SEC Filing | Caesars Entertainment, Inc.

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czr-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			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. 001-36629

CAESARS ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)


Delaware			46-3657681
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

100 West Liberty Street, 12th Floor, Reno, Nevada 89501

(Address and zip code of principal executive offices)

(775) 328-0100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.00001 par value	CZR	NASDAQ Stock Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the Registrant’s Common Stock, $0.00001 par value per share, outstanding as of October 29, 2021 was 213,774,052.

CAESARS ENTERTAINMENT, INC.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION		2
Item 1.	Unaudited Financial Statements	2
	Consolidated Condensed Balance Sheets	2
	Consolidated Condensed Statements of Operations	3
	Consolidated Condensed Statements of Comprehensive Income (Loss)	4
	Consolidated Condensed Statements of Stockholders’ Equity	5
	Consolidated Condensed Statements of Cash Flows	7
	Notes to Consolidated Condensed Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 4.	Controls and Procedures	66

PART II. OTHER INFORMATION		67
Item 1.	Legal Proceedings	67
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	72
Item 5.	Other Information	72
Item 6.	Exhibits	73

Signatures		74

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)


(In millions)	September 30, 2021		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,072	$	1,776
Restricted cash and investments	302		2,021

Accounts receivable, net	438		342
Due from affiliates	—		44
Inventories	45		44
Prepayments and other current assets	256		253
Assets held for sale ($0 and $130 attributable to our VIEs)	3,812		1,583
Total current assets	5,925		6,063
Investment in and advances to unconsolidated affiliates	203		173
Property and equipment, net	14,529		14,735
Gaming rights and other intangibles, net	5,253		4,283
Goodwill	10,967		9,864
Other assets, net	2,085		1,267

Total assets	$	38,962	$	36,385
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	340	$	167
Accrued interest	216		229
Accrued other liabilities	1,686		1,263
Current portion of long-term debt	70		67
Liabilities related to assets held for sale ($0 and $130 attributable to our VIEs)	2,666		787
Total current liabilities	4,978		2,513
Long-term financing obligation	12,411		12,295
Long-term debt	14,453		14,073
Deferred income taxes	1,197		1,166
Other long-term liabilities	970		1,304
Total liabilities	34,009		31,351
Commitments and contingencies (Note 8)
STOCKHOLDERS' EQUITY:
Caesars stockholders’ equity	4,890		5,016
Noncontrolling interests	63		18
Total stockholders’ equity	4,953		5,034
Total liabilities and stockholders’ equity	$	38,962	$	36,385

The accompanying notes are an integral part of these consolidated condensed financial statements.

Table of Contents

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2021		2020		2021		2020
REVENUES:
Casino and pari-mutuel commissions	$	1,510	$	981	$	4,308	$	1,422
Food and beverage	347		127		797		190
Hotel	511		200		1,122		257
Other	317		135		752		174


Net revenues	2,685		1,443		6,979		2,043
EXPENSES:
Casino and pari-mutuel commissions	830		493		2,111		717
Food and beverage	210		92		484		154
Hotel	130		63		317		91
Other	114		53		262		63
General and administrative	486		338		1,284		503

Corporate	86		90		228		120
Impairment charges	—		—		—		161
Depreciation and amortization	276		225		842		324
Transaction costs and other operating costs	21		220		113		243
Total operating expenses	2,153		1,574		5,641		2,376
Operating income (loss)	532		(131)		1,338		(333)
OTHER EXPENSE:
Interest expense, net	(579)		(485)		(1,734)		(620)
Loss on extinguishment of debt	(117)		(173)		(140)		(173)

Other income (loss)	(153)		9		(176)		(1)
Total other expense	(849)		(649)		(2,050)		(794)
Loss from continuing operations before income taxes	(317)		(780)		(712)		(1,127)
Benefit (provision) for income taxes	90		(138)		167		(67)
Net loss from continuing operations, net of income taxes	(227)		(918)		(545)		(1,194)
Discontinued operations, net of income taxes	(4)		(7)		(38)		(7)
Net loss	(231)		(925)		(583)		(1,201)
Net income attributable to noncontrolling interests	(2)		(1)		(2)		(1)
Net loss attributable to Caesars	$	(233)	$	(926)	$	(585)	$	(1,202)

