Caesars Entertainment Reports Fourth-Quarter and Full-Year 2013 Results

LAS VEGAS, March 11, 2014 /PRNewswire/ -- Caesars Entertainment Corporation (NASDAQ: CZR) today reported the following fourth-quarter and full-year 2013 results.

• Recently announced asset sales to Caesars Growth Partners, LLC demonstrating the Company's efforts to strengthen CEOC's financial position and capital structure
• Ongoing positive trends in F&B and hotel revenue in Las Vegas drove improved performance in 4Q of 2013
• Successful completion of CGP LLC transaction in Nov 2013; CGP LLC Q4 results consolidated into Caesars Entertainment
• CIE launched real money online gaming in New Jersey on Nov 26
• Launched the LINQ at the end of Q4; on track to fully-open venue and unveil the High Roller in coming months
• Strategic partnerships with Starwood Hotels & Resorts and Live Nation broaden and enrich hospitality experience

Summary of Financial Data

The table below highlights certain GAAP and non-GAAP financial measures:

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Management Commentary

"During 2013 we invested significantly in our properties and executed a number of initiatives to enhance the company's capital structure and better position the company for sustainable growth," said Gary Loveman, chairman, chief executive officer and president of Caesars Entertainment Corporation. "The recently announced asset sale to Caesars Growth Partners further supports these objectives by increasing liquidity at our CEOC subsidiary and facilitating new investment in some of the assets.

"While the operating environment remained challenging in the fourth quarter, we are encouraged by volume and visitation trends in our core market of Las Vegas. We are excited about our prospects here fueled by organic growth and continued investments in hospitality assets, most notably the LINQ and the High Roller. Looking ahead, our efforts to improve the company's capital structure remain a key priority as we build on our recent actions and leverage our operating and financial toolbox to create value. The asset sale is an important step in our ongoing efforts to improve the health of the CEOC subsidiary. The process to address CEOC's condition is well underway, but will take quite some time to achieve. I am proud of the milestones we have reached to date and look forward to making much more progress."

Basis of Presentation

In the fourth quarter of 2013, Caesars with its operating company, Caesars Entertainment Operating Company, Inc. ("CEOC") consummated two transformational transactions, creating a new structure called Caesars Entertainment Resort Properties ("CERP") and closing transactions that formed Caesars Growth Partners, LLC ("CGP LLC"), an entity that we consolidate as a variable interest entity.

The operating results of CEOC, CERP and CGP LLC presented later in this release cannot be added together to derive consolidated CEC results for the following reasons:

• CERP results presented herein reflect intercompany lease income from Octavius Tower for all periods presented, even though it was only acquired by CERP in October 2013. As this income is also presented in CEOC (the owner of the Tower until its transfer to CERP) for periods prior to the sale, results would be duplicated without proper elimination;
• CEOC results presented herein reflect the operating results of Planet Hollywood through the sale date in October 2013 and CGP LLC results include Planet Hollywood for all periods presented;
• Eliminating and consolidating entries are not presented in the tables; and
• CEC parent company operating results are not included.

In the discussion below, the words "Company", "Caesars", "Caesars Entertainment", "we", "our" and "us" refer to Caesars Entertainment and its consolidated entities, unless otherwise stated or the context requires otherwise.

Consolidated Financial Results

Fourth Quarter 2013 results compared with Fourth Quarter 2012

Net Revenues

Net revenues increased 3.2% compared with the prior year quarter, primarily due to the combination of increases in revenues of Caesars Interactive Entertainment, Inc. ("CIE"), increases in pass-through reimbursable management costs and a decrease in promotional allowances, partially offset by a decline in casino revenue.

Casino revenues declined $75.3 million, or 5.1%, compared with the prior year quarter, due to the continued impact of increased regional competition and continued softness in the domestic gaming market in certain U.S. regional markets outside of Nevada as well as the reduction of revenues resulting from the partial sale of our Conrad Punta del Este casino in Uruguay ("the Conrad") in the second quarter 2013. Gaming volumes for table games were up, driven by strong results in the Las Vegas region. Slot volumes were slightly down, driven by regional weakness consistent with slot trends over the recent past. Additionally, revenues were negatively impacted by increases in certain variable marketing programs, such as REEL REWARDS, discounts, and free play, that are treated as reduction of revenue. On a consolidated basis, we experienced slightly favorable hold (the portion of aggregate slot wagers and table drop that are retained by the casino as win ("hold")) in 2013 compared with the prior year, driven by the Las Vegas properties.

