total Rewards 232%
â–º REIT collaboration 49%
â–º Leverage
efficient operating model 27% 26%
23% 19%
â–º Consolidation
of operations 14%
5%
â–º Greater diversification of portfolio
PLANET HOLLYWOOD FLAMINGO
ACQUIRED 2009 ACQUIRED 2006
EBITDA GROSS GAMING
REVENUE RETAIL REVENUE F&B REVENUE
32
I N V E S T O R & A N A L Y S T E V E
N T EX PA N SI ON O P P O R T U N I T I E S
Extending our Brand Footprint
Pursuing licensing and management partnership agreements for Caesars Entertainment branded properties
A PORTFOLIO OF ICONIC BRANDS AN ASSET-LIGHT GROWTH VEHICLE
â–º Low
capital-intensity option to expand our leading brands into domestic and international markets
â–º Ability to leverage Total Rewards network to
enhance property performance and capture market share
â–º Pursuing domestic and global opportunities
33
Caesars
Entertainment
34
Appendix: Presentation of FCF
Free Cash Flow is defined as the cash generated after paying expenses required to maintain operations and is comprised of Adjusted EBITDA less (i) expected steady state
capital expenditures, (ii) expected lease payments, and (iii) expected interest expense. Management believes that Free Cash Flow is a useful measure to describe the Company’s financial performance and measures the Company’s
ability to generate additional cash from business operations. The illustrative data herein is used by management to provide meaningful financial information on a forward-looking basis by adjusting for (i) expected steady state long-term capital
expenditures, which are estimated at $425 million; (ii) expected lease payments, which assumes $640 million rent payment to the REIT in the year following emergence; and (iii) estimated interest expense of $440 million,
which reflects the capital structure post emergence and newly priced refinancing of CRC. The Company expects capital expenditures to be higher in the short-term ($670 million are expected for 2017 dropping to $500 million to
$580 million a few years thereafter), but believes capital expenditures will decline over the next few years as the Company continues to capture the ADR upside opportunity available at some properties.
Free cash flow is considered a non-GAAP financial measure and should not be construed as an alternative to net income/(loss) as an indicator
of operation performance or an alternative to cash flow provided by operating activities as a measure of liquidity as determined by U.S. GAAP. Because not all companies use identical calculations, the presentation of Free Cash Flow may not be
comparable to other similarly titled measures of other companies.
35
Reconciliation Of Non-GAAP Information: Q2 2017 LTM Adjusted EBITDA
CAESARS ENTERTAINMENT CORPORATION SUPPLEMENTAL INFORMATION
RECONCILIATION OF
NET INCOME/(LOSS) ATTRIBUTABLE TO CAESARS ENTERTAINMENT CORPORATION TO LTM PROPERTY EBITDAR AND LTM ADJUSTED EBITDA
(1) (2) (3) (3)-(2)+(1) Six Months Six Months
Year Ended Ended June Ended June December 31, LTM
(In millions) 30, 2017 30, 2016 2016 June 30, 2017
Net income/(loss) attributable to company $ (1,988)
$ (2,385) $ (3,569)
$ (3,172) Net income/(loss) attributable to non-controlling
interests 38 68
822 792 Net income from discontinued
operations —
(58) (3,380) (3,322) Income tax
(benefit)/provision
103 10 27
120 Restructuring of CEOC and other
(a) 1,873 2,263
5,758 5,368 Interest
expense 289
