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• | the financial performance of our business; | |
• | legislative and regulatory matters, changes in government regulation and regulatory action, including, without limitation, potential (1) legalization of gaming in additional states or (2) tax increases in our states of operation; | |
• | increased competition in our markets; | |
• | general business conditions, including competitive practices and changes in customer demand, and general economic conditions that impact the performance of our operations; | |
• | the cyclical nature of the gaming and hospitality businesses; and |
• | adverse outcomes of legal proceedings and the development of, and changes in, claims or litigation reserves. |
• | “Acquisition Financing Transactions” refers to the offering of the outstanding notes and the entering into of, and initial borrowings under, the senior secured credit facility and the Las Vegas secured loan. | |
• | “affiliate guarantors” refers to Realty and CP Vicksburg, affiliates of Tropicana Entertainment but not subsidiaries of Tropicana Entertainment that guarantee the outstanding notes and will guarantee the exchange notes, and JMBS Casino, an affiliate of the Yung family but not a subsidiary of Tropicana Entertainment that guarantees the outstanding notes and will guarantee the exchange notes. | |
• | “Aztar” refers to Aztar Corporation. | |
• | “Aztar Acquisition” refers to the acquisition of Aztar. | |
• | “Aztar Missouri Riverboat Gaming Company” refers to Aztar Missouri Riverboat Gaming Company, L.L.C., which holds Casino Aztar Caruthersville in Caruthersville, Missouri. |
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• | “Columbia Sussex” refers to Columbia Sussex Corporation, an affiliate of Tropicana Entertainment that is controlled by Mr. William J. Yung, III, who indirectly holds all of the equity interests in Tropicana Entertainment. | |
• | “CP Vicksburg” refers to Columbia Properties Vicksburg, LLC, an affiliate guarantor. | |
• | “JMBS Casino” refers to JMBS Casino LLC, an affiliate guarantor. | |
• | “JMBS Trust” refers to JMBS Casino Trust, a trust created for the benefit of the children of Mr. William J. Yung, III that is subject to the control of his children. | |
• | “Realty” refers to CP Laughlin Realty, LLC, an affiliate guarantor. | |
• | “restricted group” refers to those entities that are subject to the restrictive covenants contained in the indenture. The restricted group includes the affiliate guarantors and Tropicana Entertainment and its consolidated subsidiaries other than the subsidiaries that hold the assets and operations relating to the Tropicana Resort and Casino — Las Vegas. | |
• | “Transactions” refers to the Aztar Acquisition, the Acquisition Financing Transactions (including the refinancing of certain of Tropicana Casinos and Resorts’, Aztar’s and the affiliate guarantors’ indebtedness) and the corporate reorganization described under “Prospectus Summary — Corporate Reorganization” and under “Business — Corporate Reorganization.” | |
• | “Tropicana Entertainment” refers to Tropicana Entertainment, LLC. Tropicana Entertainment, LLC was formerly named Wimar OpCo, LLC. On February 12, 2007, its name was changed to Tropicana Entertainment, LLC. | |
• | “Tropicana Finance” refers to Tropicana Finance Corp., a direct wholly-owned subsidiary of Tropicana Entertainment and a co-issuer of the notes. Tropicana Finance Corp. was formerly named Wimar OpCo Finance Corp. On February 12, 2007, its name was changed to Tropicana Finance Corp. | |
• | “we,” “us,” “our” and “the company” refer to Tropicana Entertainment together with, unless the context otherwise requires, all of its consolidated subsidiaries (and, unless the context otherwise requires, such references give effect to the Aztar Acquisition and the contribution of certain gaming operations by Tropicana Casinos and Resorts to Tropicana Entertainment substantially concurrently with the consummation of the Aztar Acquisition pursuant to the corporate reorganization described under “Prospectus Summary — Corporate Reorganization” and “Business — Corporate Reorganization”) and the affiliate guarantors. | |
• | “Tropicana Entertainment Holdings” refers to Tropicana Entertainment Holdings, LLC, a direct wholly-owned subsidiary of Tropicana Casinos and Resorts, and the direct parent of Tropicana Entertainment Intermediate Holdings. Tropicana Entertainment Holdings, LLC was formerly named Wimar OpCo Holdings, LLC. On February 12, 2007, its name was changed to Tropicana Entertainment Holdings, LLC. | |
• | “Tropicana Entertainment Intermediate Holdings” refers to Tropicana Entertainment Intermediate Holdings, LLC, the direct parent of Tropicana Entertainment. Tropicana Entertainment Intermediate Holdings, LLC was formerly named Wimar OpCo Intermediate Holdings, LLC. On February 12, 2007, its name was changed to Tropicana Entertainment Intermediate Holdings, LLC. | |
• | “Tropicana Casinos and Resorts” refers to Tropicana Casinos and Resorts, Inc., Tropicana Entertainment’s ultimate parent. Tropicana Casinos and Resorts was formerly named Wimar Tahoe Corporation. On February 12, 2007, its name was changed to Tropicana Casinos and Resorts, Inc. |
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Acquisition | Approx. Casino | Slot | Table | Hotel | Parking | |||||||||||||||||||
Property Name | Location | Date | Square Footage | Machines | Games | Rooms | Spaces | |||||||||||||||||
Legacy Properties | ||||||||||||||||||||||||
Belle of Baton Rouge | Baton Rouge, LA | Oct. 2005 | 29,500 | 1,019 | 22 | 300 | 1,803 | |||||||||||||||||
River Palms Hotel and Casino | Laughlin, NV | Sept. 2003 | 63,850 | 1,061 | 28 | 1,001 | 1,834 | |||||||||||||||||
Lake Tahoe Horizon Casino and Resort | South Lake Tahoe, NV | Jan. 1990 | 43,000 | 712 | 32 | 539 | 1,396 | |||||||||||||||||
MontBleu Casino | South Lake Tahoe, NV | June 2005 | 40,585 | 638 | 52 | 440 | 1,547 | |||||||||||||||||
Lighthouse Point Casino(1)(2) | Greenville, MS | Nov. 1996(3) | 22,000 | 725 | 9 | — | 386 | |||||||||||||||||
Jubilee Casino(4) | Greenville, MS | March 2002 | 28,500 | 712 | 13 | 39 | 512 | |||||||||||||||||
Vicksburg Horizon Casino(5) | Vicksburg, MS | Oct. 2003 | 20,909 | 696 | 19 | 117 | 889 | |||||||||||||||||
Recently Acquired Properties | ||||||||||||||||||||||||
Tropicana Atlantic City | Atlantic City, NJ | Jan. 2007 | 147,248 | 3,480 | 209 | 2,129 | 5,477 | |||||||||||||||||
Tropicana Express Hotel and Casino | Laughlin, NV | Jan. 2007 | 53,680 | 1,075 | 39 | 1,495 | 2,253 | |||||||||||||||||
Casino Aztar Evansville | Evansville, IN | Jan. 2007 | 38,360 | 1,132 | 52 | 346 | 2,100 | |||||||||||||||||
Tropicana Las Vegas(2) | Las Vegas, NV | Jan. 2007 | 60,727 | 994 | 35 | 1,876 | 2,388 | |||||||||||||||||
Total | 548,359 | 12,244 | 510 | 8,282 | 20,585 | |||||||||||||||||||
(1) | Tropicana Entertainment indirectly holds a 79% voting interest and an 84% economic interest in Greenville Riverboat, LLC, which manages the Lighthouse Point Casino. A wholly-owned subsidiary of Tropicana Entertainment owns the riverboat on which the Lighthouse Point Casino conducts its operations. | |
(2) | Greenville Riverboat, LLC and the subsidiaries of Tropicana Entertainment that hold the assets and operations relating to the Tropicana Las Vegas are not guarantors of the outstanding notes or of the senior secured credit facility and will not be guarantors of the exchange notes, although Greenville Riverboat, LLC is subject to the restrictive covenants contained in the indenture and the credit documentation governing the senior secured credit facility. | |
(3) | The Lighthouse Point Casino was developed (as opposed to acquired) and commenced operations in November 1996. | |
(4) | JMBS Casino, one of the affiliate guarantors, owns and operates the Jubilee Casino. | |
(5) | CP Vicksburg, one of the affiliate guarantors, owns and operates the Vicksburg Horizon Casino. |
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• | Cost-Effective Administrative Services. We share corporate offices with Columbia Sussex and many corporate functions, such as human resources, accounting, administration, purchasing, marketing, hotel management and supervision, risk management, contracting, construction and development, treasury and maintenance-related services, are performed for certain of Tropicana Entertainment’s subsidiaries and the affiliate guarantors by Columbia Sussex pursuant to the terms of service agreements, which are subject to gaming regulatory approval. Gaming regulatory approval of the terms of one service agreement has not yet been obtained with respect to our Tropicana Atlantic City property. The service agreements extend by their terms until we elect to terminate them, which we are permitted to do at any time with 60 days written notice. Under the terms of these service agreements, subject to certain conditions, Columbia Sussex provides corporate services on behalf of our gaming properties that have received regulatory approval to date for a total amount of approximately $1.9 million per year, subject to modest price increases each year starting in 2008. We believe the service agreements enable us to obtain corporate services at costs that are more favorable than we would be able to obtain on a stand-alone basis. We have also entered into agreements with Tropicana Casinos and Resorts for the provision to certain of Tropicana Entertainment’s subsidiaries and the affiliate guarantors of casino services, such as the supervision of casino operations, staffing, marketing and advertising and accounting, which agreements are subject to gaming regulatory approval. Gaming regulatory approval of the terms of one of these agreements has not yet been obtained with respect to our Tropicana Atlantic City property. Under these agreements, we have agreed to pay Tropicana Casinos and Resorts our allocated portion of the corporate overhead costs for these services. For a more detailed description of the agreements described in this paragraph, see “Certain Relationships and Related Party Transactions.” |
• | Integrated Marketing Programs. The compatibility of Columbia Sussex’s extensive portfolio of 70 hotels and our network of casino properties has provided us with a number of opportunities to develop integrated marketing programs. We expect to develop joint programs whereby guests of our casinos can receive discounts on stays at Columbia Sussex hotel properties. In addition, we and Columbia Sussex are able to pool our respective customer databases to develop direct marketing campaigns targeting a broad group of prospective customers, and to more effectively promote these programs by sharing a centralized marketing platform. We believe that our acquisition of Aztar has provided us with additional opportunities for these types of joint marketing efforts. |
• | Extensive Construction and Development Experience. Throughout our history, we have engaged in a number of property renovation, refurbishment and development projects, and we have a number of additional projects underway or slated to commence in the near term. As a developer of hotel properties, Columbia Sussex has over 30 years of experience in planning, financing and executing hotel improvement and development programs. We have been able to leverage this experience when undertaking our development projects, which we believe has allowed us to develop and enhance our gaming assets in a cost-effective manner, while meeting target completion dates and development expectations. |
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• | Tropicana Atlantic City: In November 2004, Aztar completed a $285.0 million expansion to the Tropicana Resort and Casino — Atlantic City, or the Tropicana Atlantic City, which included a 200,000-square-foot entertainment, restaurant and retail complex known as “The Quarter at Tropicana,” which we refer to as The Quarter. We intend to proceed with a plan developed by Aztar, which we expect will cost approximately $55.0 million, to enhance the Tropicana Atlantic City by refurbishing its casino floors and hotel towers so that they are similar in quality and appearance to The Quarter. The three-phase refurbishment project commenced in December 2005. During phase one of the project, Aztar made enhancements to the north tower hotel rooms and certain non-gaming amenities, which phase was completed during the fourth quarter of 2006. During phase two of the project, we refurbished half of the casino floor and the south tower hotel rooms, which phase was completed during the second quarter of 2007. In phase three of the project, we will refurbish the other half of the casino floor and two restaurants at the property. We expect to complete the third phase in the first quarter of 2008. |
• | Casino Aztar Evansville: Construction was completed in 2007 at the Casino Aztar Evansville on a $32.6 million expansion that includes a 96-room boutique hotel, multi-venue dining and entertainment complex and associated infrastructure. We believe that the expansion has increased the attractiveness of the property and expanded customer reach through the availability of additional hotel rooms. In addition, in August 2007, the City of Evansville’s Redevelopment Commission approved our preliminary plan to build a 1,046-seat theater at the Casino Aztar Evansville. The venue, construction of which is currently projected to be completed in the first quarter of 2008 at an approximate cost of $4.0 million, is expected to offer live entertainment for patrons of the property and residents of Evansville. |
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• | Belle of Baton Rouge: The Belle of Baton Rouge benefited from the population increase in the Baton Rouge area following the displacement of residents of New Orleans as a result of Hurricane Katrina, although that benefit has since somewhat subsided. To accommodate the increased demand for gaming in this market and to build market share, we have developed plans to build a 330-space parking structure adjacent to the casino. We will endeavor to complete construction of the parking structure, which is designed to increase casino traffic and is estimated to cost approximately $12.5 million, by the second quarter of 2008. |
• | MontBleu Casino: In the summer of 2006, we completed a $21.0 million program to re-brand and reposition the former Caesars Lake Tahoe as the MontBleu. We introduced newon-site amenities and entertainment options at the MontBleu to appeal to a younger clientele, while continuing to focus on the value conscious customer in the South Lake Tahoe, Nevada market at our sister property, the Tahoe Horizon. We intend to increase our efforts to effectively market the MontBleu as we seek to strengthen our customer base. |
• | Tropicana Express: We have completed the $11.0 million program to renovate the hotel rooms at the Tropicana Express Hotel and Casino, or the Tropicana Express, which we believe will help solidify our position in the Laughlin market. In addition, the Tropicana Express is situated less than one mile from the River Palms, which we believe will allow us to achieve operational synergies and cost savings by consolidating duplicative back-office and other support functions, including the sharing of laundry facilities and employees to reduce overtime pay. |
• | Lighthouse Point Casino and Jubilee Casino: We expect to invest between $7.0 million and $8.0 million at the Lighthouse Point Casino and the Jubilee Casino, our two casinos in Greenville, Mississippi, in order to renovate the casino floors and public areas of the properties so as to better position them to meet the competitive challenges posed by the expected introduction of a new gaming property to the market in late 2007. We will add up to 850 new and converted slot machines, making all of the slot machines at the properties “ticket-in ticket-out” and upgrade the slot tracking systems. We will also make improvements to the restaurant at the Lighthouse Point Casino. |
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• | the net proceeds of the offering of the outstanding notes; |
• | a senior secured credit facility (which we refer to as the senior secured credit facility), which was made available to Tropicana Entertainment and provided for $1,530.0 million in aggregate principal amount of term loans, $229.8 million in aggregate principal amount of which we have since repaid resulting in $1,300.2 million in aggregate principal amount of such term loans being outstanding as of September 30, 2007, and a $180.0 million revolving credit facility under which we presently have approximately $170.3 million in additional availability net of approximately $9.7 million of outstanding letters of credit; |
• | a secured credit facility in an aggregate principal amount of $440.0 million (which we refer to as the Las Vegas secured loan), which was made available to Tropicana Las Vegas Resort and Casino, LLC (which we refer to as the Las Vegas Borrower), a newly formed indirect subsidiary of Tropicana Entertainment that holds the assets and operations relating to the Tropicana Las Vegas, including its34-acre property located on the Las Vegas “Strip;” |
• | the approximately $241.8 million remaining of a $313.0 million deposit plus accrued interest made by Columbia Sussex on behalf of Tropicana Casinos and Resorts into a custodial account upon the execution of the Aztar Merger Agreement; | |
• | cash-on-hand of ours and Aztar; and | |
• | an additional equity contribution of approximately $152.0 million from Tropicana Casinos and Resorts, Tropicana Entertainment’s ultimate parent. |
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(1) | Provides a first-priority pledge of all of the equity interests in Tropicana Entertainment Intermediate Holdings to secure the Las Vegas secured loan. | |
(2) | Guarantees the obligations in respect of the senior secured credit facility. Also provides a first-priority pledge of all of the equity interests in Tropicana Entertainment to secure the senior secured credit facility. | |
(3) | Guarantee the outstanding notes and the obligations in respect of the senior secured credit facility and will guarantee the exchange notes. Also provide first-priority pledges of substantially all of their tangible and intangible assets to secure the senior secured credit facility. |
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(4) | Tropicana Finance guarantees the obligations in respect of the senior secured credit facility. Tropicana Entertainment and Tropicana Finance provide a first-priority pledge of substantially all of their tangible and intangible assets to secure the senior secured credit facility. | |
(5) | Greenville Riverboat does not guarantee the outstanding notes or secure the obligations in respect of the senior secured credit facility and will not guarantee the exchange notes, although it is subject to the restrictive covenants of the indenture and the credit documentation governing the senior secured credit facility. Tropicana Entertainment holds an 84% economic interest and a 79% voting interest in Greenville Riverboat and Tropicana Entertainment’s wholly-owned subsidiary St. Louis Riverboat Entertainment, which is a guarantor of the outstanding notes and the senior secured credit facility and will be a guarantor of the exchange notes, is the owner of the vessel on which the Lighthouse Point Casino conducts its operations. | |
(6) | Guarantees the obligations in respect of the Las Vegas secured loan. Also provides a perfected first-priority pledge of all of the equity interests in the Las Vegas Borrower to secure the Las Vegas secured loan. Does not guarantee the outstanding notes or guarantee or secure the obligations in respect of the senior secured credit facility and will not guarantee the exchange notes. | |
(7) | The subsidiaries of the Las Vegas Borrower guarantee the obligations in respect of the Las Vegas secured loan. The Las Vegas Borrower and its subsidiary guarantors provide first-priority pledges of substantially all of their tangible and intangible assets to secure the Las Vegas secured loan. The Las Vegas Borrower and its subsidiaries do not guarantee the outstanding notes or guarantee or secure the obligations in respect of the senior secured credit facility, nor will they guarantee the exchange notes. |
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Outstanding Notes | 95/8% Senior Subordinated Notes due 2014, which we issued on December 28, 2006. | |
Exchange Notes | 95/8% Senior Subordinated Notes due 2014, the issuance of which has been registered under the Securities Act. The form and the terms of the exchange notes will be identical in all material respects to those of the outstanding notes, except that the transfer restrictions and registration rights relating to the outstanding notes will not apply to the exchange notes. | |
Exchange Offer | We are offering to issue up to $960.0 million aggregate principal amount of the exchange notes in exchange for a like principal amount of the outstanding notes to satisfy our obligations under the registration rights agreement that we entered into when the outstanding notes were issued in transactions in reliance upon the exemptions from registration provided by Rule 144A and Regulation S under the Securities Act. | |
Expiration Date; Tenders | The exchange offer will expire at 5:00 p.m., New York City time, on November 19, 2007, the 32nd day following the date of this prospectus, unless extended in our sole and absolute discretion. By tendering your outstanding notes, you represent to us that: | |
• you are not our “affiliate,” as defined in Rule 405 under the Securities Act or if you are our “affiliate” as defined in Rule 405 under the Securities Act and you are engaging in or intend to engage in or have an arrangement or understanding with any person to participate in a distribution of the exchange notes to be acquired pursuant to the exchange offer, you will not rely on the applicable interpretations of the SEC and will comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction; | ||
• any exchange notes you receive in the exchange offer are being acquired by you in the ordinary course of your business; | ||
• at the time of the commencement of the exchange offer, neither you nor anyone receiving exchange notes from you, has any arrangement or understanding with any person to participate in the distribution, as defined in the Securities Act, of the exchange notes in violation of the Securities Act; | ||
• if you are a broker-dealer, you will receive the exchange notes for your own account in exchange for outstanding notes that were acquired by you as a result of your market-making or other trading activities and that you will deliver a prospectus in connection with any resale of the exchange notes you receive. For further information regarding resales of the exchange notes by participating broker-dealers, see the discussion under the caption “Plan of Distribution;” and |
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• if you are not a broker-dealer, you are not engaged in, and do not intend to engage in, the distribution of the exchange notes, as defined in the Securities Act. | ||