On a consolidated basis, rooms revenue increased $17.4 million, or 6.4%, versus the prior year quarter, as a result of an increase in the average daily rate paid for rooms sold, excluding fully complimentary rooms ("cash ADR") to $100 in 2013 from $85 in 2012, primarily attributable to resort fees, which were introduced in Las Vegas and other Nevada properties beginning in March 2013. Hotel occupancy decreased 0.8 percentage points to 83% in 2013.

Reimbursable management costs increased to $64.9 million from $23.6 million, when compared with the 2012 quarter, due to new managed properties, including Horseshoe Cincinnati, which opened in March 2013 and ThistleDown Racetrack in Ohio ("Thistledown Racino"), which commenced video lottery terminal operations in April 2013. Reimbursable management costs are presented on a gross basis as revenue and expense, thus resulting in no net impact on operating income. 

Loss from Operations

Loss from operations was $1,864.2 million compared with $353.4 million in the prior year quarter, primarily due to higher non-cash intangible and tangible asset impairment charges, which totaled $1,963.3 million in 2013, as compared with $448.2 million in 2012. Aside from the change in impairment charges, loss from operations improved slightly by $4.3 million when compared with the same quarter in the prior year, primarily due to the decrease in depreciation expense.

During the fourth quarter 2013, several indicators arose that required us to assess our goodwill, intangible assets and tangible assets for impairment. These events included deteriorating market conditions in Atlantic City and potential changes in the expected useful life of certain of our property assets. Resulting impairments recorded were $1,963.3 million and consisted of $1,852.0 million of long lived tangible assets and $111.3 million of intangible asset impairments during the fourth quarter of 2013, compared with total impairments of $448.2 million, primarily related to long lived tangible assets, in the fourth quarter of 2012.  We also wrote off our equity investment in Suffolk Downs in Massachusetts in the fourth quarter 2013.

Net Loss and EBITDA measures

Net loss attributable to Caesars was $1,756.9 million compared with $480.3 million in the 2012 quarter, mainly due to the pre-tax impairments discussed above, as well as a pre-tax $49.3 million increase in interest expense, and a pre-tax $47.3 million  loss on early extinguishment of debt in 2013 compared with a pre-tax gain on extinguishment of debt of $56.5 million in 2012.  Partially offsetting the increased net loss attributable to Caesars was the year over year change in loss from discontinued operations, which was a $0.5 million post-tax loss in 2013 compared with a $40.7 million post-tax loss in 2012 and the income tax benefit of the loss. Casino revenues were 67.9% of net revenue in the 2013 quarter as compared to 73.8% in the 2012 quarter. These factors are further described in "Additional Financial Information" that follows herein.

Property EBITDA decreased $55.0 million, or 12.5%, compared with the prior year quarter as a result of the income impact of lower casino revenues and the sale of Harrah's St. Louis. Adjusted EBITDA decreased $13.8 million, or 3.3%. Further details on these non-GAAP financial measures follow herein.

Year ended December 31, 2013 compared with December 31, 2012

Net Revenues

Net revenues were relatively unchanged in 2013 from 2012 as a $434.2 million decrease in casino revenues was largely offset by increases in pass-through reimbursable management costs, rooms, food and beverage, and other revenues, coupled with lower promotional allowances. Net revenues attributable to CIE increased from the prior year due to the combination of the Buffalo Studios acquisition and continued strength in the social and mobile games business. Las Vegas rooms and food and beverage revenues grew as a result of our increased investment in hospitality offerings in this market.

Casino revenues declined in large part due to the continued weakness seen in Atlantic City resulting from increased regional competition. Continued softness in the domestic gaming market in certain other U.S. regional markets outside of Nevada has also negatively impacted casino revenues, as has the sale of the Conrad.  Slot volumes were down in virtually all domestic markets, while table volumes were relatively strong, primarily driven by baccarat in Las Vegas.  Casino revenues were also negatively affected by increased variable marketing programs, notably in the fourth quarter. On a consolidated basis, we experienced unfavorable hold in 2013 compared with 2012.

On a consolidated basis, rooms revenue increased $14.1 million, or 1.2%, and cash ADR increased by 9% to $99 in 2013 from $91 in 2012, primarily from the March 2013 introduction of resort fees at our Nevada properties. Occupancy rates decreased 2.0 percentage points to 88% in 2013.

