UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September~~March 3031, ~~2016~~2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File No. 333-199393

_________________________

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

(Exact name of registrant as specified in its charter)

_________________________



Delaware		46-3675913
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Caesars Palace Drive, Las Vegas, Nevada		89109
(Address of principal executive offices)		(Zip Code)

(702) 407-6000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

_________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” ~~and~~ “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Not Applicable.

The Registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with a reduced disclosure format as permitted by General Instruction H(2).

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		Page
Item 1.	Unaudited Financial Statements
	Consolidated Condensed Balance Sheets	3
	Consolidated Condensed Statements of Operations	4
	Consolidated Condensed Statements of Member’s Equity	5
	Consolidated Condensed Statements of Cash Flows	6
	Notes to Consolidated Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2122
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2627
Item 4.	Controls and Procedures	2627
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	2829
Item 1A.	Risk Factors	2829
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2829
Item 3.	Defaults Upon Senior Securities	2829
Item 4.	Mine Safety Disclosures	2829
Item 5.	Other Information	2829
Item 6.	Exhibits	2930
SIGNATURE		3031

PART I—FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

(In millions)	~~September~~March 3031, ~~2016~~2017		December 31, ~~2015~~2016
Assets
Current assets
Cash and cash equivalents	$	~~247~~224	$	~~150~~168
Receivables, net	6771		6879
Prepayments and other current assets	3134		3135
Inventories	1012		13
Total current assets	~~355~~341		~~262~~295
Property and equipment, net	4,~~917~~891		4,~~973~~905
Goodwill	1,402		1,402
Intangible assets other than goodwill	~~255~~230		~~292~~242
Deferred charges and other	102		99
Deferred charges and other assets	95		97
Total assets	$	76,~~031~~959	$	76,~~028~~941
Liabilities and Member’s Equity
Current liabilities
Accounts payable	$	4033	$	3337
Due to affiliates, net	2625		21
Accrued expense and other liabilities	161		124
Accrued expense and other current liabilities	134		136
Interest payable	143		94
Accrued restructuring and support expenses	131		131
Current portion of long-term debt	30		118
Interest payable	104		53
Total current liabilities	400		390
Current portion of long-term debt	26		68
Long-term debt	4,498		4,509
Total current liabilities	453		446
Deferred income taxes	1,099		1,167
Long-term debt	4,491		4,495
Deferred credits and other	6		7
Deferred income taxes	1,009		1,040
Total liabilities	6,003		6,073
Deferred credits and other liabilities	7		5
Commitments and contingencies (Note 6)
Total liabilities	5,960		5,986
Total member’s equity	1,028		955
Commitments and contingencies (Note 7)
Total liabilities and member’s equity	$	7,031	$	7,028
Total member’s equity	999		955
Total liabilities and member’s equity	$	6,959	$	6,941

See accompanying Notes to Consolidated Condensed Financial Statements.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Nine Months Ended
	Three Months Ended March 31,
	September 30,						September 30,
(In millions)	2017			2016
(In millions)	2016			2015			2016			2015
Revenues
Revenues
Casino	$	280		$	272
Casino	$	289		$	281		$	848		$	863
Food and beverage	127			131
Food and beverage	134			137			404			405
Rooms	150			136
Rooms	147			138			427			406
Other	77			76
Other	83			73			235			224
Less: casino promotional allowances	(88		)	(87		)
Less: casino promotional allowances	(84		)	(87		)	(255		)	(261		)
Net revenues	546			528
Net revenues	569			542			1,659			1,637
Operating expenses
Operating expenses
Direct
Direct
Casino	146			140
Casino	144			142			426			427
Food and beverage	62			62
Food and beverage	68			68			199			197
Rooms	40			37
Rooms	42			37			118			106
Property, general, administrative, and other	121			125
Property, general, administrative, and other	137			134			390			389
Depreciation and amortization and other	57			75
Depreciation, amortization, and other	63			53			200			154
Corporate expense and other	10			11
Corporate expense	11			10			33			32
Total operating expenses	436			450
Total operating expenses	465			444			1,366			1,305
Income from operations	110			78
Income from operations	104			98			293			332
Interest expense	(98		)	(100		)
Interest expense	(98		)	(98		)	(297		)	(299		)
Income/(loss) before income taxes	12			(22		)
Income/(loss) before income taxes	6			—			(4		)	33
Income tax benefit/(provision)	(6		)	6
Income tax benefit/(provision)	—			—			2			(13		)
Net income/(loss)	$	6		$	(16	)
Net income/(loss)	$	6		$	—		$	(2	)	$	20

See accompanying Notes to Consolidated Condensed Financial Statements.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

CONSOLIDATED CONDENSED STATEMENTS OF MEMBER’S EQUITY

(UNAUDITED)

	CERP Member’s Equity
(In millions)	Contributed Capital		Accumulated Deficit			Total Member’s Equity
(In millions)	Contributed Capital		Accumulated Deficit			Total CERP Member’s Equity			Noncontrolling Interest			TotalMember’sEquity
Balance as of December 31, 2015	$	2,042	$	(1,087	)	$	955
Balance as of December 31, 2014	$	1,932	$	(1,093	)	$	839		$	24		$	863
Net loss	—		(16		)	(16		)
Cumulative effect of CES deconsolidation (Note 1)	—		—			—			(24		)	(24		)
Contribution from parent in settlement of taxes	15		—			15
Net income	—		20			20			—			20
Share-based compensation and other	3		—			3
Contribution from parent in settlement of taxes	90		—			90			—			90
Balance as of March 31, 2016	$	2,060	$	(1,103	)	$	957
Share-based compensation and other	8		—			8			—			8
Balance as of December 31, 2016	$	2,128	$	(1,173	)	$	955
Balance as of September 30, 2015	$	2,030	$	(1,073	)	$	957		$	—		$	957
Net income	—		6			6
Balance as of December 31, 2015	$	2,042	$	(1,087	)	$	955		$	—		$	955
Contribution from parent in settlement of taxes	36		—			36
Net loss	—		(2		)	(2		)	—			(2		)
Share-based compensation and other	2		—			2
Contribution from parent in settlement of taxes	67		—			67			—			67
Balance as of March 31, 2017	$	2,166	$	(1,167	)	$	999
Share-based compensation and other	8		—			8			—			8
Balance as of September 30, 2016	$	2,117	$	(1,089	)	$	1,028		$	—		$	1,028

See accompanying Notes to Consolidated Condensed Financial Statements.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	Three Months Ended March 31,
(In millions)	~~2016~~2017			~~2015~~2016
Cash flows provided by operating activities	$	~~299~~135		$	~~269~~102
Cash flows from investing activities
Acquisitions of property and equipment, net of change in related payables	(8731		)	(~~102~~27		)
Capital contribution to CES	(4		)	(7		)
Contributions to Caesars Entertainment Services	—			(1		)
Other	(3—		)	(41		)
Cash flows used in investing activities	(9431		)	(~~113~~29		)
Cash flows from financing activities
Proceeds from long-term debt and revolving credit facility	65—			~~191~~40
Repayments of long-term debt and revolving credit facility	(~~173~~48		)	(~~319~~52		)
Cash flows used in financing activities	(~~108~~48		)	(~~128~~12		)
Net increase in cash and cash equivalents	9756			2861
Cash and cash equivalents, beginning of period	~~150~~168			~~189~~150
Cash and cash equivalents, end of period	$	~~247~~224		$	~~217~~211
Supplemental cash flow information:
Cash paid for interest	$	~~239~~44		$	~~245~~48
Non-cash investing and financing activities:
Change in accrued capital expenditures	93			918
Contribution from parent in settlement of taxes	6736			9015

See accompanying Notes to Consolidated Condensed Financial Statements.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

In this filing, the name “CERP LLC” refers to the parent holding company, Caesars Entertainment Resort Properties, LLC, exclusive of its consolidated subsidiaries, unless otherwise stated or the context otherwise requires. The words “CERP,” “Company,” “we,” “our,” and “us” refer to Caesars Entertainment Resort Properties, LLC, inclusive of its consolidated subsidiaries, unless otherwise stated or the context otherwise requires.

This Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Annual Report”).

Note 1 — Organization and Basis of Presentation and Consolidation

Organization

CERP LLC is separately organized as a single-member limited liability company, wholly owned by Caesars Entertainment Resort Properties Holdco, LLC, which is a wholly owned subsidiary of Caesars Entertainment Corporation (“CEC” and “Caesars”). CERP owns six casino properties: (1) Harrah’s Las Vegas, (2) Rio All-Suites Hotel and Casino (“Rio Las Vegas”), (3) Flamingo Las Vegas, (4) Harrah’s Atlantic City, (5) Paris Las Vegas, and (6) Harrah’s Laughlin. CERP also owns The LINQ promenade and Octavius Tower at Caesars Palace Las Vegas (“Octavius Tower”). Four of the casino properties, together with The LINQ promenade and Octavius Tower, are concentrated in Las Vegas and represented 7275% ~~and 73%~~ of consolidated net revenues for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016, respectively~~2017.

We view each casino property, including The LINQ promenade, as an operating segment and aggregate such properties into one reportable segment.

Basis of Presentation and Consolidation

The accompanying unaudited consolidated condensed financial statements of CERP have been prepared under the rules and regulations of the Securities and Exchange Commission applicable for interim periods, and therefore, do not include all information and footnotes necessary for complete financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”). The results for the interim periods reflect all adjustments (consisting primarily of normal recurring adjustments) that management considers necessary for a fair presentation of financial position, results of operations, and cash flows. The results of operations for our interim periods are not necessarily indicative of the results of operations that may be achieved for the entire ~~2016~~2017 fiscal year.

GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting periods. Due to the inherent uncertainties in making these estimates, actual amounts could differ.

~~This~~For ~~document~~the ~~should~~three bemonths ~~read~~ended inMarch 31, 2016, ~~conjunction~~$3.2 ~~with~~million ~~our~~was ~~consolidated~~reclassified ~~financial~~from ~~statements~~food ~~as of December 31, 2015~~ and ~~2014~~beverage ~~and~~revenues ~~for~~to ~~the~~other ~~years ended December 31~~revenue, ~~2015,~~ ~~2014~~ and ~~2013,~~certain ~~which~~other ~~were~~immaterial ~~included~~prior inyear ~~our~~amounts ~~Annual~~have ~~Report~~also onbeen ~~Form~~reclassified ~~10-K~~to ~~for~~conform to the current year’s ~~ended December 31, 2015~~presentation.

~~Consolidation of~~ Caesars Enterprise Services, LLC

In 2014, Caesars Entertainment Operating Company, Inc. (“CEOC”), CERP, and Caesars Growth Properties Holdings, LLC (collectively, the “Members”) formed Caesars Enterprise Services, LLC (“CES”), a services joint venture. CES provides certain corporate and administrative services for the Members’ casino properties and related entities, including substantially all of the casino properties owned by CEOC and casinos owned by unrelated third parties. CES manages certain assets for the casino properties to which it provides services, and it employs certain of the corresponding employees. CES owns, licenses or controls ~~its~~ other assets and uses them to ~~provided~~provide services to the Members. Expenses incurred by CES are allocated to the casino properties directly or to the Members according to their allocation percentages, subject to annual review. See Note 1011 for additional information on related party transactions.

CES functions as a "pass-through" entity that serves as an agent on behalf of the Members at a cost-basis, and is reimbursed by the Members for its services performed and costs incurred. CES is not intended to be a profit-generating business enterprise and is designed to have no operating cash flows of its own. Therefore, any net income or loss is generally immaterial and is typically subject to allocation to the Members in the subsequent period.

When CES was formed, we determined that it was a variable interest entity (“VIE”), and we concluded that we were the primary beneficiary. We determined that CERP had a controlling financial interest in CES based on our evaluation of several factors,

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

~~primarily~~When ~~including~~CES was formed, we determined that ~~CERP~~it was a variable interest entity (“VIE”). CERP is not considered the ~~most~~primary ~~closely~~beneficiary ~~associated~~and ~~with~~does not consolidate CES. asOur equity method investment in CES was ~~designed~~$55 tomillion ~~maintain~~and ~~working~~$56 ~~capital~~million ~~risk~~as of March 31, 2017 and ~~CERP~~December 31, ~~assumed~~2016, ~~the~~respectively, ~~greatest~~and ~~working~~is ~~capital~~included ~~burden~~in ~~through~~deferred ~~its~~charges ~~initial~~and ~~capital~~other ~~contributions~~assets.

Effective January 1, 2016, we implemented the Financial Accounting Standard Board’s (the “FASB”) Accounting Standard Update (“ASU”) No. 2015-02, which amended Topic 810, Consolidations. We applied the amended guidance retrospectively for all periods presented in the accompanying financial statements and notes thereto.

Under the amended guidance, CERP is not considered the primary beneficiary and does not consolidate CES as CERP individually does not have the characteristics of a primary beneficiary and the consideration of which Member is most closely associated with CES are no longer applicable under the amended guidance as none of the Members is considered a single decision maker and power is not shared among the Members. Additionally, substantially all of the activities of CES do not involve and are not conducted on behalf of any single Member. Therefore, we have deconsolidated CES from our consolidated financial statements.