Withdrawal; Non-Acceptance | You may withdraw any outstanding notes tendered in the exchange offer at any time prior to 5:00 p.m., New York City time, on November 19, 2007. To be effective, a written notice of withdrawal must be received by U.S. Bank National Association in its capacity as exchange agent, or the exchange agent, at the address set forth under the caption “The Exchange Offer — Exchange Agent.” The notice must specify: | |
• the name of the person or entity having tendered the outstanding notes to be withdrawn; | ||
• the outstanding notes to be withdrawn, including the principal amount of such outstanding notes; and | ||
• where certificates for outstanding notes have been transmitted, the name in which such outstanding notes are registered, if different from that of the withdrawing holder. | ||
If we decide for any reason not to accept any outstanding notes tendered for exchange, the outstanding notes will be returned to the registered holder at our expense promptly after the expiration or termination of the exchange offer. In the case of the outstanding notes tendered by book-entry transfer into the exchange agent’s account at The Depository Trust Company, which we sometimes refer to in this prospectus as DTC, any withdrawn or unaccepted outstanding notes will be credited to the tendering holder’s account at DTC. For further information regarding the withdrawal of any tendered outstanding notes, see “The Exchange Offer — Withdrawal Rights.” | ||
Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, which we may waive in our discretion. See the discussion below under the caption “The Exchange Offer — Conditions to the Exchange Offer” for more information regarding the conditions to the exchange offer. | |
Procedures for Tendering Outstanding Notes | Unless you comply with the procedures described below under the caption “The Exchange Offer — Guaranteed Delivery Procedures,” you must do one of the following on or prior to the expiration or termination of the exchange offer to participate in the exchange offer: | |
• tender your outstanding notes by sending the certificates for your outstanding notes, in proper form for transfer, a properly completed and duly executed letter of transmittal, with any required signature guarantees, and all other documents required by the letter of transmittal, to the exchange agent, at the address listed below under the caption “The Exchange Offer — Exchange Agent;” or | ||
• tender your outstanding notes by using the book-entry transfer procedures described below and transmitting a properly |
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completed and duly executed letter of transmittal, with any required signature guarantees, or an agent’s message instead of the letter of transmittal, to the exchange agent. In order for a book-entry transfer to constitute a valid tender of your outstanding notes in the exchange offer, the exchange agent must receive a confirmation of book-entry transfer of your outstanding notes into the exchange agent’s account at DTC prior to the expiration or termination of the exchange offer. For more information regarding the use of book-entry transfer procedures, including a description of the required agent’s message, see the discussion below under the caption “The Exchange Offer — Book-Entry Transfers.” | ||
Guaranteed Delivery Procedures | If you are a registered holder of outstanding notes and wish to tender your outstanding notes in the exchange offer, but | |
• the outstanding notes are not immediately available; | ||
• time will not permit your outstanding notes or other required documents to reach the exchange agent before the expiration or termination of the exchange offer; or | ||
• the procedure for book-entry transfer cannot be completed prior to the expiration or termination of the exchange offer; | ||
then you may tender your outstanding notes by following the procedures described below under the caption “The Exchange Offer — Guaranteed Delivery Procedures.” | ||
Special Procedures for Beneficial Owners | If you are a beneficial owner whose outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your outstanding notes in the exchange offer, you should promptly contact the person in whose name the outstanding notes are registered and instruct that person to tender them on your behalf. If you wish to tender in the exchange offer on your own behalf, prior to completing and executing the letter of transmittal and delivering your outstanding notes, you must either make appropriate arrangements to register ownership of the outstanding notes in your name, or obtain a properly completed bond power from the person in whose name the outstanding notes are registered. | |
Certain U.S. Federal Income Tax Considerations | The exchange of the outstanding notes for exchange notes in the exchange offer should not be a taxable transaction for United States federal income tax purposes. See the discussion below under the caption “Certain U.S. Federal Income Tax Considerations” for more information regarding the United States federal income tax consequences to you of the exchange offer. | |
Accounting Treatment | Tropicana Entertainment will record the exchange notes at the same carrying value as the outstanding notes as reflected in its accounting records on the date of the exchange. Accordingly, Tropicana Entertainment will not recognize any gain or loss for accounting purposes as a result of the exchange offer. The |
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expenses of the exchange offer will be amortized over the term of the exchange notes. | ||
Use of Proceeds | We will not receive any proceeds from the exchange offer. In consideration for issuing the exchange notes in exchange for the outstanding notes as described in this prospectus, we will receive, retire and cancel the outstanding notes. See “Use of Proceeds.” | |
Exchange Agent | U.S. Bank National Association is the exchange agent for the exchange offer. You can find the address and telephone number of the exchange agent below under the caption “The Exchange Offer — Exchange Agent.” | |
Resales | Based on interpretations by the staff of the SEC, as set forth in no-action letters issued to third parties, we believe that the exchange notes you receive in the exchange offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act. However, you will not be able to freely transfer the exchange notes if: | |
• you are our “affiliate,” as defined in Rule 405 of the Securities Act; | ||
• you are not acquiring the exchange notes in the exchange offer in the ordinary course of business; | ||
• you have an arrangement or understanding with any person to participate in the distribution, as defined in the Securities Act, of the exchange notes you will receive in the exchange offer; | ||
• you are holding outstanding notes that have or are reasonably likely to have the status of an unsold allotment in the initial offering; or | ||
• you are a broker-dealer that received exchange notes for its own account in the exchange offer in exchange for outstanding notes that were acquired as a result of market-making or other trading activities. | ||
If you fall within one of the exceptions listed above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction involving the exchange notes. See the discussion below under the caption “The Exchange Offer — Procedures for Tendering Outstanding Notes” for more information. | ||
Broker-Dealers | Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. The letter of transmittal states that by so acknowledging and delivering a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes which were received |
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by the broker-dealer as a result of market making or other trading activities. See “Plan of Distribution” for more information. | ||
Registration Rights Agreement | When we issued the outstanding notes in December 2006, we entered into a registration rights agreement with Credit Suisse Securities (USA) LLC, as representative of the several initial purchasers of the outstanding notes. See “The Exchange Offer — Purpose of the Exchange Offer.” Under the terms of the registration rights agreement, we agreed to file a registration statement with the SEC (which we refer to herein, together with all amendments and exhibits thereto, as the Registration Statement) with respect to a registered offer to exchange the outstanding notes for the publicly registered exchange notes. Under some circumstances set forth in the registration rights agreement, holders of outstanding notes, including holders who are not permitted to participate in the exchange offer or who may not freely sell exchange notes received in the exchange offer, may require us to file and cause to become effective, a shelf registration statement covering resales of the outstanding notes by these holders. | |
A copy of the registration rights agreement is attached as an exhibit to the Registration Statement of which this prospectus is a part. |
• | if they are registered under the Securities Act and applicable state securities laws; | |
• | if they are offered or sold under an exemption from registration under the Securities Act and applicable state securities laws; or | |
• | if they are offered or sold in a transaction not subject to the Securities Act and applicable state securities laws. |
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Issuers | Tropicana Entertainment, LLC, a Delaware limited liability company, and Tropicana Finance Corp., a Delaware corporation. |
Notes Offered | Up to $960,000,000 in aggregate principal amount of 95/8% Senior Subordinated Notes due 2014. |
Maturity Date | December 15, 2014. | |
Interest | 95/8% per annum, payable semi-annually in arrears on June 15 and December 15, commencing on December 15, 2007. | |
Guarantees | The exchange notes will be guaranteed, jointly and severally, by certain of Tropicana Entertainment’s existing and future domestic subsidiaries, as well as by (i) Realty and CP Vicksburg, each of which is an affiliate of Tropicana Entertainment but not a subsidiary of Tropicana Entertainment, and (ii) JMBS Casino, an affiliate of the Yung family that is not a subsidiary of Tropicana Entertainment. The exchange notes will not be guaranteed by Greenville Riverboat, a direct subsidiary of Tropicana Entertainment that it does not wholly own, although Greenville Riverboat is subject to the restrictive covenants contained in the indenture. The exchange notes will not be guaranteed by any of Tropicana Entertainment’s subsidiaries that hold the assets and operations relating to the Tropicana Las Vegas, including its34-acre property located on the Las Vegas “Strip.” | |
Ranking | The exchange notes and the guarantees will be the co-issuers’ and the guarantors’ senior subordinated obligations and will rank: | |
• junior to all of the co-issuers’ and the guarantors’ existing and future senior indebtedness, including all indebtedness under the senior secured credit facility; | ||
• equally with any of the co-issuers’ and the guarantors’ existing and future unsecured senior subordinated indebtedness, including indebtedness in respect of the outstanding notes; and | ||
• senior to all of the co-issuers’ and the guarantors’ existing and future unsecured subordinated indebtedness. |
As of September 30, 2007: |
• Tropicana Entertainment and its consolidated subsidiaries had approximately $1,740.2 million of senior indebtedness outstanding, $1,300.2 million of which consisted of secured indebtedness under the senior secured credit facility and $440.0 million of which consisted of secured indebtedness under the Las Vegas secured loan; |
• the guarantors had approximately $1,300.2 million of senior indebtedness outstanding, all of which consisted of their respective guarantees of senior indebtedness of Tropicana Entertainment under the senior secured credit facility; |
• Tropicana Entertainment’s subsidiaries that are not guarantors had $440.0 million of indebtedness outstanding, all of which |
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consisted of indebtedness under the Las Vegas secured loan; and | ||
• Tropicana Finance had no senior indebtedness outstanding other than in respect of its guarantee of senior indebtedness of Tropicana Entertainment under the senior secured credit facility. | ||
Optional Redemption | On or after December 15, 2010, we may redeem some or all of the exchange notes at the redemption prices set forth in this prospectus. In addition, prior to December 15, 2010, we may redeem some or all of the exchange notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, and the “make-whole” premium set forth in this prospectus. We may also redeem up to 35% of the aggregate principal amount of the exchange notes using the net proceeds from certain equity offerings completed on or prior to December 15, 2009 at the redemption price set forth in this prospectus. | |
The exchange notes will be subject to mandatory disposition and redemption requirements following certain determinations by gaming authorities. See “Description of the Exchange Notes — Gaming Redemption.” | ||
Change of Control | Upon a change of control, we will be required to make an offer to purchase each holder’s exchange notes at a price of 101% of the then outstanding principal amount thereof, plus accrued and unpaid interest to the date of purchase. See “Description of the Exchange Notes — Change of Control.” | |
Certain Covenants | The indenture governing the exchange notes contains covenants that will, among other things, limit the co-issuers’ ability and the ability of the guarantors, and certain of the co-issuers’ and the guarantors’ subsidiaries, to: | |
• incur or guarantee additional indebtedness; | ||
• pay dividends and make other restricted payments; | ||
• transfer or sell assets; | ||
• make certain investments; | ||
• create or incur certain liens; | ||
• transfer all or substantially all of their assets or enter into merger or consolidation transactions; and | ||
• enter into transactions with affiliates. | ||
If we do not comply with the covenants described above, a default or an event of default could result under the indenture. The covenants described above are subject to a number of important limitations and exceptions as discussed under “Description of the Exchange Notes — Certain Covenants.” | ||
Amendment | The indenture may be amended in the manner described under the caption “Description of the Exchange Notes — Amendments and Waivers.” |
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Trustee | U.S. Bank National Association is the trustee for the notes. See “Description of the Exchange Notes — Concerning the Trustee.” |
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Pro Forma for | ||||||||
Aztar Acquisition | ||||||||
Pro Forma for | and | |||||||
Corporate | Financing | |||||||
Reorganization | Transactions | |||||||
Year | Year | |||||||
Ended | Ended | |||||||
December 31, | December 31, | |||||||
2006 | 2006 | |||||||
(In thousands) | ||||||||
Income Statement Data: | ||||||||
Net operating revenues | $ | 288,863 | $ | 1,183,199 | ||||
Operating expenses | 230,285 | 968,545 | ||||||
Income from operations | 58,578 | 214,654 | ||||||
Other income (expense) | ||||||||
Other income | — | 2,640 | ||||||
Interest income | 8,918 | 10,767 | ||||||
Interest expense | (16,641 | ) | (248,195 | ) | ||||
Total other income (expense) | (7,723 | ) | (234,788 | ) | ||||
Income (loss) before minority interest | 50,855 | (20,134 | ) | |||||
Minority interest in net income in consolidated subsidiary | (3,224 | ) | (3,224 | ) | ||||
Income (loss) from continuing operations | $ | 47,631 | $ | (23,358 | ) | |||
Other Data: | ||||||||
Depreciation and amortization | $ | 18,033 | $ | 81,030 | ||||
Capital expenditures excluding acquisitions | $ | 40,924 | $ | 117,038 |
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Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||
2005 | 2006 | 2006 | 2007(1) | |||||||||||||
Tropicana | Tropicana | Tropicana | ||||||||||||||
Casinos | Casinos | Casinos | Tropicana | |||||||||||||
and Resorts | and Resorts | and Resorts | Entertainment | |||||||||||||
(In millions) | ||||||||||||||||
Income Statement Data: | ||||||||||||||||
Net operating revenues | $ | 186.6 | $ | 288.9 | $ | 147.8 | $ | 554.1 | ||||||||
Operating expenses | 146.9 | 230.3 | 112.6 | 433.5 | ||||||||||||
Income from operations | 39.7 | 58.6 | 35.2 | 120.6 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest income | 0.5 | 8.9 | 0.9 | 6.5 | ||||||||||||
Interest expense | (6.0 | ) | (35.6 | ) | (8.0 | ) | (114.1 | ) | ||||||||
Loss from early extinguishment of debt | — | — | — | (2.8 | ) | |||||||||||
Total other income (expense) | (5.5 | ) | (26.7 | ) | (7.1 | ) | (110.4 | ) | ||||||||
Income before minority interest | 34.2 | 31.9 | 28.1 | 10.2 | ||||||||||||
Minority interest in net income of consolidated subsidiaries | (3.4 | ) | (3.2 | ) | (1.8 | ) | (2.3 | ) | ||||||||
Income from continuing operations, before income tax benefit | 30.8 | 28.7 | 26.3 | 7.9 | ||||||||||||
Income tax benefit | — | — | — | 384.7 | ||||||||||||
Income from continuing operations | 30.8 | 28.7 | 26.3 | 392.6 | ||||||||||||
Discontinued operations, casinos to be transferred | (9.0 | ) | 4.7 | (2.1 | ) | — | ||||||||||
Net Income | $ | 21.8 | $ | 33.4 | $ | 24.2 | $ | 392.6 | ||||||||
Other Data: | ||||||||||||||||
Depreciation and amortization | $ | 9.6 | $ | 18.0 | $ | 6.4 | $ | 43.4 | ||||||||
Capital expenditures excluding acquisitions | $ | 24.2 | $ | 63.8 | $ | 21.1 | $ | 41.5 |
(1) | Includes Aztar’s results of operations from January 3, 2007, the date of its acquisition. |
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• | we have limited experience operating a full-scale casino resort in the Atlantic City or Las Vegas markets; |
• | we have limited experience operating the gaming properties acquired from Aztar; |
• | upon the consummation of the Aztar Acquisition, the amount of our indebtedness increased substantially, which may constrain our future operations and strategic development; | |
• | our results of operations may not meet our expectations, which would then make it difficult to service the debt we incurred to consummate the transaction; | |
• | given its size, operating Aztar may strain our management resources and the integration of Aztar may divert the attention of our management team from our other important business concerns; | |
• | we may be unable to achieve the contemplated operational synergies or other cost savings and benefits that we had anticipated in connection with the Aztar Acquisition in the expected timeframe or at all; | |
• | we may experience adverse accounting consequences as a result of efforts to conform Aztar’s accounting policies to those of Tropicana Entertainment; | |
• | we may experience difficulties and incur expenses in connection with applying our internal control procedures to Aztar’s operations; and | |
• | we may experience some or all of the risks described under “— We may not be able to successfully complete strategic transactions or integrate new businesses into our business, which may prevent us from implementing strategies to grow our business.” |
• | fees and expenses of professionals and consultants involved in completing the integration process; | |
• | settling existing liabilities of the acquired business; | |
• | integrating information technology systems and personnel; and | |
• | other transaction costs associated with the Aztar Acquisition. |
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• | shortages of energy, material and skilled labor; | |
• | labor disputes and work stoppages; | |
• | disputes with contractors or subcontractors; | |
• | delays in obtaining or inability to obtain necessary permits, licenses and approvals; | |
• | changes to plans or specifications; | |
• | engineering, geological, excavation, regulatory and equipment problems; | |
• | changes in statutes, regulations, policies and agency interpretations of laws applicable to gaming projects; | |
• | environmental and real property issues; | |
• | weather interference or delays; | |
• | unanticipated delays and cost increases; and | |
• | fires, earthquakes, floods and other natural disasters that disrupt development. |
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• | by the time we complete our planned Tropicana Las Vegas redevelopment effort, the Las Vegas market may be saturated with newly constructed casino resorts of the type we intend to offer. Among others, Sands’ expansion project, the “Palazzo,” Wynn Resorts’ latest full-scale resort project, the “Encore,” and Boyd Gaming’s new hotel-casino-shopping complex, “Echelon Place,” are scheduled to open in the coming years, any of which may adversely affect customer demand for the Tropicana Las Vegas once we have completed redeveloping the property; |
• | there can be no assurance that we will be able to obtain sufficient financing to execute the redevelopment project as presently envisaged, particularly in light of the recent weakening in the credit markets. If we are unable to obtain sufficient financing to fund the redevelopment project or obtain such funding on terms or at prices acceptable to us, we may have to adopt one or more |
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alternatives, such as reducing the scope or delaying the construction of the planned redevelopment project or certain capital expenditures associated with it; |
• | the indebtedness we expect to incur to fund the redevelopment project is anticipated to be significant, and will exceed the $440.0 million of indebtedness under the Las Vegas secured loan incurred by the Las Vegas Borrower in connection with the Aztar Acquisition (which indebtedness would be refinanced with the construction financing that we expect to obtain to fund the redevelopment); | |
• | although we intend to design the project to minimize disruption to our existing business operations, we expect portions of the existing operations at the Tropicana Las Vegas to be closed or disrupted during the redevelopment project, which may have a significant adverse effect on our results of operations; | |
• | we may incur additional design and construction costs associated with redeveloping the Tropicana Las Vegas by building around selected existing structures instead of razing all of the existing structures on the property; | |
• | recent increases in the cost of raw materials for construction, driven in part by demand in Las Vegas, may also cause the cost of the project to exceed our budgeted amount; and | |
• | as a result of the many other development and expansion projects currently being carried out and planned for the near term in the Las Vegas market, we may experience shortages of qualified contractors or the skilled labor required to complete the redevelopment project or retaining the services of such contractors or labor may cost significantly more than we presently anticipate that it will. |
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• | certificates for outstanding notes or a book-entry confirmation of a book-entry transfer of outstanding notes into the exchange agent’s account at DTC, New York, New York as a depository, including an agent’s message, as defined in this prospectus, if the tendering holder does not deliver a letter of transmittal; | |