Reimbursable management costs increased to $268.1 million from $67.1 million, when compared with the prior year, related to new managed properties, including Horseshoe Cleveland, which opened in May 2012, Horseshoe Cincinnati which opened in March 2013, ThistleDown Racino, which commenced video lottery terminal operations in April 2013, and the Caesars Windsor management company, which we are now consolidating since increasing our ownership in the management company from 50% to 100% in June 2012. Reimbursable management costs are presented on a gross basis as revenue and expense, thus resulting in no net impact on operating income. 

Loss from Operations

Loss from operations was $2,234.6 million, compared with $319.9 million in 2012. During the year several indicators arose that required us to test our goodwill, intangible assets and tangible assets for impairment. During the year, we recorded impairments of tangible assets of $2,564.7 million, intangible assets of $349.9 million, and goodwill of $104.3 million in 2013, for a total of $3,018.9 million, compared with total impairments of $1,074.2 million in 2012. 

Loss from operations also worsened due to the income impact of the decline in casino revenues, the write-off of our investment in Suffolk Downs in Massachusetts, and a $52.9 million charge for a contingent earnout liability in 2013 related to the Buffalo Acquisition.  These items were partially offset by a $149.2 million decrease in depreciation expense resulting from assets that became fully depreciated early in the first quarter 2013.

Net Loss and EBITDA measures

Net loss attributable to Caesars was $2,948.2 million, compared with $1,508.1 million in 2012. In addition to the factors described above, 2013 net loss results include  a $152.7 million increase in interest expense, partially offset by an $84.6 million favorable change in the loss from discontinued operations, net of income taxes, and a gain of $44.1 million related to the sale of 45% of Baluma S.A., which owns and operates the Conrad. Additionally, loss on early extinguishment of debt was $29.8 million in 2013 compared with a gain on early extinguishment of debt of $136.0 million in 2012, driving an unfavorable change of $165.8 million. Casino revenues were 67.9% of net revenue in 2013 as compared to 72.8% in 2012. These factors are further described in "Additional Financial Information" that follows herein.

Property EBITDA decreased $151.5 million, or 7.5%, primarily driven by the income impact of the decline in casino revenues and the sale of Harrah's St. Louis. Adjusted EBITDA decreased $83.2 million, or 4.3%.  Further details on these non-GAAP financial measures follow herein.

Regional Operating Results - Consolidated

To provide more meaningful information than would be possible on either a consolidated basis or an individual property basis, the Company's casino properties and other operations have been grouped into four regions. Operating results for each of the regions, irrespective of which structure the properties belong, are provided below.

Las Vegas

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Fourth Quarter 2013 results compared with Fourth Quarter 2012

Net revenues increased $56.8 million, or 7.6%, compared with the 2012 quarter, primarily driven by growth in rooms and food and beverage revenue, which benefited from resort fees and new venues, respectively.  Casino revenues remained flat compared with 2012 due to favorable Las Vegas hold that was largely offset by the revenues impact of variable marketing programs.

Rooms revenues increased $16.2 million, or 8.8%, compared with the prior year quarter.  Resort fees, introduced in March 2013, contributed to a 19.5% increase in cash ADR to $105 in 2013 from $88 in 2012.  Occupancy declined by 3.6 percentage points to 88% in 2013. This decrease was primarily due to lower group business and the disruption caused by construction activities related to the LINQ project and the Quad renovation.

Food and beverage revenues increased $10.1 million, or 5.2%, compared with the prior year due to the addition of several new restaurant offerings such as Nobu at Caesars Palace and the Gordon Ramsay-branded restaurants at Caesars Palace, Paris, and Planet Hollywood.

Income from operations increased $31.8 million, or 26.9%, as a result of the positive impacts of the increase in net revenues discussed above and a decrease in depreciation expense when compared to the prior quarter.  These factors were partially offset by an increase in property operating expenses, primarily related to increased information technology and marketing expenses compared to the prior year quarter.

Additionally, property EBITDA was $235.2 million compared with $216.7 million in 2012, an increase of  $18.5 million.  Further details on this non-GAAP financial measure follow herein.

Year ended December 31, 2013 compared with December 31, 2012

Net revenues increased 1.3% compared with 2012 on increases in rooms, food and beverage and other revenues, which were largely offset by the decline in casino revenues of $72.2 million, or 4.4%, compared with the prior year.  Casino revenues in 2013 were affected by increased variable marketing programs and unfavorable hold when compared with 2012, while gaming volumes remained flat year over year.

Food and beverage revenues increased $55.0 million, or 6.9%, due to the addition of several new restaurants including   Bacchanal Buffet at Caesars Palace as well as the new restaurant offerings described in the quarterly discussion above.

