Hello and welcome to today's call. My name is Jen and I'll be your event specialist today. All lines have been placed on mute to prevent any background noise. Please note that today's call is being recorded. We'll be taking questions via the phone line and instructions on how to do so will be given at the appropriate time. If you would like to view the presentation in a full-screen view, click the 'Full Screen' button in the lower right-hand corner of your screen. Press the Escape key on your keyboard to return to original view. For optimal viewing and participation, please disable your pop-up blockers. And finally, should you need technical assistance, as a best practice, we suggest you first refresh your browser. If that does not resolve the issue, please click on the 'Support' option in the upper right-hand corner of your screen for online troubleshooting. It is now my pleasure to turn today's call over to Brian Blackman, Vice President, Investor Relations. Brian, the floor is yours.

Thank you and good afternoon, and welcome to Caesars Entertainment Third Quarter 2016 Results Conference Call. Joining me today from Caesars Entertainment Corporation are Mark Frissora, President and Chief Executive Officer, and Eric Hession, Chief Financial Officer. A copy of our press release, certain earnings presentation slides and a replay of this conference call are available in the Investor Relations section on our Web-site at caesars.com. The slides are available for download and will accompany Mark and Eric's prepared remarks for those of you on the phone that would like to follow along. Also, please note that prior to this call, we furnished a copy of this afternoon's press release to the SEC in a Form 8-K and will shortly file our most recent quarterly report on Form 10-Q for the third quarter of 2016. Before we get underway, I would like to call your attention to certain statements and information on slides 1 through 4, which we incorporate by this reference. The forward-looking statement Safe Harbor disclaimers in our public documents cover this call and the simultaneous Webcast at caesars.com. This call, the Webcast, and its replay are the property of Caesars Entertainment Corporation. It's not for rebroadcast or use by any other party without the prior written consent of Caesars Entertainment Corporation. If you do not agree with these terms, please disconnect now. By remaining on the line, you agree to be bound by these terms. Today's call will include discussion of certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, property EBITDA and certain supplemental financial information. Definitions of these non-GAAP measures, reconciliations to the nearest GAAP measures, and the reasons management believe these measures provide useful information for investors can be found on Slide 3 and in the appendix to this presentation beginning on…

Thank you, Brian. In the third quarter, we delivered year-over-year improvement in our financial performance as we continued to execute against our strategic and operational objectives. These performance improvements are a direct result of our ongoing investment in hospitality assets and our focus on continuous improvement. Turning to Slide 6, net revenues for CEC, which excludes CEOC and our recently sold social and mobile games business, increased 3% to $986 million. Net income increased $761 million to $5 million positively, mainly due to a gain on the sale of the SMG business which closed on September 23, offset by an additional accrual to support the restructuring of CEOC. As you may recall, Caesars Interactive announced in August that it had agreed to sell its SMG business for $4.4 billion in cash to a consortium of Chinese investors led by Shanghai Giant Network Technology. Adjusted EBITDA for CEC increased 9% to $269 million and adjusted EBITDA margin expanded 158 basis points to 27.3%. At an Enterprise-wide level, which includes CEC, CEOC and our recently sold SMG business, adjusted EBITDA increased 1% to $638 million. Enterprise-wide performance was impacted by a significant unfavorable hold with an estimated year-over-year EBITDA impact between $30 million and $35 million. Hospitality revenues remained a key driver of performance with Enterprise-wide cash ADR increasing 9% year-over-year to an all-time high of $136 and strong growth in Las Vegas entertainment. Additionally, we continue to generate marketing and operational efficiencies which help mitigate inflationary wage pressures in Las Vegas and Atlantic City. Hold adjusted revenue per employee grew 4.5% year-over-year in the quarter. These positive drivers were offset by unfavorable year-over-year hold, predominantly at Caesars Palace and Harrah's New Orleans as well as weaker gaming volume trends in the Southeastern United States. Since our last call, there has been…