Net loss per share - basic and diluted:
Basic loss per share from continuing operations	$	(1.08)	$	(6.04)	$	(2.60)	$	(11.49)
Basic loss per share from discontinued operations	(0.02)		(0.05)		(0.18)		(0.07)
Basic loss per share	$	(1.10)	$	(6.09)	$	(2.78)	$	(11.56)
Diluted loss per share from continuing operations	$	(1.08)	$	(6.04)	$	(2.60)	$	(11.49)
Diluted loss per share from discontinued operations	(0.02)		(0.05)		(0.18)		(0.07)
Diluted loss per share	$	(1.10)	$	(6.09)	$	(2.78)	$	(11.56)
Weighted average basic shares outstanding	214		152		211		104
Weighted average diluted shares outstanding	214		152		211		104

The accompanying notes are an integral part of these consolidated condensed financial statements.

Table of Contents

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020
Net loss	$	(231)	$	(925)	$	(583)	$	(1,201)
Foreign currency translation adjustments	(33)		1		(44)		1
Change in fair market value of interest rate swaps, net of tax	11		14		33		14
Other	(3)		—		(1)		—
Other comprehensive income (loss), net of tax	(25)		15		(12)		15
Comprehensive loss	(256)		(910)		(595)		(1,186)
Comprehensive income attributable to noncontrolling interests	(2)		(1)		(2)		(1)
Comprehensive loss attributable to Caesars	$	(258)	$	(911)	$	(597)	$	(1,187)

The accompanying notes are an integral part of these consolidated condensed financial statements.

Table of Contents

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


	Caesars Stockholders’ Equity
	Common Stock									Treasury Stock
(In millions)	Shares	Amount		Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Amount		Non controlling Interests		Total Stockholders’ Equity
Balance, December 31, 2020	208	$	—	$	6,382	$	(1,391)	$	34	$	(9)	$	18	$	5,034
Issuance of restricted stock units	—	—		23		—		—		—		—		23
Net loss	—	—		—		(423)		—		—		(1)		(424)
Other comprehensive income, net of tax	—	—		—		—		11		—		—		11

Shares withheld related to net share settlement of stock awards	—	—		(14)		—		—		—		—		(14)

Balance, March 31, 2021	208	—		6,391		(1,814)		45		(9)		17		4,630
Issuance of restricted stock units	—	—		21		—		—		—		—		21
Issuance of common stock, net	5	—		454		—		—		(14)		—		440
Net income	—	—		—		71		—		—		1		72

Other comprehensive income, net of tax	—	—		—		—		2		—		—		2
Shares withheld related to net share settlement of stock awards	—	—		(13)		—		—		—		—		(13)
Acquired noncontrolling interests	—	—		—		—		—		—		10		10

Balance, June 30, 2021	213	—		6,853		(1,743)		47		(23)		28		5,162
Issuance of restricted stock units	1	—		20		—		—		—		—		20

Net income (loss)	—	—		—		(233)		—		—		2		(231)
Other comprehensive loss, net of tax	—	—		—		—		(25)		—		—		(25)
Shares withheld related to net share settlement of stock awards	—	—		(6)		—		—		—		—		(6)
Acquired noncontrolling interests	—	—		—		—		—		—		33		33

Balance, September 30, 2021	214	$	—	$	6,867	$	(1,976)	$	22	$	(23)	$	63	$	4,953

Table of Contents


	Caesars Stockholders’ Equity
	Common Stock									Treasury Stock
(In millions)	Shares	Amount		Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Amount		Non controlling Interests		Total Stockholders’ Equity
Balance, December 31, 2019	78	$	—	$	760	$	366	$	—	$	(9)	$	—	$	1,117