• | a complete and signed letter of transmittal, or facsimile copy, with any required signature guarantees, or, in the case of a book-entry transfer, an agent’s message in place of the letter of transmittal; and | |
• | any other documents required by the letter of transmittal. |
• | make it more difficult for us to satisfy our obligations with respect to the notes; | |
• | increase our vulnerability to general adverse economic and industry conditions, and limit our ability to withstand competitive pressures; | |
• | require us to dedicate a substantial portion of our cash flow from operations to payments in respect of our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, development projects and other general operating requirements; | |
• | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; | |
• | restrict us from making strategic acquisitions or exploiting business opportunities; |
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• | place us at a competitive disadvantage compared to our competitors that have less debt; and | |
• | limit our ability to borrow additional funds. |
• | incur or guarantee additional debt or issue certain preferred stock; | |
• | pay certain dividends, or make certain redemptions, repurchases or distributions, with respect to equity interests or subordinated indebtedness; | |
• | create or incur certain liens; | |
• | make certain loans or investments; |
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• | engage in mergers, acquisitions, amalgamations, asset sales and sale and leaseback transactions; | |
• | engage in transactions with affiliates; and | |
• | create restrictions on the ability of Tropicana Entertainment’s subsidiaries or the affiliate guarantors to pay dividends or make other payments to Tropicana Entertainment. |
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• | we enter into a bankruptcy, liquidation, reorganization or any otherwinding-up proceeding; | |
• | there is a default in payment under the senior secured credit facility or other secured indebtedness; or | |
• | there is an acceleration of any indebtedness under the senior secured credit facility or other secured indebtedness. |
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• | the notes were issued or the guarantee was entered into with the actual intent to hinder, delay or defraud creditors; or | |
• | the co-issuers or the applicable guarantor received less than reasonably equivalent value or fair consideration and either: |
• | was insolvent or rendered insolvent by reason of such incurrence; | |
• | was engaged in a business or transaction for which their or its remaining assets constituted unreasonably small capital; or | |
• | intended to incur, or believed that they or it would incur, debts beyond their or its ability to pay such debts as they mature. |
• | the sum of its debts, including contingent liabilities, was greater than the fair saleable value of its respective assets; or | |
• | the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or | |
• | it could not pay its respective debts as they become due. |
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• | fails to apply for a license, authorization, qualification or finding of suitability within 30 days (or such shorter period as may be required by the applicable gaming authority); or | |
• | is denied such license, authorization, qualification or finding of suitability, |
• | to require such holder or beneficial owner to dispose of its notes within 30 days (or such earlier date as may be required by the applicable gaming authority) of receipt of such notice or finding by such gaming authority; or | |
• | to call for redemption the notes held by such holder or beneficial owner. The redemption price will be equal to the lesser of: |
• | the principal amount of the notes, together with accrued interest thereon, | |
• | the price that the holder or the beneficial owner paid for the notes, together with accrued interest thereon, or | |
• | such other lesser amount as may be required by the applicable gaming authority. |
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• | certificates for outstanding notes must be received by the exchange agent along with the letter of transmittal, | |
• | a timely confirmation of a book-entry transfer, which we refer to in this prospectus as a book-entry confirmation, of outstanding notes, if this procedure is available, into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfer set forth below under “— Book-Entry Transfers” must be received by the exchange agent prior to the expiration date, with the letter of transmittal or an agent’s message in place of the letter of transmittal, or | |
• | the holder must comply with the guaranteed delivery procedures described below. |
• | by a holder of the outstanding notes who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal, or | |
• | for the account of an eligible institution (as defined below). |
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• | the exchange notes acquired pursuant to the exchange offer are being obtained in the ordinary course of business of the person receiving such exchange notes, whether or not such person is the holder; and | |
• | neither the holder nor such other person has any arrangement or understanding with any person, to participate in the distribution of the exchange notes. |
• | could not rely on the applicable interpretations of the staff of the SEC, and | |
• | must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. |
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• | certificates for such outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent’s account at DTC, | |
• | a properly completed and duly executed letter of transmittal or an agent’s message in lieu thereof, and | |
• | all other required documents. |
• | the tender is made through an eligible institution, | |
• | prior to the expiration date, the exchange agent received from such eligible institution a notice of guaranteed delivery, substantially in the form we provided, by telegram, telex, facsimile transmission, mail or hand delivery, setting forth your name and address, the amount of outstanding notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered outstanding notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed appropriate letter of transmittal or facsimile thereof or agent’s message in lieu thereof, with any required signature guarantees and any other documents required by the letter of transmittal will be deposited by such eligible institution with the exchange agent, and | |
• | the certificates for all physically tendered outstanding notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed appropriate letter of transmittal or facsimile thereof or agent’s message in lieu thereof, with any required signature guarantees and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery. |
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• | the name of the person having tendered the outstanding notes to be withdrawn, | |
• | the outstanding notes to be withdrawn, including the principal amount of such outstanding notes, and | |
• | where certificates for outstanding notes have been transmitted, the name in which such outstanding notes are registered, if different from that of the withdrawing holder. |
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Exchange Agent
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• | you are our “affiliate,” as defined in Rule 405 under the Securities Act, | |
• | you are not acquiring the exchange notes in the exchange offer in the ordinary course of your business, | |
• | you have an arrangement or understanding with any person to participate in the distribution, as defined in the Securities Act, of the exchange notes you will receive in the exchange offer, | |
• | you are holding outstanding notes that have, or are reasonably likely to have, the status of an unsold allotment in the initial offering, or |
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• | you are a broker-dealer that received exchange notes for its own account in the exchange offer in exchange for outstanding notes that were acquired as a result of market-making or other trading activities. |
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Tropicana | ||||||||||||||||||||||||||||
Tropicana | Entertainment | |||||||||||||||||||||||||||
Entertainment | Six Months Ended | |||||||||||||||||||||||||||
Tropicana Casinos and Resorts | Pro Forma | June 30, | ||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006(1) | 2007 | ||||||||||||||||||||||
Ratio of Earnings to Fixed Charges | 5.63 | 5.29 | 6.85 | 3.92 | 1.69 | — | 1.06 | |||||||||||||||||||||
(1) | Reflects ratio of earnings to fixed charges of Tropicana Entertainment on a pro forma basis to give effect to the Transactions. For this period, earnings were inadequate to cover fixed charges by $23.0 million. |
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Tropicana | ||||
Entertainment | ||||
as of | ||||
June 30, 2007 | ||||
(In thousands, | ||||
Unaudited) | ||||
Cash and cash equivalents | $ | 86,648 | ||
Restricted cash(1) | $ | 33,698 | ||
Debt (includes current maturities): | ||||
New senior secured credit facility | $ | 1,340,239 | ||
Las Vegas secured loan | 440,000 | |||
Notes | 960,000 | |||
Capital Leases | 1,550 | |||
Total debt | 2,741,789 | |||
Total member’s equity | 960,377 | |||
Total capitalization | $ | 3,702,166 | ||
(1) | Represents funds deposited in escrow in respect of interest payable under the Las Vegas secured loan for a period of 12 months. |
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• | adjustments related to the corporate reorganization that occurred immediately prior to the consummation of the Aztar Acquisition in which Tropicana Casinos and Resorts contributed to Tropicana Entertainment substantially all of its gaming properties other than its New Orleans riverboat, the gaming assets and operations at the Casuarina Las Vegas Casino and the assets and operations of Tropicana Pennsylvania; and | |
• | further adjustments related to the Aztar Acquisition and the Acquisition Financing Transactions. |
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Tropicana | Tropicana | Aztar | Pro Forma | |||||||||||||||||||||
Tropicana | Casinos | Casinos | Acquisition | for Aztar | ||||||||||||||||||||
Casinos | and Resorts | and Resorts | and Financing | Acquisition and | ||||||||||||||||||||
and Resorts | Adjustments(1) | as Adjusted | Aztar | Adjustments(2) | Financing | |||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||
Casino | $ | 239,490 | $ | — | $ | 239,490 | $ | 673,929 | $ | 44,414 | (a) | $ | 957,833 | |||||||||||
Rooms | 39,731 | — | 39,731 | 107,289 | 45,076 | (a) | 192,096 | |||||||||||||||||
Food and beverage | 41,983 | — | 41,983 | 58,773 | 58,526 | (a) | 159,282 | |||||||||||||||||
Other casino and hotel | 12,323 | — | 12,323 | 54,345 | 5,348 | (a) | 72,016 | |||||||||||||||||
Total operating revenues | 333,527 | — | 333,527 | 894,336 | 153,364 | 1,381,227 | ||||||||||||||||||
Less promotional allowances | (44,664 | ) | — | (44,664 | ) | — | (153,364 | )(a) | (198,028 | ) | ||||||||||||||
Net operating revenues | 288,863 | — | 288,863 | 894,336 | — | 1,183,199 | ||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||
Casino | 40,482 | — | 40,482 | 265,823 | (79,001 | )(e) | 227,304 | |||||||||||||||||
Rooms | 17,647 | — | 17,647 | 48,258 | 10,995 | (e) | 76,900 | |||||||||||||||||
Food and beverage | 34,579 | — | 34,579 | 57,313 | 46,510 | (e) | 138,402 | |||||||||||||||||
Other casino and hotel | 4,141 | — | 4,141 | 29,200 | 2,303 | (b) | 35,644 | |||||||||||||||||
Utilities | 10,074 | — | 10,074 | 25,234 | — | 35,308 | ||||||||||||||||||
Marketing, advertising and casino promotion | 15,513 | — | 15,513 | 82,025 | (678 | )(d) | 96,860 | |||||||||||||||||
Repairs and maintenance | 8,322 | — | 8,322 | 27,254 | — | 35,576 | ||||||||||||||||||
Provision for doubtful accounts | — | — | — | 2,475 | (2,475 | )(c) | — | |||||||||||||||||
Insurance | 2,908 | — | 2,908 | — | — | 2,908 | ||||||||||||||||||
Property and local taxes | 3,824 | — | 3,824 | 38,078 | — | 41,902 | ||||||||||||||||||
Gaming taxes and licenses | 39,869 | — | 39,869 | — | — | 39,869 | ||||||||||||||||||
Administrative and general | 16,184 | — | 16,184 | 88,338 | (19,299 | )(d) | 85,223 | |||||||||||||||||
Corporate overhead | 5,350 | — | 5,350 | — | 7,750 | (d) | 13,100 | |||||||||||||||||
Leased land and facilities | 10,771 | — | 10,771 | 11,590 | (614 | )(d) | 21,747 | |||||||||||||||||
Depreciation and amortization | 18,033 | — | 18,033 | 70,027 | (7,030 | )(f) | 81,030 | |||||||||||||||||
Insurance recoveries | — | — | — | (12,229 | ) | — | (12,229 | ) | ||||||||||||||||
Casualty loss | — | — | — | 5,420 | — | 5,420 | ||||||||||||||||||
Merger related | — | — | — | 92,972 | (78,000 | )(g) | 14,972 | |||||||||||||||||
Write off of fixed assets, deposits and other costs related to abandoned acquisitions | 2,588 | — | 2,588 | 26,021 | — | 28,609 | ||||||||||||||||||
Total operating expenses | 230,285 | — | 230,285 | 857,799 | (119,539 | ) | 968,545 | |||||||||||||||||
Income from operations | 58,578 | — | 58,578 | 36,537 | 119,539 | 214,654 | ||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||
Other income | — | — | — | 2,640 | — | 2,640 | ||||||||||||||||||
Interest income | 8,918 | — | 8,918 | 1,849 | — | 10,767 | ||||||||||||||||||
Interest expense | (35,563 | ) | 18,922 | (a) | (16,641 | ) | (55,935 | ) | (175,619 | )(h) | (248,195 | ) | ||||||||||||
Total other income (expense) | (26,645 | ) | 18,922 | (7,723 | ) | (51,446 | ) | (175,619 | ) | (234,788 | ) | |||||||||||||
Income (loss) before income taxes | 31,933 | 18,922 | 50,855 | (14,909 | ) | (56,080 | ) | (20,134 | ) | |||||||||||||||
Income taxes | — | — | — | (29,247 | ) | 29,247 | (i) | — | ||||||||||||||||
Income (loss) before minority interest | 31,933 | 18,922 | 50,855 | (44,156 | ) | (26,833 | ) | (20,134 | ) | |||||||||||||||
Minority interest in net income (loss) of consolidated subsidiaries | (3,224 | ) | — | (3,224 | ) | — | — | (3,224 | ) | |||||||||||||||
Income (loss) from continuing operations | $ | 28,709 | $ | 18,922 | $ | 47,631 | $ | (44,156 | ) | $ | (26,833 | ) | $ | (23,358 | ) | |||||||||
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(In thousands except as otherwise noted)
(1) | TROPICANA CASINOS AND RESORTS ADJUSTMENTS |
(2) | AZTAR ACQUISITION AND FINANCING ADJUSTMENTS |
Year Ended | ||||
December 31, | ||||
2006 | ||||
Casino revenue | $ | 44,414 | ||
Rooms revenue | 45,076 | |||
Food and beverage revenue | 58,526 | |||
Other casino and hotel revenue | 5,348 | |||
Total revenue adjustment | $ | 153,364 | ||
Promotional allowances | $ | (153,364 | ) | |
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(In thousands except as otherwise noted)
Year Ended | ||||
December 31, | ||||
2006 | ||||
Casino expense | $ | (75,934 | ) | |
Rooms expense | $ | 20,215 | ||
Food and beverage expense | 53,416 | |||
Other casino and hotel expense | 2,303 | |||
Total | $ | 75,934 | ||
Year Ended | ||||
December 31, | ||||
2006 | ||||
Casino expense | $ | 2,475 | ||
Provision for doubtful accounts | $ | (2,475 | ) | |
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(In thousands except as otherwise noted)
Year Ended | ||||
December 31, | ||||
2006 | ||||
Casino expense | $ | (5,542 | ) | |
Rooms expense | (9,220 | ) | ||
Food and beverage expense | (6,906 | ) | ||
Marketing, advertising and casino promotion expense | (678 | ) | ||
Leased land and facilities expense | (614 | ) | ||
Administrative and general expense(i) | (19,299 | ) | ||
Corporate overhead(i) | 7,750 | |||
Total | $ | (34,509 | ) | |
(i) | Administrative and general expense reflects an adjustment of $(19,299), which represents Aztar corporate costs and a reclassification of certain corporate overhead costs. The $7,750 add back to corporate overhead represents additional expenses in support of the acquisition in accordance with Tropicana Casinos and Resorts’ expense recognition policies and a reclassification of certain administrative and general expenses. |
Year Ended | ||||
December 31, | ||||
2006 | ||||
Note(b) reclass related to the treatment of complimentary services | $ | (75,934 | ) | |
Note(c) reclass related to the presentation of allowance for doubtful accounts | 2,475 | |||
Note(d) adjustment related to the staffing reorganization plan | (5,542 | ) | ||
Total casino expense adjustment | $ | (79,001 | ) | |
Year Ended | ||||
December 31, | ||||
2006 | ||||
Note(b) reclass related to the treatment of complimentary services | $ | 20,215 | ||
Note(d) adjustment related to the staffing reorganization plan | (9,220 | ) | ||
Total rooms expense adjustment | $ | 10,995 | ||
Year Ended | ||||
December 31, | ||||
2006 | ||||
Note(b) reclass related to the treatment of complimentary services | $ | 53,416 | ||
Note(d) adjustment related to the staffing reorganization plan | (6,906 | ) | ||
Total food and beverage expense adjustment | $ | 46,510 | ||
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(In thousands except as otherwise noted)
Value | Useful Life | Annual Expense | ||||||||||
Property and equipment: | ||||||||||||
Buildings | $ | 873,400 | 30 | $ | 29,114 | |||||||
Personal property | 106,500 | 5 | 21,300 | |||||||||
Land | 797,400 | Indefinite | — | |||||||||
Total property and equipment | 1,777,300 | 50,414 | ||||||||||
Amortizing intangible assets: | ||||||||||||
Customer loyalty program | 97,100 | 10 | 9,710 | |||||||||
Aztar trade name | 3,900 | 1.5 | 2,600 | |||||||||
Tropicana Atlantic City gaming license | 4,100 | 15 | 273 | |||||||||
Total amortizing intangibles | 105,100 | 12,583 | ||||||||||
Total | $ | 1,882,400 | $ | 62,997 | ||||||||
Year Ended | ||||
December 31, | ||||
2006 | ||||
Historical depreciation and amortization expense | $ | (70,027 | ) | |
Calculated depreciation and amortization expense | 62,997 | |||
Adjustment to depreciation and amortization expense | $ | 7,030 | ||
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(In thousands except as otherwise noted)
Year Ended | ||||
December 31, | ||||
2006 | ||||
Interest expense on new senior secured credit facility(i) | $ | (115,000 | ) | |
Less interest on repayment of debt due to acquisition termination(i) | 13,457 | |||
Interest expense on Las Vegas secured loan(ii) | (32,331 | ) | ||
Interest expense on the notes(iii) | (92,400 | ) | ||
Revolving credit facility undrawn commitment fee | (900 | ) | ||
Amortization of deferred financing costs(iv) | (21,021 | ) | ||
Total pro forma interest expense on new debt financing | (248,195 | ) | ||
Less: Tropicana Casinos and Resorts as adjusted interest and amortization of historical debt(v) | 16,641 | |||
Less: Historical Aztar interest and amortization of historical debt(v) | 55,935 | |||
Pro forma interest expense adjustment | $ | (175,619 | ) | |
(i) | The first line reflects interest on $1,530.0 million of borrowings under the senior secured credit facility. The second line reflects the extent to which interest expense was reduced under the senior secured credit facility after giving effect to the repayment of $167.9 million in aggregate principal amount of the term loan under the senior secured credit facility following the termination of the Casino Queen Acquisition Agreement. See “Prospectus Summary — Recent Developments — Casino Queen Developments” and “Description of Other Indebtedness.” The senior secured credit facility bears interest at a rate equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the higher of (x) the prime rate announced by the administrative agent under the facility or (y) the federal funds rate plus 0.50% or (b) a reserve adjusted LIBOR rate. However, Tropicana Entertainment has entered into swap agreements in the amount of $1.0 billion, which effectively fix at 5.00% per annum the LIBOR rate applicable to $1.0 billion of the indebtedness incurred under the senior secured credit facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Tropicana Entertainment and Tropicana Casinos and Resorts — Quantitative and Qualitative Disclosures About Market Risk.” We have calculated the amount above by applying an interest rate of (i) 8.02%, or LIBOR plus an applicable margin of 2.25%, to that portion of the outstanding indebtedness under the senior secured credit facility that is not hedged against, which reflects the interest rate in effect as of August 31, 2007 under the senior secured credit facility, and (ii) 7.25%, or 5.00% plus an applicable margin of 2.25%, to the $1.0 billion portion of the outstanding indebtedness under the senior secured credit facility that is hedged against by the swap agreement we entered into, which reflects the effective interest rate to Tropicana Entertainment under the senior secured credit facility after giving effect to such hedging arrangement. |
(ii) | Reflects interest on $440.0 million of borrowings under the Las Vegas secured loan. The Las Vegas secured loan bears interest at a rate equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the higher of (x) the prime rate announced by the administrative agent under the facility or (y) the federal funds rate plus 0.50% or (b) a reserve adjusted LIBOR rate. However, the Las Vegas borrower has entered into a swap agreement in the amount of $440.0 million, which effectively fixes at 5.10% per annum the LIBOR rate applicable to the entire balance outstanding under the Las Vegas secured loan. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Tropicana Entertainment and Tropicana Casinos and Resorts — Quantitative and Qualitative Disclosures About Market Risk.” We have calculated the amount above by applying an interest rate of 7.35%, or LIBORplus an applicable margin of 2.25%, to the outstanding indebtedness under the Las Vegas secured loan, which reflects the interest rate in effect for the term of the loan after giving effect to the hedging arrangement described above. | |
(iii) | Reflects interest on the notes using a fixed annual interest rate of 9.625%. |
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(In thousands except as otherwise noted)
(iv) | Reflects (a) amortization of $68.3 million in deferred financing costs in respect of the senior secured credit facility, which will be amortized on a straight-line basis over the five year term of the facility, (b) amortization of an estimated $8.7 million in deferred financing costs in respect of the Las Vegas secured loan, which will be amortized on a straight-line basis over the 18 month term of the facility and (c) amortization of $12.3 million in deferred financing costs in respect of the notes, which will be amortized on a straight-line basis over the eight year term of the notes. |
(v) | Reflects elimination of historical and as adjusted interest expense and amortization of deferred financing costs relating to Tropicana Casinos and Resorts’ historical credit facility, which was retired concurrently with the consummation of the Aztar Acquisition, and Aztar’s historical credit facility and outstanding notes, which were retired concurrently with the consummation of the Aztar Acquisition and 30 days following the Aztar Acquisition, respectively. |
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Six Months Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | June 30, | |||||||||||||||||||||||||||