There was no cumulative-effect adjustment recognized in accumulated deficit associated with the deconsolidation of CES, and we removed the previously-reported balance in noncontrolling interest. We recorded an initial equity investment in CES of $43 million. Our equity method investment in CES was $55 million and $52 million as of September 30, 2016 and December 31, 2015, respectively, and is included in deferred charges and other.

Related Party Relationship

As described above, CES provides certain corporate and administrative services for CERP’s casino properties. Subsequent to deconsolidation, transactions with CES are no longer eliminated in consolidation and are treated as related party transactions for CERP. See “Services Joint Venture” in Note 10 for all transactions between us and CES.

Effect of CES Deconsolidation on Previously Reported Financial Information
	As of December 31, 2015
	CERP(As Originally Reported)		Effect of CESDeconsolidation			CERP(As Restated)
(In millions)
Total assets	$	7,242	$	(214	)	$	7,028
Total liabilities	6,236		(163		)	6,073
Total member’s equity	1,006		(51		)	955

	For the Three Months Ended September 30, 2015
	CERP(As Originally Reported)		Effect of CESDeconsolidation		CERP(As Restated)
(In millions)
Net revenues	$	542	$	—	$	542
Net income	—		—		—

	For the Nine Months Ended September 30, 2015
	CERP(As Originally Reported)		Effect of CESDeconsolidation		CERP(As Restated)
(In millions)
Net revenues	$	1,637	$	—	$	1,637
Net income	20		—		20

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

	For the Nine Months Ended September 30, 2015
	CERP(As Originally Reported)			Effect of CESDeconsolidation			CERP(As Restated)
(In millions)
Cash flows from operating activities	$	341		$	(72	)	$	269
Cash flows from investing activities	(129		)	16			(113		)
Cash flows from financing activities	(112		)	(16		)	(128		)
Net increase in cash and cash equivalents	$	100		$	(72	)	$	28

Note 2 — Litigation

The Company is party to ordinary and routine litigation incidental to our business. We do not expect the outcome of any such litigation to have a material effect on our ~~combined and~~ consolidated financial position, results of operations, or cash flows, as we do not believe it is reasonably possible that we will incur material losses as a result of such litigation.

Birthday Cash Promotional Offer

In connection with a Birthday Cash promotional offer by Harrah’s Atlantic City, on March 19, 2010, the Superior Court of New Jersey entered a summary judgment in favor of a modified class of approximately 79,000 plaintiffs. The summary judgment found that Harrah’s Atlantic City violated the New Jersey Truth in Consumer Contract, Warranty and Notice Act. The penalty is $100 per incident, amounting to a potential exposure of up to $7.9 million. In March 2012, the judge held that the damages class, if any, should be based upon the number of individuals who redeemed certificates, not the number of certificates redeemed (as some plaintiffs had multiple certificates). As a result, the potential exposure under the judge’s ruling was decreased to $5.2 million. After the case was stayed to wait for a pending case in the New Jersey Supreme Court, the court reopened the case in July 2013. The decision in the New Jersey Supreme Court case clarified two aspects of the New Jersey Truth in Consumer Contract, Warranty and Notice Act, which support our contention that the existing judgment against us should be vacated and the case dismissed in our favor. In November 2013, the court denied both parties’ motions for reconsideration. In December 2013, we filed a motion to stay the judgment pending appeal, and in January 2014, the court granted the stay and we filed an appeal. In February 2014, per the court’s stay order, we posted into an escrow account the potential exposure under the judge’s ruling in the amount of $5.2 million plus attorneys’ fees. This amount is included in ~~deferred~~prepayments ~~charges~~ and other current assets in the accompanying balance sheets. No amount has been accrued ~~at this time~~. OnThe ~~September~~appeal 9,was ~~2016,~~argued byin ~~unanimous~~December ~~decision of a three-judge panel~~2015, and we prevailed on ~~our~~that appeal. Onon September 159, 2016,. ~~plaintiffs~~Plaintiffs thereafter filed a letter brief ~~asking~~with the appellate court toseeking ~~reconsider~~reconsideration ~~that~~of the appellate decision., ~~This~~which request was denied. Plaintiffs filed a petition for certification with the Supreme Court of New Jersey on January 3, 2017, and we opposed that petition on January 18, 2017. The petition for certification remains pending. ~~The~~On ~~Company~~January ~~continues~~12, to2017, ~~believe~~the ~~that~~trial court entered an order authorizing the ~~merits~~return of ~~its~~our ~~legal~~escrowed ~~position~~funds ~~are~~in ~~strong~~light ~~and~~of ~~will~~the ~~continue~~appellate tocourt’s ~~defend~~decision ~~against~~on the ~~lawsuit~~merits ~~vigorously~~in our favor.

CEOC Noteholder Disputes

On August 4, 2014, Wilmington Savings Fund Society, FSB, solely in its capacity as successor Indenture Trustee for the 10.00% Second-Priority Senior Secured Notes due 2018 issued by CEOC (the “CEOC 10.00% Second-Priority Notes”), on behalf of itself and, it alleges, derivatively on behalf of CEOC, filed a lawsuit in the Court of Chancery in the State of Delaware against CEC and CEOC, Caesars Growth Partners, LLC (“CGP”), Caesars Acquisition Company (“CAC”), CERP, CES, Eric Hession, Gary Loveman, Jeffrey D. Benjamin, David Bonderman, Kelvin L. Davis, Marc C. Rowan, David B. Sambur, and Eric Press. The lawsuit alleges claims for breach of contract, intentional and constructive fraudulent transfer, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and corporate waste. The lawsuit seeks (1) an award of money damages; (2) to void certain transfers, the earliest of which dates back to 2010; (3) an injunction directing the recipients of the assets in these transactions to return them to CEOC; (4) a declaration that CEC remains liable under the parent guarantee formerly applicable to the CEOC 10.00% Second-Priority Notes; (5) to impose a constructive trust or equitable lien on the transferred assets; and (6) an award to plaintiffs for their attorneys’ fees and costs. CERP believes this lawsuit is without merit and is defending itself vigorously. A motion to dismiss this action was filed by CEC and other defendants in September 2014, and the motion was argued in December 2014. During the pendency of its Chapter 11 bankruptcy proceedings, the action has been automatically stayed with respect to CEOC. The motion to dismiss with respect to CEC was denied on March 18, 2015. In a Verified Supplemental Complaint filed on August 3, 2015, the plaintiff stated that due to CEOC’s bankruptcy filing, the continuation of all claims was stayed pursuant to the bankruptcy except for Claims II, III, and X. These are claims against CEC only, for breach of contract in respect of the release of the parent guarantee formerly applicable to the CEOC 10.00% Second-Priority Notes, for declaratory relief in respect of the release of this guarantee, and for violations of the Trust Indenture Act in respect of the release of this guarantee. Fact discovery in the case is complete, and cross-motions for summary judgment have been filed by the parties. On January 26, 2017, the United States Bankruptcy Court for the Northern District of Illinois in Chicago (the “Bankruptcy Court”) entered an agreed order staying this proceeding (and others). The stay will remain in effect until the earlier of (a) the effective date of the CEOC restructuring, (b) the termination of the restructuring support agreement with the Official Committee of Second Priority Noteholders, or (c) further order of the Bankruptcy Court.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

cross-motions for summary judgment have been filed by the parties. On October 5, 2016, the United States Bankruptcy Court for the Northern District of Illinois in Chicago (the “Bankruptcy Court”) granted CEOC’s motion for a stay of this proceeding (and others). The stay will remain in effect until the earlier of (a) the first omnibus hearing after the Bankruptcy Court issues its decision confirming or denying confirmation of the CEOC reorganization plan, (b) the termination of the restructuring support agreement with the Official Committee of Second Priority Noteholders, or (c) further order of the Bankruptcy Court.

On November 25, 2014, UMB Bank (“UMB”), as successor indenture trustee for CEOC’s 8.50% Senior Secured Notes due 2020 (the “CEOC 8.50% Senior Secured Notes”), filed a verified complaint in Delaware Chancery Court against CERP, CEC, CEOC, CAC, CGP, CES, and against individual past and present CEC board members Loveman, Benjamin, Bonderman, Davis, Press, Rowan, Sambur, Hession, Colvin, Kleisner, Swann, Williams, Housenbold, Cohen, Stauber, and Winograd, alleging generally that defendants improperly stripped CEOC of certain assets, wrongfully effected a release of CEC’s parent guarantee of the CEOC 8.50% Senior Secured Notes and committed other wrongs. Among other things, UMB asked the court to appoint a receiver over CEOC. In addition, the suit pleads claims for fraudulent conveyances/transfers, insider preferences, illegal dividends, declaratory judgment (for breach of contract as regards to the parent guarantee and also as to certain covenants in the bond indenture), tortious interference with contract, breach of fiduciary duty, usurpation of corporate opportunities, and unjust enrichment, and seeks monetary, equitable and declaratory relief. The lawsuit has been automatically stayed with respect to CEOC during its Chapter 11 bankruptcy process. Pursuant to a Restructuring Support and Forbearance Agreement entered into by CEC and CEOC with certain creditors (as amended, the “First Lien Bond RSA”), the lawsuit also has been stayed in its entirety (including with respect to CERP), with the consent of all of the parties to it.

Although the claims and demands described above against CERP are not currently being litigated, the Company believes that such claims and demands are without merit and is prepared to defend itself vigorously. The claims against CEOC have been stayed due to the Chapter 11 process, and the actions against CEC ~~also~~ have now also been stayed. ~~Should~~In the ~~actions~~event ~~against~~that ~~CEC~~the ~~ultimately~~litigation ~~resume~~stays are ever lifted, CERP believes there is a reasonably possible likelihood of an adverse outcome ~~as to CEC~~. We are not able to reasonably estimate a range of reasonably possible losses should any of the noteholder disputes ultimately be resolved against CEC. Should any of the noteholder disputes ultimately be resolved through litigation outside of the financial restructuring of CEOC, and should a court 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.

In addition to the ongoing actions and uncertainties described above, certain of our affiliates, including CEC, are subject to certain liquidity concerns and other uncertainties. While it is possible that such concerns and uncertainties may result in a material adverse effect on our business, financial condition, results of operations, and cash flows, because CERP is a separate legal entity and financial structure and its properties are managed by CES, we do not believe such a scenario is likely.

Report of Bankruptcy Examiner

The Bankruptcy Court engaged an examiner to investigate possible claims CEOC might have against CEC and/or other entities and individuals. On March 15, 2016, the examiner released his report, which set forth conclusions on the relative strength of certain claims involved in the CEOC bankruptcy. The examiner calculates an estimated range of potential damages for these potential claims from $716 million to $1.3 billion for CERP, and such calculation does not account for probability of success, likelihood of collection, or the time or cost of litigation.

The report identifies a variety of potential claims against CEC and/or other entities and certain individuals related to a number of transactions dating back to 2009, including potential fraudulent transfer and breach of fiduciary duties claims relating to the transaction pursuant to which CERP acquired The LINQ promenade and Octavius Tower from CEOC. The examiner notes that the difficulty of quantifying damage might suggest that a court could order the return of Octavius Tower to CEOC. He further opines that there is at least a reasonable case that CERP will not be able to establish that it was a good faith transferee in this transaction and, under these circumstances, CERP would not be entitled to a lien for the consideration it did pay (cash and bonds valued by the examiner at $129 million), and would instead receive an unsecured claim for that amount in CEOC’s Chapter 11 proceeding. However, the examiner further notes that returning Octavius Tower would be problematic from the perspective of the lenders who expressly bargained for inclusion of Octavius Tower as part of their collateral package, and, based on available evidence, it appears that CERP’s lenders would be good faith transferees entitled to the benefit of their lien.

Most of the examiner’s findings are premised on his view that CEOC was “insolvent” at the time of the applicable transactions and that CEOC did not receive fair value for assets transferred. While this report was prepared at the request of the Bankruptcy Court, none of the findings included therein are legally binding on the Bankruptcy Court or any party.

10We and CEC contest the examiner’s findings with respect to the transaction pursuant to which The LINQ promenade and Octavius Tower were transferred to CERP, including his findings that CEOC was insolvent at relevant times, that there were breaches of fiduciary duty, that there were fraudulent transfers and that CEOC did not receive fair value for assets transferred, and as to the calculation of damages.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

We and CEC contest the examiner’s findings with respect to the transaction pursuant to which The LINQ promenade and Octavius Tower were transferred to CERP, including his findings that CEOC was insolvent at relevant times, that there were breaches of fiduciary duty, that there were fraudulent transfers and that CEOC did not receive fair value for assets transferred, and as to the calculation of damages.

