Bank of America 2013 Leveraged Finance Conference December 4, 2013

Transcription

1 Bank of America 2013 Leveraged Finance Conference December 4, 2013

2 Forward Looking Statements Certain information in this presentation may be considered forward-looking information within the meaning of the Private Securities Litigation Reform Act of 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, industry and economic conditions, competitive, legal, governmental and technological factors. There is no assurance that the Company's expectations will be realized. The Company assumes no obligation to update any forward-looking information contained in this presentation should circumstances change, except as otherwise required by securities and other applicable laws. Market data and other statistical information used throughout this presentation are based on independent industry publications, government publications, reports by market research firms or other published independent sources. Some data are also based on our good faith estimates which are derived from our review of internal surveys, as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy and completeness. 2

3 Agenda Caesars Overview Key Drivers of Value Creation Financial/Capital Review Conclusion Appendix 3

4 The Key to our Success The key to our success is the distribution of compelling brands to an expanding base of customers through their preferred channel, offering great experiences connected through rewards for loyalty Our Brands Our Distribution Channels Our Customers Bricks and Mortar Online 4

5 An Industry Leader in Gaming and Entertainment (1) Market Leadership #1 and #2 market share in almost every U.S. market WSOP - world s leading poker brand (2) No. 1 global publisher in the social casino-style games market (2,3) Robust Entertainment & Hospitality Offering 43,000 hotel rooms 440 restaurants, bars and clubs 290 retail shops Unprecedented Scale 2012 adjusted EBITDA: $1.9 billion (4) 52 casinos across 13 states and 6 countries (5) 68,000 employees 3 million square feet of casino gaming space 2 million square feet of convention space Broad and Loyal Customer Base ~44 million Total Rewards customers (5) ~8 million active users (5) (1) Statistics as of December 31, 2012 unless otherwise stated, and reflect the consolidation of Caesars Growth Partners (CGP) into Caesars Entertainment s financial statements. (2) WSOP brand and social casino games franchise are assets of CGP. Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock. (3) Source: Eilers Research (4) See Appendix A for a GAAP reconciliation (5) As of June 30,

6 Caesars Has the Most Geographically Diverse Distribution Network Global reach with a leading position in most markets In-place domestic pipeline #1 Reno / Lake Tahoe #1 Council Bluffs #1 Chicagoland Windsor Cleveland #1 Philadelphia Atlantic City #1 Pursuing and capturing newly opening markets #2 #1 Las Vegas Laughlin #2 Kansas City Metropolis #1 Elizabeth Cincinnati Tunica #1 Shreveport / Bossier City USA & CANADA EUROPE & AFRICA #1 #1 Market Share #1 #1 Biloxi New Orleans #2 #2 Market Share Caesars Owned or Managed Property Caesars JV with Rock Native American Casino Managed by CEOC 6

7 Total Rewards is the First and Largest Loyalty Program in the Luxury Entertainment Industry Making new investments in technology and people to ensure that Caesars remains a leader in marketing and customer loyalty programs Re-launch of Total Rewards in 2012 is yielding results Adding new tiers and new benefits giving customers additional reasons to come visit us Expanded program provides new insights into non-gaming behavior Experienced double-digit growth in bookings from the re-launched Caesars.com and are testing new ways of engaging customers online Increased adoption and usage of a new Total Rewards credit card, which launched earlier in 2013 Launched a fuel rewards program, addressing one of our customers biggest pain points Enhancing database and analytics capabilities to maximize the value of Total Rewards Upgraded Big Data capabilities enable us to be more efficient and strategic in marketing efforts Total Rewards Program Unmatched scale ~44 million tracked player base ~8 million active Largest network Accepted at 38 casinos in North America Unparalleled options Reward Credits earned and redeemed across U.S. properties TR Marketplace: 500 online retailers & 3,000 stores Drives Cross Market Play (1) Tracked Play 76% Cross property play 70% Improves Win Per Position (2) Destination and Regional 22% premium (1) As of June Includes managed properties. (2) Win per position equals gaming revenue / 365 days / (slot units + gaming tables x 6) as of