301 599 587 Income/(loss) from
operations 315
199 257 373 Depreciation and
amortization 198
215 439 422 Other operating costs
(b) 15 42
89 62 Corporate
expense 73 81
166 158 CIE stock-based
compensation —
43 189 146
Property EBITDAR $ 601
$ 580 $ 1,140
$ 1,161
Corporate
expense (73)
(81) (166) (158) Stock-based compensation expense
(c) 15 24
40 31 Other items
(d) 20 28
56 48
Adjusted
EBITDAR, CEC $ 563 $ 551
$ 1,070 $ 1,082
Adjusted EBITDAR Margin, CEC 28.7% 28.4% 27.6% 27.7%
Adjusted EBITDAR, CEOC (e)
$ 553 $ 595
$ 1,140 $ 1,098
Adjusted EBITDAR Margin, CEOC 25.4% 26.4% 25.1% 24.6%
Adjusted EBITDAR, CEC + CEOC
$ 1,116 $ 1,146
$ 2,210 $ 2,180
Adjusted EBITDAR Margin, CEC + CEOC 27.0% 27.3% 26.3% 26.1%
Rent
expense — —
— -
Adjusted EBITDA, CEC + CEOC $ 1,116
$ 1,146 $ 2,210
$ 2,180
Adjusted EBITDA Margin, CEC + CEOC 27.0% 27.3% 26.3% 26.1%
36
Reconciliation Of Non-GAAP Information: 2014 Adjusted EBITDA
CAESARS ENTERTAINMENT CORPORATION SUPPLEMENTAL INFORMATION
RECONCILIATION OF
NET INCOME/(LOSS) ATTRIBUTABLE TO CAESARS ENTERTAINMENT CORPORATION
TO LTM PROPERTY EBITDAR AND LTM ADJUSTED EBITDAR
(In millions) 2014
Net income/(loss) attributable to company
$ (2,783) Net income/(loss) attributable to non-controlling
interests (83) Net income from discontinued operations 143
Income tax (benefit)/provision (596) Restructuring of CEOC and other
(a) 95 Interest expense 2,669 Income/(loss) from
operations (555) Depreciation and amortization 658
Impairments of goodwill 695 Impairments of tangible and intangible
assets 299 Other operating costs (b) 203 Corporate
expense 232 CIE stock-based compensation 49 EBITDA
attributable to discontinued operations (7)
Property EBITDAR
$ 1,574
Corporate
expense (232) Stock-based compensation expense (c) 45 Other
items (d) 75
Adjusted EBITDAR
$ 1,462
Adjusted EBITDA Margin 18.4%
Rent Expense -
Adjusted EBITDA $ 1,462
Adjusted EBITDA Margin 18.4%
37
Reconciliation Of Non-GAAP Information: Q2 2017 LTM Net Revenue
CAESARS ENTERTAINMENT CORPORATION SUPPLEMENTAL INFORMATION
RECONCILIATION OF
NET REVENUES TO CAESARS ENTERTAINMENT CORPORATION
(In millions) Net Revenues by Entity
(1) (2) (3) (1)-(2)+(3) Six Months Six Months Year Ended LTM Ended June Ended June December 31, June 30, 30, 2017 30, 2016 2016 2017
CERP $ 1,116
$ 1,090 $ 2,195
$ 2,221 CGP
856
861 1,697 1,692
Other (7) (9)
(15) (13) Continuing CEC
$ 1,965 $ 1,942
$ 3,877 $ 3,900
CEOC
(e) 2,173 2,256
4,541 4,458 CEC + CEOC
$ 4,138 $ 4,198
$ 8,418 $ 8,358
38
Reconciliation Of Non-GAAP Information: Notes
Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash and other items as exhibited in the above reconciliation,
and is presented as a supplemental measure of the Company’s performance. Management believes that Adjusted EBITDA provides investors with additional information and allows a better understanding of the results of operational activities separate
from the financial impact of decisions made for the long-term benefit of the Company. In addition, compensation of management is in part determined by reference to certain of such financial information. As a result, we believe this supplemental
information is useful to investors who are trying to understand the results of the Company. Adjusted EBITDA Margin is the ratio of Adjusted EBITDA to Net Revenue and is presented for the same reasons as Adjusted EBITDA noted above.