National Retirement Fund

In January 2015, a majority of the Trustees of the National Retirement Fund (“NRF”), a multi-employer defined benefit pension plan, voted to expel the five indirect subsidiaries of CEC, including the subsidiary that owns Harrah’s Atlantic City, which were required to make contributions to the legacy plan of the NRF (the “Five Employers”). The NRF contended that the financial condition of the Five Employers’ controlled group (the “CEC Controlled Group”) and CEOC’s then-potential bankruptcy presented an “actuarial risk” to the plan because, depending on the outcome of any CEOC bankruptcy proceedings, CEC might no longer be liable to the plan for any partial or complete withdrawal liability. As a result, the NRF claimed that the expulsion of the Five Employers constituted a complete withdrawal of the CEC Controlled Group from the plan. CEOC, in its bankruptcy proceedings, has to date not rejected the contribution obligations to the NRF of any of its subsidiary employers. The NRF has advised the CEC Controlled Group (which includes CERP) that the expulsion of the Five Employers has triggered a joint and several withdrawal liability with a present value of approximately $360 million, payable in 80 quarterly payments of about $6 million.

Prior to the NRF’s vote to expel the Five Employers, the Five Employers reiterated their commitments to remain in the plan and not seek rejection of any collective bargaining agreement in which the obligation to contribute to NRF exists. The Five Employers were current with respect to pension contributions at the time of their expulsion, and are current with respect to pension contributions as of today pursuant to the Standstill Agreement referred to below.

We have opposed the various NRF expulsion actions.

On January 8, 2015, prior to the NRF’s vote to expel the Five Employers, CEC filed an action in the United States District Court for the Southern District of New York (the “S.D.N.Y.”) against the NRF and its Board of Trustees, seeking a declaratory judgment that they did not have the authority to expel the Five Employers and thus allegedly trigger withdrawal liability for the CEC Controlled Group (the “CEC Action”). On December 25, 2015, the District Judge entered an order dismissing the CEC Action on the ground that CEC’s claims in this action must first be arbitrated under ERISA. CEC has appealed this decision to the United States Court of Appeals for the Second Circuit. Oral argument on this appeal was heard on January 30, 2017, and the Second Circuit has reserved decision on this appeal.

On March 6 and March 27, 2015, CEOC and certain of its subsidiaries filed in the CEOC bankruptcy proceedings two motions to void (a) the purported expulsion of the Five Employers and based thereon the alleged triggering of withdrawal liability for the non-debtor members of the CEC Controlled Group, and (b) a notice and payment demand for quarterly payments of withdrawal liability subsequently made by the NRF to certain non-debtor members of the CEC Controlled Group, respectively, on the ground that each of these actions violated the automatic stay (the “362 Motions”). On November 12, 2015, Bankruptcy Judge Goldgar issued a decision denying the 362 Motions on the ground that the NRF’s actions were directed at non-debtors and therefore did not violate the automatic stay. CEOC has appealed this decision to the federal district court in Chicago.

On March 6, 2015, CEOC commenced an adversary proceeding against the NRF and its Board of Trustees in the Bankruptcy Court for the Northern District of Illinois (the “Adversary Proceeding”). On March 11, 2015, CEOC filed a motion in that Adversary Proceeding to extend the automatic stay in the CEOC bankruptcy proceedings to apply to the NRF’s expulsion of the Five Employers (the “105 Motion”). Judge Goldgar has not yet decided the 105 Motion.

On March 20, 2015, CEC, CEOC and CERP, on behalf of themselves and others, entered into a Standstill Agreement with the NRF and its Board of Trustees that, among other things, stayed each member of the CEC Controlled Group’s purported obligation to commence making quarterly payments of withdrawal liability and instead required the Five Employers to continue making monthly contribution payments to the NRF, unless and until each of the 362 Motions and the 105 Motion had been denied. As the 105 Motion has not yet been decided, the Standstill Agreement remains in effect.

If both the 105 Motion and CEC’s appeal of the CEC Action are denied, then CEC could be required to pay to the NRF joint and several withdrawal liability with a present value of approximately $360 million, payable in 80 quarterly payments of about $6 million each, while CEC simultaneously arbitrates whether the NRF and its Board of Trustees had the authority to expel the Five Employers and trigger withdrawal liability for the CEC Controlled Group.

On March 18, 2015, before the Standstill Agreement was executed, the NRF and its fund manager commenced a collection action in the S.D.N.Y. against CEC, CERP and all non-debtor members of the CEC Controlled Group for the payment of the first quarterly payment of withdrawal liability, which the NRF contended was due on March 15, 2015 (the “NRF Action”). On December 25, 2015, the District Judge entered an Order adopting the Magistrate Judge’s recommendation to deny defendants’ motion to dismiss over the defendants’ objections on the ground that the defendants’ arguments must first be arbitrated under ERISA. On February 26, 2016,

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

the NRF and its fund manager filed a motion for summary judgment against CEC and CERP for payment of the first quarterly payment of withdrawal liability and for interest, liquidated damages, attorneys’ fees and costs. On November 7, 2016, the District Judge entered an Order adopting the Magistrate Judge’s recommendation to grant partial summary judgment to the NRF Action plaintiffs over CEC and CERP’s objections on the ground that CEC and CERP’s further arguments must also first be arbitrated under ERISA. CEC and CERP filed a Notice of Appeal to protect their rights in response to this Order. Subsequently, the District Judge determined that no final order or judgment was entered, and thus the Notice of Appeal was premature. Accordingly, the parties stipulated to the dismissal of the appeal without prejudice to any party’s rights to appeal a final, appealable judgment that may later be entered in the case.

On December 5, 2016, an interlocutory judgment was entered against CEC and CERP comprising the first quarterly payment of withdrawal liability referred to above, interest and liquidated damages under ERISA. On December 19, 2016, a CEC and CERP filed a motion to certify a final judgment under Rule 54(b) of the Federal Rules of Civil Procedure for immediate appeal and to stay the NRF Action plaintiffs’ motions to amend and for summary judgment, as described below. On January 11, 2017, the District Court granted the motion to certify a final judgment under Rule 54(b) in the amount of $9 million, but denied the motion for a stay, and a judgment in that amount was entered the next day. CEC has appealed this decision to the Second Circuit, and has bonded the judgment pending appeal. On February 3, 2017, the NRF Action plaintiffs filed a motion for an order permitting plaintiffs to execute on the Rule 54(b) judgment immediately, which CEC and CERP opposed. The district court has not yet ruled on this motion.

On December 23, 2016, the NRF Action plaintiffs filed a motion to amend their complaint to add claims for the second through eighth quarterly payments of withdrawal liability, which the NRF Action plaintiffs contended were past due, as well as for injunctive relief requiring the defendants to pay all further quarterly payments as they purportedly became due. Also on December 23, 2016, the NRF Action plaintiffs simultaneously filed a motion for summary judgment against CEC and CERP for payment of the second through eighth quarterly payments of withdrawal liability, for interest, liquidated damages, attorneys’ fees and costs, and for injunctive relief requiring the defendants to pay all further quarterly payments as they purportedly became due. The magistrate judge has not yet ruled on these motions.

On March 13, 2017, CEC, CERP, CEOC (on behalf of itself and each of the debtors and its other direct and indirect subsidiaries), the Five Employers, the NRF, the NRF’s Legacy Plan, the NRF’s Trustees, and others entered into a Settlement Agreement (the “NRF Settlement Agreement”). Under the NRF Settlement Agreement, on the effective date of the debtors’ reorganization plan, CEC would pay $45 million to the NRF (the “NRF Payments”) in three different baskets: (1) a settlement basket consisting of $10 million as litigation settlement and $5 million for legal fee reimbursement; (2) a contribution basket consisting of $15 million, which sum will grow at 3.1% per year, and which, beginning 17.5 years after the plan effective date, will be applied to offset the first $8 million of contributions from the Five Employers to the Legacy Plan annually until completely utilized; and (3) a withdrawal liability basket of $15 million, which does not grow, to be applied if there is a partial or complete withdrawal at any time after the plan effective date. Upon the NRF Payments being made, mutual releases will be exchanged between the CEC-affiliated parties and the NRF-affiliated parties to the Settlement Agreement. On March 20, 2017, the debtors moved for the Settlement Agreement to be approved by the Bankruptcy Court. On April 19, 2017, the Bankruptcy Court approved the NRF Settlement Agreement, and the parties have filed joint requests to stay all actions and appeals relating to the CEC Action and the NRF Action pending the settlement becoming final.

No liability will be recorded by the CERP for the NRF Payments because (1) CERP will not be obligated to reimburse CEC for any portion of the payments related to the settlement and withdrawal liability baskets and (2) the payment related to the contribution basket will be accounted for as a prepayment toward future pension contributions. CERP is not obligated to reimburse CEC for the payments related to the settlement and withdrawal liability because CERP remained current on all contribution payments to the pension, and therefore the payments were not made on behalf of the CERP. CERP will reimburse CEC for its portion of the contribution basket in a manner similar to other pension contributions that are made on CERP’s behalf in the ordinary course of business.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Also, on March 18, 2015, the NRF and its fund manager commenced a collection action in the S.D.N.Y. against CEC, CERP and all non-debtor members of the CEC Controlled Group for the payment of the first quarterly payment of withdrawal liability, which the NRF contended was due on March 15, 2015 (the “NRF Action”). On December 25, 2015, the District Judge denied the defendants’ motion to dismiss the NRF Action on the ground that the arguments raised by the defendants must first be arbitrated under ERISA. On February 26, 2016, the NRF and its fund manager filed a motion for summary judgment against CEC and CERP for payment of the first quarterly payment of withdrawal liability and for interest, liquidated damages, attorneys’ fees and costs. On May 5, 2016, the Magistrate Judge recommended in his report and recommendation (“Report and Recommendation”) that the NRF Action plaintiffs’ motion for summary judgment be granted on the ground that the further arguments raised by CEC and CERP must first be arbitrated under ERISA. On May 19, 2016, CEC and CERP filed their objections to the Report and Recommendation (the “Objections”). On June 2, 2016, the NRF Action plaintiffs filed their response to the Objections. The District Judge has not yet ruled on the Objections. If the District Judge adopts the Magistrate Judge’s Report and Recommendation, then a judgment could be entered against CEC and CERP for approximately $8 million comprising the first quarterly payment of withdrawal liability referred to above, interest and liquidated damages under ERISA, which amount would be paid or bonded pending an appeal.

We believe our legal arguments against the actions undertaken by NRF are strong and will pursue them vigorously, and will defend vigorously against the claims raised by the NRF in the NRF Action. Since settlement discussions with the NRF are continuing and no material discovery has yet been performed with respect to any of the above actions, we cannot currently provide assurance as to the ultimate outcome of the matters at issue.

Note 3 — Recently Issued Accounting Pronouncements

~~During~~The ~~2016,~~Financial weAccounting ~~adopted~~Standards ~~Account~~Board ~~Standards~~(the ~~Update~~“FASB”) ~~No.~~issued ~~2015-02,~~the ~~Consolidation:~~following ~~Amendments~~authoritative toguidance amending the ~~Consolidation~~FASB ~~Analysis~~Accounting ~~(see~~Standards ~~Note 1)~~Codification.

~~The~~Intangibles ~~FASB~~- ~~issued~~Goodwill and Other - January 2017: Amendments in this update intend to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the ~~following~~goodwill ~~authoritative~~impairment test. Step 2 measures goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of goodwill. Under the amended guidance, ~~amending~~an entity should perform its annual, or interim, goodwill impairment test by comparing the ~~FASB~~fair ~~Accounting~~value ~~Standards~~of ~~Codification~~a reporting unit with its carrying amount. The elimination of Step 2 from the goodwill impairment test should reduce the cost and complexity of evaluating goodwill for impairment. Amendments should be applied on a prospective basis disclosing the nature of and reason for the change in accounting principle upon transition. Disclosure should be provided in the first annual period and in the interim period in which the entity initially adopts the amendments. Updated amendments are effective for fiscal years beginning after December 15, 2019, and interim period within those fiscal years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We currently plan to implement the updated guidance when we perform our annual goodwill impairment assessment as of October 1, or earlier, if impairment indicators exist.

~~New~~Business ~~Developments~~Combinations - January 2017: Updated amendments intend to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisition (or disposals) of assets or businesses. Amendments in this update provide a more robust framework to use in determining when a set of assets and activities is a business and to provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The amendments are effective to annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is allowed as follows: (1) Transactions for which acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance and (2) transactions in which a subsidiary is deconsolidated or a group of assets is derecognized that occur before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. We are currently assessing the effect the adoption of this standard will have on our financial statements.

Statement of Cash Flows - August 2016: Amended guidance addresses eight specific cash flow issues with the objective of reducing diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments should be applied retrospectively to each period presented. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the effect the adoption of this standard will have on our financial statements.

Income Taxes - October 2016: Amended guidance addresses intra-entity transfers of assets other than inventory, which requires the recognition of any related income tax consequences when such transfers occur. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Amendments are effective for fiscal years beginning after December 15, 2017, and interim reporting periods within those years. Early adoption is permitted. We are currently assessing the impact the adoption of this standard will have on our financial statements.