8 Agenda Caesars Overview Key Drivers of Value Creation Financial/Capital Review Conclusion Appendix 8

9 Sustained economic recovery to provide additional tailwind Key Drivers of Value Creation (1) Reinvigorating and Expanding the Core In Place Development Pipeline Investments in wholly owned assets with focus on hospitality; Expected to drive significant upside Focus on enhancing hospitality and entertainment assets New initiatives to further strengthen loyalty/marketing programs Minority stakes/management agreements; Expected to generate outsized returns Domestic pipeline with two expansion properties opened in 2013 and one in 2014 (2) No. 1 social casino games franchise (2,3) Upside Opportunities Emerging opportunities with significant upside potential Real money online gaming (2) Nevada and New Jersey Will leverage the strength of the WSOP brand (2) Supported by: - World s largest and most diverse gaming platform - Ability to drive cross market play with Total Rewards loyalty program - Continued efforts to improve balance sheet - Unwavering focus on cost reduction (1) Reflects the consolidation of Caesars Growth Partners (CGP) into Caesars Entertainment s financial statements. (2) Horseshoe Baltimore, social casino games franchise, real money online gaming and WSOP brand are assets of CGP. Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock (3) Source: Eilers Research 9

10 Agenda Caesars Overview Key Drivers of Value Creation Reinvigorating and Expanding the Core In Place Development Pipeline Upside Opportunities Financial/Capital Review Conclusion Appendix 10

11 Reinvigorating and Expanding Offerings in Las Vegas Invested more than $1 billion in Las Vegas properties over the last five years, with a focus on hospitality assets Bacchanal Buffet (Sept. 2012) Villas (Nov. 2012) Gordon Ramsay BurGR (Dec. 2012) Nobu Restaurant (Feb. 2013) Bally s South Tower Room Upgrades (4Q13) The Linq (4Q13/1H14) Octavius Tower (Jan. 2012) Gordon Ramsay Steak (May 2012) Gordon Ramsay Pub & Grill (Dec. 2012) Nobu Tower (Feb. 2013) The Quad Renovation (4Q13) Bill s Las Vegas (1H14) 11

12 Significant Operational Leverage Coupled with Hospitality Investments Expected to Drive Improved Performance Hypothetical EBITDA Impact of Improved ADR in Las Vegas ($ millions) $30 Las Vegas $60 $90 $119 $0 $20 $40 $60 $80 $100 $120 $140 $5 Increase $10 Increase $15 Increase $20 Increase Note: Assumes base case 2012 ADR and constant room occupation. 12

13 The Linq: A Transformational Attraction at the Heart of the Las Vegas Strip Outdoor Retail, Dining and Entertainment Promenade Connecting Caesars Properties and Anchored by World s Largest Observation Wheel 550 Feet Tall Unparalleled experience expected to attract many of the 20+ million plus visitors who cross in front of its entrance each year Plan to open the retail, dining and entertainment offerings in phases beginning at the end of 2013 Plan to open the High Roller in the second quarter of 2014 The Linq will provide a number of revenue generating opportunities and is expected to drive incremental visitation and enhanced ADRs at surrounding properties 13

14 Las Vegas Blvd. Koval Lane Caesars Approximately 300 Acre Presence at the Center of the Strip to be Connected by The Linq Caesars Palace (4,270 rooms) Bellagio Harrah s (2,530 rooms) The Quad (2,540 rooms) Flamingo (3,460 rooms) Bill s (200 rooms) Bally s (2,810 rooms) Paris (2,920 rooms) Project Location Flamingo Road Cosmopolitan Planet Hollywood (1) (2,500 rooms) Harmon Avenue Note: Rooms are approximate as of year-end (1) Planet Hollywood is an asset of CGP. Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock. 14

15 Atlantic City: Working to Attract New Segments of Visitation to Help Stabilize the Market Began construction on the largest meeting and conference center in the Northeast State-of-the-art facility is adjacent to Harrah s Atlantic City Believe it will attract new segments of visitation to the market, particularly midweek, and absorb excess hotel room and restaurant capacity Average weekday volume is only 43.5% of average weekend volume Opportunity to capture a share of the $16 billion convention and meetings market in the Northeast 15

16 Agenda Caesars Overview Key Drivers of Value Creation Reinvigorating and Expanding the Core In Place Development Pipeline Upside Opportunities Financial/Capital Review Conclusion Appendix 16

17 Expanding Domestic Casino Distribution Network Horseshoe Cleveland (1) Thistledown Racino (1) Opened May 2012 in the Historic Higbee Building in Downtown Cleveland Opened April 2013 outside of Cleveland Horseshoe Cincinnati (1) Opened March 2013 in Downtown Cincinnati Cleveland Cincinnati Baltimore Horseshoe Baltimore (2) Completed financing and began construction; expected to open 3Q14 Large-scale, underserved market with crossmarket benefits Existing Total Rewards members in the area (1) 20% owned in partnership with Rock Gaming. Property is managed by Caesars Entertainment. (2) CGP has a 41% ownership stake in Horseshoe Baltimore (pro forma for sale of equity to local investor group). Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock. Property to be managed by Caesars Entertainment. 17