Rooms revenues increased $30.5 million, or 3.9%, primarily from resort fees, which contributed to an increase in cash ADR to $102 in 2013 from $92 in 2012. However, the region's occupancy declined 2.5 percentage points to 92% in 2013, primarily due to lower group business.

Income from operations increased $98.5 million, or 23.0%, primarily due to the net revenue increases described above and decreases in casino expenses and depreciation expense. 

Property EBITDA increased $59.8 million, or 7.4%, mainly due to the income impact of higher net revenues. Further details on this non-GAAP financial measure follow herein.

Atlantic Coast

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Fourth Quarter 2013 results compared with Fourth Quarter 2012

Net revenues in the fourth quarter 2013 were relatively unchanged compared with the prior year quarter during which Hurricane Sandy closed our properties for five days in Atlantic City and two days in Philadelphia, significantly reducing revenues in the 2012 quarter. Additionally, the Atlantic Coast properties continue to be negatively affected by the competitive environment in the region, which has caused a decline in visitation to its properties. Casino revenues declined $10.8 million, or 3.7%, in 2013, compared with the prior year quarter, offset by increases in food and beverage and rooms revenues. Casino revenues declined due to increased spending on variable marketing programs, partially offset by the impact of higher slot volumes and favorable hold in 2013 compared with the prior year quarter.

Loss from operations was $1,909.3 million compared with $477.0 million in the prior year, a worsening of $1,432.3 million, primarily due to tangible and intangible asset impairment charges of $1,885.9 million in 2013 compared with $450.0 million in the 2012 quarter. Aside from the impairment charges, loss from operations remained relatively unchanged as a $17.7 million decrease in depreciation expense was largely offset by increased property operating expenses related to increased marketing spend and property taxes. 

Property EBITDA in the region declined $17.5 million, or 60.8%, in 2013 compared with the prior year as a result of lower casino revenues and increases in property operating expenses. Further details on this non-GAAP financial measure follow herein.

Year ended December 31, 2013 compared with December 31, 2012

Net revenues decreased $160.4 million, or 9.5%, compared with 2012, primarily due to the decline in casino revenues of $157.0 million, or 11.0%, as a result of the continued decline in gaming volumes in this region compared with 2012, while hold remained relatively flat.  The region continues to be affected by ongoing competitive pressure, and visitation to the region's properties has not recovered following Hurricane Sandy in the fourth quarter 2012. 

Loss from operations was $2,405.3 million in 2013 compared with $394.6 million in 2012, primarily due to tangible and intangible asset impairment charges totaling $2,444.5 million compared with $450.0 million in 2012, combined with the income impact of lower net revenues. Property operating expenses in 2013 were lower than in the prior year as a result of decreases in costs attributable to our cost savings initiatives, and depreciation expense declines of $48.5 million.

Property EBITDA declined $62.2 million, or 23.4%, due to the income impact of lower revenues, partially offset by the decline in property operating expense. Further details on this non-GAAP financial measure follow herein.

We expect the region will continue to be challenged as a result of the competitive pressures. We continue to consider our participation strategies in this region to better align capacity with demand.

Other U.S

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Fourth Quarter 2013 results compared with Fourth Quarter 2012

Net revenues decreased by $33.6 million, or 4.7%, from the 2012 quarter, reflecting the persistent softness in the regional markets as noted across the industry in recent quarters, primarily attributable to lower visitation, increased regional competition and severe weather in December 2013 across the Midwest. Additionally, casino revenue declines of $40.3 million reflect the factors mentioned plus unfavorable hold.

Income from operations was $95.1 million compared with $149.6 million in the prior year, a decrease of $54.5 million, or 36.4%. In addition, declines in casino revenue discussed above reduced income from operations but was partially offset by an $18.0 million decrease in depreciation expense.  In 2013, we reduced our preliminary impairment charges by a net $9.8 million compared to the net $50.8 million reduction in the 2012 quarter, largely due to the changes in estimates in our preliminary third quarter impairment charge in each of the two years.

Property EBITDA declined $29.1 million, or 17.7%, compared with the prior year quarter primarily due to the income impact of declines in revenues. Further details on this non-GAAP financial measure follow herein.

Year ended December 31, 2013 compared with December 31, 2012

Net revenues declined $124.8 million, or 4.1%, in 2013 compared with the prior year, primarily attributable to lower visitation to the region's properties, driven by competition in the regional markets and the persistent softness in the regional markets as noted above.  Casino revenue declined $126.9 million as a result of unfavorable hold and weaker slot volumes compared with 2012, while table games volumes increased slightly.