~~Consolidation~~Revenue Recognition - ~~October~~May ~~2016~~2014 (amended January 2017): ~~Amended~~Created ~~consolidation~~a ~~guidance~~new ~~addresses~~Topic ~~how~~606, aRevenue ~~reporting~~from ~~entity~~Contracts ~~that~~with Customers. The new guidance is intended to clarify the ~~single~~principles ~~decision~~for ~~maker~~recognizing ofrevenue and to develop a ~~VIE~~common ~~should~~revenue ~~treat~~standard ~~indirect~~for ~~interests~~United inStates ~~the~~GAAP ~~entity~~applicable ~~held~~to ~~through~~revenue ~~related~~transactions. ~~parties~~Existing ~~that~~industry ~~are~~guidance ~~under~~will ~~common~~be ~~control~~eliminated, ~~with~~including revenue recognition guidance specific to the ~~reporting~~gaming ~~entity~~industry. ~~when~~The ~~determining~~FASB ~~whether~~has itrecently isissued several amendments to the ~~primary~~standard, ~~beneficiary~~including ofclarification ~~that~~on ~~VIE~~accounting for and identifying performance obligations. ~~The~~This ~~amendments~~guidance ~~are~~is effective for ~~fiscal~~annual ~~years~~reporting periods beginning after December 15, ~~2016~~ 2017, ~~and~~ including interim periods within those ~~fiscal~~reporting ~~years~~periods. ~~During~~The ~~2016~~guidance weshould ~~adopted~~be ~~ASU~~applied Nousing the full retrospective method or retrospectively with the cumulative effect initially applying the guidance recognized at the date of initial application. ~~2015-2~~We ~~and~~anticipate adopting this standard effective January 1, 2018. We are ~~required~~currently toin ~~apply~~the ~~updated~~process ~~amendments~~of ~~retrospectively~~our toanalysis ~~all~~and ~~relevant~~anticipate ~~prior~~this ~~periods~~standard ~~beginning~~will ~~with~~have a material effect on our consolidated financial statements. As described below, we expect the ~~fiscal~~most ~~year~~significant ineffect ~~which~~will ~~amendments~~be inrelated ~~ASU~~to Nothe accounting for the Total Rewards customer loyalty program and casino promotional allowances. ~~2015-2~~However, ~~were~~the ~~applied~~quantitative effects of these changes have not yet been determined and are still being analyzed. We are currently assessing the ~~impact~~full effect the adoption of this standard will have on our financial statements.

The Total Rewards customer loyalty program effects revenues from our four core businesses: casino entertainment, food and beverage, rooms and hotel, and entertainment and other business operations. Currently, CEC estimates the cost of fulfilling the

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

~~Previously~~redemption ~~Disclosed~~of Reward Credits, after consideration of estimated forfeitures (referred to as “breakage”), based upon the cost of historical redemptions. Upon adoption of the new guidance, Reward Credits will no longer be recorded at cost, and a deferred revenue model will be used to account for the classification and timing of revenue recognized as well as the classification of related expenses when Reward Credits are redeemed.

~~Revenue Recognition - May 2014 (amended May 2016): Created a new Topic 606~~Additionally, ~~Revenue~~we ~~from~~expect ~~Contracts with Customers. The new guidance is intended~~ to ~~clarify~~see ~~the principles for recognizing revenue and to develop~~ a ~~common~~significant ~~revenue~~decrease ~~standard~~in ~~for~~gaming ~~United States GAAP applicable to revenue transactions~~revenues. ~~This~~The ~~guidance~~presentation ~~provides that an entity should recognize revenue to depict the transfer~~ of ~~promised~~ goods orand services provided to customers inwithout ancharge ~~amount~~in ~~that~~gross ~~reflects~~revenue ~~the~~with ~~consideration~~a tocorresponding ~~which~~reduction ~~the entity expects to be entitled~~ in ~~exchange~~promotional ~~for~~allowances ~~those~~will ~~goods~~no orlonger ~~services. Existing industry guidance will~~ be ~~eliminated, including revenue recognition guidance specific to the gaming industry~~reported. InRevenue ~~addition, interim and annual disclosures~~ will be ~~substantially~~recognized ~~revised.~~based This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We expect to adopt this standard effective January 1, 2018. We are currently assessing the impact the adoption of this standard will have on ~~our~~relative ~~financial~~standalone ~~statements;~~selling ~~however,~~prices ~~we expect that the accounting~~ for ~~the~~transactions ~~Total~~with ~~Rewards~~more ~~customer~~than ~~loyalty~~one ~~program~~performance ~~and casino promotional allowances will be affected~~obligation.

~~Going~~Recognition ~~Concern~~and Measurement of Financial Instruments - ~~August~~January ~~2014~~2016: Amended ~~the~~certain ~~existing~~aspects ~~requirements~~of ~~for~~recognition, ~~disclosing~~measurement, ~~information~~presentation, ~~about~~and andisclosure ~~entity’s~~of ~~ability~~financial toinstruments. ~~continue~~Among asother athings, ~~going~~they ~~concern.~~require ~~This~~equity ~~guidance~~investments ~~explicitly~~(except ~~requires~~those ~~management~~accounted tofor ~~assess~~under anthe ~~entity’s~~equity ~~ability~~method toof ~~continue~~accounting asor athose ~~going~~that ~~concern~~result ~~and~~in consolidation) to ~~provide~~be ~~related~~measured ~~footnote~~at ~~disclosure~~fair value with any changes in ~~certain~~fair ~~circumstances~~value recognized in net income and simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. ~~This~~The new guidance is effective for ~~annual~~fiscal ~~reporting~~years, ~~periods~~and ~~ending~~interim ~~after~~periods ~~December 15, 2016,~~within ~~and~~those ~~for~~fiscal ~~annual~~years, ~~and~~beginning ~~interim~~after ~~reporting~~December ~~periods~~15, ~~thereafter~~2017. Early adoption is permitted on certain provisions. We doare ~~not~~currently ~~believe~~assessing the effect the adoption of this standard will have ~~any impact~~ on our financial statements, but do not expect the effect to be material.

~~Recognition~~Leases ~~and~~- ~~Measurement~~February of2016 ~~Financial~~(amended ~~Instruments -~~ January ~~2016~~2017): ~~Amended~~The ~~certain~~amended ~~aspects~~guidance ofrequires ~~recognition,~~most ~~measurement,~~lease ~~presentation,~~obligations ~~and~~to ~~disclosure~~be ofrecognized ~~financial~~as ~~instruments.~~a ~~Among~~right-of-use ~~other~~(“ROU”) ~~things,~~asset ~~they~~with ~~require~~a ~~equity~~corresponding ~~investments~~liability ~~(except~~on ~~those~~the ~~accounted~~balance ~~for~~sheet. ~~under~~The ~~the~~guidance ~~equity~~also ~~method~~requires ofadditional ~~accounting~~qualitative orand ~~those~~quantitative ~~that~~disclosures ~~result~~to inassess ~~consolidation)~~the toamount, betiming, ~~measured~~and atuncertainty ~~fair~~of ~~value~~cash ~~with~~flows ~~any~~arising ~~changes~~from inleases. ~~fair~~This ~~value~~guidance ~~recognized~~is ineffective ~~net~~for ~~income~~fiscal years, and ~~simplify~~interim ~~the~~periods ~~impairment~~within ~~assessment~~those offiscal ~~equity~~years, ~~investments~~beginning ~~without~~after ~~readily~~December ~~determinable~~15, ~~fair~~2018. ~~values~~The byguidance ~~requiring~~should abe ~~qualitative~~implemented ~~assessment~~for tothe ~~identify~~earliest ~~impairment.~~period ~~The~~presented ~~new~~using ~~guidance~~a ismodified ~~effective~~retrospective ~~for fiscal years~~approach, ~~and~~which ~~interim~~includes ~~periods~~optional ~~within~~practical ~~those~~expedients ~~fiscal~~primarily ~~years,~~focused ~~beginning~~on ~~after~~leases ~~December~~that ~~15,~~commenced ~~2017.~~before ~~Early~~the ~~adoption~~effective isdate, ~~permitted~~including oncontinuing ~~certain~~to ~~provisions.~~account Wefor ~~are~~leases ~~currently~~that ~~assessing~~commenced before the ~~effect~~effective ~~the~~date ~~adoption~~in ofaccordance ~~this~~with ~~standard~~previous ~~will~~guidance, ~~have~~unless onthe ~~our~~lease ~~financial~~is ~~statements~~modified.

~~Leases~~Currently, -all ~~February~~of ~~2016:~~our ~~The~~capital ~~new~~leases ~~guidance~~are ~~requires~~set ~~lease~~to ~~obligations~~expire tobefore bethe ~~recognized~~initial oneffective ~~the~~date ~~balance~~and ~~sheet.~~will ~~This~~not ~~guidance~~require isany ~~effective~~accounting adjustments. Accounting for ~~fiscal~~our ~~years~~operating leases where we are the lessor, ~~and~~including ~~interim~~leases ~~periods~~for ~~within~~the ~~those~~Octavius ~~fiscal~~Tower ~~years,~~at ~~beginning~~Caesars ~~after~~Palace ~~December~~Las 15Vegas and gaming space at The LINQ promenade, ~~2018~~will remain unchanged. ~~The~~Operating ~~guidance~~leases, ~~should~~including beagreements ~~implemented~~relating ~~for~~to ~~the~~slot ~~earliest~~machines, ~~period~~will ~~presented~~be ~~using~~recorded aon ~~modified~~the ~~retrospective~~balance ~~approach~~sheet ~~which~~as ~~includes~~an ~~optional~~ROU ~~practical~~asset ~~expedients~~with ~~primarily~~a ~~focused~~corresponding onlease ~~leases~~liability, ~~that~~which ~~commenced~~will ~~before~~be amortized using the effective ~~date,~~interest ~~including~~rate ~~continuing~~method toas ~~account~~payments ~~for~~are ~~leases~~made. ~~that~~The ~~commence~~ROU ~~before~~asset ~~the~~will ~~effective~~be ~~date~~depreciated inon ~~accordance~~a ~~with~~straight-line ~~previous~~basis ~~guidance,~~and ~~unless~~recognized ~~the~~as lease ~~is modified~~expense. ~~Early~~The qualitative and quantitative effects of adoption isare ~~permitted~~still being analyzed. We are ~~currently~~in ~~assessing~~ the ~~effect~~process of evaluating the ~~adoption~~full ofeffect ~~this~~the ~~standard~~new guidance will have on our financial statements.

Note 4 — Property and Equipment

(In millions)	~~September~~March 3031, ~~2016~~2017			December 31, ~~2015~~2016
Land and land improvements	$	2,498		$	2,498
Buildings and improvements	2,~~813~~798			2,~~772~~789
Furniture, fixtures, and equipment	~~670~~677			~~640~~673
Construction in progress	5633			3022
Total property and equipment	6,~~037~~006			5,~~940~~982
Less: accumulated depreciation	(1,~~120~~115		)	(~~967~~1,077		)
Total property and equipment, net	$	4,~~917~~891		$	4,~~973~~905

Depreciation Expense and Capitalized Interest

	Three Months Ended March 31,
(In millions)	2017		2016
Depreciation expense ⁽¹⁾	$	42	$	60

____________________


⁽¹⁾	Depreciation expense in the first quarter of 2016 includes $20 million of accelerated depreciation due to asset removal and replacement in connection with property renovations primarily at Harrah’s Las Vegas and Flamingo Las Vegas.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Depreciation Expense and Capitalized Interest
	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2016		2015		2016		2015
Depreciation expense (1)	$	49	$	39	$	152	$	110
Capitalized interest	—		1		1		4

____________________

(1) Primarily in the first quarter of 2016, the depreciation of certain assets was accelerated due to their removal and replacement in connection with property renovations at Harrah’s Las Vegas and Flamingo Las Vegas.

Note 5 — Goodwill and Other Intangible Assets

Changes in Carrying Value of Goodwill and Other Intangible Assets
	AmortizingIntangible Assets			Non-Amortizing Intangible Assets
(In millions)				Goodwill		Other
Balance as of December 31, 2015	$	255		$	1,402	$	37
Balance as of December 31, 2016	$	205		$	1,402	$	37
Amortization	(3712		)	—		—
Balance as of September 30, 2016	$	218		$	1,402	$	37
Balance as of March 31, 2017	$	193		$	1,402	$	37

Gross Carrying Value and Accumulated Amortization of Intangible Assets Other Than Goodwill
	September 30, 2016								December 31, 2015
	March 31, 2017								December 31, 2016
(Dollars in millions)	WeightedAverageRemainingUseful Life(in years)	GrossCarryingAmount		AccumulatedAmortization			NetCarryingValue		GrossCarryingAmount		AccumulatedAmortization			NetCarryingValue
Customer relationships	4.61	$	682	$	(~~464~~489	)	$	~~218~~193	$	682	$	(~~427~~477	)	$	~~255~~205
Trademarks							37							37
Total intangible assets other than goodwill							$	~~255~~230						$	~~292~~242

Note 6 — ~~Commitments~~Accrued Restructuring and ~~Contingencies~~Support Expenses

~~During~~CEC has agreed to support the ~~nine~~CEOC’s ~~months~~plan ~~ended~~of ~~September~~reorganization (the “Plan”), which was confirmed by the Bankruptcy Court on January 3017, ~~2016~~2017. As part of the CEOC’s Plan, weit ~~have~~is ~~not~~anticipated ~~entered~~that CEOC will be divided into ~~any~~two ~~material~~companies ~~contractual~~- ~~commitments~~OpCo ~~outside~~and ofPropCo. ~~the~~OpCo ~~ordinary~~will ~~course~~manage CEOC’s properties and facilities. PropCo will hold certain of ~~business~~CEOC’s ~~that~~real ~~have~~property ~~materially~~assets ~~changed~~and ~~our~~related ~~contractual~~fixtures ~~commitments~~and aswill ~~compared~~lease tothose ~~December 31,~~assets ~~2015~~to OpCo.