18 Fostering Brand Loyalty and Expanding Customer Base through Social/Mobile Games (1) No. 1 global publisher in the social casinostyle games market (2) Portfolio of Social and Mobile Games Slotomania One of the top ten highest grossing casino-themed games on Facebook, ios and Android platforms as of 9/30/13 Bingo Blitz A leading bingo game on Facebook, Android and ios Acquired the World Series of Poker social and mobile game assets and intellectual property from Electronic Arts in May 2013 (1) WSOP brand and social/mobile casino games franchise are owned by Caesars Interactive Entertainment (CIE); CGP owns 76% of CIE. Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock. (2) Source: Eilers Research 18

19 Asset Pipeline Horseshoe Cleveland Octavius Tower & Villas Nobu Tower Horseshoe Cincinnati Thistledown Ohio Nevada Online Poker (2) NJ Online Gaming (2) LINQ Bill s Las Vegas Horseshoe Baltimore (2) Q Open Q Open Q Open February 2013 Open March 2013 Open April 2013 Open September 2013 Launched November 2013 Launched (1) 1H Q 2014 AC Conference Center 2015 (1) Reflects phased opening (2) Real money online gaming is owned by CIE; CGP owns 76% of CIE. CGP also has a 41% ownership stake in Horseshoe Baltimore (pro forma for sale of equity to local investor group). Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock. Property to be managed by Caesars Entertainment. 19

20 Agenda Caesars Overview Key Drivers of Value Creation Reinvigorating and Expanding the Core In Place Development Pipeline Upside Opportunities Financial/Capital Review Conclusion Appendix 20

21 Real Money Online Gaming Opportunity in the U.S. (1) Actively pursuing legalization with stateby-state efforts gaining momentum Nevada Launched real money online poker under the WSOP brand on 9/19 New Jersey Soft-launched on 11/21; Hardlaunched 11/26 Launched with three online casino websites (caesarscasino.com; wsop.com; harrahscasino.com) Successful launch of real money online gaming in Nevada and New Jersey could be a model for other states considering online gaming legalization (1) WSOP brand and real money online gaming are owned by CIE; CGP owns 76% of CIE. Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock. 21

22 Agenda Caesars Overview Key Drivers of Value Creation Financial/Capital Review Conclusion Appendix 22

23 Conducting Debt Financings, Issuing Equity and Executing Strategic Asset Sales to Improve Balance Sheet & Financial Profile Actions have enhanced liquidity profile and reduced near-term debt maturities by ~$4B, with no significant maturities until 2018 Debt Financings & Repurchases 4Q13: Refinanced outstanding CMBS and Octavius/Linq debt for ~$3.65B, capturing ~$100M in discounted repurchases and extending out debt maturities until 2020 and 2021 Repurchased ~$275M of debt in 2Q13 and ~$70M in 3Q13 Opportunistic Equity Sales 4Q13: Completed public offering of ~10M shares for ~$200M in proceeds to be used for general corporate purposes Have continued to issue equity via the At-the-Market program: ~1M shares for ~$16M in proceeds through 3Q13 Strategic Transactions / Asset Sales 4Q13: o Completed sale of Macau land concession to Pearl Dynasty Investments Limited for $438M o Completed formation of Caesars Growth Partners (CGP); Sold Planet Hollywood, Horseshoe Baltimore and 50% of the management fee to CGP for $360M 2Q13: Completed the sale of 45% of the Conrad Punta Del Este Resort and Casino in Uruguay for total consideration of $139.5M (1) Reflects the consolidation of Caesars Growth Partners (CGP) into Caesars Entertainment s financial statements. Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock 23