Because not all companies use identical calculations, the presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. a) Primarily
represents CEC’s estimated costs in connection with the restructuring of CEOC. b) Amounts primarily represent costs incurred in connection with property openings and expansion projects at existing properties, costs associated with the
development activities and reorganization activities, and/or recoveries associated with such items. c) Amounts represent stock-based compensation expense related to shares, stock options, and restricted stock units granted to the Company’s
employees. d) Amounts represent add-backs and deductions from EBITDA permitted under certain indentures. Such add-backs and deductions include litigation awards and
settlements, costs associated with CEOC’s restructuring and related litigation, severance and relocation costs, sign-on and retention bonuses, permit remediation costs, and business optimization expenses.
e) Amounts include consolidating adjustments, eliminating adjustments and other adjustments to reconcile to consolidated
39 CEC Property EBITDA and Adjusted
EBITDA.
Caesars—The Future of Gaming
I N V E S T O R & A N A L Y S T E V E N T
C A E S A R S E N T E R T A I N M E N T C O R P O R A T I O N
CHRISTIAN STUART
EXECUTIVE VICE PRESIDENT, GAMING AND INTERACTIVE ENTERTAINMENT
O C T O B E R 24, 2 0 1 7
I N V E S T O R & A N A L Y S T E V E
N T
Compelling Gaming Demographics
CASINO GAMERS NON-CASINO GAMERS
54% 53% 48% 25% 23% 22%
MILLENNIALS GEN X BOOMERS MILLENNIALS GEN X BOOMERS
70-80% OF THE POPULATION ARE ACTIVE IN SOME FORM OF GAMING
“Casino” gamers convert to new games/platforms if content
resonates “Non-Casino” gamers require new form factors and curated experiences
1
Note: Demographic figures sourced from internal, proprietary study.
I N V E S T O R & A N A L Y S T E V E
N T
We Are On A Clear Path Towards The Future Of Gaming
1 2 3 4
DEEPENING ENHANCING OUR BROADENING TRANSFORMING ENGAGEMENT CORE PRODUCTS OUR OFFERINGS THE EXPERIENCE
Leveraging Invigorating Launching new Testing innovative database and table and slot play gaming platforms experiences to lead mobile technology with new features that attract
broader the evolution of the to drive more play to raise profitability demographics customer journey
2
I N V E S T O R & A N A L Y S T E V E
N T
1 Deepening Engagement
Leverage New Offer System
ESTABLISHING A UNIFIED VIEW OF THE CUSTOMER
Deeper knowledge of activities and preferences
Capturing combined wallet from gaming and hospitality
DYNAMIC TRIGGERED WAVE OFFER COST SEGMENTATION OFFERS CAMPAIGNS REDUCTIONS
PRECISE CUSTOMER ACTIONS UTILIZES - EXPIRATION LEAD REINVESTMENT GENERATE OFFERS BUSINESS RULES TIMES DELIVERY
3
I N V E S T O R & A N A L Y S T E V E
N T
1 Deepening Engagement
Driving Trips and Longer Sessions
DEEPENING GUEST ENGAGEMENT WITH GAMIFICATION FEATURES
Distinctively positioned to create
unique customer journeys
Personalized challenges drove over $8M in revenue gains in test phase
- Badging promotions showed increased cross-market play
- Leaderboards have proven to drive
engagement
4
I N V E S T O R & A N A L Y S T E V E N T
2 Enhancing Core Products
New Features Are Increasing Revenue
Launching multiple new table game side bets and proprietary products Investing in new slot product at a rate 30% higher than industry average
NEW TABLE OFFERINGS SLOT INCREMENTALITY
JANUARY – JUNE 2017 APRIL 2017 – MARCH 2018
+11% +18% +8% +15%
INCREASE IN APPROXIMATE LIFT INCREASED INCREMENTAL REVENUE
AT SELECT ON PROPRIETARY VOLUME WITH REVENUE ACROSS TABLES WITH NEW GAME TRIAL IN ADDITION OF SLOT PRODUCT SIDE BETS ACROSS BACCARAT PIT PROGRESSIVES ON LAS VEGAS SELECT TABLES PROPERTIES
5 Notes: Incrementality for table initiatives is based on Q1-Q2 2017 actuals. Slot incrementality is measured in Apr-Aug 2017 and forecasted for Sep 2017-Mar-2018 for Q1-Q2 2017
slot purchases. Owned properties only.