~~CEOC~~As ~~and~~a ~~certain~~result of ~~its~~the ~~United~~Bankruptcy ~~States~~Court’s ~~subsidiaries~~confirmation ~~filed an amended plan~~ of ~~reorganization~~CEOC’s ~~on October 20~~Plan, ~~2016~~ ~~with~~we ~~the~~believe ~~United~~it ~~States~~is ~~Bankruptcy~~probable ~~Court~~that ~~for~~certain ~~the~~obligations ~~Northern~~described ~~District~~in ofthe ~~Illinois~~Plan inwill ~~Chicago~~ultimately ~~that~~be ~~contemplates,~~settled ~~among~~by ~~other things~~CEC, ~~that~~CERP’s ~~CEC~~parent ~~would~~company. ~~give~~For instance, the ~~new~~Plan ~~entity~~provides ~~that~~PropCo ~~will~~with ~~operate~~a ~~CEOC’s~~call ~~properties~~right atfor ~~the~~up ~~time~~to offive ~~CEOC’s~~years ~~emergence~~to ~~from~~purchase ~~bankruptcy~~the areal ~~call~~property ~~right~~assets toassociated ~~purchase~~with Harrah’s Atlantic City and Harrah’s Laughlin from CERP. No(subject ~~amounts~~to ~~have~~the ~~been~~terms ~~recorded~~of ~~for~~the ~~this~~CERP ~~contemplated~~credit ~~transaction~~agreement). ~~because~~Therefore, ~~the~~we ~~transaction~~have isaccrued ~~not~~this ~~legally~~item ~~enforceable~~in ataccrued ~~this~~restructuring ~~time~~ and issupport ~~subject~~expenses toon the ~~terms~~Balance ofSheets. Our accrual represents the ~~CERP~~estimated ~~Notes~~fair ~~and~~value ~~CERP~~of ~~Credit~~the ~~Facility~~call ~~agreements~~right.

Estimated Fair Value

(In millions)	Balance		Level 1		Level 2		Level 3
December 31, 2016
Liabilities - PropCo Call Right	$	131	$	—	$	—	$	131
March 31, 2017
Liabilities - PropCo Call Right	$	131	$	—	$	—	$	131

Changes in Level 3 Fair Value Measurements

(In millions)	PropCo Call Right
Balance as of January 1, 2017	$	131
Loss in restructuring and support expenses	—
Balance as of March 31, 2017	$	131

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

~~Note 7~~Valuation ~~— Debt~~ Methodologies

		September 30, 2016							December 31, 2015
(Dollars in millions)	FinalMaturity	Rate (1)	Face Value			Book Value			Book Value
CERP Credit Facility
CERP Revolving Credit Facility (2)	2018	variable	$	—		$	—		$	80
CERP Senior Secured Loan (3)	2020	7.00%	2,431			2,391			2,403
CERP Notes
CERP First Lien Notes	2020	8.00%	1,000			993			992
CERP Second Lien Notes	2021	11.00%	1,150			1,139			1,138
Capital lease obligations and other	2016 to 2017	various	5			5			14
Total debt			4,586			4,528			4,627
Current portion of long-term debt			(30		)	(30		)	(118		)
Long-term debt			$	4,556		$	4,498		$	4,509
Unamortized discounts and deferred finance charges						$	58		$	67
Fair value			$	4,721

The PropCo Call Right will allow PropCo up to five years to purchase and leaseback the real property assets associated with Harrah’s Atlantic City and Harrah’s Laughlin from CERP for a cash purchase price of ten times the agreed upon annual rent for each property (subject to the terms of the CERP credit agreement). The initial rent for each property under the agreement will be determined based on a rent-to-earnings before interest, taxes, depreciation, amortization, and rent (“EBITDAR”) ratio of 1.00-to-1.67. PropCo’s purchase price will be determined by multiplying each property’s initial rent by 10.

The valuation model used to estimate the fair value of the PropCo Call Right is a Monte Carlo simulation and utilized the following key assumptions:

Key Assumptions -


•	Ratio of EBITDAR to Initial Rent under Property Lease - 1.67 to 1.00


•	EBITDAR volatility - 25%


•	Enterprise value to revenue volatility - 14%


•	Ratio of initial purchase price to property lease rent - 12.00 to 1.00


•	EBITDAR to multiple correlation - 0.0%


•	Composite projected revenue growth rate - 2.4%


•	Composite projected EBITDAR margin growth rate - 23.2%

Since the key assumptions used in the valuation model are significant unobservable inputs, the fair value for the call right is classified as Level 3. Should these assumptions fluctuate over time, it could result in an increase or decrease in the fair value of the call right and the corresponding restructuring accrual. Specifically, an increase in the volatility assumptions would result in an increase in the restructuring accrual.

Note 7 — Commitments and Contingencies

During the three months ended March 31, 2017, we have not entered into any material contractual commitments outside of the ordinary course of business that have materially changed our contractual commitments as compared to December 31, 2016.

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 8 — Debt



		March 31, 2017							December 31, 2016
(Dollars in millions)	Final Maturity	Rate(s)⁽¹⁾	Face Value			Book Value			Book Value
CERP Credit Facility
CERP Revolving Credit Facility⁽²⁾	2018	variable	$	—		$	—		$	40
CERP Senior Secured Term Loan⁽³⁾	2020	7.00%	2,419			2,382			2,387
CERP Notes
CERP First Lien Notes	2020	8.00%	1,000			994			993
CERP Second Lien Notes	2021	11.00%	1,150			1,140			1,140
Capital lease obligations and other	2017	various	1			1			3
Total debt			4,570			4,517			4,563
Current portion of long-term debt			(26		)	(26		)	(68		)
Long-term debt			$	4,544		$	4,491		$	4,495

Unamortized discounts and deferred finance charges						$	53		$	55
Fair value			$	4,743

____________________


⁽¹⁾	Interest rate is fixed, except where noted.


⁽²⁾	Variable interest rate for amounts currently borrowed is determined by adding LIBOR to a base rate of 6.00%.

(3) Variable interest rate calculated as a fixed rate plus the greater of LIBOR or a 1% floor. The rate is set at the 1% floor as of ~~September~~March 3031, ~~2016~~2017.

Current Portion of Long-Term Debt

The current portion of long-term debt as of ~~September~~December 3031, 2016, includes the $40 million outstanding under the revolving credit facility as well as principal payments on the ~~Senior~~senior ~~Secured~~secured ~~Loan~~loan, other unsecured borrowings, and ~~capital~~capitalized lease obligations that are expected to be paid within 12 months.

Although there is no amount outstanding under the Revolving Credit Facility as of ~~September~~March 3031, ~~2016~~2017, borrowings under the CERP Revolving Credit Facility are subject to separate note agreements executed based on the provisions of the applicable credit facility agreement, and each note has a contractual maturity of less than one year. The applicable credit facility agreement has a contractual maturity of greater than one year, and we have the ability to rollover the outstanding principal balance on a long-term basis; however, we generally intend to repay any principal balance outstanding at the end of the quarter within the subsequent 12 month period. Amounts borrowed under the CERP Revolving Credit Facility are intended to satisfy short term liquidity needs and are classified as current.

We believe that our cash and cash equivalents balance, our cash flows from operations, and/or financing available under our revolving credit facility will be sufficient to meet our normal operating requirements, to fund planned capital expenditures, and to fund debt service during the next 12 months and the foreseeable future.

Fair Value

The fair value of debt has been estimated based on the borrowing rates available as of ~~September~~March 3031, ~~2016~~2017, for debt with similar terms and maturities. ~~The~~We classify the fair value of ~~our~~ debt iswithin ~~primarily~~Level ~~classified~~1 ~~within~~and ~~level~~Level 2 in the fair value hierarchy.

Estimated Debt Service Payments (1)
(In millions)	Remaining2016		2017		2018		2019		2020		Thereafter		Total
Long-term debt principal payments	$	10	$	26	$	25	$	25	$	3,350	$	1,150	$	4,586
Estimated interest payments	190		380		380		380		340		130		1,800
Total principal and interest	$	200	$	406	$	405	$	405	$	3,690	$	1,280	$	6,386

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Estimated Debt Service Payments ⁽¹⁾

	Remaining		Years Ended December 31,
(In millions)	2017		2018		2019		2020		2021		Thereafter		Total
Annual maturities of long-term debt ⁽²⁾	$	20	$	25	$	25	$	3,350	$	1,150	$	—	$	4,570
Estimated interest payments	340		390		400		360		130		—		1,620
Total principal and interest	$	360	$	415	$	425	$	3,710	$	1,280	$	—	$	6,190

____________________


⁽¹⁾	Debt principal payments are estimated amounts based on maturity dates and potential borrowings under our revolving credit facility. Interest payments are estimated based on the forward-looking LIBOR curve. Actual payments may differ from these estimates.


⁽²⁾	The CERP Term Loan requires scheduled quarterly principal payments of $6 million, with the balance due at maturity.

Restrictive Covenants

The CERP Notes and CERP Credit Facility include negative covenants, subject to certain exceptions, and contain customary events of default, subject to customary or agreed-upon exceptions, baskets and thresholds (including equity cure provisions in the case of the CERP Credit Facilities).

The CERP Credit Facility also contains certain customary affirmative covenants and requires that we maintain a senior secured leverage ratio of no more than 8.00 to 1.00, which is the ratio of first lien senior secured net debt to earnings before interest, taxes, depreciation and amortization, adjusted as defined in the Credit Facility.

CERP has pledged a significant portion of its assets as collateral under the notes and facilities. The CERP Notes are co-issued, as well as fully and unconditionally guaranteed, jointly and severally, by CERP LLC and each of its wholly-owned subsidiaries on a senior secured basis. Although CERP’s subsidiaries are allowed to make distributions to CERP LLC, restrictions under CERP’s lending arrangements generally prevent the distribution of cash to CEC; except for certain restricted payments.

Note 89 — Casino Promotional Allowances

The retail value of accommodations, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as casino promotional allowances. The estimated cost of providing such casino promotional allowances is included in casino expense.

Estimated Retail Value of Casino Promotional Allowances
	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
(In millions)	~~2016~~2017		~~2015~~2016		~~2016~~		~~2015~~
Food and Beverage	$	42	$	45	$	133	$	135
Food and beverage	$	45	$	47
Rooms	38		3936		~~110~~		~~114~~
Other	45		34		12		12
	$	8488	$	87	$	~~255~~	$	~~261~~

Estimated Cost of Providing Casino Promotional Allowances
	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
(In millions)	~~2016~~2017		~~2015~~2016		~~2016~~		~~2015~~
Food and Beverage	$	27	$	27	$	81	$	80
Food and beverage	$	29	$	28
Rooms	14		1514		41		43
Other	3		2		8		8
	$	4446	$	44	$	~~130~~	$	~~131~~

1617

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 910 — Income Taxes

Income Tax Allocation
	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(Dollars in millions)	~~2016~~2017			~~2015~~2016			~~2016~~			~~2015~~
Income/(loss) before income taxes	$	612		$	—(22	)	$	(4	)	$	33
Income tax benefit/(provision)	$	—(6	)	$	—6		$	2		$	~~(13~~	)
Effective tax rate	—50.0		%	—27.3		%	~~50.0~~		%	~~39.4~~		%

We classify reserves for tax uncertainties within accrued expenses and deferred credits and other in our consolidated condensed balance sheets, separate from any related income tax payable or deferred income taxes. Reserve amounts relate to any potential income tax liabilities resulting from uncertain tax positions as well as potential interest or penalties associated with those liabilities.

The effective tax rate for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016~~2017 differed from the expected US tax rate of 35% primarily due to the ~~projected~~state deferred tax ~~benefit~~expense. ofEffective ~~federal~~January 1, 2017, CEC elected to no longer treat CERP as a corporation for income tax ~~credits~~purposes. As a result, CERP now no longer has a filing requirement in New Jersey and thus, forfeits its state net operating loss carryforward, which resulted in additional state deferred tax expense. The effective tax rate for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 differed from the expected US tax rate of 35% primarily due to the ~~unfavorable~~projected ~~impact~~tax benefit of ~~state~~federal ~~taxes~~tax ~~and~~credits ~~nondeductible~~on ~~expenses.~~the annual projected effective tax rate for 2016.