2002(1) | 2003(1) | 2004(1) | 2005(1) | 2006(1) | 2006(1) | 2007(2) | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Casino | $ | 61,236 | $ | 73,426 | $ | 100,240 | $ | 150,040 | $ | 239,490 | $ | 124,922 | $ | 443,417 | ||||||||||||||
Room | 10,190 | 12,177 | 18,032 | 28,381 | 39,731 | 19,456 | 97,734 | |||||||||||||||||||||
Food and beverage | 11,930 | 15,736 | 21,829 | 30,032 | 41,983 | 20,402 | 80,668 | |||||||||||||||||||||
Other casino and hotel | 3,886 | 5,031 | 5,845 | 8,373 | 12,323 | 5,437 | 34,282 | |||||||||||||||||||||
Total operating revenues | 87,242 | 106,370 | 145,946 | 216,826 | 333,527 | 170,217 | 656,101 | |||||||||||||||||||||
Less promotional allowance | (2,855 | ) | (16,399 | ) | (24,029 | ) | (30,184 | ) | (44,664 | ) | (22,435 | ) | (102,045 | ) | ||||||||||||||
Net operating revenues | 84,387 | 89,971 | 121,917 | 186,642 | 288,863 | 147,782 | 554,056 | |||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Casino | 10,395 | 15,206 | 19,822 | 27,658 | 40,482 | 20,197 | 61,434 | |||||||||||||||||||||
Rooms | 3,093 | 4,997 | 8,257 | 12,830 | 17,647 | 8,686 | 40,863 | |||||||||||||||||||||
Food and beverage | 7,506 | 11,940 | 17,829 | 25,962 | 34,579 | 16,918 | 67,398 | |||||||||||||||||||||
Other casino and hotel | 21,660 | 21,153 | 27,210 | 44,834 | 79,909 | 42,229 | 123,723 | |||||||||||||||||||||
Selling, general and administrative | 17,436 | 10,633 | 16,647 | 23,253 | 37,047 | 17,146 | 96,478 | |||||||||||||||||||||
Depreciation and amortization | 4,364 | 5,478 | 6,615 | 9,646 | 18,033 | 6,415 | 43,353 | |||||||||||||||||||||
Write off of fixed assets, deposits and other costs related to abandoned acquisitions | — | — | 79 | 2,742 | 2,588 | 979 | 263 | |||||||||||||||||||||
Total operating expenses | 64,454 | 69,407 | 96,459 | 146,925 | 230,285 | 112,570 | 433,512 | |||||||||||||||||||||
Income from operations | 19,933 | 20,564 | 25,458 | 39,717 | 58,578 | 35,212 | 120,544 | |||||||||||||||||||||
Loss from early extinguishment of debt | — | — | — | — | — | — | (2,799 | ) | ||||||||||||||||||||
Interest expense (net) | (970 | ) | (741 | ) | (796 | ) | (5,511 | ) | (26,645 | ) | (7,124 | ) | (107,595 | ) | ||||||||||||||
Income before minority interest and income taxes | 18,963 | 19,823 | 24,662 | 34,206 | 31,933 | 28,088 | 10,150 | |||||||||||||||||||||
Minority interest in net income of consolidated subsidiary | (2,594 | ) | (2,952 | ) | (3,873 | ) | (3,433 | ) | (3,224 | ) | (1,750 | ) | (2,317 | ) | ||||||||||||||
Income from continuing operations before income taxes | 16,369 | 16,871 | 20,789 | 30,773 | 28,709 | 26,338 | 7,833 | |||||||||||||||||||||
Income tax benefit, net | — | — | — | — | — | — | 384,767 | |||||||||||||||||||||
Discontinued operations, casinos to be transferred | — | (852 | ) | (2,869 | ) | (8,929 | ) | 4,705 | (2,097 | ) | — | |||||||||||||||||
Net income | $ | 16,369 | $ | 16,019 | $ | 17,920 | $ | 21,844 | $ | 33,414 | $ | 24,241 | $ | 392,600 | ||||||||||||||
Balance Sheet Data (as of period end): | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 14,400 | $ | 21,884 | $ | 26,339 | $ | 41,233 | $ | 33,023 | $ | 62,166 | $ | 86,648 | ||||||||||||||
Total assets | 55,550 | 100,158 | 115,808 | 368,268 | 1,734,091 | 714,347 | 3,851,539 | |||||||||||||||||||||
Total debt (excluding related party) | 6,700 | 22,700 | 19,950 | 199,500 | 1,155,975 | 196,629 | 2,741,789 | |||||||||||||||||||||
Stockholder’s equity | 32,060 | 53,653 | 71,573 | 120,017 | 146,931 | 156,921 | 960,377 |
(1) | Reflects results of Tropicana Casinos and Resorts. | |
(2) | Reflects results of Tropicana Entertainment. Includes Aztar’s results of operations from January 3, 2007, the date of its acquisition. |
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RESULTS OF OPERATIONS — TROPICANA ENTERTAINMENT AND TROPICANA CASINOS AND RESORTS
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• | The gaming assets and operations of the River Palms in Laughlin, Nevada. Realty acquired the real estate and substantially all of the non-gaming assets of the property. The acquisitions were made in September 2003 for an aggregate cash purchase price of $25.2 million. Tropicana Casinos and Resorts has since invested nearly $13.6 million in hotel room renovations and casino floor improvements at the River Palms. | |
• | The MontBleu in South Lake Tahoe, Nevada, which Tropicana Casinos and Resorts acquired in June 2005 for an aggregate cash purchase price of $47.2 million. During the fourth quarter of 2005, Tropicana Casinos and Resorts commenced a $21.0 million redevelopment of the MontBleu, which encompassed, among other things, remodeling the common areas of the property, including the lobby, restaurants and onsite nightclub. The renovated MontBleu re-opened in May 2006. |
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• | The Argosy Riverboat Casino and related assets in Baton Rouge, Louisiana, which Tropicana Casinos and Resorts acquired in October 2005 for an aggregate cash purchase price of approximately $149.7 million. The property has since been renamed the Belle of Baton Rouge. |
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Six Months Ended | ||||||||||||||||||||
Year Ended December 31, | June 30, | |||||||||||||||||||
2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Nevada Segment: | ||||||||||||||||||||
Tahoe Horizon | $ | 47,074 | $ | 47,614 | $ | 44,138 | $ | 19,964 | $ | 18,793 | ||||||||||
MontBleu(1) | — | 33,374 | 49,953 | 21,486 | 24,893 | |||||||||||||||
River Palms | 47,378 | 50,316 | 52,101 | 28,221 | 27,189 | |||||||||||||||
Tropicana Express(3) | — | — | — | — | 46,438 | |||||||||||||||
Total Nevada | 94,452 | 131,304 | 146,192 | 69,671 | 117,313 | |||||||||||||||
Mississippi River Basin Segment: | ||||||||||||||||||||
Lighthouse Point | 27,465 | 29,041 | 28,426 | 15,395 | 15,511 | |||||||||||||||
Belle of Baton Rouge(2) | — | 26,297 | 114,245 | 62,716 | 53,519 | |||||||||||||||
Casino Aztar Evansville(3) | — | — | — | — | 67,115 | |||||||||||||||
Total Mississippi River Basin | 27,465 | 55,338 | 142,671 | 78,111 | 136,145 | |||||||||||||||
Tropicana Atlantic City(3) | — | — | — | — | 217,982 | |||||||||||||||
Tropicana Las Vegas(3) | — | — | — | — | 82,408 | |||||||||||||||
Corporate | — | — | — | — | 208 | |||||||||||||||
Total | $ | 121,917 | $ | 186,642 | $ | 288,863 | $ | 147,782 | $ | 554,056 | ||||||||||
Net operating revenue for casinos held for the entire period | $ | 121,917 | $ | 126,971 | $ | 124,665 | $ | 147,782 | $ | 140,113 | ||||||||||
(1) | Reflects results since June 10, 2005 acquisition. | |
(2) | Reflects results since October 25, 2005 acquisition. | |
(3) | Reflects results since January 3, 2007 acquisition. |
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Six Months Ended | ||||||||||||||||||||
Year Ended December 31, | June 30, | |||||||||||||||||||
2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Nevada Segment: | ||||||||||||||||||||
Tahoe Horizon | $ | 9,929 | $ | 9,361 | $ | 8,236 | $ | 2,376 | $ | 835 | ||||||||||
MontBleu(1) | — | 4,614 | (4,077 | ) | (5,406 | ) | 572 | |||||||||||||
River Palms | 6,868 | 7,895 | 9,154 | 7,029 | 5,875 | |||||||||||||||
Tropicana Express(3) | — | — | — | — | 11,798 | |||||||||||||||
Total Nevada | 16,797 | 21,870 | 13,313 | 3,999 | 19,080 | |||||||||||||||
Mississippi River Basin Segment: | ||||||||||||||||||||
Lighthouse Point | 10,943 | 12,616 | 11,376 | 6,389 | 6,091 | |||||||||||||||
Belle of Baton Rouge(2) | — | 10,828 | 39,241 | 26,089 | 16,922 | |||||||||||||||
Casino Aztar Evansville(3) | — | — | — | — | 11,144 | |||||||||||||||
Total Mississippi River Basin | 10,943 | 23,444 | 50,617 | 32,478 | 34,157 | |||||||||||||||
Tropicana Atlantic City(3) | — | — | — | — | 55,578 | |||||||||||||||
Tropicana Las Vegas(3) | — | — | — | — | 23,355 | |||||||||||||||
Segment Totals | 27,740 | 45,314 | 63,930 | 36,477 | 132,170 | |||||||||||||||
Corporate | (2,282 | ) | (5,597 | ) | (5,352 | ) | (1,265 | ) | (11,626 | ) | ||||||||||
Minority interest net income of consolidated subsidiaries | (3,873 | ) | (3,433 | ) | (3,224 | ) | (1,750 | ) | (2,317 | ) | ||||||||||
Total | $ | 21,585 | $ | 36,284 | $ | 55,354 | $ | 33,462 | $ | 118,227 | ||||||||||
Operating income for casinos held for the entire period | $ | 21,585 | $ | 20,842 | $ | 20,190 | $ | 33,462 | $ | 16,352 | ||||||||||
(1) | Reflects results since June 10, 2005 acquisition. | |
(2) | Reflects results since October 25, 2005 acquisition. | |
(3) | Reflects results since January 3, 2007 acquisition. |
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Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||
2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Nevada Segment: | ||||||||||||||||||||
Tahoe Horizon | $ | 13,202 | $ | 13,051 | $ | 12,649 | $ | 3,906 | $ | 2,747 | ||||||||||
MontBleu(1) | — | 5,917 | 640 | (2,975 | ) | 2,492 | ||||||||||||||
River Palms | 8,611 | 10,649 | 13,012 | 8,244 | 8,056 | |||||||||||||||
Tropicana Express(3) | — | — | — | — | 16,565 | |||||||||||||||
Total Nevada | 21,813 | 29,617 | 26,301 | 9,175 | �� | 29,860 | ||||||||||||||
Mississippi River Basin Segment: | ||||||||||||||||||||
Lighthouse Point | 12,621 | 14,320 | 12,957 | 7,218 | 6,340 | |||||||||||||||
Belle of Baton Rouge(2) | — | 11,752 | 45,291 | 27,478 | 19,763 | |||||||||||||||
Casino Aztar Evansville(3) | — | — | — | — | 16,600 | |||||||||||||||
Total Mississippi River Basin | 12,621 | 26,072 | 58,248 | 34,696 | 42,703 | |||||||||||||||
Tropicana Atlantic City(3) | — | — | — | — | 60,435 | |||||||||||||||
Tropicana Las Vegas(3) | — | — | — | — | 23,753 | |||||||||||||||
Segment Adjusted EBITDA | 34,434 | 55,689 | 84,549 | 43,871 | 156,751 | |||||||||||||||
Corporate | (2,282 | ) | (3,584 | ) | (5,350 | ) | (1,265 | ) | (6,666 | ) | ||||||||||
EBITDA | 32,152 | 52,105 | 79,199 | 42,606 | 150,085 | |||||||||||||||
Write off of fixed assets and deposits related to abandoned acquisition | (79 | ) | (2,742 | ) | (2,588 | ) | (979 | ) | (263 | ) | ||||||||||
Construction accident insurance recoveries, net | — | — | — | — | 14,075 | |||||||||||||||
Depreciation and amortization | (6,615 | ) | (9,646 | ) | (18,033 | ) | (6,415 | ) | (43,353 | ) | ||||||||||
Operating income | 25,458 | 39,717 | 58,578 | 35,212 | 120,544 | |||||||||||||||
Interest income | 113 | 482 | 8,918 | 886 | 6,483 | |||||||||||||||
Interest expense | (909 | ) | (5,993 | ) | (35,563 | ) | (8,010 | ) | (114,078 | ) | ||||||||||
Loss from early extinguishment of debt | — | — | — | — | (2,799 | ) | ||||||||||||||
Minority interest in net income of consolidated subsidiaries | (3,873 | ) | (3,433 | ) | (3,224 | ) | (1,750 | ) | (2,317 | ) | ||||||||||
Income from continuing operations before income tax | $ | 20,789 | $ | 30,773 | $ | 28,709 | $ | 26,338 | $ | 7,833 | ||||||||||
EBITDA for casinos held for the entire period | $ | 32,152 | $ | 34,436 | $ | 33,268 | $ | 42,606 | $ | 32,732 | ||||||||||
(1) | Reflects results since June 10, 2005 acquisition. | |
(2) | Reflects results since October 25, 2005 acquisition. | |
(3) | Reflects results since January 3, 2007 acquisition. | |
(4) | Segment Adjusted EBITDA is net income before interest expense, interest income, depreciation, amortization, corporate expenses, write offs of fixed assets and deposits related to abandoned acquisition and minority interest in net income of consolidated subsidiary. Segment Adjusted EBITDA should not be construed as a substitute for either operating income or net income as they are determined in accordance with GAAP. Management uses Segment Adjusted EBITDA as a measure to compare operating results between segments and accounting periods. Management manages cash and finances Tropicana Entertainment’s operations at the corporate level. Management manages the allocation of capital among segments at the corporate level. Management accordingly believes that Segment Adjusted EBITDA is useful as a measure of operating results at the segment level because it reflects the results of operating decisions at that level separated from the effects of financing decisions that are managed at the corporate level. Management also uses Segment Adjusted EBITDA as an important operating performance measure in bonus programs for managers and executive officers. Management also believes that Segment Adjusted EBITDA is a commonly used measure of operating performance in the gaming industry and is an important basis for the valuation of gaming companies. Management’s |
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calculation of Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies and, therefore, any such differences must be considered when comparing performance among different companies. While management believes that Segment Adjusted EBITDA provides a useful perspective for some purposes, Segment Adjusted EBITDA has material limitations as an analytical tool. For example, among other things, although depreciation, amortization and write off of fixed assets and deposits related to abandoned acquisition are non-cash charges, the assets being depreciated, amortized and written off may have to be replaced in the future, and Segment Adjusted EBITDA does not reflect the requirements for such replacements. Interest expense, interest income, and minority interest in net income of consolidated subsidiary are also not reflected in Segment Adjusted EBITDA. Therefore, management does not consider Segment Adjusted EBITDA in isolation, and it should not be considered as a substitute for measures determined in accordance with GAAP. A reconciliation of Segment Adjusted EBITDA with operating income and net income as determined in accordance with GAAP is reflected in the table above. |
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• | The net proceeds of the offering of the outstanding notes. |
• | A senior secured credit facility, which was made available to Tropicana Entertainment on January 3, 2007 and provided for $1,530.0 million in aggregate principal amount of term loans, $229.8 million in aggregate principal amount of which we have since repaid resulting in $1,300.2 million in aggregate principal amount of such term loans being outstanding as of September 30, 2007, and a $180.0 million revolving credit facility under which we presently have approximately $170.3 million in additional availability net of approximately $9.7 million of outstanding letters of credit, each of which is scheduled to mature on January 3, 2012. The interest rates per annum applicable to the loans are, at our option, an adjusted LIBOR rateplus an applicable margin of 2.25% or an alternate base rateplus an applicable margin of 1.50%, and in the case of the revolving credit facility will vary according to our leverage ratio during the term of the revolving credit facility. However, Tropicana Entertainment has entered into swap agreements in the amount of $1.0 billion, which effectively fix at 5.00% per annum the LIBOR rate applicable to $1.0 billion of the indebtedness incurred under the senior secured credit facility. See “ — Quantitative and Qualitative Disclosures About Market Risk.” The senior secured credit facility contains covenants that limit, subject to certain exceptions, the ability of Tropicana Entertainment and the guarantors (including the affiliate guarantors) to, among other things, incur debt, declare certain dividends or make certain distributions, repay certain indebtedness, incur liens or other encumbrances, make loans or other investments, merge, consolidate or sell substantially all of its property or business, make capital expenditures above certain prescribed levels during any fiscal year, enter into transactions with affiliates (which are not guarantors of the senior secured credit facility), cause its subsidiaries to pay certain dividends or make certain distributions, amend debt or other material agreements and enter into a new line of business. The senior secured credit facility also requires Tropicana Entertainment to comply with certain financial covenants, including a maximum leverage ratio and a minimum interest coverage ratio which will become more restrictive over time. |
• | A secured credit facility in an aggregate principal amount of $440.0 million, which was made available to the Las Vegas Borrower on January 3, 2007, a newly formed indirect subsidiary of Tropicana Entertainment that indirectly holds the assets and operations relating to the Tropicana Las Vegas, which is not part of the “restricted group” under the indenture governing the exchange notes and whose operating results do not support debt service obligations under the exchange notes. The initial term of the Las Vegas secured loan concludes on July 3, 2008. The Las Vegas secured loan affords the Las Vegas Borrower two six month options to extend the term of such loan. The interest rates per annum applicable to the Las Vegas secured loan are, at the Las Vegas Borrower’s option, an adjusted LIBOR rate plus an applicable margin of 2.25% or an alternate base rate plus an applicable margin of 1.50%. However, the Las Vegas borrower has entered into a swap agreement in the amount of $440 million, which effectively fixes at 5.10% per annum the LIBOR rate applicable to the entire balance outstanding under the Las Vegas secured loan. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Tropicana Entertainment and Tropicana Casinos and Resorts — Quantitative and Qualitative Disclosures About Market Risk.” The Las Vegas secured loan contains covenants that, subject to certain exceptions, limit the Las Vegas Borrower’s ability to, among other things, incur debt, declare certain dividends on, redeem or repurchase its capital stock generally, repay certain outstanding indebtedness, incur liens or other |
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encumbrances, make loans or other investments, merge, consolidate or sell substantially all its property or business, make certain capital expenditures, cause its subsidiaries to pay certain dividends or make certain distributions and amend debt or other material agreements. The Las Vegas secured loan also requires the Las Vegas Borrower to comply with certain financial covenants, including a maximum ratio of total indebtedness to the appraised value of the property located on the Las Vegas “Strip” of 60%, and maximum capital expenditure amounts. |
• | The approximately $241.8 million remaining of a $313.0 million deposit plus accrued interest made by Columbia Sussex on behalf of Tropicana Casinos and Resorts into a custodial account upon the execution of the Aztar Merger Agreement. | |
• | Cash-on-hand of ours and Aztar. | |
• | An additional equity contribution of approximately $152.0 million from Tropicana Casinos and Resorts, Tropicana Entertainment’s ultimate parent. |
• | Tropicana Atlantic City: In November 2004, Aztar completed a $285.0 million expansion to the Tropicana Atlantic City, which included a 200,000-square-foot entertainment, restaurant and retail complex known as “The Quarter at Tropicana.” We intend to proceed with a plan developed by Aztar, which we expect will cost approximately $55.0 million, to enhance the Tropicana Atlantic City by refurbishing its casino floors and hotel towers so that they are similar in quality and appearance to The Quarter. The three-phase refurbishment project commenced in December 2005. During phase one of the project, Aztar made enhancements to the north tower hotel rooms and certain non-gaming amenities, which phase was completed during the fourth quarter of 2006. During phase two of the project, we refurbished half of the casino floor and the south tower hotel rooms, which phase was completed in the second quarter of 2007. In phase three of the project, we will refurbish the other half of the casino floor and two restaurants at the property. We expect to complete the third phase in the first quarter of 2008. |
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• | Belle of Baton Rouge: The Belle of Baton Rouge benefited from the population increase in the Baton Rouge area following the displacement of residents of New Orleans as a result of Hurricane Katrina, although that benefit has since somewhat subsided. To accommodate the increased demand for gaming in this market and to build market share, we are currently building a 330-space parking structure adjacent to the casino. We will endeavor to complete construction of the parking structure, which is designed to increase casino traffic and is estimated to cost approximately $12.5 million, by the second quarter of 2008. |
• | Redevelop the Tropicana Las Vegas Site. To capitalize on its premium location on the Las Vegas “Strip,” we expect to redevelop the Tropicana Las Vegas by refurbishing one of its two existing hotel towers and its existing showroom (we expect to raze the other existing tower and all of the other remaining structures on the site) and redeveloping the remainder of its34-acre site. Our preliminary plan for this redevelopment effort envisions approximately 10,200 new and refurbished hotel rooms of which approximately 500 will be refurbished hotel rooms in the existing hotel tower to be retained, approximately 600,000 square feet of new meeting space, an increase in the size of the casino floor to approximately 120,000 square feet, a more modern casino floor layout and a new approximately 250,000-square-foot retail plaza. We plan to complete this redevelopment in 2010. The redevelopment is expected to be funded by a construction financing transaction independent of the financing transactions that funded the Aztar Acquisition and, if necessary, by additional capital contributions from Tropicana Casinos and Resorts, Tropicana Entertainment’s ultimate parent. |
• | Lighthouse Point Casino: We expect to invest between $4.0 million and $5.0 million at the Lighthouse Point Casino in Greenville, Mississippi in order to renovate the casino floors and public areas of the property so as to better position it to meet the competitive challenges posed by the expected introduction of a new gaming property to the market in late 2007. We will add up to 350 new and converted slot machines, making all of the slot machines at the property “ticket-in ticket-out” and upgrade the slot tracking systems. We will also make improvements to the restaurant at the property. |
• | Casino Aztar Evansville: In August 2007, the City of Evansville’s Redevelopment Commission approved our preliminary plan to build a 1,046-seat theater at the Casino Aztar Evansville. The venue, construction of which is currently projected to be completed in the first quarter of 2008 at an approximate cost of $4.0 million, is expected to offer live entertainment for patrons of the property and residents of Evansville. |
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Payments due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Contractual Obligations | 1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | |||||||||||||||
Tropicana Casinos and Resorts, Inc.: | ||||||||||||||||||||
Long-term debt, including current portion | $ | 2,294 | $ | 4,052 | $ | 189,629 | $ | 960,000 | $ | 1,155,975 | ||||||||||
Interest expense — variable | 19,236 | 37,879 | 28,775 | — | 85,890 | |||||||||||||||
Interest expense — fixed | 92,400 | 184,800 | 184,800 | 277,200 | 739,200 | |||||||||||||||
Operating leases | 10,582 | 20,650 | 19,249 | 203,369 | 253,850 | |||||||||||||||
Purchase obligations | 571 | 602 | 67 | — | 1,240 | |||||||||||||||
