Acquisitions, Dispositions, and Other Property Matters

Acquisitions

Pacific Interactive

In February 2014, CIE acquired Pacific Interactive UK Limited (“Pacific Interactive”) and the assets of various affiliates, a social and mobile games developer and owner of House of Fun Slots. CIE recorded contingent consideration payable of approximately $29 million associated with this acquisition as of the acquisition date, which has been subsequently adjusted to its estimated fair market value, as described in Note 14, “Fair Value Measurements.”

Buffalo Studios, LLC

In December 2012, CIE purchased substantially all of the net assets of Buffalo Studios, LLC (“Buffalo Studios”), a social and mobile games developer and owner of Bingo Blitz, for consideration of $45 million plus a contingent earnout payment with an acquisition date fair value estimated at $6 million at the time of acquisition. As of December 31, 2013, the contingent earnout liability was $59 million, and was settled in April 2014.

Baltimore, Maryland

In October 2012, Caesars entered into definitive agreements with other investors to form a joint venture that would build and own Horseshoe Baltimore in Maryland. Pursuant to the agreements, we committed to contribute a maximum of $78 million in cash capital to the venture for the purpose of developing and constructing the casino, of which we had contributed $56 million as of December 31, 2013. This property opened in the third quarter 2014. CGP LLC had approximately 41% indirect ownership interest in the venture as of December 31, 2014. See Note 11, “Stockholders' Equity and Loss Per Share.”

Dispositions

Showboat Atlantic City

CEOC’s Showboat Atlantic City casino permanently closed effective August 2014. As a result, we accrued severance and other exit costs totaling $26 million, of which we have paid $5 million. The remaining accrual is $20 million as of December 31, 2014.

In December 2014, we sold Showboat Atlantic City for $18 million. Prior to the sale, we recognized a tangible asset impairment of $10 million because the net book value of the assets exceeded the anticipated sale price. This transaction had not met the requirements of a completed sale of real estate for accounting purposes as of December 31, 2014. As a result, we have recorded $18 million as assets held for sale and a corresponding deposit liability for the proceeds received in the Consolidated Balance Sheet at December 31, 2014. We anticipate that the requirements for the accounting sale treatment will be met in the first quarter of 2015.

CIE RMG BEL, LLC

Effective August 2014, CIE suspended operations of CIE RMG BEL, LLC, an indirectly wholly owned subsidiary in Minsk, Belarus. As a result, CIE recorded a $16 million impairment charge.

Harrah’s Tunica

CEOC’s Harrah’s Tunica casino permanently closed effective June 2014. In 2014, CEOC recorded intangible and tangible asset impairment charges totaling $68 million and accrued exit costs of $16 million associated with the closure of this casino. Of the $16 million accrued, $6 million was paid. The remaining accrual is $10 million as of December 31, 2014. In 2013, CEOC recorded a tangible asset impairment charge of $115 million related to Harrah’s Tunica as a result of completing an assessment for impairment for certain of our properties.

Golden Nugget

CEOC’s Golden Nugget casino in London permanently closed effective February 2014. As a result, we recorded charges of $2 million related to the impairment of intangible and tangible assets and $13 million related to accrued exit costs. During 2014, we paid exit costs of $4 million and accrued an additional $1 million, leaving a liability of $10 million as of December 31, 2014.

Macau Land Concession

In November 2013, CEOC completed the sale of its interest in the Macau Land Concession for net proceeds of $425 million. We recognized an impairment of $6 million in 2013 prior to the sale. There were no exit costs or other liabilities associated with the sale.

Conrad Punta del Este Resort and Casino

In May 2013, CEOC formed a strategic relationship with Enjoy S.A. (“Enjoy”) in Latin America. Enjoy acquired 45% of Baluma S.A., CEOC’s subsidiary that owns and operates the Conrad Punta del Este Resort and Casino in Uruguay (the “Conrad”), in exchange for total consideration of $140 million. After customary deductions for expenses associated with the closing, we received $50 million in cash (net of $30 million of cash deconsolidated), a note receivable of $32 million, and a 4.5% equity stake in Enjoy. The $32 million note receivable was paid by Enjoy on October 15, 2014.

In connection with the transaction, Enjoy assumed control of the Baluma S.A. board and responsibility for management of the Conrad. Upon completion of the transaction, CEOC deconsolidated Baluma S.A. from our financial statements and began accounting for Baluma S.A. as an investment in non-consolidated affiliates under the equity method of accounting.