Thank you, Mark. I'll start with a review of CEC's consolidated results, followed by a review of the Company's reportable segments and supplemental information which will include CEOC's performance as well. Slide 16 summarizes CEC's results, which do not include CEOC as it is no longer consolidated. Additionally, the sale of CIE's social and mobile games business in the third quarter has caused that business to be classified as a discontinued operation. CIE's remaining business, which includes real money online gaming and the World Series of Poker, will be accounted for going forward in CEC and CGP's results. For the third quarter of 2016, CEC's net revenues increased 3% to $986 million, mainly due to strong growth in the Las Vegas region, which was partially offset by revenue declines in Atlantic City and New Orleans and unfavorable year-over-year hold. Net income, before including the effect of non-controlling interest, was $5 million in the quarter compared to a net loss of $756 million in the third quarter of 2015. Earnings per share for CEC, which includes the effect of non-controlling interest, was a loss of $4.38 per share compared to a net loss of $5.44 per share in the year ago period. The non-controlling interest is primarily Caesars Acquisition Company's ownership in CGP. Year-over-year, net income and earnings per share improvements were driven by a $4.2 billion pre-tax gain on the sale of CIE's social and mobile games unit, partially offset by an accrual increase of approximately $3 billion related to the restructuring of CEOC. Due to these large charges, we believe it's beneficial to provide adjusted EBITDA figures as further insight into our operational performance. Adjusted EBITDA increased 9% to $269 million, with a margin increase of 158 basis points, mainly due to higher revenues and efficiency initiatives. Hold was…

Thank you, Eric. Please turn to Slide 23. In summary, Caesars delivered solid operating performance in the third quarter despite contending with significant unfavorable hold, inflationary pressures and gaming weakness in the Southeastern U.S. As we look to 2017, we are focused on executing against our cornerstone initiatives, prudently allocating our capital to high-return projects and laying the groundwork to continue our solid performance. Hospitality will remain a critical driver of revenue growth as additional renovated hotel inventory comes online. We're also optimistic of the introduction of new and exciting skills-based gaming products will appeal to new customers. Further, we are pleased about the progress that has been made in the CEOC restructuring. We are hopeful that this puts CEOC on a path to emerge from bankruptcy next year. We're looking forward to directing management's full attention towards executing our strategic priorities and creating value for our stakeholders. We will now open up the line for Q&A. We'd ask that you please keep your questions focused on business performance. Operator?

[Operator Instructions] Your first question comes from the line of Susan Berliner with J.P. Morgan.

So you guys talked a lot about skill-based, and I was wondering, I know it's early, if you could give any color with regards to how those machines are doing versus what's on the existing floor, what kind of demographics of people have been seeking those out?

Unfortunately, you're right. We just put them on the floor I believe last week. So we don't have data to share at this point. So I think we'll have to wait until the next conference call. We're obviously very excited to trial the games in Atlantic City and get the responses from the customers, but at this point unfortunately it's just too early to give any feedback.

Great. And is it too early also to discuss any change that you have seen with the new Borgata management, any increased promotions in AC markets?

Yes, a similar answer. We haven't heard of any significant changes at this point. But as you know, it has been fairly recent when they changed ownership structure.

Great. And then just turning to the consumer, I was wondering if you could talk about trends you saw during the quarter and if you can give us any color on October with regards to spend, visitation or different buckets of customers?

From a database perspective, really the trends have been quite consistent for the last multiple quarters. We continue to see some slight increases in trips from our higher-end customers and our spend-per-trip across most categories continues to increase. Where we're seeing declines, it does tend to be in the lower-end segment, and that's on a trip basis, not necessarily on a spend-per-trip basis. So that's from the gaming side, which is largely consistent to what we've seen before. From the non-gaming side, which is particularly dominant here in Las Vegas, we continue to see relatively strong demand from the FIT, and overall, although it's somewhat lumpy, from the group customer the demand also continues to be reasonably strong.

Great. My last question is, Eric, if you could give us CapEx by each entity for the quarter?