Total | $ | 125,083 | $ | 247,983 | $ | 422,520 | $ | 1,440,569 | $ | 2,236,155 | ||||||||||
Payments due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Contractual Obligations | 1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | |||||||||||||||
Tropicana Entertainment: | ||||||||||||||||||||
Long term debt, including current portion | $ | 13,914 | $ | 467,292 | $ | 1,321,240 | $ | 960,000 | $ | 2,762,446 | ||||||||||
Interest expense — variable | 26,895 | 50,698 | 47,089 | — | 124,682 | |||||||||||||||
Interest expense — fixed | 197,231 | 345,966 | 329,800 | 277,200 | 1,150,197 | |||||||||||||||
Operating leases | 14,482 | 24,450 | 20,549 | 203,469 | 262,950 | |||||||||||||||
Purchase obligations | 44,271 | 6,202 | 367 | — | 50,840 | |||||||||||||||
Other | 900 | 1,900 | 4,000 | 15,600 | 22,400 | |||||||||||||||
Total | $ | 297,693 | $ | 896,508 | $ | 1,723,045 | $ | 1,456,269 | $ | 4,373,515 | ||||||||||
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Six Months Ended | ||||||||||||||||||||||||
Year Ended December 31, | June 30, | |||||||||||||||||||||||
2003(1) | 2004 | 2005 | 2006 | 2006 | 2007 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Casino | $ | 3,890 | $ | 24,093 | $ | 31,364 | $ | 32,427 | $ | 18,006 | $ | 14,898 | ||||||||||||
Rooms | 309 | 1,751 | 1,738 | 1,921 | 1,068 | 751 | ||||||||||||||||||
Food and beverage | 409 | 3,272 | 4,088 | 4,423 | 2,419 | 1,655 | ||||||||||||||||||
Other casino and hotel | 46 | 385 | 559 | 731 | 511 | 238 | ||||||||||||||||||
Total operating revenues | 4,654 | 29,501 | 37,749 | 39,502 | 22,004 | 17,542 | ||||||||||||||||||
Less promotional allowances | (692 | ) | (3,968 | ) | (4,978 | ) | (5,903 | ) | (3,232 | ) | (1,953 | ) | ||||||||||||
Net operating revenues | 3,962 | 25,533 | 32,771 | 33,599 | 18,772 | 15,589 | ||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||
Casino | 1,366 | 6,703 | 6,948 | 7,201 | 3,648 | 2,326 | ||||||||||||||||||
Rooms | 250 | 1,085 | 974 | 981 | 483 | 722 | ||||||||||||||||||
Food and beverage | 529 | 3,007 | 3,660 | 4,048 | 2,116 | 1,580 | ||||||||||||||||||
Other casino and hotel | 1,171 | 7,081 | 8,182 | 8,799 | 4,644 | 3,978 | ||||||||||||||||||
Selling, general and administrative | 855 | 4,688 | 5,696 | 6,242 | 3,479 | 3,381 | ||||||||||||||||||
Depreciation and amortization | 373 | 2,724 | 3,033 | 3,413 | 1,522 | 1,764 | ||||||||||||||||||
Write off of fixed assets, deposits and other costs related to abandoned acquisitions | — | — | — | 273 | 18 | 29 | ||||||||||||||||||
Total operating expenses | 4,544 | 25,288 | 28,493 | 30,957 | 15,910 | 13,780 | ||||||||||||||||||
Income (loss) from operations | (582 | ) | 245 | 4,278 | 2,642 | 2,862 | 1,809 | |||||||||||||||||
Interest expense net | (143 | ) | (877 | ) | (1,168 | ) | (1,118 | ) | (1,007 | ) | — | |||||||||||||
Net Income (loss) | $ | (725 | ) | $ | (632 | ) | $ | 3,110 | $ | 1,524 | $ | 1,855 | $ | 1,809 | ||||||||||
(1) | Includes the results of operations from October 27, 2003, date of acquisition, to December 31, 2003. |
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December 31, | June 30, | |||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2006 | 2007 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Balance Sheet Data (as of period end): | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 5,351 | $ | 4,935 | $ | 5,072 | $ | 3,705 | $ | 6,357 | $ | 3,990 | ||||||||||||
Total assets | 39,991 | 39,736 | 40,266 | 36,540 | 41,040 | 38,289 | ||||||||||||||||||
Lease liability(1) | 3,022 | 2,921 | 2,820 | 2,558 | 2,634 | 2,482 | ||||||||||||||||||
Total debt, excluding related party | 20,000 | 20,000 | 17,143 | — | 15,714 | — | ||||||||||||||||||
Members’ equity | 14,274 | 13,642 | 15,302 | 28,976 | 17,308 | 30,785 |
(1) | Represents the amount needed to adjust future lease payments under CP Vicksburg’s lease agreement with the city of Vicksburg to current market rents, which is based on an appraisal at the date of acquisition of the Vicksburg Horizon and is being amortized over the remaining20-year term of the lease on a straight-line basis. |
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RESULTS OF OPERATIONS — COLUMBIA PROPERTIES VICKSBURG
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Payments Due by Period | ||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Contractual Obligations | 1 Year | Years | Years | 5 Years | Total | |||||||||||||||
Columbia Properties Vicksburg, LLC: | ||||||||||||||||||||
Operating leases | $ | 576 | $ | 1,152 | $ | 1,152 | $ | 12,669 | $ | 15,549 | ||||||||||
Purchase obligations | 298 | 173 | — | — | 471 | |||||||||||||||
Total | $ | 874 | $ | 1,325 | $ | 1,152 | $ | 12,669 | $ | 16,020 | ||||||||||
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Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||||||||||||||
2002(1) | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Casino | $ | 24,947 | $ | 32,251 | $ | 34,656 | $ | 30,607 | $ | 30,545 | $ | 16,235 | $ | 15,662 | ||||||||||||||
Rooms | 732 | 501 | 502 | 428 | 353 | 173 | 172 | |||||||||||||||||||||
Food and beverage | 982 | 1,330 | 1,289 | 929 | 757 | 398 | 283 | |||||||||||||||||||||
Other casino and hotel | 104 | 163 | 247 | 141 | 183 | 72 | 90 | |||||||||||||||||||||
Total operating revenues | 26,765 | 34,245 | 36,694 | 32,105 | 31,838 | 16,878 | 16,207 | |||||||||||||||||||||
Less promotional allowances | (4,070 | ) | (5,396 | ) | (5,786 | ) | (4,295 | ) | (4,221 | ) | (2,484 | ) | (1,742 | ) | ||||||||||||||
Net operating revenues | 22,695 | 28,849 | 30,908 | 27,810 | 27,617 | 14,394 | 14,465 | |||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||
Casino | 6,822 | 6,448 | 5,355 | 5,107 | 5,740 | 2,025 | 2,396 | |||||||||||||||||||||
Rooms | 301 | 442 | 176 | 204 | 201 | 112 | 195 | |||||||||||||||||||||
Food and beverage | 674 | 733 | 628 | 497 | 529 | 338 | 331 | |||||||||||||||||||||
Other casino and hotel | 3,547 | 6,978 | 7,349 | 6,836 | 7,095 | 3,398 | 3,527 | |||||||||||||||||||||
Selling, general and administrative | 3,116 | 2,210 | 3,267 | 2,834 | 2,607 | 1,802 | 1,700 | |||||||||||||||||||||
Depreciation and amortization | 2,149 | 2,594 | 2,709 | 2,915 | 2,918 | 1,409 | 1,117 | |||||||||||||||||||||
Total operating expenses | 16,609 | 19,405 | 19,484 | 18,393 | 19,090 | 9,084 | 9,266 | |||||||||||||||||||||
Income from operations | 6,086 | 9,444 | 11,424 | 9,417 | 8,527 | 5,310 | 5,199 | |||||||||||||||||||||
Interest expense, net and other expenses | (411 | ) | (706 | ) | (554 | ) | (532 | ) | (346 | ) | (178 | ) | 55 | |||||||||||||||
Income from continuing operations | 5,675 | 8,738 | 10,870 | 8,885 | 8,181 | 5,132 | 5,254 | |||||||||||||||||||||
Discontinued operations | (5 | ) | (568 | ) | (430 | ) | (44 | ) | — | — | ||||||||||||||||||
Net income | $ | 5,675 | $ | 8,733 | $ | 10,302 | $ | 8,455 | $ | 8,137 | $ | 5,132 | $ | 5,254 | ||||||||||||||
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December 31, | June 30, | |||||||||||||||||||||||||||
2002(1) | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Balance Sheet Data (as of period end): | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 2,741 | $ | 4,673 | $ | 7,021 | $ | 5,435 | $ | 4,031 | $ | 4,787 | $ | 4,227 | ||||||||||||||
Total assets | 46,816 | 46,989 | 46,807 | 41,882 | 37,912 | 40,672 | 41,256 | |||||||||||||||||||||
Total debt, excluding related party | 18,063 | 14,397 | 10,572 | 7,066 | — | 5,153 | — | |||||||||||||||||||||
Member’s equity | 26,364 | 30,769 | 34,070 | 32,795 | 35,557 | 32,789 | 39,762 |
(1) | Reflects results from March 12, 2002, the date on which JMBS Casino acquired the Jubilee Casino. |
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Payments Due by Period | ||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Contractual Obligations | 1 Year | Years | Years | 5 Years | Total | |||||||||||||||
JMBS Casino LLC: | ||||||||||||||||||||
Operating leases | $ | 862 | $ | 1,134 | $ | 310 | $ | 17 | $ | 2,323 | ||||||||||
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Year Ended | ||||||||||||||||||||||||
January 2, | January 1, | December 30, | December 31, | December 31, | ||||||||||||||||||||
2003 | 2004 | 2004 | 2005(1) | 2006 | ||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Casino | $ | 641,948 | $ | 595,170 | $ | 587,114 | $ | 673,342 | $ | 673,929 | ||||||||||||||
Rooms | 73,702 | 76,218 | 85,713 | 104,051 | 107,289 | |||||||||||||||||||
Food and beverage | 55,670 | 55,458 | 54,677 | 59,438 | 58,773 | |||||||||||||||||||
Other casino and hotel | 38,720 | 39,323 | 39,310 | 50,833 | 54,345 | |||||||||||||||||||
Total operating revenues | 810,040 | 766,169 | 766,814 | 887,664 | 894,336 | |||||||||||||||||||
Costs and Expenses | ||||||||||||||||||||||||
Casino | 272,466 | 249,404 | 246,445 | 268,346 | 265,823 | |||||||||||||||||||
Rooms | 38,336 | 39,349 | 42,602 | 47,495 | 48,258 | |||||||||||||||||||
Food and beverage | 53,085 | 53,328 | 53,729 | 56,886 | 57,313 | |||||||||||||||||||
Other casino and hotel | 114,241 | 107,841 | 112,537 | 125,133 | 133,831 | |||||||||||||||||||
Selling, general and administrative | 149,443 | 144,006 | 155,926 | 180,880 | 170,363 | |||||||||||||||||||
Construction accident related, net of recoveries | — | 512 | (8,261 | ) | 3,405 | (6,809 | ) | |||||||||||||||||
Depreciation and amortization | 47,699 | 48,151 | 52,213 | 64,381 | 70,027 | |||||||||||||||||||
Preopening costs | — | — | 2,893 | — | — | |||||||||||||||||||
Tropicana Las Vegas capitalized development cost write-off | — | — | — | — | 26,021 | |||||||||||||||||||
Merger related costs | — | — | — | — | 92,972 | |||||||||||||||||||
Total operating expenses | 675,270 | 642,591 | 658,084 | 746,526 | 857,799 | |||||||||||||||||||
Operating income | 134,770 | 123,578 | 108,730 | 141,138 | 36,537 | |||||||||||||||||||
Interest expense, net | (40,189 | ) | (35,639 | ) | (36,205 | ) | (54,976 | ) | (54,086 | ) | ||||||||||||||
Other income (expense) | (458 | ) | — | 3,907 | 6,001 | 2,640 | ||||||||||||||||||
Loss on early extinguishment of debt | — | — | (10,372 | ) | — | — | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | 94,123 | 87,939 | 66,060 | 92,163 | (14,909 | ) | ||||||||||||||||||
Income taxes | (36,585 | ) | (28,241 | ) | (38,973 | ) | (38,598 | ) | (29,247 | ) | ||||||||||||||
Income (loss) from continuing operations | 57,538 | 59,698 | 27,087 | 53,565 | (44,156 | ) | ||||||||||||||||||
Discontinued operations, casinos to be transferred, net of tax | 1,321 | 1,232 | 1,388 | 2,395 | 4,351 | |||||||||||||||||||
Net Income (loss) | $ | 58,859 | $ | 60,930 | $ | 28,475 | $ | 55,960 | $ | (39,805 | ) | |||||||||||||
Balance Sheet Data (as of period end): | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 51,650 | $ | 69,003 | $ | 51,353 | $ | 86,361 | $ | 121,416 | ||||||||||||||
Total assets | 1,173,343 | 1,347,773 | 1,511,640 | 1,555,334 | 1,573,252 | |||||||||||||||||||
Total debt (excluding related party) | 529,081 | 645,566 | 732,545 | 722,969 | 702,711 | |||||||||||||||||||
Stockholders’ equity | 515,354 | 534,574 | 566,291 | 636,530 | 621,974 |
(1) | Aztar switched to a calendar year in 2005. |
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Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(52 weeks) | ||||||||||||
Casino revenue | ||||||||||||
Tropicana Atlantic City | $ | 334.2 | $ | 410.9 | $ | 413.0 | ||||||
Tropicana Las Vegas | 67.8 | 66.1 | 63.8 | |||||||||
Tropicana Express Laughlin | 68.1 | 72.7 | 73.0 | |||||||||
Casino Aztar Evansville | 117.0 | 123.6 | 124.1 | |||||||||
Total consolidated | $ | 587.1 | $ | 673.3 | $ | 673.9 | ||||||
Total revenues | ||||||||||||
Tropicana Atlantic City | $ | 384.6 | $ | 490.1 | $ | 496.2 | ||||||
Tropicana Las Vegas | 162.0 | 163.8 | 162.9 | |||||||||
Tropicana Express Laughlin | 91.0 | 97.1 | 97.6 | |||||||||
Casino Aztar Evansville | 129.2 | 136.6 | 137.6 | |||||||||
Total consolidated | $ | 766.8 | $ | 887.6 | $ | 894.3 | ||||||
Segment Adjusted EBITDA(a) | ||||||||||||
Tropicana Atlantic City | $ | 81.8 | $ | 118.7 | $ | 144.4 | ||||||
Tropicana Las Vegas | 36.2 | 39.0 | 37.7 | |||||||||
Tropicana Express Laughlin | 23.0 | 27.3 | 26.5 | |||||||||
Casino Aztar Evansville | 37.4 | 41.3 | 37.5 | |||||||||
Corporate | (17.5 | ) | (20.8 | ) | (139.6 | ) | ||||||
Depreciation and amortization | (52.2 | ) | (64.4 | ) | (70.0 | ) | ||||||
Operating income | 108.7 | 141.1 | 36.5 | |||||||||
Other income | 3.9 | 6.0 | 2.6 | |||||||||
Interest income | 0.8 | 1.4 | 1.9 | |||||||||
Interest expense | (37.0 | ) | (56.3 | ) | (55.9 | ) | ||||||
Loss on early retirement of debt | (10.3 | ) | — | — | ||||||||
Income taxes | (39.0 | ) | (38.6 | ) | (29.2 | ) | ||||||
Income(loss) from continuing operations | 27.1 | 53.6 | (44.1 | ) | ||||||||
Discontinued operations, net of income taxes | 1.4 | 2.4 | 4.3 | |||||||||
Net income(loss) | $ | 28.5 | $ | 56.0 | $ | (39.8 | ) | |||||
(a) | Segment Adjusted EBITDA is net income(loss) before discontinued operations, income taxes, loss on early retirement of debt, interest expense, interest income, other income, depreciation and amortization |
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and corporate. Segment Adjusted EBITDA should not be construed as a substitute for either operating income or net income(loss) as they are determined in accordance with GAAP. Segment Adjusted EBITDA, which is computed in accordance with SFAS No. 131, does not represent a non-GAAP financial measure as it is presented in the above summary. The use of Segment Adjusted EBITDA for any other purpose would constitute a non-GAAP financial measure. Aztar uses Segment Adjusted EBITDA as a measure to compare operating results among Aztar’s properties and between accounting periods. Aztar manages cash and finances its operations at the corporate level. Aztar manages the allocation of capital among properties at the corporate level. Aztar also files a consolidated income tax return. Accordingly, Aztar believes Segment Adjusted EBITDA is useful as a measure of operating results at the property level because it reflects the results of operating decisions at that level separated from the effects of tax and financing decisions that are managed at the corporate level. Aztar also believes that Segment Adjusted EBITDA is a commonly used measure of operating performance in the gaming industry and is an important basis for the valuation of gaming companies. Aztar’s calculation of Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies and, therefore, any such differences must be considered when comparing performance among different companies. While Aztar believes Segment Adjusted EBITDA provides a useful perspective for some purposes, Segment Adjusted EBITDA has material limitations as an analytical tool. For example, among other things, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Segment Adjusted EBITDA does not reflect the requirements for such replacements. Corporate, other income, interest expense, net of interest income, loss on early retirement of debt, income taxes, and discontinued operations are also not reflected in Segment Adjusted EBITDA. Therefore, Aztar does not consider Segment Adjusted EBITDA in isolation, and it should not be considered as a substitute for measures determined in accordance with GAAP. A reconciliation of Segment Adjusted EBITDA with operating income and net income(loss) as determined in accordance with GAAP is reflected in the above summary. |
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Payments Due by Period | ||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Contractual Obligations | 1 Year | Years | Years | 5 Years | Total | |||||||||||||||
Long-term debt, including current portion | $ | 7.0 | $ | 220.5 | $ | 175.1 | $ | 300.1 | $ | 702.7 | ||||||||||
Interest Payments | 49.7 | 92.7 | 72.8 | 58.0 | 273.2 | |||||||||||||||
Operating leases | 3.9 | 3.8 | 1.3 | 0.1 | 9.1 | |||||||||||||||
Purchase obligations | 43.7 | 5.6 | 0.3 | — | 49.6 | |||||||||||||||
Other long-term liabilities, including current portion | 0.9 | 1.9 | 4.0 | 15.6 | 22.4 | |||||||||||||||
Total | $ | 105.2 | $ | 324.5 | $ | 253.5 | $ | 373.8 | $ | 1,057.0 | ||||||||||
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Acquisition | Approx. Casino | Slot | Table | Hotel | Parking | |||||||||||||||||||||||
Property Name | Location | Date | Square Footage | Machines | Games | Rooms | Spaces | |||||||||||||||||||||
Legacy Properties | ||||||||||||||||||||||||||||
Belle of Baton Rouge | Baton Rouge, LA | Oct. 2005 | 29,500 | 1,019 | 22 | 300 | 1,803 | |||||||||||||||||||||
River Palms Hotel and Casino | Laughlin, NV | Sept. 2003 | 63,850 | 1,061 | 28 | 1,001 | 1,834 | |||||||||||||||||||||
Lake Tahoe Horizon Casino and Resort | South Lake Tahoe, NV | Jan. 1990 | 43,000 | 712 | 32 | 539 | 1,396 | |||||||||||||||||||||
MontBleu Casino | South Lake Tahoe, NV | June 2005 | 40,585 | 638 | 52 | 440 | 1,547 | |||||||||||||||||||||
Lighthouse Point Casino(1)(2) | Greenville, MS | Nov. 1996(3 | ) | 22,000 | 725 | 9 | — | 386 | ||||||||||||||||||||
Jubilee Casino(4) | Greenville, MS | March 2002 | 28,500 | 712 | 13 | 39 | 512 | |||||||||||||||||||||
Vicksburg Horizon Casino(5) | Vicksburg, MS | Oct. 2003 | 20,909 | 696 | 19 | 117 | 889 | |||||||||||||||||||||
Recently Acquired Properties | ||||||||||||||||||||||||||||
Tropicana Atlantic City | Atlantic City, NJ | Jan. 2007 | 147,248 | 3,480 | 209 | 2,129 | 5,477 | |||||||||||||||||||||
Tropicana Express Hotel and Casino | Laughlin, NV | Jan. 2007 | 53,680 | 1,075 | 39 | 1,495 | 2,253 | |||||||||||||||||||||
Casino Aztar Evansville | Evansville, IN | Jan. 2007 | 38,360 | 1,132 | 52 | 346 | 2,100 | |||||||||||||||||||||
Tropicana Las Vegas(2) | Las Vegas, NV | Jan. 2007 | 60,727 | 994 | 35 | 1,876 | 2,388 | |||||||||||||||||||||
Total | 548,359 | 12,244 | 510 | 8,282 | 20,585 | |||||||||||||||||||||||
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(1) | Tropicana Entertainment indirectly holds a 79% voting interest and an 84% economic interest in Greenville Riverboat, which manages the Lighthouse Point Casino. A wholly-owned subsidiary of Tropicana Entertainment owns the riverboat on which the Lighthouse Point Casino conducts its operations. | |
(2) | Greenville Riverboat and the subsidiaries of Tropicana Entertainment that hold the assets and operations relating to the Tropicana Las Vegas are not guarantors of the outstanding notes or of the senior secured credit facility and will not be guarantors of the exchange notes, although Greenville Riverboat is subject to the restrictive covenants contained in the indenture and the credit documentation governing the senior secured credit facility. | |
(3) | The Lighthouse Point Casino was developed (as opposed to acquired) and commenced operations in November 1996. | |
(4) | JMBS Casino, one of the affiliate guarantors, owns and operates the Jubilee Casino. | |
(5) | CP Vicksburg, one of the affiliate guarantors, owns and operates the Vicksburg Horizon. |
• | Cost-Effective Administrative Services. We share corporate offices with Columbia Sussex and many corporate functions, such as human resources, accounting, administration, purchasing, marketing, hotel management and supervision, risk management, contracting, construction and development, treasury and maintenance-related services, are performed for certain of Tropicana Entertainment’s subsidiaries and the affiliate guarantors by Columbia Sussex pursuant to the terms of service agreements, which are subject to gaming regulatory approval. Gaming regulatory approval of the terms of one service agreement has not yet been obtained with respect to our Tropicana Atlantic City property. The service agreements extend by their terms until we elect to terminate them, which we are permitted to do at any time with 60 days written notice. Under the terms of these service agreements, subject to certain conditions, Columbia Sussex provides corporate services on behalf of our gaming properties that have received regulatory approval to date for a total amount of approximately $1.9 million per year, subject to modest price increases each year starting in 2008. We believe the service agreements enable us to obtain corporate services at costs that are more favorable than we would be able to obtain on a stand-alone basis. We have also entered into agreements with Tropicana Casinos and Resorts for the provision to certain of Tropicana Entertainment’s subsidiaries and the affiliate guarantors of casino services, such as the supervision of casino operations, staffing, marketing and advertising and accounting, which agreements are subject to gaming regulatory approval. Gaming regulatory approval of the terms of one of these agreements has not yet been obtained with respect to our Tropicana Atlantic City property. Under these agreements, we have agreed to pay Tropicana Casinos and Resorts our allocated portion of the corporate overhead costs |
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for these services. For a more detailed description of the agreements described in this paragraph, see “Certain Relationships and Related Party Transactions.” |
• | Integrated Marketing Programs. The compatibility of Columbia Sussex’s extensive portfolio of 70 hotels and our network of casino properties has provided us with a number of opportunities to develop integrated marketing programs. We expect to develop joint programs whereby guests of our casinos can receive discounts on stays at Columbia Sussex hotel properties. In addition, we and Columbia Sussex are able to pool our respective customer databases to develop direct marketing campaigns targeting a broad group of prospective customers, and to more effectively promote these programs by sharing a centralized marketing platform. We believe that our acquisition of Aztar has provided us with additional opportunities for these types of joint marketing efforts. |
• | Extensive Construction and Development Experience. Throughout our history, we have engaged in a number of property renovation, refurbishment and development projects, and we have a number of additional projects underway or slated to commence in the near term. As a developer of hotel properties, Columbia Sussex has over 30 years of experience in planning, financing and executing hotel improvement and development programs. We have been able to leverage this experience when undertaking our development projects, which we believe has allowed us to develop and enhance our gaming assets in a cost-effective manner, while meeting target completion dates and development expectations. |
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• | Tropicana Atlantic City: In November 2004, Aztar completed a $285.0 million expansion to the Tropicana Atlantic City, which included a 200,000-square-foot entertainment, restaurant and retail complex known as “The Quarter at Tropicana.” We intend to proceed with a plan developed by Aztar, which we expect will cost approximately $55.0 million, to enhance the Tropicana Atlantic City by refurbishing its casino floors and hotel towers so that they are similar in quality and appearance to The Quarter. The three-phase refurbishment project commenced in December 2005. During phase one of the project, Aztar made enhancements to the north tower hotel rooms and certain non-gaming amenities, which phase was completed during the fourth quarter of 2006. During phase two of the project, we refurbished half of the casino floor and the south tower hotel rooms, which phase was completed in the second quarter of 2007. In phase three of the project, we will refurbish the other half of the casino floor and two restaurants at the property. We expect to complete the third phase in the first quarter of 2008. |