24 Where Are We CZR Today? & CACQ: Caesars Corporate Post Transaction Structure Structure 1 Hamlet Holdings Other Participating Shareholders Hamlet Holdings Public Shareholders Caesars Acquisition Company (CAC) (NASDAQ: CACQ) 42% economic interest through Class A Voting Units 58% economic interest through Class B Non-Voting Units Caesars Entertainment Corporation (CZR) (NASDAQ: CZR) 3rd party shareholders Caesars Growth Partners (CGP) CERP CEOC Other CEC Subsidiaries (1) 24% (1) 6 casino properties Total Rewards 76% Linq / Octavius system 100% 41% (2) 100% Primary brands Caesars Interactive Entertainment (CIE) Bond Portfolio Horseshoe Baltimore Planet Hollywood Restricted Subs Unrestricted Subs ~43 casino properties ROC Ohio JV Bill s (non recourse sub) (1) Represents fully-diluted ownership. Does not include all subsidiaries. (2) 41% ownership in Horseshoe Baltimore development is pro forma for sale of equity to local investor group. Caesars ownership is 52% prior to such equity sale. 24

25 CZR: Improved Debt Maturity Profile Debt maturity profile provides clear runway for the recovery of the core business and time for new growth opportunities to generate returns As of Sept. 30, 2013 Debt Maturity Schedule ($ Billions) $13.9 $5.5 $0.1 $0 $1.7 $2.7 Pro Forma & Beyond $18.5 $0.1 $0 $1.1 $1.7 $ & Beyond CMBS/CERP First Lien Notes Second Lien Notes Subsidiary Guranteed Debt/Other Term Loans Unsecured Notes 1. For 9/30/13, assumes CMBS and PH extension options exercised (options subject to certain conditions). Reflects the consolidation of Caesars Growth Partners (CGP) into Caesars Entertainment s financial statements. 25

26 Agenda Caesars Overview Key Drivers of Value Creation Financial/Capital Review Conclusion Appendix 26

27 Sustained economic recovery to provide additional tailwind Caesars is Positioned for Significant Growth and Value Creation Reinvigorating and Expanding the Core Investments in wholly owned assets with focus on hospitality; Expected to drive significant upside Focus on enhancing hospitality and entertainment assets Las Vegas: Development of The Linq, conversion of Bill s, remodel of The Quad; and room upgrades at Bally s South Tower New initiatives to further strengthen loyalty/marketing programs Big Data, new Caesars.com, Total Rewards credit card and fuel rewards program In Place Development Pipeline Minority stakes/management agreements; Expected to generate outsized returns Domestic pipeline with three expansion properties Horseshoe Cincinnati and Thistledown: Opened in March and April 2013 Horseshoe Baltimore (1) : Completed financing and broke ground; expected to open 3Q14 No. 1 social casino games franchise (1,2) Emerging opportunities with significant upside potential Upside Opportunities Expanded online gaming (1) Nevada: Launched online poker on 9/19 New Jersey: Launched 11/26 Will leverage the strength of the WSOP brand (1) Supported by: - World s largest and most diverse gaming platform - Ability to drive cross market play with Total Rewards loyalty program - Continued efforts to improve balance sheet - Unwavering focus on cost reduction (1) Horseshoe Baltimore, social casino games franchise, real money online gaming and WSOP brand are assets of CGP. Caesars Entertainment has a 58% economic interest in CGP through its ownership of non-voting stock (2) Source: Eilers Research 27

28 Agenda Caesars Overview Key Drivers of Value Creation Financial/Capital Review Conclusion Appendix 28

29 Appendix A: Adjusted EBITDA GAAP Reconciliation Nine Months Ended Sept. 30, 2013 and 2013, and Year Ended 2012 (1) (2) (3) Nine Months Nine Months Ended September Ended September Year Ended (1)-(2)+(3) (In millions) 30, , 2012 December 31, 2012 LTM Net loss attributable to Caesars $ (1,191.3) $ (1,027.8) $ (1,497.5) $ (1,661.0) Interest expense, net of interest capitalized and interest income 1, , , ,190.8 Benefit for income taxes (a) (819.1 ) (484.9 ) (820.4 ) (1,154.6 ) Depreciation and amortization (b) EBITDA Project opening costs, abandoned projects and development costs (c) Acquisition and integration costs (d) Gain on early extinguishments of debt (e) (17.5 ) (79.5 ) (136.0 ) (74.0 ) Net income/(loss) attributable to non-controlling interests, net of (distributions) (f) 2.2 (4.1 ) (3.3 ) 3.0 Impairments of intangible and tangible assets (g) 1, , ,508.8 Non-cash expense for stock compensation benefits (h) Adjustments for recoveries from insurance claims for flood losses (k) (6.6) (6.6) Gain on sale of discontinued operations (l) 0.7 (9.3 ) (8.6 ) Gain on sale on partial sale of subsidiary (i) (44.1 ) (44.1 ) Other items (j) Adjusted EBITDA $ 1,448.2 $ 1,517.6 $ 1, ,868.3 Pro Forma adjustments related to properties (m) 7.4 Pro Forma adjustment for estimated cost savings yet-to-be-realized (n) Pro Forma adjustments for discontinued operations (o) 5.5 LTM Adjusted EBITDA-Pro Forma $ 2,007.4 Note: See footnote explanations on slide