Income from operations improved $23.4 million, or 70.5%, as a result of reductions in property operating expenses related to lower variable costs and a $45.4 million decrease in depreciation expense.  Write-downs, reserves, and project opening costs, net of recoveries were $9.4 million in 2013 compared with $39.3 million in 2012, improving 2013 income from operations by $29.9 million.  Additionally, non-cash impairment charges were $389.2 million in 2013 compared with $408.7 million in 2012.

Property EBITDA declined $71.4 million, or 9.8%, compared with prior year mainly due to the income impact of lower revenues. Further details on this non-GAAP financial measure follow herein.

Certain markets in the Other U.S. region have been challenged by new competition, while others have been challenged by lower visitation trends over time.  We continue to evaluate our participation strategies in certain markets to better align capacity with demand.

Managed, International and Other

Managed properties include companies that operate three Indian-owned casinos, as well as Horseshoe Cleveland, Horseshoe Cincinnati, Caesars Windsor, and ThistleDown Racino since August 2012, when the racetrack was contributed to Rock Ohio Caesars, LLC, a joint venture in which Caesars holds a 20% ownership interest.  Reimbursable management costs are presented on a gross basis as revenue and expense, thus resulting in no net impact on results.

In March 2013, the Company closed the Alea Leeds casino in England and its operating results have been classified as discontinued operations for all periods presented and are excluded from the table above.

In May 2013, the Company sold 45% of its equity interest in the Conrad, and as a result of this transaction, no longer consolidates this property's results of operations, but instead accounts for it as an equity method investment. The above table includes the consolidated results of the Conrad through May 31, 2013, and the equity method income or loss from operations beginning June 1, 2013.

In November 2013, we completed the sale of all of the equity interests of the subsidiaries that held the Macau Land Concession.  As a result, the related operating results have been classified as discontinued operations for all periods presented and are excluded from the table above.

Other is comprised of corporate expenses, including administrative, marketing, and development costs, income from certain non-consolidated affiliates and the results of CIE. CIE is a majority owned subsidiary of CGP LLC, which is consolidated into our financial statements and whose results are presented later in this release.

Fourth Quarter 2013 results compared with Fourth Quarter 2012

Reimbursable management costs increased $39.5 million, compared with the 2012 quarter, due to new managed properties opening in 2013 in Ohio, including Horseshoe Cincinnati and ThistleDown Racino near Cleveland.  Net revenues in the international region declined $35.7 million, or 29.4%, in 2013 compared with the prior year quarter, primarily as a result of the Conrad sale impact.

Other loss from operations was $202.8 million in 2013 compared with $152.6 million in the prior year. This change was primarily due to a $101.9 million write-off of our investment in Suffolk Downs in Massachusetts in the fourth quarter 2013.

Year ended December 31, 2013 compared with December 31, 2012

Increases in reimbursable management costs relate to new managed properties described above and our consolidation of Caesars Windsor management company since increasing our ownership of the management company from 50% to 100% in June 2012. Net revenues in the international region declined $88.9 million, or 19.5%, in 2013 compared with the prior year, primarily as a result of the Conrad sale, which resulted in a $73.8 million decrease in net revenues, combined with net revenue declines at our London Clubs properties in 2013 due to competitive pressures.

Other loss from operations was $454.3 million in 2013, compared with $425.1 million the prior year.  This change was primarily due to a $101.9 million write-off of our investment in Suffolk Downs in Massachusetts as mentioned above, partially offset by improvement in operating results of CIE and a $33.6 million decrease in corporate expense.

Additional Financial Information

Interest Expense

During the fourth quarter 2013, interest expense increased by $49.3 million, or 9.4%, to $575.3 million from $526.0 million from in the 2012 quarter, primarily due to higher interest rates as a result of CEOC's February 2013 9.0% senior secured notes offering, the proceeds of which were used to repay a portion of lower interest rate term loans on CEOC's credit facilities, as well as with higher CEOC debt balances and increases in rates on the CERP financing, which closed in the fourth quarter 2013. Interest expense for fourth quarter 2013 includes $6.6 million of expenses related to derivatives not designated as accounting hedges. Interest expense for fourth quarter 2012 includes (i) $2.5 million of expenses related to derivatives not designated as accounting hedges and (ii) $7.2 million of expense due to amortization and reclassification of losses on derivative instruments from Accumulated Other Comprehensive Loss ("AOCL").