• | Casino Aztar Evansville: Construction was completed in 2007 at the Casino Aztar Evansville on a $32.6 million expansion that includes a 96-room boutique hotel, multi-venue dining and entertainment complex and associated infrastructure. We believe that the expansion has increased the attractiveness of the property and expanded customer reach through the availability of additional hotel rooms. In addition, in August 2007, the City of Evansville’s Redevelopment Commission approved our preliminary plan to build a 1,046-seat theater at the Casino Aztar Evansville. The venue, construction of which is currently projected to be completed in the first quarter of 2008 at an approximate cost of $4.0 million, is expected to offer live entertainment for patrons of the property and residents of Evansville. |
• | Belle of Baton Rouge: The Belle of Baton Rouge benefited from the population increase in the Baton Rouge area following the displacement of residents of New Orleans as a result of Hurricane Katrina, although that benefit has since somewhat subsided. To accommodate the increased demand for gaming in this market and to build market share, we have developed plans to build a 330-space parking structure adjacent to the casino. We will endeavor to complete construction of the parking structure, which is designed to increase casino traffic and is estimated to cost approximately $12.5 million, by the second quarter of 2008. |
• | MontBleu Casino: In the summer of 2006, we completed a $21.0 million program to re-brand and reposition the former Caesars Lake Tahoe as the MontBleu. We introduced newon-site amenities and entertainment options at the MontBleu to appeal to a younger clientele, while continuing to focus on the value conscious customer in the South Lake Tahoe, Nevada market at our sister property, the Tahoe Horizon. We intend to increase our efforts to effectively market the MontBleu as we seek to strengthen our customer base. |
• | Tropicana Express: We have completed the $11.0 million program to renovate the hotel rooms at the Tropicana Express, which we believe will help solidify our position in the Laughlin market. In addition, the Tropicana Express is situated less than one mile from the River Palms, which we believe will allow us to achieve operational synergies and cost savings by consolidating duplicative back-office and other support functions including the sharing of laundry facilities and employees to reduce overtime pay. |
• | Lighthouse Point Casino and Jubilee Casino: We expect to invest between $7.0 million and $8.0 million at the Lighthouse Point Casino and the Jubilee Casino, our two casinos in Greenville, Mississippi, in order to renovate the casino floors and public areas of the properties so as to better |
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position them to meet the competitive challenges posed by the expected introduction of a new gaming property to the market in late 2007. We will add up to 850 new and converted slot machines, making all of the slot machines at the properties “ticket-in ticket-out” and upgrade the slot tracking systems. We will also make improvements to the restaurant at the Lighthouse Point Casino. |
• | three restaurants; | |
• | a lounge, a 70-seat sports bar, and a small entertainment venue; | |
• | approximately 150,000 square feet of available retail space; | |
• | approximately 40,000 square feet of meeting space; and | |
• | a 50,000-square-foot glass-enclosed atrium. |
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• | four dining facilities; | |
• | two bars, two lounges and one nightclub; | |
• | a spa and salon; | |
• | approximately 10,500 square feet of meeting and convention space; and | |
• | a 1,834-space parking facility. |
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• | South Lake Tahoe’s largest outdoor pool; | |
• | an eight-screen movie theater; | |
• | four restaurants; | |
• | two entertainment venues featuring Las Vegas-style shows, comedy performances, live music and dancing; | |
• | GameWorld, a game arcade for adults and children; and | |
• | approximately 11,000 square feet of full-service meeting and convention space. |
• | four distinctive restaurants, including a steakhouse, a Eurasian-themed restaurant and lounge, and a buffet; | |
• | a 1,500-seat auditorium; | |
• | a shopping galleria; | |
• | a nightclub targeted to younger visitors; and | |
• | 13,899 square feet of meeting and convention space. |
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• | two restaurants; | |
• | a sports bar; and | |
• | two covered parking garages and an additional parking lot with free valet service, providing customers with a total of 889 parking spaces. |
• | The Quarter, a 200,000-square-foot Las Vegas-style indoor dining, entertainment and retail center with a Havana-inspired theme, which includes nine restaurants, five entertainment facilities and 26 retail outlets; | |
• | a 2,000-seat theatrical showroom; | |
• | approximately 99,000 square feet of meeting, convention and banquet space; | |
• | three gourmet restaurants and several mid-price range restaurants; and | |
• | additional amenities including indoor and outdoor swimming pools, tennis courts, a health and fitness club and a jogging track. |
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• | five restaurants; | |
• | several lounges, including an entertainment lounge and a premium lounge for high-end players; | |
• | a train-shaped, heated outdoor swimming pool and attached spa; and | |
• | special events and retail space. |
• | four restaurants; | |
• | an entertainment lounge; | |
• | a gift shop; and | |
• | a full-service Starbucks café. |
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• | three outdoor pools and one of the world’s largest indoor/outdoor swimming pools; | |
• | afive-acre water oasis and tropical garden; | |
• | approximately 106,358 square feet of convention and exhibit space; | |
• | seven restaurants; and | |
• | theFolies Bergere, the longest-running production show in Las Vegas. |
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• | the net proceeds of the offering of the outstanding notes; |
• | the senior secured credit facility, which was made available to Tropicana Entertainment and provided for $1,530.0 million in aggregate principal amount of term loans, $229.8 million in aggregate principal amount of which we have since repaid resulting in $1,300.2 million in aggregate principal amount of such term loans being outstanding as of September 30, 2007, and a $180.0 million revolving credit facility under which we presently have approximately $170.3 million in additional availability net of approximately $9.7 million of outstanding letters of credit; |
• | the Las Vegas secured loan in an aggregate principal amount of $440.0 million, which was made available to the Las Vegas Borrower, a newly formed indirect subsidiary of Tropicana Entertainment that holds the assets and operations relating to the Tropicana Las Vegas, including its34-acre property located on the Las Vegas “Strip;” |
• | the approximately $241.8 million remaining of a $313.0 million deposit plus accrued interest made by Columbia Sussex on behalf of Tropicana Casinos and Resorts into a custodial account upon the execution of the Aztar Merger Agreement; |
• | cash-on-hand of ours and Aztar; and |
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• | an additional equity contribution of approximately $152.0 million from Tropicana Casinos and Resorts, Tropicana Entertainment’s ultimate parent. |
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• | Establish and maintain responsible accounting practices and procedures; |
• | Maintain effective controls over their financial practices, including establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues; |
• | Maintain systems for reliable record-keeping; and |
• | File periodic reports with gaming regulators. |
• | Adopt rules and regulations under the implementing statutes; |
• | Enforce gaming laws and impose disciplinary sanctions for violations, including revocation or suspension of a gaming license, imposing conditions on the license, or fines and penalties; |
• | Review the character and fitness of participants in gaming operations and make determinations regarding their suitability or qualification for licensure; |
• | Grant Gaming Licenses for participation in gaming operations; |
• | Collect and review reports and information submitted by participants in gaming operations; |
• | Review and approve transactions, such as acquisitions or change-of-control transactions of gaming industry participants and securities offerings and debt transactions executed by such participants; and |
• | Establish and collect fees and taxes. |
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• | the financial stability, integrity and responsibility of the applicant, including whether the operation is adequately capitalized in the state and exhibits the ability to maintain adequate insurance levels; |
• | the quality of the applicant’s casino facilities; |
• | the amount of revenue to be derived by the applicable state through operation of the applicant’s gaming facility; |
• | the applicant’s practices with respect to minority hiring and training; |
• | the effect on competition and general impact on the community; and |
• | the legality and suitability of the casino site. |
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• | to require the holder to dispose of its notes or beneficial interest therein within 30 days of receiving notice of our election or such earlier date as may be requested or prescribed by a gaming authority; or |
• | to redeem the notes, possibly within less than 30 days following the notice of redemption, if so requested or prescribed by the gaming authority, at a redemption price equal to the lesser of (1) the holder’s cost, plus accrued and unpaid interest to the earlier of the redemption date and the date of the finding of unsuitability, (2) 100% of the principal amount thereof, plus accrued and unpaid interest to the earlier of the redemption date and the date of the finding of unsuitability, and (3) any other amount as may be required by applicable law or by order of any gaming authority. |
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• | a percentage of the gross revenues or net gaming proceeds received; |
• | the number of gaming devices and table games operated; |
• | franchise fees for riverboat casinos operating on certain waterways; and |
• | admission fees for customers boarding our riverboat casinos. |
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Name | Age | Position | ||||
William J. Yung, III | 66 | President and Chief Executive Officer; Sole Member of Board of Managers of Tropicana Entertainment; Sole Member of Board of Directors of Tropicana Finance | ||||
John G. Jacob | 47 | Senior Vice President, Chief Financial Officer and Treasurer | ||||
Kevin E. Preston | 36 | Senior Vice President, Casino Operations | ||||
Joseph A. Yung | 43 | Senior Vice President, Development | ||||
Donna B. More | 48 | Vice President, General Counsel and Secretary |
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• | William J. Yung, III, President and Chief Executive Officer; Sole Member of the Board of Managers of Tropicana Entertainment; Sole Member of Board of Directors of Tropicana Finance |
• | John G. Jacob, Senior Vice President, Chief Financial Officer and Treasurer |
• | Kevin E. Preston, Senior Vice President, Casino Operations |
• | Donna B. More, Vice President, General Counsel and Secretary |
• | Mark Giannantonio, General Manager of Tropicana Atlantic City |
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• | 20% after two years of service; |
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• | an additional 20% each year thereafter; and |
• | 100% after six years of service. |
Nonqualified | ||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||||||
Name and Principal Position(s) | Year | Salary ($) | Bonus ($) | Awards ($) | Awards ($) | Compensation ($) | Earnings ($) | Compensation ($) | Total ($) | |||||||||||||||||||||||||||
William J. Yung, III President and Chief Executive Officer of Tropicana Entertainment and Sole Director of Tropicana Finance | 2006 | None | None | N/A | N/A | N/A | N/A | None | None | |||||||||||||||||||||||||||
Richard M. FitzPatrick Senior Vice President, Chief Financial Officer and Treasurer(1) | 2006 | None | None | N/A | N/A | N/A | N/A | None | None | |||||||||||||||||||||||||||
Howard Reinhardt Senior Vice President, Casino Operations(2) | 2006 | $ | 230,000 | $ | 100,000 | N/A | N/A | N/A | N/A | None | $ | 330,000 | ||||||||||||||||||||||||
Donna B. More Vice President, General Counsel and Secretary(3) | 2006 | $ | 39,134 | None | N/A | N/A | N/A | N/A | None | $ | 39,134 | |||||||||||||||||||||||||
Fred A. Buro(4) President and Chief Operating Officer of Tropicana Atlantic City | 2006 | $ | 146,923 | None | N/A | N/A | N/A | N/A | None | $ | 146,923 |
(1) | Mr. FitzPatrick served as the Senior Vice President, Chief Financial Officer and Treasurer of Tropicana Entertainment and Tropicana Finance from May 2006 through July 25, 2007, at which time his previously announced resignation became effective. Mr. FitzPatrick was succeeded in his capacities as Senior Vice President, Chief Financial Officer and Treasurer of Tropicana Entertainment and Tropicana Finance by Mr. John G. Jacob on August 23, 2007. Mr. FitzPatrick did not draw a salary from Tropicana Entertainment or Tropicana Finance in 2006, although he did draw a salary from Tropicana Entertainment in 2007 through July 25, 2007. |
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(2) | Mr. Reinhardt served as Senior Vice President, Casino Operations for Tropicana Entertainment and Tropicana Finance until June 14, 2007, at which time he resigned and was succeeded in such capacities by Mr. Kevin E. Preston. |
(3) | Ms. More joined the management team of Tropicana Entertainment and Tropicana Finance on November 1, 2006. The salary reported above has been prorated for the amount of time Ms. More was employed with Tropicana Entertainment in 2006. |
(4) | Mr. Buro served as President and Chief Operating Officer of Tropicana Atlantic City until August 8, 2007, at which time he resigned and was succeeded shortly thereafter in such capacities by Mr. Mark Giannantonio. |
Payments | ||||||||||||||
Number of | Present | During | ||||||||||||
Years | Value of | Last | ||||||||||||
Credited | Accumulated | Fiscal | ||||||||||||
Name | Plan Name | Service (#) | Benefit ($) | Year ($) | ||||||||||
William J. Yung, III President and Chief Executive Officer, Sole Member of Tropicana Entertainment and Sole Director of Tropicana Finance | Columbia Sussex Corporation Pension Plan | 34 | $ | 2,690,864 | $ | 16,050 | ||||||||
Richard M. FitzPatrick(1) Senior Vice President, Chief Financial Officer and Treasurer | Columbia Sussex Corporation Pension Plan | 1 | None | None | ||||||||||
Howard Reinhardt Senior Vice President, Casino Operations(2) | Columbia Sussex Corporation Pension Plan | 10 | $ | 4,194 | $ | 4,194 | ||||||||
Donna B. More Vice President, General Counsel and Secretary | Columbia Sussex Corporation Pension Plan | 0 | None | None | ||||||||||
Fred Buro(3) President and Chief Operating Officer of Tropicana Atlantic City | Columbia Sussex Corporation Pension Plan | 0 | $ | 21,437 | $ | 10,569 |
(1) | Mr. FitzPatrick served as the Senior Vice President, Chief Financial Officer and Treasurer of Tropicana Entertainment and Tropicana Finance from May 2006 through July 25, 2007, at which time his previously announced resignation became effective. Mr. FitzPatrick was succeeded in his capacities as Senior Vice President, Chief Financial Officer and Treasurer of Tropicana Entertainment and Tropicana Finance by Mr. John G. Jacob on August 23, 2007. |
(2) | Mr. Reinhardt served as Senior Vice President, Casino Operations for Tropicana Entertainment and Tropicana Finance until June 14, 2007, at which time he resigned and was succeeded in such capacities by Mr. Kevin E. Preston. |
(3) | Mr. Buro served as President and Chief Operating Officer of Tropicana Atlantic City until August 8, 2007, at which time he resigned and was succeeded shortly thereafter in such capacities by Mr. Mark Giannantonio. |
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• | Net Profits: (i) to Tropicana Casinos and Resorts to the extent of its negative capital account balance; (ii) if net losses were previously allocated to any unit holders, net profits will be allocated to them in an amount equal to the amount of such net losses previously allocated to them; (iii) to the unit holders then holding the following units: Rainbow Units — 50%, Tropicana Casinos and Resorts Units — 49.375% and the Yung Unit — 0.625%, until the aggregate net profits allocated to them since Greenville Riverboat was organized equals $3.0 million; (iv) to the unit holders then holding the Tropicana Casinos and Resorts Units and the Yung Unit in proportion to their respective ownership percentages, an aggregate amount equal to the sum of (a) $4.5 million, (b) five times a prescribed finder’s fee amount and (c) an amount equal to the aggregate additional amounts distributable as a consequence of amounts remaining undistributed as of July 1, 2004; and (v) any remaining excess profits will be allocated to the unit holders (a) for periods on or before December 31, 2003 or on and after January 1, 2025, in proportion to their respective holdings, (b) for the period commencing January 1, 2005 and ending December 31, 2023, to the unit holders then holding the Rainbow Units — 15%, Tropicana Casinos and Resorts Units — 83.9375% and the Yung Unit — 1.0625% and (c) for the fiscal years ending December 31, 2004 and December 31, 2024, to the holders of the Rainbow Units — 17.5%, Tropicana Casinos and Resorts Units — 81.46875% and the Yung Unit — 1.0325%. |
• | Net Losses: (i) if net profits were previously allocated as described in (iii), (iv) or (v) of the preceding bullet point, net losses will be allocated to them in an amount equal to the amount of net profits previously allocated to them; (ii) to any unit holders who have positive capital account balances in proportion to and to the extent of such positive balances; and (iii) any remaining balance to Tropicana Casinos and Resorts. |
• | Distributions: (i) in the case of a sale or liquidation only, to all unit holders with positive capital account balances in the proportion such positive balances bear to each other in amounts sufficient to reduce each such capital account balance to zero; (ii) an aggregate amount equal to the then undistributed amount of the returnable contribution, as defined, in the limited liability company agreement made by Tropicana Casinos and Resorts in respect of the Tropicana Casinos and Resorts Units; (iii) an aggregate amount of $3.0 million as follows: in respect of the Rainbow Units — 50%, in respect of the Tropicana Casinos and Resorts Units and the Yung Unit — 50%; (iv) an aggregate amount of $4.5 million in respect of the Tropicana Casinos and Resorts Units and the Yung Unit, provided that any amount which remains undistributed as of July 1, 2004 is to be multiplied by70/45 and the resulting product will be deemed the remaining amount to be distributed; (v) an aggregate amount equal to five times a prescribed finder’s fee, provided that any amount which remains undistributed as of July 1, 2004 is to be multiplied by4/3 and the resulting product will be deemed the remaining amount to be distributed; (vi) any remaining balance is to be allocated to the unit holders (a) for periods on or before June 30, 2004 and after June 30, 2024, in proportion to their respective holdings of units, and (b) for periods after June 30, 2004 and before July 1, 2024, in respect of the Rainbow Units — 15% and in respect of the Tropicana Casinos and Resorts Units and the Yung Unit — 85%. |
• | Distribution Adjustment Account: Greenville Riverboat is required to maintain a distribution adjustment account, which is to be credited with an amount equal to 8% of the excess of Greenville Riverboat’s annual gross revenues over $36,575,000. At the time each distribution would otherwise be made in respect of the Rainbow Units pursuant to the preceding bullet point, the amount of any |
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such distribution is to be reduced on a dollar-for-dollar basis by any amount then credited to this distribution adjustment account, and such amount is to be distributed instead in respect of the Tropicana Casinos and Resorts Units and the Yung Unit. If any net profits were previously allocated to the Tropicana Casinos and Resorts Units or the Yung Unit pursuant to this allocation mechanism and net losses are thereafter accrued, then the Tropicana Casinos and Resorts Unitsand/or the Yung Units will be entitled to an allocation of such net losses in an amount equal to the amount of net profits previously allocated to them from the distribution adjustment account. |
• | Minimum Tax Distributions: On or before April 1 of each calendar year, distributions will be made for the most recently ended tax year to unit holders of record on the last day of such year in the amount necessary to satisfy federal, state and local income taxes payable by the unit holders with respect to Greenville Riverboat’s net taxable income, provided that this distribution will be reduced on a dollar-for-dollar basis by the amount of tax savings generated by tax losses or credits received by such unit holders for previous tax years. |
• | Optional Tax Distributions Made at the Discretion of Tropicana Casinos and Resorts: (i) cash distributions to the unit holders for any tax year in an amount which exceeds the required distribution described in the preceding bullet point and (ii) quarterly cash distributions to the unit holders based on an estimate of the required distribution noted in the preceding bullet point in order to permit the unit holders to pay quarterly estimated taxes. |
• | the dissolution of Greenville Riverboat; |
• | the merger, consolidation or combination of Greenville Riverboat; |
• | an amendment to the certificates; or |
• | the sale, exchange, lease or other transfer of all or substantially all of the property other than in the ordinary course of business. |
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• | incur debt; |
• | declare certain dividends or make distributions; |
• | prepay, redeem or repurchase our outstanding indebtedness; |
• | incur liens or other encumbrances; |
• | make loans or other investments; |
• | merge, consolidate or sell substantially all of our property or business; |
• | make capital expenditures above certain prescribed levels during any fiscal year; |
• | enter into transactions with affiliates (which are not guarantors of the senior secured credit facility); |
• | cause subsidiaries to pay dividends or make distributions; |