I N V E S T O R & A N A L Y S T E V E
N T
3 Broadening our Offerings
Attracting New Customers
VIDEOGAME GAMBLING MACHINES
First to pilot skills-based gambling machines
NEW SPORTS BETTING PLATFORM
Mobile Sports at Caesars Entertainment App launched with strong
early adoption
8,700 BETS AND $1.4M IN DEPOSITS IN OPENING WEEKS
6
I N V E S T O R & A N A L Y S T E V E
N T
4 Transforming the Experience
Testing Innovative Experiences
LEADING IN ESPORTS EVENTS
Highly successful tournaments held in partnership with Microsoft
Xbox
Atlantic City Las Vegas
>1000 Spectators1 >850 Spectators1
PILOTING VIRTUAL REALITY EXPERIENCES
Encouraging results at recent events
>800 Lake Guests Tahoe >750 Las Vegas Guests
PURSUING ONLINE GAMING
GROWTH
Caesars Interactive Entertainment rejoined CEC post-emergence
7
1. Total venue and online spectators throughout duration of event.
Caesars
Entertainment
8
Relentlessly Focused On Continuous Improvement
I N V E S T O R & A N A L Y S T E V E N T
C A E S A R S E N T E R T A I N M E N T C O R P O R A T I O N
BRENT LESSING
SENIOR VICE PRESIDENT, CONTINUOUS IMPROVEMENT
O C T O B E R 24, 2 0 1 7
I N V E S T O R & A N A L Y S T E V E
N T
Office of Continuous Improvement
DRIVING SUSTAINABLE EBITDA GROWTH WITH
OUR CONTINUOUS IMPROVEMENT CULTURE WHILE IMPROVING CUSTOMER AND EMPLOYEE SATISFACTION
1 2 3
LEVERAGING DATA REENGINEERING OUR IMPROVING SERVICE AND ANALYTICS BUSINESS PROCESS AND EFFICIENCY
To increase To improve To enhance engagement and productivity across the customer revenue return the enterprise experience
1
I N V E S T O R & A N A L Y S T E V E
N T
1 Data & Analytics
Using Advanced Analysis Tools To Lift Revenue
ENHANCING THE VIP PLAYER CONTACT STRATEGY FOR CASINO HOSTS
Enterprise-wide
analytics launched last year to prioritize calls to VIP players
Using statistical analysis and machine learning to prioritize calls with the highest yield
Significant increase in trips and theo observed as casino hosts began to use new model
+6.7% +7.8%
OVERALL VIP
REVENUE REVENUE
PER VIP HOST IMPROVEMENT
YOY YOY
2
I N V E S T O R & A N A L Y S T E V E
N T
2 Business Processes
Operating In A More Productive Way
INCREASING THE PRODUCTIVITY OF TABLE GAME OPERATIONS1
Table startup and shutdown procedures
optimized to reduce downtime Enhanced table mix and table placement in casino pits Significant improvement in labor productivity observed following adjustments
-3.4%
REDUCTION IN +14.5% DEALER HOURS
DROP PER DEALER HOUR
3
1. Initiative piloted at Horseshoe Southern Indiana; evaluating ability to replicate across the enterprise.
I N V E S T O R & A N A L Y S T E V E
N T
3 Service & Efficiency
Improving The Customer Experience
REDUCING LINE WAIT TIME AT OUR ENTERTAINMENT VENUES1
Reconfigured queue,
delivery and payment processes to streamline the experience Increased customer satisfaction and reduced line abandonment at peak periods Significant improvement in transactions per hour driving increased revenue
-40%
AVERAGE GUEST +32.3% WAITING TIME
TRANSACTIONS PER HOUR
4
1. Initiative piloted at Harrah’s Council Bluffs; evaluating ability to replicate across the enterprise.
Caesars
Entertainment
5