WeIn ~~believe~~determining ~~that~~the itneed isfor ~~reasonably~~a ~~possible~~valuation ~~that~~allowance, ~~the~~we ~~total~~must ~~amount~~consider ofboth ~~unrecognized~~positive ~~tax~~and ~~benefits~~negative asevidence ofincluding ~~September 30~~historical losses, ~~2016~~ ~~will~~current ~~not~~earnings, ~~materially~~and ~~change~~tax-planning ~~within~~strategies, as well as the ~~next~~weight 12of ~~months~~the evidence. ~~Audit~~The ~~outcomes~~valuation allowance on deferred tax assets which we believe cannot be realized is reviewed quarterly and ~~the~~is ~~timing~~maintained ofuntil ~~audit~~sufficient ~~settlements~~positive ~~are~~evidence ~~subject~~exists to ~~significant~~support ~~uncertainty~~a reversal. ~~Although~~Based on current year earnings and future profitability, we believe it is reasonably possible that anwe ~~adequate~~will ~~provision~~release ~~has~~the ~~been~~valuation ~~made~~allowance ~~for~~in ~~such~~the ~~matters~~current year, ~~there~~although the exact timing is subject to change based on the ~~possibility~~level of profitability that we are able to achieve for the ~~ultimate~~remainder ~~resolution~~of 2017. Any release of ~~such~~the ~~matters~~valuation ~~could~~allowance ~~have~~will anbe ~~adverse~~recorded ~~effect~~during onthe ~~our~~period of release as a tax benefit increasing net earnings. ~~Conversely,~~The ifvaluation ~~these~~allowance ~~matters~~will be maintained until we are ~~resolved~~able ~~favorably~~to inconclude ~~the~~that ~~future,~~it ~~the~~is ~~related~~more ~~provision~~likely ~~would~~than not that we will be ~~reduced,~~able ~~thus~~to ~~having~~realize our deferred tax assets. We will continue to monitor the need for a ~~favorable~~valuation ~~impact~~allowance on ~~earnings~~a quarterly basis considering all of the available evidence.

We believe that it is reasonably possible that the total amount of unrecognized tax benefits as of March 31, 2017 will not materially change within the next 12 months. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. Although we believe that an adequate provision has been made for such matters, there is the possibility that the ultimate resolution of such matters could have an adverse effect on our earnings. Conversely, if these matters are resolved favorably in the future, the related provision would be reduced, thus having a favorable impact on earnings.

CERP is included in the CEC consolidated tax return filing. We have allocated taxes based upon the separate return method for CERP financial reporting purposes. Historically, we have treated taxes paid or refunds received by CEC for CERP as equity contributions or distributions. Although there is no formal tax sharing agreement in place between the CERP entities and CEC for federal income tax purposes, CERP may make payments to CEC or its subsidiaries for federal, state, or local taxes that would have been paid if CERP was a standalone taxpayer.

The amounts recorded as tax assets, tax liabilities, tax reserves and tax provision reflect CERP’s conclusion that certain challenged transactions identified in Note 1 were negotiated in good faith and the CEC tax consolidated group received fair value for assets transferred. These amounts could change if litigation and potential claims related to the challenged transactions are resolved unfavorably. If that occurs, changes may be necessary to reduce tax assets and increase tax liabilities, tax reserves and the tax provision recorded in CERP’s financial statements. Such changes could be material. Management cannot predict the various potential outcomes of pending litigation and other potential claims, thus cannot estimate the reasonably possible amount or range of effects, if any, to the recorded tax accounts.18

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 1011 — Related Party Transactions

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
(In millions)	~~2016~~2017		~~2015~~2016		~~2016~~		~~2015~~
Services Joint Venture
Shared services allocated expenses from CES	$	60	$	5855	$	~~171~~	$	~~164~~
CEOC Shared Services Agreement
Shared services allocated expenses from CEOC	6		87		19		26
Transactions with CEC
Transactions with CEC and other affiliates
Employee benefits and incentive awards	23		4		9		14
Other	21		1—		2		1
Transactions with Sponsors and their affiliates
Reimbursements and expenses allocated to CERP	—		1		2		2
Other Related Party Transactions
Lease revenue received	13		13		38		38
Lease payments	—		—		1		2
Service provider fee	1		1
Service provider fee	2		—		3		3
World Series of Poker agreements	1		1		2		2

Services Joint Venture

As described in Note 1, CES provides certain corporate and administrative services to CERP and its other Members, and the costs of these services are allocated among the Members. CES serves as an agent on behalf of the Members at a cost-basis. CERP reimburses CES for the services it performs and the costs it incurs.

CEOC Shared Services Agreement

Pursuant to a shared services agreement, CEOC provides CEC with certain corporate and administrative services, and the costs of these services are allocated among us and all of CEC’s operating subsidiaries. In May 2014, the Members entered into a services joint venture, CES, and the Omnibus License and Enterprise Services Agreement (the “Omnibus Agreement”). Certain of these corporate and administrative services are now provided by CES (see Note 1).

Transactions with CEC

Employee Benefit Plans

CEC maintains a defined contribution savings and retirement plan in which employees of CERP may participate. The plan provides for, among other things, pre-tax and after-tax contributions by employees. Under the plan, participating employees may elect to contribute up to 50% of their eligible earnings (subject to certain IRS and plan limits). In addition, employees subject to collective bargaining agreements receive benefits through the multi-employer pension plans sponsored by the organization in which they are a member. The expenses related to contributions made to the plans on their behalf are allocated to the properties at which they are employed.

Equity Incentive Awards

CEC maintains an equity incentive awards plan under which CEC may issue time-based and performance-based stock options, restricted stock units and restricted stock awards to CERP employees. Although awards under the plan result in the issuance of shares of CEC, because CERP is a consolidated subsidiary of CEC, the amounts are included in CERP share-based compensation expense as a component of total compensation for CERP employees. During the second quarter of 2016, CEC implemented ~~the~~ASU ~~Account Standards Update~~ No. ~~2106~~2016-09, which amended Topic 718, Compensation - Stock Compensation. This updated guidance amended the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. CEC applied the amended guidance using a modified retrospective transition method, ~~but~~which ~~there~~had ~~was~~ no material effect on CERP’s financial statements.

1819

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Transactions with Sponsors and their Affiliates

The members of Hamlet Holdings LLC (“Hamlet Holdings”) are comprised of individuals affiliated with Apollo Global Management, LLC and affiliates of TPG Capital LP (collectively, the “Sponsors”). As of ~~September~~March 3031, ~~2016~~2017, Hamlet Holdings beneficially owned ~~the~~a majority of CEC’s common stock.

Reimbursements and Expenses allocated to CERP

CEC has a services agreement with the Sponsors relating to the provision of financial and strategic advisory services and consulting services. The Sponsors have granted aan ongoing waiver of the monitoring fees for management services; however, CEC reimburses the Sponsors for expenses they incur related to these management services and certain legal expenses. A portion of the reimbursed expenses are allocated to CERP.

Sponsors’ Portfolio Companies

We may engage in transactions with companies owned or controlled by affiliates of the Sponsors in the normal course of business. Amounts paid to the Sponsors’ portfolio companies are included in the table above and we believe such transactions are conducted at fair value.

In addition, certain entities affiliated with or under the control of our Sponsors may from time to time transact in and hold our debt securities, and participate in any modifications of such instruments on terms available to any other holder of our debt.

Other Related Party Transactions

Lease Agreements

We lease Octavius Tower ~~at Caesars Palace~~ to CEOC for approximately $35 million per year and gaming space in The LINQ promenade to CGP for approximately $15 million per year pursuant to separate lease agreements that both expire April 2026.

LINQ Access and Parking Easement Lease Agreement

Under the LINQ Access and Parking Easement lease agreement, CEOC leases the parking lot behind The LINQ promenade and The LINQ Hotel & Casino to CERP and CGP. Pursuant to the lease agreement, which expires in April 2028, CERP pays approximately $1 million annually, subject to a 3% annual increase.

Service Provider Fee

CEOC, CERP and CGP have a shared services agreement under which CERP and CGP pay for certain indirect corporate support costs. ~~CEOC is authorized to charge CERP for an amount equal to 21.8% of unallocated corporate support costs.~~

World Series of Poker (“WSOP”) Agreements

Pursuant to multiple agreements with Caesars Interactive Entertainment, Inc. (“CIE”), CERP is allowed to host various WSOP events in Las Vegas and Atlantic City, including the annual Main Event at the Rio Las Vegas. CERP pays CIE $2 million per year for the right to host WSOP tournaments in Las Vegas and pays to host a certain number of WSOP circuit events in Atlantic City. These agreements are in effect until September 1, 2017, unless terminated earlier pursuant to each agreement’s terms.

Total Rewards Loyalty Program

CEOC’s customer loyalty program, Total Rewards, offers incentives to customers from their spending related to on-property entertainment expenses, including gaming, hotel, dining, and retail shopping at our and CEOC’s resort properties located in the U.S. and Canada. Under the program, customers are able to accumulate, or bank, Reward Credits over time that they may redeem at their discretion under the terms of the program. The Reward Credit balance will be forfeited if the customer does not earn a Reward Credit over the prior six-month period. As a result of the ability of the customer to bank the Reward Credits, CEOC estimates the cost of fulfilling the redemption of Reward Credits, after consideration of estimated forfeitures (referred to as “breakage”) based upon the cost of historical redemptions. The estimated value of Reward Credits is expensed as the Reward Credits are earned by customers and is included in direct casino expense. The total estimated cost is accrued by CEOC, with the incremental charges related to our casino properties included in due to affiliates, net in the ~~accompanying~~Balance ~~balance sheets~~Sheets.

1920

CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Due to Affiliates

Amounts due to affiliates for each counterparty represent the payable as of the end of the reporting period primarily resulting from the transactions described above and are settled on a net basis by each counterparty in accordance with the legal and contractual restrictions governing transactions by and among CERP’s affiliated entities. As of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016, due to affiliates was $2625 million and $21 million, respectively.

Intellectual Property License Agreements

Each of the CERP properties and certain of their subsidiaries have entered into license agreements with Caesars License Company, LLC (“CLC”), a subsidiary of CEOC, pursuant to which we receive non-exclusive royalty-free licenses to use certain intellectual property, including trademarks and copyrights owned by CLC in connection with the operation of the CERP properties. These license agreements have a termination date of 2023, subject to annual renewal thereafter. The licenses contemplated by the Omnibus Agreement are subject to these licenses.

In addition, certain subsidiaries of the CERP properties have entered into license agreements with CLC and CEOC pursuant to which CLC and CEOC receive non-exclusive royalty-free licenses to use certain property-specific intellectual property owned by the CERP properties, including the right to use the “Rio,” “Flamingo,” and “Paris” trademarks. These license agreements continue until the applicable operating company or the management company no longer manages the applicable property.

Centralized Transactions

In addition, the Company participates with other CEC subsidiaries in marketing, purchasing, insurance, employee benefit and other programs that are defined, negotiated and managed on a company-wide basis. The Company believes that participating in these consolidated programs is beneficial in comparison to the cost and terms for similar programs that it could negotiate on a standalone basis.

2021

Note references are to the notes to consolidated condensed financial statements included in Item 1, “Unaudited Financial Statements.”

The following discussion and analysis of the financial position and operating results of CERP for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016 should be read in conjunction with the unaudited consolidated condensed financial statements and the notes thereto and other financial information included elsewhere in this Form 10-Q as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) presented in CERP’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015~~2016 (“~~2015~~2016 ~~10-K~~Annual Report”).

The statements in this discussion regarding our expectations regarding our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

CERP LLC is a single-member limited liability company, wholly owned by Caesars Entertainment Resort Properties Holdco, LLC, which is a wholly owned subsidiary of Caesars Entertainment Corporation (“CEC,” “Caesars,” and “Caesars Entertainment”). We own six casino properties that operate under well-known brands and include four properties located in Las Vegas, Nevada: (1) Paris Las Vegas, (2) Harrah’s Las Vegas, (3) Rio All-Suites Hotel and Casino (“Rio Las Vegas”), (4) Flamingo Las Vegas, (5) Harrah’s Atlantic City, and (6) Harrah’s Laughlin. We also own The LINQ promenade and Octavius Tower at Caesars Palace Las Vegas.