• | amend debt or other material agreements; and |
• | enter into a new line of business. |
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• | incur debt; |
• | declare certain dividends on, redeem or repurchase its capital stock generally; |
• | prepay, redeem or repurchase its outstanding indebtedness; |
• | incur liens or other encumbrances; |
• | make loans or other investments; |
• | merge, consolidate or sell substantially all its property or business; |
• | make certain capital expenditures; |
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• | cause its subsidiaries to pay dividends or make distributions; and |
• | amend debt or other material agreements. |
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• | registered under the Securities Act; |
• | newly issued securities that will not be eligible for trading in The PORTALtm Market, a subsidiary of The Nasdaq Stock Market, Inc.; and |
• | generally free of any covenants regarding exchange registration rights. |
• | the term “Company” refers only to Tropicana Entertainment, LLC and not to any of its subsidiaries, not to CP Laughlin Realty, LLC or Columbia Properties Vicksburg LLC, affiliates of ours that guarantee the Outstanding Notes and will guarantee the Exchange Notes but that are not subsidiaries of ours, and not to JMBS Casino LLC, an affiliate of the Yung family that guarantees the Outstanding Notes and will guarantee the Exchange Notes but that is not a subsidiary of Tropicana Entertainment; |
• | the term “Tropicana Finance” refers only to Tropicana Finance Corp., a wholly-owned subsidiary of the Company with nominal assets and which conducts no operations; |
• | the terms “Issuers”, “we”, “our” and “us” refer to the Company and Tropicana Finance; |
• | the term “Exchange Notes” means the Notes to be issued pursuant to the exchange offer and the Indenture; |
• | the term “Notes” means the Outstanding Notes and the Exchange Notes, in each case outstanding at any given time and issued under the Indenture; and |
• | the term “Outstanding Notes” means the Notes issued on December 28, 2006 pursuant to the Indenture. |
• | unsecured senior subordinated obligations of the Issuers; |
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• | subordinated in right of payment to all existing and future Senior Indebtedness of the Issuers; |
• | senior in right of payment to any future Subordinated Obligations of the Issuers; and |
• | guaranteed by each Notes Guarantor. |
Redemption | ||||
Period | Price | |||
2010 | 104.813 | % | ||
2011 | 102.406 | % | ||
2012 and thereafter | 100.000 | % |
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• | holders subject to the alternative minimum tax; |
• | banks, insurance companies, or other financial institutions; |
• | tax-exempt organizations; |
• | dealers in securities or commodities; |
• | traders in securities; |
• | U.S. holders (as defined below) whose “functional currency” is not the U.S. dollar; |
• | persons that will hold the notes as a position in a hedging, “straddle,” “conversion” or other risk-reduction transaction; |
• | persons deemed to sell the notes under the constructive sale provisions of the Code; or |
• | non-resident aliens subject to the tax on expatriates under Section 877 of the Internal Revenue Code. |
• | a citizen or resident of the U.S., as determined for federal income tax purposes; |
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• | a corporation or other entity taxable as a corporation created or organized in or under the laws of the U.S., any State thereof or the District of Columbia; |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; |
• | a trust, if a U.S. court can exercise primary supervision over the administration of the trust and one or more U.S. persons can control all substantial decisions of the trust, or, if the trust was in existence on August 20, 1996, was treated as a U.S. person prior to such date and has elected to be treated as a U.S. person; or |
• | a former citizen or resident of the U.S. whose income and gain on the notes is subject to U.S. income tax under certain circumstances. |
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• | fails to furnish its taxpayer identification number, or TIN, which, for an individual, is ordinarily his or her social security number; |
• | furnishes an incorrect TIN; |
• | is notified by the Internal Revenue Service that it has failed to properly report payments of interest or dividends; or |
• | fails to certify, under penalties of perjury, that it has furnished a correct TIN and that the Internal Revenue Service has not notified the U.S. Holder that it is subject to backup withholding. |
• | you do not directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of all of our classes of stock; |
• | you are not a controlled foreign corporation that is related to us through stock ownership; |
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• | you are not a bank whose receipt of interest on a note is described in section 881(c)(3)(A) of the Code; and |
• | either (1) you provide your name and address, and certify, under penalties of perjury, that you are not a U.S. person (which certification may be made on an Internal Revenue ServiceForm W-8BEN), (2) a securities clearing organization, bank, or other financial institution that holds customers’ securities in the ordinary course of its business holds the note on your behalf and certifies, under penalties of perjury, that it, or the financial institution between it and thenon-U.S. holder, has received from thenon-U.S. holder a statement, under penalties of perjury, that such holder is not a “U.S. person” and provides us or our paying agent with a copy of such statement or (3) thenon-U.S. holder holds its notes directly through a “qualified intermediary” and certain conditions are satisfied. |
• | that gain is effectively connected with your conduct of a trade or business in the U.S. (or if a tax treaty applies, the gain is effectively connected with the conduct by thenon-U.S. holder of a trade or business within the U.S. and attributable to a US permanent establishment maintained by suchnon-U.S. holder); or |
• | you are an individual who is present in the U.S. for 183 days or more in the taxable year of that disposition, and certain other conditions are met. |
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• | a U.S. person; |
• | a controlled foreign corporation for U.S. federal income tax purposes; |
• | a foreign person 50% or more of whose gross income is effectively connected with a U.S. trade or business for a specified three-year period; or |
• | a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons, as defined in Treasury Regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership or if, at any time during its tax year, the foreign partnership is engaged in a U.S. trade or business. |
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Page | ||||
Tropicana Entertainment, LLC and Subsidiaries Condensed Consolidated Financial Statements for the Six Month Periods Ended June 30, 2007 and June 30, 2006 (Unaudited) | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
Tropicana Casinos and Resorts, Inc. and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2006, December 31, 2005 and December 31, 2004 (Audited) | ||||
F-27 | ||||
F-28 | ||||
F-29 | ||||
F-30 | ||||
F-31 | ||||
F-32 | ||||
Argosy of Baton Rouge Consolidated Financial Statements for the Year Ended December 31, 2004 and the Period from January 1, 2005 to October 24, 2005 (Audited) | ||||
F-59 | ||||
F-60 | ||||
F-61 | ||||
F-62 | ||||
F-63 | ||||
F-64 | ||||
Desert Palace Inc. (a wholly-owned Independent Subsidiary of Caesars Entertainment, Inc.) Statement of Direct Revenues and Expenses for the Period from January 1, 2005 to June 10, 2005 (Audited) | ||||
F-69 | ||||
F-70 | ||||
F-71 | ||||
CP Laughlin Realty LLC Financial Statements for the Six Month Periods Ended June 30, 2007 and June 30, 2006 (Unaudited) | ||||
F-74 | ||||
F-75 | ||||
F-76 | ||||
F-77 | ||||
CP Laughlin Realty LLC Financial Statements for the Years Ended December 31, 2006, December 31, 2005 and December 31, 2004 (Audited) | ||||
F-80 | ||||
F-81 | ||||
F-82 | ||||
F-83 | ||||
F-84 | ||||
F-85 | ||||
Columbia Properties Vicksburg LLC Financial Statements for the Six Month Periods Ended June 30, 2007 and June 30, 2006 (Unaudited) | ||||
F-89 |
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Page | ||||
F-90 | ||||
F-91 | ||||
F-92 | ||||
Columbia Properties Vicksburg LLC Financial Statements for the Years Ended December 31, 2006, December 31, 2005 and December 31, 2004 (Audited) | ||||
F-95 | ||||
F-96 | ||||
F-97 | ||||
F-98 | ||||
F-99 | ||||
F-100 | ||||
JMBS Casino LLC Financial Statements for the Six Month Periods Ended June 30, 2007 and June 30, 2006 (Unaudited) | ||||
F-107 | ||||
F-108 | ||||
F-109 | ||||
F-110 | ||||
JMBS Casino LLC Financial Statements for the Years Ended December 31, 2006, December 31, 2005 and December 31, 2004 (Audited) | ||||
F-113 | ||||
F-114 | ||||
F-115 | ||||
F-116 | ||||
F-117 | ||||
F-118 | ||||
Aztar Corporation and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2006, December 31, 2005 and December 30, 2004 (Audited) | ||||
F-124 | ||||
F-125 | ||||
F-126 | ||||
F-127 | ||||
F-128 | ||||
F-129 | ||||
F-130 |
F-2
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Audited | Unaudited | |||||||
Predecessor | Successor | |||||||
December 31, 2006 | June 30, 2007 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 33,023 | $ | 86,648 | ||||
Accounts receivable — net of allowance for doubtful accounts | 3,958 | 28,175 | ||||||
Amounts due from related parties — non-guarantors | 2,293 | 3,983 | ||||||
Amounts due from casinos to be transferred | 3,635 | — | ||||||
Inventories | 1,596 | 7,984 | ||||||
Income tax receivable | — | 20,514 | ||||||
Prepaid expenses and other assets | 5,217 | 34,858 | ||||||
Discontinued operations — current assets of casinos to be transferred, including cash and cash equivalents of $1,185 | 9,805 | — | ||||||
Total current assets | 59,527 | 182,162 | ||||||
Restricted cash | — | 33,698 | ||||||
Property and equipment — net | 226,238 | 1,984,470 | ||||||
Deposits and costs for pending acquisitions | 1,310,026 | — | ||||||
Investments | — | 26,698 | ||||||
Goodwill | 16,802 | 989,045 | ||||||
Intangible assets — net | 51,450 | 495,450 | ||||||
Deferred charges and other assets — net | 27,670 | 140,016 | ||||||
Discontinued operations — long-term assets of casinos to be transferred | 42,378 | — | ||||||
Total Assets | $ | 1,734,091 | $ | 3,851,539 | ||||
Current Liabilities: | ||||||||
Current portion, long-term debt | $ | 2,295 | $ | 500 | ||||
Accounts payable | 14,749 | 48,469 | ||||||
Amounts due to related parties – non-guarantors | 9,651 | 6,599 | ||||||
Amounts payable to casinos to be transferred | 2,325 | — | ||||||
Accrued expenses and other liabilities | 18,198 | 65,240 | ||||||
Discontinued operations — current liabilities of casinos to be transferred | 6,912 | — | ||||||
Total current liabilities | 54,130 | 120,808 | ||||||
Long-term debt | 1,153,680 | 2,741,289 | ||||||
Related party note payable | 369,083 | — | ||||||
Notes payable to affiliate guarantors | — | 7,000 | ||||||
Other long-term liabilities | 237 | 10,512 | ||||||
Discontinued operations — other liabilities of casinos to be transferred | 177 | — | ||||||
Total liabilities | 1,577,307 | 2,879,609 | ||||||
Minority interest in consolidated subsidiaries | 9,853 | 11,553 | ||||||
Member’s Equity | ||||||||
Common stock | 1 | — | ||||||
Paid in capital | 76,280 | — | ||||||
Retained earnings | 70,650 | — | ||||||
Member’s equity | — | 960,377 | ||||||
Total Member’s equity | 146,931 | 960,377 | ||||||
Total Liabilities and Member’s Equity | $ | 1,734,091 | $ | 3,851,539 | ||||
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For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
(Predecessor) | (Successor) | (Predecessor) | (Successor) | |||||||||||||
Operating Revenue: | ||||||||||||||||
Casino | $ | 59,495 | $ | 216,632 | $ | 124,922 | $ | 443,417 | ||||||||
Rooms | 8,816 | 50,806 | 19,456 | 97,734 | ||||||||||||
Food and beverage | 8,406 | 40,291 | 20,402 | 80,668 | ||||||||||||
Other casino and hotel | 3,090 | 16,901 | 5,437 | 34,282 | ||||||||||||
Total operating revenues | 79,807 | 324,630 | 170,217 | 656,101 | ||||||||||||
Less promotional allowances | (10,849 | ) | (51,379 | ) | (22,435 | ) | (102,045 | ) | ||||||||
Net operating revenue | 68,958 | 273,251 | 147,782 | 554,056 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Casino | 12,737 | 29,684 | 20,197 | 61,434 | ||||||||||||
Rooms | 3,873 | 20,940 | 8,686 | 40,863 | ||||||||||||
Food and beverage | 7,652 | 33,592 | 16,918 | 67,398 | ||||||||||||
Other casino and hotel | 1,023 | 6,330 | 1,824 | 13,973 | ||||||||||||
Utilities | 2,376 | 8,809 | 5,315 | 16,945 | ||||||||||||
Marketing, advertising and casino promotions | 5,289 | 23,013 | 7,467 | 45,344 | ||||||||||||
Repairs and maintenance | 2,707 | 6,272 | 4,162 | 12,455 | ||||||||||||
Insurance | 1,410 | 4,206 | 2,173 | 8,173 | ||||||||||||
Property and local taxes | 1,043 | 8,640 | 1,758 | 16,942 | ||||||||||||
Gaming taxes and licenses | 10,230 | 28,331 | 21,450 | 58,767 | ||||||||||||
Casino and hotel administrative and general | 1,480 | 23,904 | 8,414 | 44,468 | ||||||||||||
Corporate overhead | 801 | 3,980 | 1,265 | 6,666 | ||||||||||||
Leased land and facilities | 2,879 | 5,208 | 5,547 | 10,543 | ||||||||||||
Construction accident insurance recoveries, net | — | (15,463 | ) | — | (14,075 | ) | ||||||||||
Loss on disposal of assets | 979 | 263 | 979 | 263 | ||||||||||||
Depreciation and amortization | 2,845 | 25,816 | 6,415 | 43,353 | ||||||||||||
Total operating expenses | 57,324 | 213,525 | 112,570 | 433,512 | ||||||||||||
Income from operations | 11,634 | 59,726 | 35,212 | 120,544 | ||||||||||||
Other Income (Expense): | ||||||||||||||||
Interest income | 679 | 1,755 | 886 | 6,483 | ||||||||||||
Interest expense | (4,403 | ) | (45,874 | ) | (8,010 | ) | (114,078 | ) | ||||||||
Loss from early extinguishment of debt | — | — | — | (2,799 | ) | |||||||||||
Total other expense | (3,724 | ) | (44,119 | ) | (7,124 | ) | (110,394 | ) | ||||||||
Income before minority interest and income tax benefit | 7,910 | 15,607 | 28,088 | 10,150 | ||||||||||||
Minority interest in net income of consolidated subsidiaries | (1,273 | ) | (1,383 | ) | (1,750 | ) | (2,317 | ) | ||||||||
Income from continuing operations, before income tax benefit | 6,637 | 14,224 | 26,338 | 7,833 | ||||||||||||
Income tax benefit, net | — | 399,145 | — | 384,767 | ||||||||||||
Income from continuing operations | 6,637 | 413,369 | 26,338 | 392,600 | ||||||||||||
Discontinued operations, casinos to be transferred | (636 | ) | — | (2,097 | ) | — | ||||||||||
Net Income | $ | 6,001 | $ | 413,369 | $ | 24,241 | $ | 392,600 | ||||||||
F-4
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Six Months Ended June 30, | ||||||||
2006 | 2007 | |||||||
(Predecessor) | (Successor) | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 24,241 | $ | 392,600 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 7,142 | 55,078 | ||||||
Non-cash portion of casualty loss — hurricane | 4,200 | — | ||||||
Change in fair value of interest rate swap | — | (15,122 | ) | |||||
Loss from early extinguishment of debt | — | 2,799 | ||||||
Change in deferred taxes | — | (397,273 | ) | |||||
Change in deferred rent | (19 | ) | (232 | ) | ||||
Write off of property and equipment | 979 | 263 | ||||||
Minority interest in net income of consolidated subsidiary | 1,750 | 2,317 | ||||||
Changes in current assets and current liabilities, net of effects from purchase of hotels and casinos: | ||||||||
Accounts receivable | 1,251 | 19,920 | ||||||
Inventories, prepaids and other assets | (3,389 | ) | 9,409 | |||||
Accounts payable, accrued expenses and other liabilities | 3,821 | (24,195 | ) | |||||
Net cash provided by operating activities | 39,976 | 45,564 | ||||||
Cash Flows from Investing Activities: | ||||||||
Additions to property and equipment | (21,074 | ) | (41,466 | ) | ||||
Aztar acquisition, net of cash acquired | — | (2,194,143 | ) | |||||
Deposits used (made) for acquisition | (313,487 | ) | 977,967 | |||||
Other changes, net | — | 813 | ||||||
Net cash used in investing activities | (334,561 | ) | (1,256,829 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of long-term debt | — | 1,970,000 | ||||||
Payments on long-term debt | (2,871 | ) | (1,047,913 | ) | ||||
Deposits into restricted cash | — | (33,698 | ) | |||||
Payment of financing costs | (524 | ) | (64,376 | ) | ||||
Advances from related parties | 319,188 | 2,853 | ||||||
Advances from affiliate guarantors | — | 7,000 | ||||||
Capital contributions by member | — | 441,575 | ||||||
Cash retained by predecessor | — | (11,415 | ) | |||||
Distribution to stockholder | (900 | ) | — | |||||
Distribution to minority interest holders | (925 | ) | (321 | ) | ||||
Net cash provided by financing activities | 313,968 | 1,263,705 | ||||||
Net Increase in Cash and Cash Equivalents | 19,383 | 52,440 | ||||||
Cash and Cash Equivalents (Including Cash and Cash Equivalent of Casinos to be Transferred), Beginning of Period | 42,783 | 34,208 | ||||||
Cash and Cash Equivalents (Including Cash and Cash Equivalent of Casinos to be Transferred), End of Period | $ | 62,166 | $ | 86,648 | ||||
F-5
Table of Contents
(Unaudited)
1. | ORGANIZATION |
• | Aztar Corporation (“Aztar”), which owns and operates the Casino Aztar in Evansville, Indiana (“Evansville”), the Tropicana Hotel & Casino in Atlantic City (“Tropicana AC”), the Tropicana Express in Laughlin, Nevada (“Tropicana Express”), and the Tropicana Hotel & Casino in Las Vegas, Nevada (“Tropicana LV”), |
• | Tropicana Finance Corporation (“Finance”), co-issuer of the senior secured notes, |
• | Columbia Properties Laughlin, LLC (“Laughlin”), which operates the River Palms Hotel and Casino (“River Palms”) and owns the gaming assets related to this operation. Realty owns the non-gaming assets related to this operation, |
• | 79% ownership interest (84% economic interest) in Greenville Riverboat, LLC (“Greenville”), which owns and operates the Lighthouse Point Casino, |
• | Tahoe Horizon, LLC (“Horizon”), which owns and operates the Horizon Casino & Resort located in Lake Tahoe, Nevada, |
• | Columbia Properties Tahoe, LLC (“MontBleu”), which owns and operates the MontBleu Casino Resort located in Lake Tahoe, Nevada, |
• | CP Baton Rouge Casino, LLC (“Baton Rouge”) and its subsidiaries, which own and operate the Belle of Baton Rouge and the Sheraton Baton Rouge, and |
• | St. Louis Riverboat Entertainment, Inc, (“St. Louis”) which owns the vessel used by Greenville in the Lighthouse Point Casino operation. |
F-6
Table of Contents
• | Belle of Orleans, LLC (“Orleans”), which owns and operates a riverboat casino in Amelia, Louisiana (formerly in New Orleans, Louisiana), |
• | LV Casino, LLC, which operates the Casuarina Casino Las Vegas (“Las Vegas”) in space it leases in the Westin Casuarina Las Vegas Hotel & Spa from CP Las Vegas, LLC, an affiliated company, and |
• | Tropicana Pennsylvania, LLC (“Trop PA”), which was acquired on December 12, 2006 from Aztar, and owns land in Allentown, Pennsylvania which is held for sale as of December 31, 2006. |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-7
Table of Contents
F-8
Table of Contents
F-9
Table of Contents
3. | ACQUISITIONS |
Cash and cash equivalents | $ | 121,690 | ||
Current Assets | 72,944 | |||
Fixed assets | 1,777,200 | |||
Investments | 25,129 | |||
Intangible assets | 448,809 | |||
Goodwill | 972,243 | |||
Deferred tax assets | 33,440 | |||
Other assets | 79,576 | |||
Accrued expenses | (37,205 | ) | ||
Long-term debt | (702,710 | ) | ||
Deferred tax liabilities | (397,273 | ) | ||
Other liabilities | (78,010 | ) | ||
Net Assets Acquired | $ | 2,315,833 | ||
F-10
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Three Months | Six Months | |||||||
Ended June 30, | Ended June 30, | |||||||
2006 | 2006 | |||||||
Net operating revenue | $ | 290,884 | $ | 590,978 | ||||
Net loss | (13,766 | ) | (36,984 | ) |
F-11
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4. | PROPERTY AND EQUIPMENT |
Audited | Unaudited | |||||||
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Buildings and improvements | $ | 168,192 | $ | 1,042,669 | ||||
Furniture, fixtures and equipment | 77,014 | 120,572 | ||||||
Riverboats and barges | 29,635 | 48,854 | ||||||
274,841 | 1,212,095 | |||||||
Accumulated depreciation | (73,649 | ) | (110,003 | ) | ||||
Construction in progress | 6,250 | 61,216 | ||||||
Land | 18,796 | 821,162 | ||||||
Property and equipment, net | $ | 226,238 | $ | 1,984,470 | ||||
5. | GOODWILL AND INTANGIBLE ASSETS |
Audited | Unaudited | |||||||
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Amortizing intangibles: | ||||||||
Favorable leases (amortized over 25 to 77 years) | $ | 4,278 | $ | 4,278 | ||||
Customer Loyalty Programs (amortized over 12 years) | — | 92,900 | ||||||
Aztar Trade name (amortized over 1.5 years) | — | 3,900 | ||||||
Other | 500 | 500 | ||||||
Accumulated amortization | (274 | ) | (5,083 | ) | ||||
Total amortizing intangible assets | 4,504 | 96,495 | ||||||
Non-amortizing intangible assets: | ||||||||
Gaming licenses | 46,946 | 210,955 | ||||||
Tropicana Trade name | — | 188,000 | ||||||
Total intangibles assets | $ | 51,450 | $ | 495,450 | ||||
F-12
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2007 (six months) | $ | 5,234 | ||
2008 | 9,167 | |||
2009 | 7,867 | |||
2010 | 7,867 | |||
2011 | 7,867 | |||
Thereafter | 58,493 | |||
Total | $ | 96,495 | ||
6. | INVESTMENTS |
Unaudited | ||||
June 30, | ||||
2007 | ||||
CRDA deposits, net of a valuation allowance of $5,442 | $ | 15,423 | ||
CRDA bonds, net of an unamortized discount of $5,219 | 6,399 | |||
CRDA other investments, net of a valuation allowance of $1,254 | 4,876 | |||
Total investments | $ | 26,698 | ||
F-13
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7. | LONG-TERM DEBT |
Audited | Unaudited | |||||||
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Senior Subordinated Notes, due 2014 | $ | 960,000 | $ | 960,000 | ||||
Senior Secured Term Loan, due 2012 | — | 1,340,239 | ||||||
Senior Secured Las Vegas Term Loan, due 2008 | — | 440,000 | ||||||
Credit Facility, Term Loan A, due 2010 | 96,879 | — | ||||||
Credit Facility, Term Loan B, due 2011 | 98,750 | — | ||||||
Other | 346 | 1,550 | ||||||
Total debt | 1,155,975 | 2,741,789 | ||||||
Less current portion | (2,295 | ) | (500 | ) | ||||
Total long-term debt | $ | 1,153,680 | $ | 2,741,289 | ||||
F-14
Table of Contents
8. | RELATED PARTY TRANSACTIONS |
F-15
Table of Contents
9. | DISCONTINUED OPERATIONS |
F-16
Table of Contents
Cash | $ | 1,185 | ||
Amounts due from related parties | 6,754 | |||
Other current assets | 1,866 | |||
Current assets transferred | $ | 9,805 | ||
Property and equipment, net | $ | 31,682 | ||
Other assets | 10,696 | |||
Long term assets transferred | $ | 42,378 | ||
Accounts payable and accrued expenses | $ | 1,907 | ||
Amounts due to related parties | 5,005 | |||
Current liabilities transferred | $ | 6,912 | ||
Long term liabilities transferred | $ | 177 | ||
10. | DERIVATIVE FINANCIAL INSTRUMENTS |
11. | SEGMENT INFORMATION |
F-17
Table of Contents
Unaudited | Unaudited | |||||||||||||||