Alea Leeds

In March 2013, CEOC permanently closed its Alea Leeds casino in England. As a result of the closure, CEOC recorded charges of $6 million related to tangible and intangible asset impairments and $16 million in exit costs primarily related to non-cancellable contract costs. The remaining accrual is $16 million as of December 31, 2014, after payments totaling $2 million offset by additional accruals of $2 million during 2014.

Other Dispositions

Claridge Hotel Tower

In October 2013, CEOC entered into an agreement to sell the Claridge Hotel Tower, which was part of the Bally’s Atlantic City asset group, for $13 million, less customary closing adjustments. CEOC received these proceeds in February 2014 upon the transaction closing. The Claridge Hotel Tower assets of $12 million were classified as assets held for sale as of December 31, 2013. There are no assets held for sale related to the Claridge Hotel Tower as of December 31, 2014.

Suffolk Investment

CEOC previously invested $102 million in Sterling Suffolk, the owner of Suffolk Downs racecourse in East Boston, Massachusetts. This investment was comprised of a $42 million convertible preferred equity investment and a $60 million common equity ownership in Sterling Suffolk, recorded as an intangible asset representing the right to manage a potential future gaming facility. On October 18, 2013, Caesars agreed to withdraw its application as a qualifier in Massachusetts. In December 2013, CEOC entered into a termination and release agreement with Sterling Suffolk (“Suffolk Agreement”), pursuant to which we terminated several agreements between us and Sterling Suffolk. Based on this termination and on our assessment of the recoverability of the investment, during the quarter ended December 31, 2013, we recorded an impairment charge totaling $102 million, the full amount of our cash investment, of which $42 million was recorded in write-downs, reserves, and project opening costs, net of recoveries and $60 million was recorded in impairments of intangible and tangible assets.

Other Property Matters

AC Conference Center

CERP is building a new meeting and conference center that will be connected to its Harrah’s Atlantic City casino. In July 2014, CEC contributed to CERP the subsidiaries holding the interests in the conference center. The total net book value contributed was $82 million, which primarily consisted of real estate and the initial development costs. There was no impact on CEC’s consolidated financial statements as a result of this transaction.

Iowa Dog Racing Legislation

As a result of new legislation passed in May 2014 in the State of Iowa, CEOC is required to cease all greyhound racing activities at its Horseshoe Council Bluffs casino in Council Bluffs, Iowa, effective December 31, 2015. The new legislation (“Iowa Dog Racing Legislation”) requires that CEOC pay a total of $65 million to the Iowa Racing and Gaming Commission over a seven-year period, beginning in January 2016. These exit costs were recorded at the present value of the future liability and will be accreted over the term of the payments. The liability related to the exit costs was $43 million as of December 31, 2014.

Harrah's Gulf Coast

In 2012, we abandoned a construction project near the Mississippi Gulf Coast and recorded an initial exit cost accrual of $20 million related to future obligations under land lease agreements. The accrual was $21 million as of December 31, 2013. In 2014, we paid $4 million against the accrual and recorded additional adjustments and accretions of $9 million. The accrual was $26 million as of December 31, 2014.

Discontinued Operations

The operating results of certain properties have been classified as discontinued operations for all periods presented and are excluded from the results of operations presented within this Form 10-K. The following table summarizes net revenues, pre-tax loss, and total loss for all of our discontinued operations.



	Years Ended December 31,
(In millions)	2014			2013			2012
Net revenues
Showboat Atlantic City	$	115		$	199		$	228
Harrah’s Tunica	46			130			155
Other	2			14			230
Total net revenues	$	163		$	343		$	613

Pre-tax income/(loss) from operations
Showboat Atlantic City	$	(59	)	$	(66	)	$	(450	)
Harrah’s Tunica	(120		)	(140		)	(3		)
Other	(34		)	(33		)	(67		)
Total pre-tax loss from discontinued operations	$	(213	)	$	(239	)	$	(520	)

Income/(loss), net of income taxes
Showboat Atlantic City	$	(38	)	$	(83	)	$	(281	)
Harrah’s Tunica	(120		)	(91		)	(2		)
Other	(34		)	(33		)	(117		)
Total loss from discontinued operations, net of income taxes	$	(192	)	$	(207	)	$	(400	)