During the year ended December 31, 2013, interest expense increased $152.7 million, or 7.3%, from 2012 primarily due to higher interest rates as a result of CEOC's February 2013 9.0% senior secured notes offering, the extension of the maturities of CEOC debt, as well as higher CEOC debt balances and rates on the CERP financing closed in 2013. Interest expense for 2013 includes (i) $34.4 million of expenses related to derivatives not designated as accounting hedges and (ii) $4.0 million of expense due to amortization and reclassification of deferred losses on derivative instruments from AOCL. Interest expense for 2012 includes (i) $140.0 million of expenses related to derivatives not designated as accounting hedges and (ii) $28.4 million of expense due to amortization and reclassification of deferred losses on derivative instruments from AOCL.

Gain/(Loss) on Early Extinguishment of Debt

During the fourth quarter 2013, we recognized a $47.3 million loss on early extinguishment of debt. The loss was primarily related to the CERP refinancing. During the fourth quarter 2012, we repurchased $165.0 million face value of CMBS Loans for $107.3 million, recognizing a net gain on early extinguishment of debt of $56.5 million.

During the year ended December 31, 2013, we recognized a loss on early extinguishment of debt of $29.8 million, primarily related to the CERP refinancing and additional charges from the repurchase of debt under the CEOC Credit Facility in the first and third quarters of 2013, partially offset by third quarter gains on extinguishment of debt related to purchases of CMBS Loans. During 2012, we recognized a net gain on early extinguishment of debt of $136.0 million, primarily due to the purchase of $367.3 million face value of CMBS debt for $229.3 million.

Gain on partial sale of subsidiary

In connection with the sale of 45% of our interest in the Conrad, we recognized a gain of $44.1 million in the second quarter 2013.  There was no comparable amount in the prior year.

Benefit for Income Taxes

The effective tax rate benefit for the fourth quarter 2013 and 2012 was 29.4% and 46.6%, respectively.  The decrease in the 2013 effective tax rate benefit is primarily due to deferred tax implications of the CGP LLC transaction in 2013, the change in our federal valuation allowance, and a larger tax benefit from the reversal of uncertain tax positions in 2012.

The effective tax rate benefit for 2013 and 2012 was 34.7% and 38.5%, respectively. The 2013 effective rate benefit was primarily impacted by the tax benefits from a capital loss resulting from a tax election made for U.S. federal income tax purposes and the reversal of uncertain tax positions offset by the change in our federal valuation allowance and the deferred tax implications of the CGP LLC transaction in 2013. The 2012 effective tax rate benefit was primarily impacted by the tax benefit from the reversal of uncertain tax positions offset by the tax effects of nondeductible goodwill impairments.

Loss from discontinued operations, net of income taxes

During the fourth quarter 2013, loss from discontinued operations, net of income taxes was $0.5 million compared with $40.7 million in 2012, primarily related to the fourth quarter 2012 sale of the Harrah's St. Louis casino.

During the year ended December 31, 2013, loss from discontinued operations, net of income taxes was $30.0 million, primarily comprised of charges totaling $21.5 million for exit activities and the write-down of intangible and tangible assets related to the March 4, 2013 closure of the Alea Leeds casino and net write-downs of $5.8 million related to our land concession in Macau. During the year ended December 31, 2012, loss from discontinued operations, net of income taxes was $114.6 million and included a $101.0 million non-cash tangible asset impairment charge related to our land concession in Macau.

Cost-Savings Initiatives

The Company has undertaken comprehensive cost-reduction efforts to manage expenses with current business levels. We estimate that our cost-savings programs produced $7.2 million and $12.1 million in incremental cost savings for the fourth quarter and full year 2013, respectively, compared with the same periods in 2012. Additionally, as of December 31, 2013, the Company expects that these and other identified new cost-savings programs will produce further annual cost-savings of $91.4 million, based on the full implementation of current projects that are in process. As the Company realizes savings or identifies new cost-reduction activities, this amount will change.

Recent Developments

Golden Nugget. On February 11, 2014, we permanently closed our Golden Nugget casino in England.

Sale of Properties from CEOC to CGP LLC. On March 1, 2014, we executed a definitive agreement to sell Bally's Las Vegas, The Cromwell, The Quad and Harrah's New Orleans to CGP LLC for a purchase price of $2,200.0 million, including assumed debt of $185.0 million, and committed project capital expenditures of $223.0 million, resulting in anticipated cash proceeds to CEOC of approximately $1,800.0 million.

