Liquidity Considerations

We are a highly-leveraged company, primarily resulting from the leverage of CEOC. We had $25.6 billion in consolidated face value of debt outstanding as of December 31, 2014, including $18.4 billion outstanding by CEOC. As a result, a significant portion of our liquidity needs are for debt service, including significant interest payments. As of December 31, 2014, our consolidated estimated debt service obligation for 2015 is $18.8 billion, consisting of $18.0 billion in principal maturities and $764 million in required interest payments. Of those totals, CEOC’s estimated debt service obligation for 2015 is $18.2 billion, consisting of $18.0 billion in principal maturities and $184 million in required interest payments.

CEC is primarily a holding company with no independent operations, employees, or material debt issuances of its own. CEC has ownership interests in CEOC, CERP and CGP LLC; however, CEC’s relationship with its main operating subsidiaries does not allow for the subsidiaries to provide dividends to CEC nor does CEC have a requirement to fund its subsidiaries’ operations.

Cash and Available Revolver Capacity

	December 31, 2014
(In millions)	CEOC⁽¹⁾		CERP			CES		CGP LLC		Parent
Cash and cash equivalents	$	1,194	$	189		$	70	$	944	$	409
Revolver capacity			270			—		150		—
Revolver capacity drawn or committed to letters of credit			(180		)	—		—		—
Total			$	279		$	70	$	1,094	$	409

____________________


⁽¹⁾	See information about CEOC’s Financial Restructuring Plan below and Note 23, “Subsequent Events - CEOC Bankruptcy and Deconsolidation.” CEOC is unable to draw on its remaining revolver capacity.

See Note 10, “Debt,” for details of our debt outstanding and related restrictive covenants, including the restrictions on our subsidiaries to pay dividends to CEC or otherwise transfer cash to CEC. This includes, among other information, a table presenting details of our individual borrowings outstanding as of December 31, 2014 and 2013, each subsidiary’s annual maturities of long-term debt (face value) as of December 31, 2014, as well as discussion of recent changes in our debt outstanding and changes in the terms of existing debt subsequent to December 31, 2014.

CEOC Financial Restructuring Plan

As a result of CEOC’s highly-leveraged capital structure and the general decline in its gaming results since 2007, on January 15, 2015, CEOC and certain of its U.S. subsidiaries voluntarily filed for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. Because CEOC is under the control of the Bankruptcy Court, CEC deconsolidated this subsidiary effective January 15, 2015. However, we expect this financial restructuring plan ultimately will reduce CEOC’s long-term debt and related interest payments. See Note 23, “Subsequent Events - CEOC Bankruptcy and Deconsolidation,” for details of CEOC’s proceedings under Chapter 11 of the Bankruptcy Code and CEOC liquidity considerations.

CEC, CERP and CGP LLC, which are separate entities with independent capital structures, have not filed for bankruptcy relief. All CEC properties, including those owned or managed by CEOC or CES, are continuing to operate in the ordinary course.

CERP Liquidity Discussion and Analysis

As of December 31, 2014, CERP’s cash and cash equivalents totaled $189 million. CERP’s operating cash inflows are typically used for operating expenses, debt service costs and working capital needs. CERP is highly-leveraged and a significant portion of its liquidity needs are for debt service. As of December 31, 2014, CERP had $4.8 billion face value of indebtedness outstanding including capital lease indebtedness. Cash paid for interest was $379 million for the year ended December 31, 2014. CERP’s estimated debt service obligation for 2015 is $433 million, consisting of $39 million in principal maturities and $394 million in required interest payments. Payments of short-term debt obligations and other commitments are expected to be made from operating cash flows.

CERP’s estimated interest payments for the years ended December 31, 2016 through 2019 are $394 million, $407 million, $415 million, and $405 million, respectively, and $539 million in total thereafter through maturity.

CERP’s ability to fund its operations, pay its debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond its control, and disruptions in capital markets and restrictive covenants related to its existing debt could impact CERP’s ability to secure additional funds through financing activities. We believe that CERP’s cash and cash equivalents balance, its cash flows from operations, and/or financing available under its revolving credit facility will be sufficient to meet normal operating requirements, to fund planned capital expenditures, and to fund debt service during the next 12 months and the foreseeable future.

CGP LLC Liquidity Discussion and Analysis

CGP LLC’s primary sources of liquidity include currently available cash and cash equivalents, cash flows generated from its operations and borrowings under the CGPH Term Loan (see Note 10, “Debt”). CGP LLC’s cash and cash equivalents, excluding restricted cash, totaled $944 million as of December 31, 2014, and includes $92 million held by a foreign subsidiary.