Issuance of restricted stock units	—	—		6		—		—		—		—		6
Net loss	—	—		—		(176)		—		—		—		(176)
Shares withheld related to net share settlement of stock awards	—	—		(7)		—		—		—		—		(7)
Balance, March 31, 2020	78	—		759		190		—		(9)		—		940
Issuance of restricted stock units	—	—		4		—		—		—		—		4
Issuance of common stock	21	—		772		—		—		—		—		772
Net loss	—	—		—		(100)		—		—		—		(100)

Balance, June 30, 2020	99	—		1,535		90		—		(9)		—		1,616
Issuance of restricted stock units	1	—		37		—		—		—		—		37
Issuance of common stock, net	7	—		235		—		—		—		—		235
Net income (loss)	—	—		—		(926)		—		—		1		(925)
Shares issued to Former Caesars shareholders	62	—		2,381		—		—		—		—		2,381
Former Caesars replacement awards	—	—		24		—		—		—		—		24
Other comprehensive income, net of tax	—	—		—		—		15		—		—		15
Shares withheld related to net share settlement of stock awards	—	—		1		—		—		—		—		1
Acquired noncontrolling interests	—	—		(18)		—		—		—		18		—
Other	—	—		5		—		—		—		—		5
Balance, September 30, 2020	169	$	—	$	4,200	$	(836)	$	15	$	(9)	$	19	$	3,389

The accompanying notes are an integral part of these consolidated condensed financial statements.

Table of Contents

CAESARS ENTERTAINMENT, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30,
(In millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:




















Net cash provided by (used in) operating activities	$	974	$	(203)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net	(313)		(95)
Former Caesars acquisition, net of cash acquired	—		(6,357)
Acquisition of William Hill, net of cash acquired	(1,551)		—
Purchase of additional interest in Horseshoe Baltimore, net of cash consolidated	(5)		—
Acquisition of gaming rights and trademarks	(282)		(20)

Proceeds from sale of businesses, property and equipment, net of cash sold	709		231
Proceeds from the sale of investments	206		—
Proceeds from insurance related to property damage	44		—
Investments in unconsolidated affiliates	(39)		(1)
Net cash used in investing activities	(1,231)		(6,242)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt and revolving credit facilities	1,308		9,765
Repayments of long-term debt and revolving credit facilities	(1,125)		(2,826)
Cash paid to settle convertible notes	(367)		(574)
Proceeds from sale-leaseback financing arrangement	—		3,219
Financing obligation payments	—		(49)
Debt issuance and extinguishment costs	(42)		(356)
Proceeds from issuance of common stock	—		772
Taxes paid related to net share settlement of equity awards	(33)		(8)

Net cash provided by (used in) financing activities	(259)		9,943

CASH FLOWS FROM DISCONTINUED OPERATIONS:
Cash flows from operating activities	(55)		3
Cash flows from investing activities	(1,453)		(3)
Cash flows from financing activities	591		—
Net cash used in discontinued operations	(917)		—

Change in cash, cash equivalents and restricted cash classified as assets held for sale	10		—

Effect of foreign currency exchange rates on cash	31		—
Increase (decrease) in cash, cash equivalents and restricted cash	(1,392)		3,498
Cash, cash equivalents and restricted cash, beginning of period	4,280		217
Cash, cash equivalents and restricted cash, end of period	$	2,888	$	3,715

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO AMOUNTS REPORTED WITHIN THE CONSOLIDATED CONDENSED BALANCE SHEETS:
Cash and cash equivalents	$	1,072	$	1,051
Restricted cash included in restricted cash and investments	302		2,251
Restricted and escrow cash included in other assets, net	1,166		413
Cash and cash equivalents and restricted cash - discontinued operations	348		—
Total cash, cash equivalents and restricted cash	$	2,888	$	3,715

Table of Contents


	Nine Months Ended September 30,
(In millions)	2021		2020
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	1,528	$	373
Income taxes paid (refunded), net	(6)		19
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Payables for capital expenditures	72		117

Exchange for sale-leaseback financing obligation	—		246
Convertible notes settled with shares	440