Continued positive underlying trends in third quarter Las Vegas hotel and F&B revenue as a result of resort fees and hospitality investments
Effective cost containment generated $65 million in cost savings in the third quarter 2013, compared to the third quarter 2012
Strengthened debt maturity profile through refinancing of CMBS and LINQ/Octavius debt
Raised approximately $200 million in cash via public equity offering; largest equity issuance since its IPO
Launched real-money online poker in Nevada on September 19th, leveraging World Series of Poker brand
Initial closing of Caesars Growth Partners ("CGP") transaction occurred on October 21, 2013 and in connection Caesars sold certain assets to CGP in exchange for $360 million; expect closing of rights offering on November 18, 2013; November 2, 2013 is rights expiration date
Expects to close sale of Macau golf course in the fourth quarter 2013, for approximately $420 million in net cash proceeds
Summary Financial Data
"We made considerable progress on the execution of our strategy and achieved key milestones on many projects during the quarter, despite continued softness in the domestic gaming business," said Gary Loveman, chairman, chief executive officer and president of Caesars Entertainment Corporation. "Building on our momentum, we further enhanced our hospitality assets in Las Vegas and are particularly pleased with the improvements we've seen in hotel and F&B performance.
"We advanced our expansion efforts with the continued development of Horseshoe Baltimore and the launch of real money online poker in Nevada. We also executed several transactions over the past several months that strengthened our balance sheet, including the refinancing of our CMBS debt, the initial closing of the Caesars Growth Partners transaction, the sale of approximately $200 million of common equity and the announcement of the sale of our Macau golf course for approximately $420 million, net of commissions. As a result of these transactions, we have greater liquidity and no significant maturities until 2018, providing a runway for new growth opportunities to generate returns for the recovery of the core business.
"While we were disappointed with the circumstances in Massachusetts that led to us ultimately withdrawing from our partnership, we have turned our focus back to our ongoing development and repositioning efforts, which are greater catalysts for enhancing the Company's performance. With a stronger capital structure and positive momentum in our core business - both on the development and operations side - I remain quite enthusiastic about our prospects heading into 2014," Loveman concluded.
Consolidated Financial Results
Net revenues remained relatively unchanged in the third quarter 2013 compared to the same quarter in the prior year mainly due to a decline in casino revenue of $112.2 million, or 7.1%, which was largely offset by the combination of lower promotional allowances and increases in non-gaming revenues, including pass-through management cost reimbursements.
Casino revenue declines were primarily driven by the continued impact of regional competition in Atlantic City and in certain other U.S. regional markets outside of Nevada, continued softness in the domestic gaming market and the loss of revenues resulting from the partial sale of our Conrad Punta del Este, Uruguay casino in the second quarter of 2013. Gaming results indicate continued weakening in slot volumes in virtually all domestic markets, while table volumes were relatively strong. On a consolidated basis, we experienced favorable hold in the third quarter 2013 compared to the prior year, driven by strong hold in Las Vegas, with unfavorable hold in other domestic markets.
On a consolidated basis, room revenue increased $6.4 million, or 2.1%, as a result of an increase in cash average daily room rates from $89 in the third quarter 2012 to $101 in the current quarter, primarily attributable to resort fees in Las Vegas and other Nevada properties. Total occupancy decreased 3 percentage points to 92% in the third quarter 2013 from 2012 due mainly to the disruption caused by construction activities related to the LINQ and renovation of The Quad Resort & Casino (the "Quad"), in Las Vegas.
Revenues for the Company's Managed properties increased $47.8 million for the third quarter 2013 when compared to the third quarter 2012 due to new managed properties, including Horseshoe Cincinnati (opened in March 2013) and Thistledown Racino in Ohio (commenced video lottery terminal operations in April 2013). A large portion of these revenues represent reimbursable management costs, which are presented on a gross basis as revenue and expense, thus resulting in no net impact on results. Reimbursable management costs were $72.7 million in the third quarter 2013 compared to $22.3 million in the prior year quarter.
Income from Operations
Loss from operations for the third quarter 2013 was $637.5 million compared to $216.8 million in the prior year quarter primarily due to higher non-cash intangible and tangible asset impairment charges which totaled $930.9 million in the third quarter 2013, as compared with $419.0 million in the third quarter 2012. Aside from the change in impairment charges, income from operations increased $91.2 million due primarily to a $48.6 million decrease in depreciation and amortization expense, a $32.3 million decrease in write-downs, reserves and project opening costs, net of recoveries and a $14.7 million decrease in corporate expense.
Net Loss and EBITDA measures
Net loss attributable to Caesars was $761.4 million in the third quarter 2013 compared to $505.5 million in the third quarter of 2012 due mainly to the decline in income from operations discussed above, and a $47.2 million increase in interest expense, net of interest capitalized interest, partially offset by an increase in income from discontinued operations, net of income taxes, of $12.6 million. These factors are further described in "Additional Financial Information" that follows later in this release.
Property EBITDA for the third quarter 2013 was relatively unchanged as the effects of cost reductions largely offset the income impact of lower revenues. Adjusted EBITDA increased $23.5 million, or 4.9%. Further details on these non-GAAP financial measures are found later in this release.
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 four 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 .