Consolidated Operating Results
	Three Months Ended September 30,						PercentFavorable/(Unfavorable)		Nine Months Ended September 30,						PercentFavorable/(Unfavorable)
	Three Months Ended March 31,						PercentFavorable/(Unfavorable)
(Dollars in millions)	~~2016~~2017			~~2015~~2016					~~2016~~			~~2015~~
Casino revenues	$	~~289~~280		$	~~281~~272		2.89	%	$	~~848~~		$	~~863~~		~~(1.7~~	)%
Net revenues	$546	~~569~~		$528	~~542~~		53.04	%	$	~~1,659~~		$	~~1,637~~		~~1.3~~	%
Income from operations	$110	~~104~~		$78	98		641.10	%	$	~~293~~		$	~~332~~		~~(11.7~~	)%
Interest expense	$98	98		$100	98		—2.0	%	$	~~297~~		$	~~299~~		~~0.7~~	%
Net income/(loss)	$6	6		$(16	—	)	~~100.0~~*	%	$	(2	)	$	20		*
Property EBITDA (1)	$177	~~178~~		$164	~~161~~		107.69	%	$	~~526~~		$	~~518~~		~~1.5~~	%
Operating margin (2)	1820.31		%	1814.18		%	05.23 pts		~~17.7~~		%	~~20.3~~		%	~~(2.6) pts~~

____________________


⁽¹⁾	See the Reconciliation of Non-GAAP Financial Measures discussion later in this MD&A for a reconciliation of Property EBITDA.


⁽²⁾	Operating margin is calculated as income from operations divided by net revenues.


*	Not meaningful.

2122

Ongoing Property Renovations

• We perform ongoing refurbishment and maintenance at our properties to maintain our quality standards. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016~~2017, our capital spending totaled $2831 million ~~and~~compared with $8727 million, ~~respectively.~~in ~~Estimated~~the ~~total capital expenditures for~~ 2016 ~~are expected to be between $150 million and $165 million, including funds for these projects that are in process~~quarter. Our most significant construction projects that are planned or in process as of ~~September~~March 3031, ~~2016~~2017 include the following (in millions):

Property	Project Description	Estimated Remaining Cost		Estimated Completion Date (1)
Paris Las Vegas	Rooms renovation	$	33	fourth quarter 2016
Harrah’s Las Vegas	Carnaval North renovation	$	69	fourth quarter 2017
Harrah’s Atlantic City	Tower renovation	20		second quarter 2017
Flamingo Las Vegas	Tower renovation	23		second quarter 2018
Flamingo Las Vegas	Elevators modernization	5		fourth quarter 2017
Harrah’s Atlantic City	Tower renovation	10		second quarter 2017
Paris Las Vegas	Rooms renovation	8		fourth quarter 2016
Flamingo Las Vegas	Meeting rooms remodel	5		second quarter 2017
Flamingo Las Vegas	Elevators modernization	3		fourth quarter 2017

____________________

•(1) InAlthough ~~connection~~the ~~with~~majority ~~ongoing~~of ~~property~~assets ~~renovation~~related ~~projects~~to ~~primarily~~each atproject ~~Harrah’s~~will ~~Las~~be ~~Vegas~~placed ~~(which~~in ~~was~~service ~~substantially~~by ~~completed~~the asestimated ofcompletion ~~September 30~~date, ~~2016),~~we ~~Paris~~expect ~~Las~~to ~~Vegas,~~make ~~and~~payments ~~Flamingo~~subsequent ~~Las~~to ~~Vegas,~~ the ~~depreciation~~completion ofdate ~~certain~~as ~~assets~~ancillary ~~was~~work ~~accelerated~~continues ~~due~~ to ~~their~~be ~~removal~~performed and ~~replacement. We recognized additional depreciation and amortization expense of $8 million and $32 million for~~ the ~~three~~project ~~and~~is ~~nine months ended September 30, 2016, respectively~~finalized.

•

In connection with ongoing property renovation projects, the depreciation of certain assets was accelerated due to their removal and replacement. We recognized additional depreciation and amortization expense of $20 million in the first quarter of 2016 related to certain assets at primarily Harrah’s Las Vegas and Flamingo Las Vegas compared with $1 million in the first quarter of 2017 related to primarily projects at Harrah’s Atlantic City and Flamingo Las Vegas.

Net Revenues

• ~~Expansion~~Net ofrevenues ~~resort~~increased ~~fees~~$18 ~~to all properties in our portfolio during 2015~~million, ~~improved~~or ~~hotel yield~~3.4%, ~~and the opening of the Harrah’s Atlantic City Waterfront Conference Center (the “Atlantic City Conference Center”)~~ in ~~the~~2017 ~~third~~compared ~~quarter~~with of2016 ~~2015~~primarily ~~continued~~due to ~~drive~~increases ~~an increase~~ in ~~our~~rooms ~~hotel~~revenues ~~average cash daily rate to $124 for the third quarter of 2016 from $111 in 2015~~ and tocasino ~~$123 for the nine months ended September 30, 2016 from $112 in 2015~~revenues.

• Rooms ~~revenue~~revenues ~~was~~increased ~~negatively~~$14 ~~affected~~million, byor ~~scheduled~~10.3%, ~~room~~during ~~renovations~~the atfirst ~~Harrah’s~~quarter ~~Las~~of ~~Vegas~~2017. Increased resort fees and ~~Paris~~improved ~~Las~~hotel ~~Vegas,~~yield ~~which~~continued ~~resulted~~to drive an increase in ~~over~~our ~~32,000~~hotel ~~room~~average ~~nights~~cash ~~out~~daily ofrate ~~service~~to ~~during~~$138 ~~the~~in ~~third~~2017 ~~quarter~~from of$123 in 2016. ~~and~~Harrah’s ~~over~~Las ~~90,000~~Vegas had an 18% increase in room nights available during the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September~~2017 ~~30,~~due to construction at the property in the 2016 first quarter, which contributed to an increase in rooms revenues of $6 million in 2017.

• Casino revenues increased ~~during~~$8 ~~the third quarter of 2016 primarily due to higher gaming volumes in Nevada~~million, asor ~~well as favorable gaming hold~~2.9%, ~~Casino~~during ~~revenues declined for~~ the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September~~2017 ~~30,~~primarily ~~2016~~ due to ~~declines~~higher in gaming volumes~~, primarily in Atlantic City~~.

• Other revenues increased $10 million and $11 million during the three and nine months ended September 30, 2016, respectively, driven by increases at Rio Las Vegas, which contributed to higher entertainment revenue.

Operating Expenses

• Operating expenses ~~were~~decreased ~~relatively flat in 2016 compared with the prior year periods except for increases of~~ $1014 million, or 183.91%, induring ~~depreciation, amortization, and other for~~ the ~~third~~first quarter of ~~2016~~2017 ~~and~~primarily ~~$46~~due ~~million,~~to ora ~~29.9%,~~decrease ~~for~~in ~~the~~depreciation, ~~nine months ended September 30~~amortization, ~~2016~~and other. The ~~increases~~decrease ~~were~~mostly ~~due~~resulted ~~primarily~~from toaccelerated ~~the property renovations discussed above, as well as increased~~ depreciation ~~and~~in ~~amortization~~the ~~expense~~prior ~~related~~year due to the ~~Atlantic~~removal ~~City~~and ~~Conference~~replacement ~~Center~~ of $4certain ~~million~~assets ~~for~~as ~~the~~discussed ~~nine months ended September 30, 2016~~above.

Income Taxes

The effective tax ~~rate~~rates for ~~each of~~ the three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015 was zero, respectively, and for the nine months ended September 30,~~ 2016 ~~and 2015~~ were 50.0% and 3927.43%, respectively. See Note 910 for a detailed discussion of income taxes and the effective tax rate.

Recent Accounting Pronouncements

See Note 3 for ~~discussions~~discussion of the adoption and potential impacts of recently issued accounting standards.

Critical Accounting Policies

For information on critical accounting policies, see “Critical Accounting Policies and Estimates” in MD&A of the ~~2015~~2016 ~~10-K~~Annual Report. There have been no changes to these policies during the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017.

2223

Liquidity and Capital Resources

Liquidity Discussion and Analysis

AsOur ~~discussed~~cash inand ~~Note~~cash equivalents totaled $224 million as of March 131, 2017. ~~effective~~We ~~January~~generated 1,net ~~2016,~~income weof ~~implemented~~$6 million during the ~~Financial~~three ~~Accounting~~months ~~Standard~~ended ~~Board’s~~March 31, 2017, ~~Accounting~~which ~~Standard~~includes ~~Update~~$57 ~~No.~~million ~~2015~~of non-~~02,~~cash ~~which~~items ~~amended~~such ~~Topic~~as ~~810~~depreciation, ~~Consolidations~~amortization, and ~~under~~other. ~~the~~Our ~~new~~operating ~~guidance,~~activities weyielded ~~deconsolidated~~cash ~~Caesars~~flows ~~Enterprise~~of ~~Services~~$135 million, ~~LLC~~an ~~(“CES”)~~increase ~~from~~of ~~our~~$33 ~~financial~~million, ~~statements~~or 32.4%, ~~Because~~compared with the ~~cash~~prior ~~and~~year ~~cash~~period. ~~equivalents~~The ~~held~~increase ~~by CES~~ was ~~not~~primarily ~~available~~due to ~~satisfy~~improvement ~~CERP’s~~in ~~obligations~~operating results in 2017, including the ~~deconsolidation~~increase ofin ~~CES~~net ~~did~~revenues ~~not~~discussed ~~have~~above, anthe ~~effect~~timing onof ~~CERP’s~~payments ~~ongoing~~for ~~liquidity~~amounts ordue ~~ability~~ to ~~satisfy~~affiliates, ~~its~~and ~~obligations~~other offsetting working capital fluctuations.

WeCapital ~~generated~~expenditures awere ~~net loss of~~ $231 million during the ~~nine~~2017 ~~months~~period ~~ended~~in ~~September 30~~support of our ongoing property renovations, ~~2016~~ an increase of $4 million, ~~which~~or ~~includes~~14.8%, compared with the ~~impact~~prior ofyear ~~non-cash~~period. ~~items~~Our ~~such~~projected ascapital ~~depreciation,~~expenditures ~~amortization,~~for ~~and~~2017 ~~other~~are ~~expense~~estimated ofto be $~~200~~180 million ~~during~~to ~~the~~$230 ~~period~~million. ~~and~~We ~~changes~~incur capital expenditures in ~~deferred~~the ~~income~~normal ~~taxes~~course of ~~$14~~business, ~~million.~~and ~~Other~~we ~~than~~perform ~~accelerated~~ongoing ~~depreciation~~refurbishment and ~~amortization~~maintenance ~~expense~~at ~~compared~~our ~~with~~existing ~~the~~properties ~~prior~~to ~~year~~maintain ~~(described~~our ~~above),~~quality ~~our~~standards. ~~operating~~We ~~activities~~also ~~were~~continue ~~stable~~to ~~and~~pursue ~~yielded~~development ~~operating~~and ~~cash~~acquisition ~~flows~~opportunities offor ~~$299~~additional ~~million,~~casino anentertainment ~~increase~~and ofother ~~$30~~hospitality ~~million,~~facilities orthat ~~11.2%,~~meet ~~compared~~our ~~with~~strategic ~~the~~and ~~prior~~return ~~year~~on ~~period~~investment criteria. ~~The~~Cash ~~increase~~used ~~was~~for ~~primarily~~capital ~~due~~expenditures toin ~~improvement~~the innormal ~~operating~~course ~~results~~of inbusiness ~~2016,~~is ~~including~~typically ~~the~~made ~~increase~~available infrom ~~net~~cash ~~revenues~~flows ~~discussed~~generated ~~above,~~by ~~the~~our ~~timing~~operating ofactivities, ~~payments~~while cash used for ~~amounts~~development ~~due~~projects tois ~~affiliates~~typically funded from established debt programs, ~~and~~specific ~~largely~~project ~~offsetting~~financing, ~~working~~and ~~capital~~additional ~~fluctuations~~debt offerings.

~~Capital~~We ~~expenditures~~are ~~were~~highly ~~$87~~leveraged ~~million~~and ~~during~~a ~~the~~significant ~~2016~~amount ~~period in support~~ of our ~~ongoing~~liquidity ~~property~~needs ~~renovations,~~are afor ~~decrease~~debt ofservice. ~~$15~~As ~~million,~~of ~~or 14.7%~~March 31, 2017, ~~compared~~we ~~with~~had ~~the prior year period~~$4.6 Inbillion ~~addition~~face tovalue ~~acquisitions~~ of ~~property~~indebtedness ~~and~~outstanding ~~equipment,~~including wecapital ~~also~~lease ~~have~~indebtedness. ~~commitments~~During ~~related~~the tothree ~~our~~months ~~long-term~~ended ~~debt and~~March 31, ~~from time to time~~ 2017, ~~our~~we ~~revolving~~incurred ~~credit~~a ~~facility.~~total Inof ~~2016, we incurred~~ $~~297~~98 million of interest expense, ~~of which $239 million was paid in cash,~~ and we repaid $~~108~~48 million ~~net~~ primarily on our revolving ~~line~~credit offacility. ~~credit~~See ~~($173~~Note 8 ~~million~~for indetails ~~payments~~of ~~less~~our ~~$65~~debt ~~million~~outstanding, indebt ~~revolver~~service ~~draws)~~requirements, and restrictive covenants.

We are highly leveraged and a significant amount of our liquidity needs are for debt service and related interest payments. As of September 30, 2016, we had $4.6 billion face value of indebtedness outstanding including capital lease obligations (see Note 7).