CEOC Results

During the fourth quarter of 2013, the Company determined that certain amounts related to intercompany insurance premiums within CEOC's unaudited Consolidated Condensed Balance Sheets as of December 31, 2013 and 2012, and its unaudited Consolidated Condensed Statements of Operations and unaudited Consolidated Condensed Statements of Cash Flows for the years ended December 31, 2013 and 2012 were improperly eliminated. The amounts were determined to be immaterial to prior periods; however, correcting this error in the fourth quarter would have been material to the fourth quarter results of operations. Accordingly, we have recast prior CEOC results to reflect the intercompany insurance premiums properly in all prior periods. CEC results, on a consolidated basis, were not affected by this error. In addition, we changed our accounting methods associated with accounting for income taxes on a standalone presentation basis and pension accounting. Once recasting for the prior period error described above, we are obligated to recast for all known immaterial errors in prior periods. On a recasted basis, we remained in compliance with the senior secured leverage ratio covenant under the CEOC credit agreement at each reporting period, including and up to December 31, 2013.

Due to CEOC's continuing involvement with the LINQ and Octavius Tower, CEOC continues to consolidate the related net assets and income statement impacts into CEOC's financial results subsequent to the transfer of these properties to CERP in October 2013, which is reflected in the tables below. Management believes the Non-GAAP measures presented below are helpful to investors because the LINQ and Octavius Tower are not legally owned by CEOC.  Reconciliation of Property EBITDA and Adjusted EBITDA to the most closely related GAAP financial measure is presented later in this release.

CEOC is our wholly owned operating subsidiary that conducts a significant part of our business operations. The following is being provided as supplementary financial information. Full CEOC results will be provided in a report on Form 8-K subsequent to filing Caesars' Annual Report on Form 10-K ("Form 10-K") in March 2014.

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CERP Results

CERP was formed as a result of refinancing transactions which closed in October 2013.

CERP results include:

• Harrah's Atlantic City, Harrah's Las Vegas, Harrah's Laughlin, Flamingo Las Vegas, Paris Las Vegas, and Rio All-Suite Hotel and Casino, collectively the former CMBS properties;
• Lease income of Octavius Tower for all periods presented (paid by CEOC), even though it was only contributed to CERP in October 2013;
• Operating results from the LINQ, which partially opened in late December 2013;
• Operating results from the High Roller observation wheel, which will begin operations in 2014; and
• Lease income of O'Sheas casino (paid by CEOC) beginning in 2014.

The Company believes it is meaningful to provide information on the combined results of operations of CERP which are summarized below. CERP's Supplemental Information and Reconciliation of Net Income/(Loss) Attributable to CERP to Adjusted EBITDA can be found later in this release. Full CERP results will be provided separately in a report on Form 8-K subsequent to filing Caesars' Form 10-K.

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Caesars Growth Partners Results

As previously disclosed, Caesars Acquisition Company ("CAC") was formed to own 100% of the voting membership units in CGP LLC. In October 2013, Caesars and its subsidiaries, CAC and CGP LLC consummated a transaction in which Caesars acquired all of the non-voting units of CGP LLC in exchange for certain consideration.  Our interests in CGP LLC constitute variable interests and CGP LLC is a variable interest entity which we are required to consolidate.

The financial statement information for the year ended December 31, 2012 and for the period from January 1, 2013 through October 21, 2013 does not reflect the impacts of the October 21, 2013 formation transaction, including the recording of non-controlling interest or the determination of taxes in accordance with the LLC structure of CGP LLC. Instead, this financial information presents the combination of the assets and entities that were purchased by or contributed to CGP LLC for the periods presented as that financial information was initially recorded in the underlying accounting records of Caesars Entertainment.

The financial statement information for the period from October 22, 2013 through December 31, 2013 reflects the financial statements of CGP LLC on a consolidated basis, giving regard to all impacts of the formation transaction. Full CGP LLC results will be provided separately in CAC's Form 10-K.

CGP LLC's Supplemental Information and Reconciliation of Net Income/(Loss) Attributable to CGP to Adjusted EBITDA can be found later in this release.

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Liquidity

Each of the structures comprising Caesars Entertainment's consolidated financial statements have separate debt agreements with related restrictions on usage of their capital resources. CGP LLC is a variable interest entity that is consolidated by Caesars Entertainment. CAC is the managing member of CGP LLC and therefore controls all decisions regarding liquidity and capital resources of CGP LLC.

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Conference Call Information

Caesars Entertainment Corporation (NASDAQ: CZR) will host a conference call at 2 p.m. Pacific Time Tuesday, March 11, 2014, to review its fourth-quarter results. The call will be accessible in the Investor Relations section of www.caesars.com.