Sure. I'll just run through it and it's detailed in the Q that will be coming out shortly as well. For CERP, we spent $28 million, which makes our year-to-date $87 million. For CGP, it was $17 million and year-to-date would be $57 million. CES was $8 million in the quarter, which is $14 million year-to-date. And then at CEOC, it was $37 million, and that makes the total year-to-date $171 million. So the total for the quarter was $90 million and the total year-to-date was $329 million. As you saw in the materials, we did update our ranges slightly. The aggregate change for all the subsidiaries on a consolidated basis was to reduce the low end by $20 million and then the high end by $10 million. Again, I would think of that as basically timing. Some of our construction spending got pushed into 2017 that we had anticipated we would achieve in the late 2016 timeframe.

Great. Thanks very much.

Your next question comes from the line of David Farber with Credit Suisse.

I had a couple of questions. I wanted to first lead with Las Vegas. Obviously we see continued strength in the hotel and F&B side. I was curious how you feel you are positioned for 2017, any expectations you may have for Vegas in 2017? And then separately, maybe talk a little bit about how many rooms you think will be offline given all the developments you're doing on the Strip? And then I had a couple of follow-ups. Thanks.

Sure. I'll try to answer it first. From a positioning standpoint, one of the objectives that we've had and what's part of our cornerstone initiatives is to really improve the asset quality of our hotel rooms and the underlying product that we are able to offer to the customers. As you have been following since late 2014, we have undertaken an initiative to try to renovate the majority of our Las Vegas rooms and we're making significant progress along those lines. What ultimately happens is that then the customers perceive our product as better, we are able to then get more efficient bookings that cost us less, we also get up-sells as we've mentioned from a revenue standpoint, and customers that stay in upgraded rooms also tend to spend more on the other activities. So it's a very virtuous position to be in. As we mentioned, we'll have about 10,000 of the rooms or 44% completed by the midpoint of next year. And so, that will significantly improve our position with respect to the market. And that's really from a Las Vegas standpoint where we think the biggest upside is from that non-gaming side. Regarding the room construction disruption, we mentioned this quarter we had about 32,000 rooms out of order. We'd anticipate throughout next year, although again it could be somewhat lumpy, but we would anticipate to have outages of that similar magnitude. Certainly in the fourth quarter we have a number of towers under renovation, including significant construction at Paris and Planet Hollywood. And then heading into next year, we also take out the Palace Tower here at Caesars Palace, which is slightly over 1,100 rooms. So that's a significant renovation. Those will all finish up next year, but there is going to be similar construction disruption as we head into next year.

That's helpful. And then on the mix side, any sort of expectations around Vegas in terms of either bookings, group bookings, RevPAR, any sort of thoughts around what you think 2017 may look like given what's on the calendar today?

Again, it's similar to how I answered Su's comment on the database makeup. The trends have been largely consistent. The FIT business has been relatively strong throughout the year. We don't see any reason why that would change. The group business, although it can be lumpy at times, has also been reasonably strong and we would expect 2017 to be a continuation of what we've achieved this year. So, from a mix standpoint, I wouldn't anticipate anything dramatically changing, just an improvement in our offerings which will enable us to be able to attract customers and charge higher rates on the ADR front.

Okay. And then just switching over to CEOC for the moment, the results were a touch weaker this quarter, although I guess the hold adjustment gets you guys effectively flattish it seems. So, I guess away from Vegas, I was curious to hear how you're thinking about the regional markets, what customer behavior may be like? Any thoughts there would be helpful, and then I had one last question. Thanks.

You're right, we had very unusual poor hold concentrated within CEOC, and you're right that adjusting for that makes it much more of a respectable performance for the quarter. The impact from the regional markets is really being hit down in the Louisiana-Mississippi region. There is definite weakness in the consumer. We believe it's centered around the oil and gas industry and it's kind of across the board in terms of our properties. We're taking actions to try to minimize that as I mentioned with some things we're doing in New Orleans, and Mark mentioned the potential entertainment activities that we're able to do down there. So, we are trying to offset it but there is weakness in that Louisiana-Mississippi region. Broadly speaking, the rest of the regional markets are similar to what we have seen throughout 2016, with some markets up a few percent, some markets down a few percent, but really I wouldn't call out any other abnormal trends.

Okay. And then just finally, there are a number of sort of new market growth opportunities, potentially in the near to mediate term. I guess I was just curious how you think Caesars is positioned either internationally or domestically, maybe a new topic with the exit, but I'd be curious to hear how you think about those growth opportunities and what, if any, particular market you might be focusing on? And that's it for me. Thanks.