30 Appendix B: Adjusted EBITDA GAAP Reconciliation Footnotes (a) Amounts include a provision for income taxes related to discontinued operations of $3.1 million and $1.6 million for the three months ended September 30, 2013 and 2012, respectively, a provision for income taxes related to discontinued operations of $0.2 million, $4.6 million and $50.1 million for the nine months ended September 30, 2013 and 2012, and for the year ended December 31, 2012, respectively. (b) Amounts include depreciation and amortization related to discontinued operations of $3.2 million for the three months ended September 30, There was no depreciation and amortization related to discontinued operations for the three months ended September 30, Amounts include depreciation and amortization related to discontinued operations of $0.2 million, $19.3 million and $29.0 million for the nine months ended September 30, 2013 and 2012 and for the year ended December 31, 2012, respectively. (c) Amounts represent pre-opening costs incurred in connection with new property openings and expansion projects at existing properties, as well as any non-cash write-offs of abandoned development projects. Amounts include reserves related to the closure of Alea Leeds in March 2013 which are included in loss from discontinued operations of $15.8 million for the nine months ended September 30, 2013 and $4.8 million for the three months ended September 30, There were no reserves related to discontinued operations for the three months ended September 30, 2013, the nine months ended September 30, 2012 and for the year ended December 31, (d) Amounts include certain costs associated with acquisition and development activities and reorganization activities which are infrequently occurring costs. (e) Amounts represent the difference between the fair value of consideration paid and the book value, net of deferred financing costs, of debt retired through debt extinguishment transactions, which are capital structure-related, rather than operational-type costs. (f) Amounts represent minority owners share of income/(loss) from the Company's majority-owned consolidated subsidiaries, net of cash distributions to minority owners, which is a non-cash item as it excludes any cash distributions. (g) Amounts represent non-cash charges to impair intangible and tangible assets primarily resulting from changes in the business outlook in light of economic conditions. Amounts include impairment charges related to discontinued operations of $11.5 million, $101.0 million and $101.0 million for the nine months ended September 30, 2013 and 2012 and for the year ended December 31, 2012, respectively. For the three months ended September 30, 2013 amounts include $15.2 million increase in the fair value less cost to sell related to the Company's land concessions in Macau. There were no impairment charges related to discontinued operations for the three months ended September 30, (h) Amounts represent non-cash stock-based compensation expense related to stock options and restricted stock granted to the Company's employees. (i) Amounts represent the gain recognized on the sale of 45% of Baluma S.A to Enjoy S.A. (j) Amounts represent add-backs and deductions from EBITDA, whether permitted and/or required under the indentures governing CEOC s existing notes and the credit agreement governing CEOC s senior secured credit facilities, included in arriving at LTM Adjusted EBITDA-Pro Forma but not separately identified. Such add-backs and deductions include litigation awards and settlements, severance and relocation costs, sign-on and retention bonuses, permit remediation costs, gains and losses from disposals of assets, costs incurred in connection with implementing the Company's efficiency and cost-saving programs, business optimization expenses, the Company's insurance policy deductibles incurred as a result of catastrophic events such as floods and hurricanes, one time sales tax assessments and accruals, project start-up costs, non-cash equity in earnings of nonconsolidated affiliates (net of distributions), and adjustments to include controlling interests' portion of Baluma S.A. adjusted EBITDA. (k) Amounts represent adjustments for insurance claims related to lost profits during the floods that occurred in (l) Amount represents the gain recognized on the sale of the Harrah's St. Louis casino. (m) Amounts represent the estimated annualized impact of operating results related to newly completed construction projects, combined with the estimated annualized EBITDA impact associated with properties acquired during the period. (n) Amount represents adjustments to reflect the impact of annualized run-rate cost savings and anticipated future cost savings to be realized from the Company's announced Project Renewal and other profitability improvement and cost-savings programs. (o) Per CEOC's senior secured credit facilities, EBITDA related to the Company's discontinued operations are deducted from LTM Adjusted EBITDA - Pro Forma. 30

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