If you would like to ask questions and be an active participant in the call, you may dial (877) 637-3676, or (832) 412-1752 for international callers, and enter Conference ID 36895079 approximately 10 minutes before the call start time.  A recording of the live call will be available on the Company's website for 90 days after the event.

About Caesars

Caesars Entertainment Corporation is the world's most diversified casino-entertainment provider and the most geographically diverse U.S. casino-entertainment company. Since its beginning in Reno, Nevada, 75 years ago, Caesars has grown through development of new resorts, expansions and acquisitions and now operates casinos on three continents. The Company's resorts operate primarily under the Caesars^®, Harrah's^® and Horseshoe^® brand names. Caesars also owns the London Clubs International family of casinos. Caesars is focused on building loyalty and value with its guests through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. The Company is committed to environmental sustainability and energy conservation and recognizes the importance of being a responsible steward of the environment. For more information, please visit www.caesars.com.

Forward Looking Information

This release includes "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.  You can identify these statements by the fact that they do not relate strictly to historical or current facts.  These statements contain words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue," "pursue," or the negative or other variations thereof or comparable terminology.  In particular, they include statements relating to, among other things, future actions, new projects, strategies, future performance, the outcomes of contingencies, and future financial results of Caesars.  These forward-looking statements are based on current expectations and projections about future events.

Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified, and, consequently, the actual performance of Caesars may differ materially from those expressed or implied by such forward-looking statements.  Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in the Company's reports filed with the Securities and Exchange Commission (including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein):

• the impact of the Company's substantial indebtedness and the restrictions in the Company's debt agreements;
• access to available and reasonable financing on a timely basis, including the ability of the Company to refinance its indebtedness on acceptable terms;
• the effects of local and national economic, credit, and capital market conditions on the economy, in general, and on the gaming industry, in particular;
• the ability to realize the expense reductions from cost savings programs;
• changes in the extensive governmental regulations to which the Company and its stockholders are subject, and changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions, disciplines, and fines of courts, regulators, and governmental bodies;
• the ability of the Company's customer-tracking, customer loyalty, and yield-management programs to continue to increase customer loyalty and same-store or hotel sales;
• the effects of competition, including locations of competitors and operating and market competition;
• the ability to recoup costs of capital investments through higher revenues;
• abnormal gaming holds ("gaming hold" is the amount of money that is retained by the casino from wagers by customers);
• the ability to timely and cost-effectively integrate companies that the Company acquires into its operations;
• the potential difficulties in employee retention and recruitment as a result of the Company's substantial indebtedness or any other factor;
• construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, and building permit issues;
• litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation;
• acts of war or terrorist incidents, severe weather conditions, uprisings or natural disasters, including losses therefrom, including losses in revenues and damage to property, and the impact of severe weather conditions on the Company's ability to attract customers to certain of its facilities, such as the amount of losses and disruption to the Company as a result of Hurricane Sandy in late October 2012;
• the effects of environmental and structural building conditions relating to the Company's properties;
• access to insurance on reasonable terms for the Company's assets; and
• the impact, if any, of unfunded pension benefits under multi-employer pension plans.

Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made.  Caesars disclaims any obligation to update the forward-looking statements.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated or, if no date is stated, as of the date of this release.

In addition, the Company's estimated financial performance for the Purchased Properties for the year ended  December 31, 2013 constitute forward-looking statements and are based upon Caesars Entertainment's preliminary internal estimates and best judgment of the performance of the Purchase Properties. These estimates for the year ended December 31, 2013 may be subject to adjustments in connection with the company's routine year-end procedures. The Purchase Properties actual results for the year ended December 31, 2013 may differ materially from its current estimates. The preliminary financial data for the year ended December 31, 2013 for the Purchased Properties included on page 36 and has been prepared by, and is the responsibility of, management.

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The following table reconciles net loss attributable to Caesars to Adjusted EBITDA for the years ended December 31, 2013 and 2012, and net loss attributable to Caesars to LTM Adjusted EBITDA-Pro Forma for the year ended December 31, 2013.

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The following table reconciles net loss attributable to CEOC to Adjusted EBITDA for the years ended December 31, 2013 and 2012, and net loss attributable to CEOC to LTM Adjusted EBITDA-Pro Forma and LTM adjusted EBITDA-Pro Forma - CEOC Restricted for the year ended December 31, 2013.

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The following table reconciles net income to Adjusted EBITDA for the periods indicated, and reconciles net income to LTM Adjusted EBITDA-Pro Forma for the last twelve months ended December 31, 2013.

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SOURCE Caesars Entertainment Corporation