I think that as you look at the opportunity going forward, what we've modelled anyway, is based on the agreements actually getting approved by the Bankruptcy Court, which would be in January. We'll have a very strong balance sheet, one of the strongest balance sheets of all public companies. Leverage will be a little bit lower than what most of the public companies are at right now, probably a turn lower on debt-to-EBITDA. And so, we'll take advantage of that. We'll have an opportunity to look at certain markets that I would call destination markets where we know that if we invest some capital, we get a reasonable return on it. So, if it's for example a hotel product, there's an opportunity to get cash business on it. And then if we're like number three or number four in the market, we think there may be an opportunity to get synergies by buying smaller players not doing well, someone who we could for example bring Total Rewards in and get a lift. And we're seeing obviously anywhere we go with Total Rewards, we bring in a usual lift in the property. So, we think there will be development opportunities once we get out of bankruptcy. We haven't been able to pursue those obviously for the last couple of years, but given our regional presence, we think there is opportunity in some of those regional markets from a – what you would call destination markets. So, that could be New Orleans, Lake Tahoe, Atlantic City to a lesser extent, but there are markets that we think we could develop even better. We also know that globally there is a lot of development projects that we certainly have our row in the water but nothing has come to fruition. But you certainly heard MGM talk about those today. We are certainly – we are in the mix on all those and we'll make sure that we pursue those and there will be lots of growth opportunities globally going forward the next couple of years. The last thing I'll just mention is that we also – when we look at the room product in Vegas, we think that can provide really good earnings momentum as we come out of bankruptcy because we were a little undercapitalized and we hadn't kept current with our room product, and everyone else on the Strip had. That allows really nice flow-through. When we do a room refurb, we get typically a 30% to 35% ROIC on that, and that's very high and it's very low-risk project and it provides really good flow-through on the $25 to $40 a room night that we get. The cost is there already, it's a fixed cost to service the room, and we just get very high flow-through from it. So, we think that will provide really good earnings momentum going forward with the company.

Very good. Thanks.

Your next question comes from John DeCree with Union Gaming.

Mark, just wanted to stay on the topic that you just brought up there, I was wondering if on the room renovations, the cash ADR premium you see, if it's relatively instant in terms of price directing on your side or if there's a little bit of a ramp once some of your customers get a chance to see the new rooms, and just curious if there's a little bit of a ramp-up period once those rooms come online?

Not really. I'll let Eric respond on this too, but I mean in general it's fairly quick. I would say, within 90 days or less we were seeing an instant lift. We typically do some pre-promotion on it. So it's not like we introduce the room product in the market and then just expect everyone to know about it. I mean we do launch some PR, some online, some social media to make sure people understand the rooms are new and they can be booking them. And we open up big quadrums of them, if you will. It's not just, like if we get one onboard, we'll go ahead and announce one, we'll announce a whole tower. For example, Caesars Palace, and we did that for example on Augustus, and we were talking about it and we did – we just announced recently the opening of Julius, and we got very quick lift on it. So, again, we've done 10,000 rooms of the 24,000 rooms we have on the Strip. We expect to complete the rest of them over the next couple of years. And we've had obviously interruption in our numbers this year and we'll have that next year, but we're still overcoming that being able to get a nice profit improvement from it.

Got it. Thank you. And one question, sorry if I missed it, Eric, in your prepared remarks, I think you mentioned some inflationary cost pressures, wasn't sure if that was just general inflation or elevated costs from some of the reinvestment projects that you guys are doing, if you could just give me a little bit of color on that?

Sure. I did mention it in the specific remarks, but it's general inflation. However, it's somewhat exacerbated by some particular increases that we've had in the salaries, wages and benefits area associated with large portions of our workforce. And then the rest of the increases would be general inflation associated with just normal commodities.

Got it. Thanks a lot.

At this time, there are no further questions.

Thank you, operator. And that concludes our third quarter call and we look forward to reporting fourth quarter and full-year results after the beginning of next year. Thanks very much.