Estimated Debt Service Payments ⁽¹⁾

(In millions)	Remaining 2017		2018		2019		2020		2021		Thereafter		Total
Long-term debt principal payments	$	20	$	25	$	25	$	3,350	$	1,150	$	—	$	4,570
Estimated interest payments	340		390		400		360		130		—		1,620
Total principal and interest	$	360	$	415	$	425	$	3,710	$	1,280	$	—	$	6,190

Estimated Debt Service Payments (1)
(In millions)	Remaining2016		2017		2018		2019		2020		Thereafter		Total
Long-term debt principal payments	$	10	$	26	$	25	$	25	$	3,350	$	1,150	$	4,586
Estimated interest payments	190		380		380		380		340		130		1,800
Total principal and interest	$	200	$	406	$	405	$	405	$	3,690	$	1,280	$	6,386

____________________


⁽¹⁾	Debt principal payments are estimated amounts based on maturity dates and potential borrowings under our revolving credit facility. Interest payments are estimated based on the forward-looking LIBOR curve. Actual payments may differ from these estimates.

Our ability to fund our operations, pay our debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond our control, and disruptions in capital markets and restrictive covenants related to our existing debt could impact our ability to fund liquidity needs, pay indebtedness, and secure additional funds through financing activities. We believe that our cash and cash equivalents balance, our cash flows from operations, and financing available under our revolving credit facility will be sufficient to meet our normal operating requirements during the next 12 months and the foreseeable future. Although CERP’s subsidiaries are allowed to make distributions to CERP LLC, the indentures governing the CERP Notes generally prevent the distribution of cash to Caesars Entertainment, except for certain payments as described in the indentures. We believe that our cash flows from operations are sufficient to cover our planned capital expenditures for ongoing property renovations during the remainder of ~~2016~~2017, as well as remaining ~~2016~~2017 estimated interest and principal payments due on our long-term debt totaling $~~200~~360 million. However, if needed, our existing cash and cash equivalents of $~~247~~224 million and availability under our revolving credit facility of $270 million, both as of ~~September~~March 3031, ~~2016~~2017, are available to further support CERP’s operations during the next 12 months and the foreseeable future. ~~In addition, restrictions under our lending arrangements generally prevent the distribution of cash to CEC, except for certain restricted payments.~~

We cannot assure you that our business will generate sufficient cash flows from operations, or that future borrowings will be available to us, to fund our liquidity needs and pay our indebtedness. If we are unable to meet our liquidity needs or pay our indebtedness when it is due, we may have to reduce or delay refurbishment and expansion projects, reduce expenses, sell assets, or attempt to restructure our debt. Any such actions could negatively impact our competitive position and revenue generation.

Related-Party Transactions

We participate with other CEC subsidiaries in marketing, purchasing, insurance, employee benefit, and other programs that are defined, negotiated and managed on a company-wide basis. ~~The~~We ~~Company~~believe ~~believes~~ that participating in these consolidated programs is beneficial in comparison to the cost and terms for similar programs that itwe could negotiate on a standalone basis. For a more complete description of the nature and extent of these and other transactions with related parties, see Note 1011.

2324

Other Obligations and Commitments

As of ~~September~~March 3031, ~~2016~~2017, there have been no material changes outside of the ordinary course of business to our other known contractual obligations, which are set forth in the table included in Item 7 in our ~~2015~~2016 ~~10-K~~Annual Report.

Reconciliation of Non-GAAP Financial Measures

Property earnings before interest, taxes, depreciation, and amortization (“EBITDA”) is presented as a measure of the Company’s performance. Property EBITDA is defined as revenues less property operating expenses and is comprised of net income/(loss) before (i) interest expense, net of interest capitalized and interest income, (ii) income tax (benefit)/provision, (iii) depreciation and amortization, (iv) corporate expenses, and (v) certain items that the Company does not consider indicative of its ongoing operating performance at an operating property level. In evaluating Property EBITDA you should be aware that, in the future, the Company may incur expenses that are the same or similar to some of the adjustments in this presentation. The presentation of Property EBITDA should not be construed as an inference that future results will be unaffected by unusual or unexpected items.

Property EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net income/(loss) as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with accounting principles generally accepted in the United States (“GAAP”)). Property EBITDA may not be comparable to similarly titled measures reported by other companies within the industry. Property EBITDA is included because management uses Property EBITDA to measure performance and allocate resources, and believes that Property EBITDA provides investors with additional information consistent with that used by management.

Reconciliation of Property EBITDA
	Three Months Ended September 30,					Nine Months Ended September 30,
	Three Months Ended March 31,
(In millions)	~~2016~~2017		~~2015~~2016			~~2016~~			~~2015~~
Net income/(loss)	$	6	$	—(16	)	$	(2	)	$	20
Income tax (benefit)/provision	—6		—(6		)	(2		)	13
Interest expense	98		98100			~~297~~			~~299~~
Depreciation, amortization, and other	6357		5375			~~200~~			~~154~~
Corporate expense	11		10			33			32
Corporate expense and other	10		11
Property EBITDA	$	~~178~~177	$	~~161~~164		$	~~526~~		$	~~518~~

2425

CAUTIONARY ~~STATEMENT~~STATEMENTS ~~PURSUANT~~REGARDING TOFORWARD-LOOKING ~~THE PRIVATE~~ STATEMENTS

SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q contains or may contain “forward- looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. We have based these forward-looking statements on our current expectations about future events.

Further, statements that include words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue,” “present,” "seek," "hope," or “pursue,” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements. These forward-looking statements are found at various places throughout this report. These forward-looking statements, including, without limitation, those relating to future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings, the restructuring of CEOC, and future financial results, wherever they occur in this report, are necessarily estimates reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward- looking statements. These forward-looking statements should, therefore, be considered in light of various important factors set forth above and from time to time in our filings with the Securities and Exchange Commission.

Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include without limitation:

▪ the ~~impact~~effect of our substantial indebtedness and the restrictions in our debt agreements;


•	our dependence on CES and its management for services pursuant to the Omnibus License and Enterprise Services Agreement, access to intellectual property rights, the Total Rewards loyalty program, its customer database and other services, rights and information, and our dependence on Caesars Entertainment’s management;


▪	our ability to use CEOC’s customer-tracking, customer loyalty and yield-management programs to continue to increase customer loyalty and same-store or hotel sales;

▪ the effects of CEOC’s bankruptcy filing on us and ~~CEC~~Caesars Entertainment, and the interest of various creditors and other constituents;

▪ the ~~impact~~effect of a bankruptcy by other third parties that we depend on;


▪	the effects of competition, including locations of competitors, growth of online gaming, competition for new licenses and operating and market competition;

▪ ~~the effects of local and national economic, credit, and capital market conditions on the economy, in general, and on the gaming industry, in particular, including~~ reductions in consumer discretionary spending due to economic downturns or other factors;


▪	continued growth in consumer demand for non-gaming activities replacing demand for gambling;


▪	our ability to renew our agreement to host the World Series of Poker’s Main Event;


▪	our ability to retain our resident performers on acceptable terms;


▪	uncertainty in the completion of projects neighboring our properties that are expected to be beneficial to our properties;

▪ ~~our~~changes ~~ability~~in the extensive governmental regulations to ~~realize~~which ~~any~~we are subject, and changes in laws, including increased tax rates, smoking bans, regulations or ~~all~~accounting standards, third-party relations and approvals, and decisions, disciplines and fines of ~~our~~courts, ~~projected~~regulators ~~cost~~and ~~savings~~governmental bodies;

▪ changes in the extensive governmental regulations to which we are subject, and changes in laws, including increased tax rates, smoking bans, gaming regulations or accounting standards, third-party relations and approvals, and decisions, disciplines and fines of courts, regulators and governmental bodies;


▪	any impairments to goodwill, indefinite-lived intangible assets, or long- lived assets that we may incur;

▪ acts of war or terrorist incidents, severe weather conditions, uprisings or natural disasters, including losses therefrom, ~~including~~ losses in revenues and damage to property, and the impact of severe weather conditions on our ability to attract customers to certain of our facilities;


▪	fluctuations in energy prices;


▪	work stoppages and other labor problems;


▪	the impact, if any, of unfunded pension benefits under multi-employer pension plans;


▪	our ability to recover on credit extended to our customers;

▪ the potential difficulties in employee retention and recruitment as a result of our substantial indebtedness, ~~any ongoing weakness in~~ the ~~gaming industry, the~~ restructuring of CEOC, or any other factors;


▪	differences in our interests and those of our Sponsors;


▪	damage caused to our brands due to the unauthorized use of our brand names by third parties;

▪ the failure of ~~CES~~Caesars ~~and~~Entertainment ~~CEOC~~ to protect the trademarks that are licensed to us;

▪ the outcome of currently pending litigation ~~outcomes~~or threatened litigation, including, but not limited to, the proceedings described under “~~Bondholder~~Noteholder Disputes” in Part II, Item 1, “Legal Proceedings,” ~~threatened litigation by the National Retirement Fund~~ and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation;

▪ ~~access to available and reasonable financing on a timely basis, including~~ our ability to ~~refinance~~access ~~our~~additional ~~indebtedness~~capital on acceptable terms or at all;


▪	abnormal gaming holds (“gaming hold” is the amount of money that is retained by the casino from wagers by customers);


▪	our exposure to environmental liability, including as a result of unknown environmental contamination;


▪	our ability to recoup costs of capital investments through higher revenues;


▪	access to insurance on reasonable terms for our assets;


▪	the effects of compromises to our information systems or unauthorized access to confidential information or our customers’ personal information;

▪ the effects of environmental and structural building conditions related to our properties;


▪	the effects of deterioration in the success of third parties adjacent to our business; and

• the other factors set forth under “Risk Factors” in our ~~2015~~2016 ~~10-K~~Annual Report.

You are cautioned ~~not~~ to not place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our market risk in ~~2016~~2017. For information on our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our ~~2015~~2016 ~~10-K~~Annual Report.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our ~~President~~principal executive officer and ~~Treasurer~~principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) at ~~September~~March 3031, ~~2016~~ 2017. Based on this evaluation required by paragraph (b) of Rules 13a-15 or 15d-15, our ~~President~~CEO and ~~Treasurer~~CFO concluded that our disclosure controls and procedures were effective as of ~~September~~March 3031, ~~2016~~ 2017.

Changes in Internal Controls

~~There~~We have ~~not~~commenced ~~been~~several ~~changes~~transformation ininitiatives, ~~internal~~including ~~controls~~implementing ~~over~~new ~~financial~~general ~~reporting~~ledger ~~during~~software ~~the~~to ~~three~~automate ~~months~~and ~~ended~~simplify ~~September 30,~~our ~~2016~~business processes. These are long-term initiatives that ~~have~~we ~~materially~~believe ~~affected,~~will orenhance ~~are~~our ~~reasonably~~internal ~~likely~~control over financial reporting due to ~~materially~~increased ~~affect,~~automation and integration of related processes. We will continue to monitor and evaluate our internal ~~controls~~control over financial reporting throughout the transformation.

There have not been changes in our internal control over financial reporting during the three months ended March 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II—OTHER INFORMATION


Item 1.	Legal Proceedings

The Company is party to ordinary and routine litigation incidental to our business. See Note 2 for full details of the matters outlined below.

Noteholder Disputes


•	Litigation commenced by Wilmington Savings Fund Society, FSB on August 4, 2014.


•	Litigation commenced by UMB Bank on November 25, 2014.

Other Litigation


•	Judgment related to a Birthday Cash promotional offer by Harrah’s Atlantic City on March 19, 2010.


•	Litigation commenced by Trustees of the National Retirement Fund in January 2015.


Item 1A.	Risk Factors

For risk factors that could cause actual results to differ materially from those anticipated, please refer to our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

~~Not applicable~~None.


Item 3.	Defaults Upon Senior Securities

~~Not applicable~~None.


Item 4.	Mine Safety Disclosures

Not applicable.


Item 5.	Other Information

None.

2829


Item 6.	Exhibits

Incorporated by Reference

ExhibitNumber

Exhibit Description

Filed Herewith

Form

Period Ending

Exhibit

Filing Date

Link

31.1

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Link

31.2

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Link

*32.1

Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

—

Link

*32.2

Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

—

Link

101

The following financial statements from the Company’s Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL: (i) Consolidated Condensed Balance Sheets, (ii) Consolidated Condensed Statements of Operations, (iii) Consolidated Condensed Statement of Member’s Equity, (iv) Consolidated Condensed Statements of Cash Flows, (v) Notes to Consolidated Financial Statements.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

_______________

* Furnished herewith.

2930

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CAESARS ENTERTAINMENT RESORT PROPERTIES, LLC
November 7, 2016	By:	/S/ ERIC HESSION
May 2, 2017	By:	/S/ ERIC HESSION
		Eric Hession
		Treasurer and Manager

3031

Filing Compare · Caesars Entertainment Resort Properties, LLC