Payments of short-term debt obligations and other commitments are expected to be made from operating cash flows. Long-term obligations are expected to be paid through operating cash flows, refinancing of existing debt or the issuance of new debt, or, if necessary, additional investments from its equity holders. CGP LLC’s operating cash inflows are used for operating expenses, debt service costs, working capital needs, and capital expenditures in the normal course of business. CGP LLC’s ability to refinance debt will depend upon numerous factors such as market conditions, CGP LLC’s financial performance, and the limitations applicable to such transactions under CGP LLC’s and its subsidiaries’ financing documents. Additionally, CGP LLC’s ability to fund operations, pay debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond CGP LLC’s control, and disruptions in capital markets and restrictive covenants related to CGP LLC’s existing debt could impact CGP LLC’s ability to fund liquidity needs, pay indebtedness and secure additional funds through financing activities.

CGP LLC’s cash paid for interest was $107 million for the year ended December 31, 2014. CGP LLC’s estimated debt service obligation for 2015 is $206 million, consisting of $20 million in principal maturities and $186 million in required interest payments. CGP LLC’s estimated interest payments for the years ended December 31, 2016 through 2019 under the current debt structure are $187 million, $196 million, $200 million, and $200 million, respectively, and $316 million in total thereafter through maturity.

CGP LLC’s ability to fund its operations, pay its debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond its control, and disruptions in capital markets and restrictive covenants related to its existing debt could impact CGP LLC’s ability to secure additional funds through financing activities. We believe that CGP LLC’s cash and cash equivalents balance, its cash flows from operations, and/or financing available under its revolving credit facility will be sufficient to meet normal operating requirements, to fund planned capital expenditures, and to fund debt service during the next 12 months and the foreseeable future.

Consolidated Liquidity Discussion and Analysis

Consolidated cash and cash equivalents, excluding restricted cash, totaled $2.8 billion as of December 31, 2014. Cash and cash equivalents as of December 31, 2014, includes (1) $944 million held by CGP LLC, which is not available for our use to fund operations or satisfy our obligations unrelated to CGP LLC; and (2) $1.2 billion held by CEOC, which is subject to CEOC’s Financial Restructuring Plan described above.

In addition to cash flows from operations, available sources of cash include amounts available under our current revolving credit facilities. CERP’s revolving credit facility provides for up to $270 million, of which $90 million remained as available borrowing capacity for CERP as of December 31, 2014. CGP LLC’s revolving credit facility provides for up to $150 million, and an immaterial amount was committed for outstanding letters of credit as of December 31, 2014.

We experienced negative consolidated operating cash flows of $735 million for the year ended December 31, 2014, and expect to experience negative consolidated operating cash flows for the foreseeable future.

As previously noted, CEOC did not expect that its cash flows from operations would be sufficient to repay its indebtedness, and as a result, has begun a reorganization under Chapter 11 of the Bankruptcy Code. Although CEOC does not believe that its cash flows from operations combined with existing liquidity sources will be sufficient to repay its indebtedness when it comes due, because of the absence of cross-default provisions in the indebtedness issued by other CEC subsidiaries due within the next 15 months and the modification of the parent guarantee (as discussed in Note 10, “Debt”), we do not believe that the impact of the event of default by CEOC, resulting from its bankruptcy filing, would materially impact the liquidity of CEC and its consolidated operating subsidiaries other than CEOC.

As described in Note 2, “Basis of Presentation and Principles of Consolidation - Caesars Enterprise Services,” CEOC, CERP, and CGPH entered into a services joint venture, CES. Effective October 1, 2014, substantially all our properties are managed by CES (and the remaining properties will be transitioned upon regulatory approval). Under the terms of the joint venture and the Omnibus License and Enterprise Services Agreement, we believe that CEC and its other operating subsidiaries will continue to have access to the services historically provided to us by CEOC and its employees, its trademarks, and its programs despite the CEOC bankruptcy filing.

As described in “Going Concern” in Note 1, “Description of Business,” and described more fully in Note 15, “Litigation, Contractual Commitments, and Contingent Liabilities,” under the heading “Noteholder Disputes,” and in Note 22, “Subsequent Events - Other,” under the heading “Demands for Payment,” the Noteholder Disputes are in their very preliminary stages and discovery has begun on the Unsecured Note Lawsuits (as defined in Note 15). We cannot provide assurance as to the outcome of the Noteholder Disputes or of the range of potential losses should the Noteholder Disputes ultimately be resolved against us, due to the inherent uncertainty of litigation and the stage of the related litigation. Should these matters ultimately be resolved through litigation outside of the CEOC Financial Restructuring, and were a court to find in favor of the claimants in any of these Noteholder Disputes, such determination could have a material adverse effect on our business, financial condition, results of operations, and cash flows. Accordingly, we have concluded that the material uncertainty related to certain of the Litigation proceeding against CEC raises substantial doubt about the Company's ability to continue as a going concern.