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
Net Operating Revenues | ||||||||||||||||
Nevada segment: | ||||||||||||||||
Lake Tahoe Horizon | $ | 10,044 | $ | 8,913 | $ | 19,964 | $ | 18,793 | ||||||||
MontBleu | 10,266 | 11,061 | 21,486 | 24,893 | ||||||||||||
River Palms | 12,861 | 13,006 | 28,221 | 27,189 | ||||||||||||
Tropicana Express(b) | — | 22,842 | — | 46,438 | ||||||||||||
Total Nevada segment | 33,171 | 55,822 | 69,671 | 117,313 | ||||||||||||
Mississippi River Basin segment: | ||||||||||||||||
Lighthouse Point | 6,966 | 7,128 | 15,395 | 15,511 | ||||||||||||
Belle of Baton Rouge | 28,821 | 25,019 | 62,716 | 53,519 | ||||||||||||
Casino Aztar Evansville(b) | — | 32,461 | — | 67,115 | ||||||||||||
Total Mississippi River Basin segment | 35,787 | 64,608 | 78,111 | 136,145 | ||||||||||||
Tropicana Las Vegas Segment(b) | — | 43,079 | — | 82,408 | ||||||||||||
Tropicana Atlantic City Segment(b) | — | 109,736 | — | 217,982 | ||||||||||||
Corporate | — | 6 | — | 208 | ||||||||||||
Total consolidated net operating revenues | $ | 68,958 | $ | 273,251 | $ | 147,782 | $ | 554,056 | ||||||||
Segment Adjusted EBITDA(a) Nevada segment: | ||||||||||||||||
Lake Tahoe Horizon | $ | 1,947 | $ | 855 | $ | 3,906 | $ | 2,747 | ||||||||
MontBleu | (3,021 | ) | 603 | (2,975 | ) | 2,492 | ||||||||||
River Palms | 3,067 | 3,556 | 8,244 | 8,056 | ||||||||||||
Tropicana Express(b) | — | 8,156 | — | 16,565 | ||||||||||||
Total Nevada segment | 1,993 | 13,170 | 9,175 | 29,860 | ||||||||||||
Mississippi River Basin segment: | ||||||||||||||||
Lighthouse Point | 2,863 | 2,602 | 7,218 | 6,340 | ||||||||||||
Belle of Baton Rouge | 11,403 | 8,172 | 27,478 | 19,763 | ||||||||||||
Casino Aztar Evansville(b) | — | 7,630 | — | 16,600 | ||||||||||||
Total Mississippi River Basin segment | 14,266 | 18,404 | 34,696 | 42,703 | ||||||||||||
Tropicana Las Vegas Segment(b) | — | 12,520 | — | 23,753 | ||||||||||||
Tropicana Atlantic City Segment(b) | — | 31,616 | — | 60,435 | ||||||||||||
Total Segment Adjusted EBITDA | 16,259 | 75,710 | 43,871 | 156,751 | ||||||||||||
Corporate | (801 | ) | (5,368 | ) | (1,265 | ) | (6,666 | ) | ||||||||
Total EBITDA | 15,458 | 70,342 | 42,606 | 150,085 | ||||||||||||
Adjustments to reconcile Segment Adjusted EBITDA to net income from continuing operations, before income tax benefit: | ||||||||||||||||
Depreciation and amortization | (2,845 | ) | (25,816 | ) | (6,415 | ) | (43,353 | ) | ||||||||
Interest income | 679 | 1,755 | 886 | 6,483 | ||||||||||||
Interest expense | (4,403 | ) | (45,874 | ) | (8,010 | ) | (114,078 | ) |
F-18
Table of Contents
Unaudited | Unaudited | |||||||||||||||
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
Construction accident insurance recoveries, net | — | 15,463 | — | 14,075 | ||||||||||||
Loss from early extinguishment of debt | — | — | — | (2,799 | ) | |||||||||||
Write-offs of fixed assets and deposits | (979 | ) | (263 | ) | (979 | ) | (263 | ) | ||||||||
Minority interest in net income of consolidated subsidiaries | (1,273 | ) | (1,383 | ) | (1,750 | ) | (2,317 | ) | ||||||||
Income from continuing operations, before income tax benefit | $ | 6,637 | $ | 14,224 | $ | 26,338 | $ | 7,833 | ||||||||
(a) | Segment Adjusted EBITDA is net income before interest expense, interest income, depreciation, amortization, corporate expenses, write offs of fixed assets and deposits related to abandoned acquisition and minority interest in net income of consolidated subsidiaries. Segment Adjusted EBITDA should not be construed as a substitute for either operating income or net income as they are determined in accordance with generally accepted accounting principles (GAAP). The Company uses Segment Adjusted EBITDA as a measure to compare operating results between segments and accounting periods. The Company manages cash and finances its operations at the corporate level. The Company manages the allocation of capital among segments at the corporate level. The Company accordingly believes Segment Adjusted EBITDA is useful as a measure of operating results at the segment level because it reflects the results of operating decisions at the segment level separated from the effects of financing decisions that are managed at the corporate level. The Company also uses Segment Adjusted EBITDA as an important operating performance measure in its bonus programs for managers and executive officers. The Company also believes that Segment Adjusted EBITDA is a commonly used measure of operating performance in the gaming industry and is an important basis for the valuation of gaming companies. The Company’s calculation of Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies and, therefore, any such differences must be considered when comparing performance among different companies. While the Company believes Segment Adjusted EBITDA provides a useful perspective for some purposes, Segment Adjusted EBITDA has material limitations as an analytical tool. For example, among other things, although depreciation, amortization and write off of fixed assets and deposits related to abandoned acquisition are non-cash charges, the assets being depreciated, amortized and written off may have to be replaced in the future, and Segment Adjusted EBITDA does not reflect the requirements for such replacements. Interest expense, interest income, and minority interest in net income of consolidated subsidiary are also not reflected in Segment Adjusted EBITDA. Therefore, the Company does not consider Segment Adjusted EBITDA in isolation, and it should not be considered as a substitute for measures determined in accordance with GAAP. A reconciliation of Segment Adjusted EBITDA with operating income and net income as determined in accordance with GAAP is reflected in the above summary |
F-19
Table of Contents
(b) | Reflects results since January 3, 2007, the date of acquisition, and therefore excludes three days of the Quarter. |
Audited | Unaudited | |||||||
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Total Assets by Segment: | ||||||||
Nevada | $ | 180,641 | $ | 518,846 | ||||
Mississippi River Basin | 168,349 | 653,191 | ||||||
Las Vegas | — | 989,064 | ||||||
Atlantic City | — | 1,417,717 | ||||||
Corporate | 1,385,101 | 272,721 | ||||||
Total assets | $ | 1,734,091 | $ | 3,851,539 | ||||
12. | ACCOUNTING FOR THE IMPACT OF THE OCTOBER 30, 2003 CONSTRUCTION ACCIDENT — TROPICANA, ATLANTIC CITY |
F-20
Table of Contents
13. | SUMMARY FINANCIAL INFORMATION |
Tropicana Entertainment | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
As of June 30, 2007 | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 6,202 | $ | 59,818 | $ | 20,628 | $ | — | $ | 86,648 | ||||||||||
Other current assets | 34,941 | 48,597 | 11,976 | — | 95,514 | |||||||||||||||
Total current assets | 41,143 | 108,415 | 32,604 | — | 182,162 | |||||||||||||||
Restricted Cash | — | — | 33,698 | — | 33,698 | |||||||||||||||
Property and Equipment — Net | — | 1,246,958 | 737,512 | — | 1,984,470 | |||||||||||||||
Investments | 5,495,061 | 26,698 | — | (5,495,061 | ) | 26,698 | ||||||||||||||
Goodwill | (29,965 | ) | 826,752 | 192,258 | — | 989,045 | ||||||||||||||
Intangible Assets — Net | 189,168 | 305,302 | 980 | — | 495,450 | |||||||||||||||
Deferred Charges and Other Assets — Net | 73,377 | 63,171 | 3,643 | (175 | ) | 140,016 | ||||||||||||||
Total Assets | $ | 5,768,784 | $ | 2,577,296 | $ | 1,000,695 | $ | (5,495,236 | ) | $ | 3,851,539 | |||||||||
Current Liabilities: | ||||||||||||||||||||
Current portion, long-term debt | $ | — | $ | 30 | $ | 470 | $ | — | $ | 500 | ||||||||||
Accounts payable | 242 | 34,418 | 13,809 | — | 48,469 | |||||||||||||||
Other current liabilities | 85,497 | 297,284 | (310,942 | ) | — | 71,839 | ||||||||||||||
Total current liabilities | 85,739 | 331,732 | (296,663 | ) | — | 120,808 | ||||||||||||||
Long-Term Debt | 2,300,239 | 256 | 440,794 | — | 2,741,289 | |||||||||||||||
Other Long-Term Liabilities | 17,403 | 284 | — | (175 | ) | 17,512 | ||||||||||||||
Total liabilities | 2,403,381 | 332,272 | 144,131 | (175 | ) | 2,879,609 | ||||||||||||||
Minority Interest in Consolidated Subsidiaries | 11,553 | — | — | — | 11,553 | |||||||||||||||
Member’s equity | 3,353,850 | 2,245,024 | 856,564 | (5,495,061 | ) | 960,377 | ||||||||||||||
Total Liabilities and Member’s Equity | $ | 5,768,784 | $ | 2,577,296 | $ | 1,000,695 | $ | (5,495,236 | ) | $ | 3,851,539 | |||||||||
F-21
Table of Contents
Tropicana Casinos and Resorts (Predecessor) | ||||||||||||||||||||||||||||||||
Non- | ||||||||||||||||||||||||||||||||
TE | Guarantor | Guarantor | TE | TCR | TCR | |||||||||||||||||||||||||||
TCR | Parent | Subsidiaries | Subsidiary | Eliminations | Total | Eliminations | Total | |||||||||||||||||||||||||
As of December 31, 2006 | ||||||||||||||||||||||||||||||||
Current Assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 166 | $ | 29,112 | $ | 3,745 | $ | — | $ | 33,023 | $ | — | $ | 33,023 | ||||||||||||||||
Other current assets | 9,805 | 543 | 15,645 | 511 | — | 16,699 | — | 26,504 | ||||||||||||||||||||||||
Total current assets | 9,805 | 709 | 44,757 | 4,256 | — | 49,722 | — | 59,527 | ||||||||||||||||||||||||
Property and Equipment — net | — | — | 222,640 | 3,598 | — | 226,238 | — | 226,238 | ||||||||||||||||||||||||
Deposits and Costs for Pending Acquisitions | — | 977,967 | 332,059 | — | — | 1,310,026 | — | 1,310,026 | ||||||||||||||||||||||||
Investments | 126,137 | — | — | — | — | — | (126,137 | ) | — | |||||||||||||||||||||||
Goodwill | — | — | 16,802 | — | — | 16,802 | — | 16,802 | ||||||||||||||||||||||||
Intangible Assets — net | — | — | 51,450 | — | — | 51,450 | — | 51,450 | ||||||||||||||||||||||||
Deferred Charges and Other Assets — net | — | 22,183 | 5,481 | 181 | — | 27,670 | — | 27,670 | ||||||||||||||||||||||||
Discontinued Operations — Long-Term Assets of Casinos to be Transferred | 42,378 | — | — | — | — | — | — | 42,378 | ||||||||||||||||||||||||
Total Assets | $ | 178,320 | $ | 1,000,859 | $ | 673,189 | $ | 8,035 | $ | (175 | ) | $ | 1,681,908 | $ | (126,137 | ) | $ | 1,734,091 | ||||||||||||||
Current Liabilities: | ||||||||||||||||||||||||||||||||
Current portion, long-term debt | $ | — | $ | — | $ | 2,295 | $ | — | $ | — | $ | 2,295 | $ | — | $ | 2,295 | ||||||||||||||||
Accounts payable | — | 2,684 | 11,470 | 595 | — | 14,749 | — | 14,749 | ||||||||||||||||||||||||
Other current liabilities and Discontinued operations | $ | 6,912 | 1,179 | 27,288 | 1,707 | — | 30,174 | — | 37,086 | |||||||||||||||||||||||
Total current liabilities | 6,912 | 3,863 | 41,053 | 2,302 | — | 47,218 | — | 54,130 | ||||||||||||||||||||||||
Long-Term Debt | 25,494 | 960,000 | 168,186 | — | — | 1,128,186 | — | 1,153,680 | ||||||||||||||||||||||||
Related Party Note Payable | 369,083 | — | — | — | — | — | 369,083 | |||||||||||||||||||||||||
Other Long-Term Liabilities and Discontinued Operations | 177 | — | 412 | — | (175 | ) | 237 | — | 414 | |||||||||||||||||||||||
Total liabilities | 401,666 | 963,863 | 209,651 | 2,302 | (175 | ) | 1,175,641 | — | 1,577,307 | |||||||||||||||||||||||
Minority Interest in Consolidated Subsidiaries | 9,853 | — | — | — | — | — | — | 9,853 | ||||||||||||||||||||||||
Stockholder’s Equity | (233,199 | ) | 36,996 | 463,538 | 5,733 | — | 506,267 | (126,137 | ) | 146,931 | ||||||||||||||||||||||
Total Liabilities and Stockholder’s Equity | $ | 178,320 | $ | 1,000,859 | $ | 673,189 | $ | 8,035 | $ | (175) | $ | 1,681,908 | $ | (126,137 | ) | $ | 1,734,091 | |||||||||||||||
F-22
Table of Contents
Tropicana Entertainment | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Guarantor | Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
For the six months ended June 30, 2007 | ||||||||||||||||||||
Operating Revenues: | ||||||||||||||||||||
Casino | $ | — | $ | 394,881 | $ | 48,536 | $ | — | $ | 443,417 | ||||||||||
Rooms | — | 66,096 | 31,638 | — | 97,734 | |||||||||||||||
Food and beverage | — | 66,821 | 13,847 | — | 80,668 | |||||||||||||||
Other casino and hotel | 208 | 22,502 | 12,044 | (472 | ) | 34,282 | ||||||||||||||
Total operating revenues | 208 | 550,300 | 106,065 | (472 | ) | 656,101 | ||||||||||||||
Less promotional allowances | — | (93,899 | ) | (8,146 | ) | — | (102,045 | ) | ||||||||||||
Net operating revenues | 208 | 456,401 | 97,919 | (472 | ) | 554,056 | ||||||||||||||
Operating Expenses: | ||||||||||||||||||||
Casino | — | 51,205 | 10,229 | — | 61,434 | |||||||||||||||
Rooms | — | 29,409 | 11,454 | — | 40,863 | |||||||||||||||
Food and beverage | — | 53,343 | 14,055 | — | 67,398 | |||||||||||||||
Other casino and hotel | — | 8,082 | 5,891 | — | 13,973 | |||||||||||||||
Utilities | — | 13,709 | 3,236 | — | 16,945 | |||||||||||||||
Marketing, advertising and casino promotions | — | 42,768 | 2,576 | — | 45,344 | |||||||||||||||
Repairs and maintenance | — | 9,983 | 2,472 | — | 12,455 | |||||||||||||||
Insurance | (3 | ) | 6,931 | 1,245 | — | 8,173 | ||||||||||||||
Property and local taxes | — | 15,743 | 1,199 | — | 16,942 | |||||||||||||||
Gaming taxes and licenses | — | 53,581 | 5,186 | — | 58,767 | |||||||||||||||
Administrative and general | 6,750 | 35,122 | 9,262 | — | 51,134 | |||||||||||||||
Leased land and facilities | 127 | 9,867 | 1,021 | (472 | ) | 10,543 | ||||||||||||||
Construction accident insurance recoveries, net | — | (14,075 | ) | — | — | (14,075 | ) | |||||||||||||
Loss on disposal of assets | 176 | 87 | — | — | 263 | |||||||||||||||
Depreciation and amortization | 4,784 | 37,682 | 887 | — | 43,353 | |||||||||||||||
Total operating expenses | 11,834 | 353,437 | 68,713 | (472 | ) | 433,512 | ||||||||||||||
Income (Loss) from Operations | (11,626 | ) | 102,964 | 29,206 | — | 120,544 | ||||||||||||||
Other Income (Expense): | ||||||||||||||||||||
Interest income | 4,215 | 1,220 | 1,048 | — | 6,483 | |||||||||||||||
Interest expense | (90,915 | ) | (190 | ) | (22,973 | ) | — | (114,078 | ) | |||||||||||
Loss from early extinguishment of debt | — | (2,799 | ) | — | — | (2,799 | ) | |||||||||||||
Total other expense | (86,700 | ) | (1,769 | ) | (21,925 | ) | — | (110,394 | ) | |||||||||||
Income (Loss) before Minority Interest and Income Tax Benefit | (98,326 | ) | 101,195 | 7,281 | — | 10,150 | ||||||||||||||
Minority Interest in Net Income of Consolidated Subsidiaries | — | (1,372 | ) | (945 | ) | — | (2,317 | ) | ||||||||||||
Income (Loss) from Continuing Operations, before income tax benefit | (98,326 | ) | 99,823 | 6,336 | — | 7,833 | ||||||||||||||
Income tax benefit | 384,767 | — | — | — | 384,767 | |||||||||||||||
Net Income | $ | 286,441 | $ | 99,823 | $ | 6,336 | $ | — | $ | 392,600 | ||||||||||
F-23
Table of Contents
Tropicana Casinos and Resorts (Predecessor) | ||||||||||||||||||||||||||||||||
Non- | ||||||||||||||||||||||||||||||||
Guarantor | Guarantor | TE | TE | |||||||||||||||||||||||||||||
TCR | Parent | Subsidiaries | Subsidiaries | Eliminations | Total | Eliminations | Consolidated | |||||||||||||||||||||||||
For the six months ended June 30, 2006 | ||||||||||||||||||||||||||||||||
Operating Revenues: | ||||||||||||||||||||||||||||||||
Casino | $ | — | $ | — | $ | 107,070 | $ | 17,852 | $ | — | $ | 124,922 | $ | — | $ | 124,922 | ||||||||||||||||
Rooms | — | — | 19,455 | 1 | — | 19,456 | — | 19,456 | ||||||||||||||||||||||||
Food and beverage | — | — | 19,845 | 557 | — | 20,402 | — | 20,402 | ||||||||||||||||||||||||
Other casino and hotel | — | — | 5,905 | 4 | (472 | ) | 5,437 | — | 5,437 | |||||||||||||||||||||||
Total operating revenues | — | — | 152,275 | 18,414 | (472 | ) | 170,217 | — | 170,217 | |||||||||||||||||||||||
Less promotional allowances | — | — | (19,279 | ) | (3,156 | ) | — | (22,435 | ) | — | (22,435 | ) | ||||||||||||||||||||
Net operating revenues | — | — | 132,996 | 15,258 | (472 | ) | 147,782 | — | 147,782 | |||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||||||
Casino | — | — | 17,591 | 2,606 | — | 20,197 | — | 20,197 | ||||||||||||||||||||||||
Rooms | — | — | 8,686 | — | — | 8,686 | — | 8,686 | ||||||||||||||||||||||||
Food and beverage | — | — | 16,459 | 459 | — | 16,918 | — | 16,918 | ||||||||||||||||||||||||
Other casino and hotel | — | — | 1,822 | 2 | — | 1,824 | — | 1,824 | ||||||||||||||||||||||||
Utilities | — | — | 5,124 | 191 | — | 5,315 | — | 5,315 | ||||||||||||||||||||||||
Marketing, advertising and casino promotions | — | — | 6,987 | 480 | — | 7,467 | — | 7,467 | ||||||||||||||||||||||||
Repairs and maintenance | — | — | 3,900 | 262 | — | 4,162 | — | 4,162 | ||||||||||||||||||||||||
Insurance | — | — | 1,882 | 291 | — | 2,173 | — | 2,173 | ||||||||||||||||||||||||
Property and local taxes | — | — | 1,591 | 167 | — | 1,758 | — | 1,758 | ||||||||||||||||||||||||
Gaming taxes and licenses | — | — | 19,251 | 2,199 | — | 21,450 | — | 21,450 | ||||||||||||||||||||||||
Administrative and general | — | — | 8,695 | 984 | — | 9,679 | — | 9,679 | ||||||||||||||||||||||||
Leased land and facilities | — | — | 5,030 | 989 | (472 | ) | 5,547 | — | 5,547 | |||||||||||||||||||||||
Loss on disposal of assets | — | — | 979 | — | — | 979 | — | 979 | ||||||||||||||||||||||||
Depreciation and amortization | — | — | 5,817 | 598 | — | 6,415 | — | 6,415 | ||||||||||||||||||||||||
Total operating expenses | — | — | 103,814 | 9,228 | (472 | ) | 112,570 | — | 112,570 | |||||||||||||||||||||||
Income from Operations | — | — | 29,182 | 6,030 | — | 35,212 | — | 35,212 | ||||||||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||||||||||
Interest income | 863 | — | 2 | 21 | — | 23 | — | 886 | ||||||||||||||||||||||||
Interest expense | (3,768 | ) | — | (4,242 | ) | — | — | (4,242 | ) | — | (8,010 | ) | ||||||||||||||||||||
Total other expense | (2,905 | ) | — | (4,240 | ) | 21 | — | (4,219 | ) | — | (7,124 | ) | ||||||||||||||||||||
Income before Minority Interest | (2,905 | ) | — | 24,942 | 6,051 | — | 30,993 | — | 28,088 | |||||||||||||||||||||||
Minority Interest in Net Income of Consolidated Subsidiaries | (1,750 | ) | — | — | — | — | — | — | (1,750 | ) | ||||||||||||||||||||||
Income from Continuing Operations | (4,655 | ) | — | 24,942 | 6,051 | — | 30,993 | — | 26,338 | |||||||||||||||||||||||
Discontinued Operations, Casinos to be Transferred | (2,097 | ) | — | — | — | — | — | — | (2,097 | ) | ||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | (6,752 | ) | $ | — | $ | 24,942 | $ | 6,051 | $ | — | $ | 30,993 | $ | — | $ | 24,241 | |||||||||||||||
F-24
Table of Contents
Tropicana Entertainment | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Guarantor | Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
For the six months ended June 30, 2007 | ||||||||||||||||||||
Cash Flows from Operating Activities | $ | (115,743 | ) | $ | 142,171 | $ | 18,960 | $ | 176 | $ | 45,564 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Additions to property and equipment | — | (29,169 | ) | (12,297 | ) | — | (41,466 | ) | ||||||||||||
Acquisition of casino, net of cash acquired | 852,217 | (2,140,140 | ) | (906,220 | ) | — | (2,194,143 | ) | ||||||||||||
Other cash flows from investing activities | (1,679,900 | ) | (28,136 | ) | (298 | ) | 2,687,114 | 978,780 | ||||||||||||
Net cash used in investing activities | (827,683 | ) | (2,197,445 | ) | (918,815 | ) | 2,687,114 | (1,256,829 | ) | |||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | 1,530,000 | — | 440,000 | — | 1,970,000 | |||||||||||||||
Payment of financing costs | (56,205 | ) | — | (8,171 | ) | — | (64,376 | ) | ||||||||||||
Other cash flows from financing activities | (550,935 | ) | 2,128,041 | 468,265 | (2,687,290 | ) | (641,919 | ) | ||||||||||||
Net cash provided by financing activities | 922,860 | 2,128,041 | 900,094 | (2,687,290 | ) | 1,263,705 | ||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (20,566 | ) | 72,767 | 239 | — | 52,440 | ||||||||||||||
Cash and Cash Equivalents (Including Cash and Cash Equivalent of Casinos to be Transferred), Beginning of Period | 26,768 | (12,949 | ) | 20,389 | — | 34,208 | ||||||||||||||
Cash and Cash Equivalents, End of Period | $ | 6,202 | $ | 59,818 | $ | 20,628 | $ | — | $ | 86,648 | ||||||||||
F-25
Table of Contents
Tropicana Casinos and Resorts (Predecessor) | ||||||||||||||||||||||||||||||||
Non- | ||||||||||||||||||||||||||||||||
Guarantor | Guarantor | TE | ||||||||||||||||||||||||||||||
TCR | Parent | Subsidiaries | Subsidiaries | Eliminations | Total | Eliminations | Consolidated | |||||||||||||||||||||||||
For the six months ended June 30, 2006 | ||||||||||||||||||||||||||||||||
Cash Flows from Operating Activities | $ | 1,821 | $ | 5 | $ | 31,935 | $ | 6,215 | $ | — | $ | 38,155 | $ | — | $ | 39,976 | ||||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||||||||||||||
Additions to property and equipment | (671 | ) | — | (20,320 | ) | (83 | ) | — | (20,403 | ) | — | (21,074 | ) | |||||||||||||||||||
Deposits and costs related to pending acquisition | (313,487 | ) | (313,487 | ) | ||||||||||||||||||||||||||||
Other cash flows from investing | (21,280 | ) | — | (1 | ) | 1 | — | — | 21,280 | — | ||||||||||||||||||||||
Net cash used in investing activities | (335,438 | ) | — | (20,321 | ) | (82 | ) | — | (20,403 | ) | 21,280 | (334,561 | ) | |||||||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||||||||||||||
Payments on long-term debt | — | (2,371 | ) | (500 | ) | — | — | (2,871 | ) | — | (2,871 | ) | ||||||||||||||||||||
Payment of financing costs | (115 | ) | (227 | ) | (184 | ) | 2 | — | (409 | ) | — | (524 | ) | |||||||||||||||||||
Other cash flows from financing activities | 333,262 | 2,593 | 7,447 | (4,659 | ) | — | 5,381 | (21,280 | ) | 317,363 | ||||||||||||||||||||||
Net cash used in by financing activities | 333,147 | (5 | ) | 6,763 | (4,657 | ) | — | 2,101 | (21,280 | ) | 313,968 | |||||||||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (470 | ) | — | 18,377 | 1,476 | — | 19,853 | — | 19,383 | |||||||||||||||||||||||
Cash and Cash Equivalents (Including Cash and Cash Equivalent of Casinos to be Transferred), Beginning of Period | 1,550 | — | 36,889 | 4,344 | — | 41,233 | — | 42,783 | ||||||||||||||||||||||||
Cash and Cash Equivalents (Including Cash and Cash Equivalent of Casinos to be Transferred), End of Period | $ | 1,080 | $ | — | $ | 55,266 | $ | 5,820 | $ | — | $ | 61,086 | $ | — | $ | 62,166 | ||||||||||||||||
F-26
Table of Contents
Tropicana Casinos and Resorts, Inc.
F-27
Table of Contents
(In thousands)
As of December 31, | ||||||||
2005 | 2006 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 41,233 | $ | 33,023 | ||||
Accounts receivable — net of allowance for doubtful accounts | 4,422 | 3,958 | ||||||
Amounts due from related parties | 94 | 2,293 | ||||||
Amounts due from casinos to be transferred | 3,033 | 3,635 | ||||||
Inventories | 1,216 | 1,596 | ||||||
Prepaid expenses and other assets | 3,821 | 5,217 | ||||||
Discontinued operations — current assets of casinos to be transferred, including cash and cash equivalents of $1,550 and $1,185 for the periods ended 2005 and 2006, respectively | 1,885 | 9,805 | ||||||
Total current assets | 55,704 | 59,527 | ||||||
Property and equipment — net | 205,285 | 226,238 | ||||||
Deposits and costs for pending acquisitions | — | 1,310,026 | ||||||
Goodwill | 27,142 | 16,802 | ||||||
Intangible assets — net | 41,841 | 51,450 | ||||||
Deferred charges and other assets — net | 6,269 | 27,670 | ||||||
Discontinued operations — long-term assets of casinos to be transferred | 32,027 | 42,378 | ||||||
Total assets | $ | 368,268 | $ | 1,734,091 | ||||
Current Liabilities: | ||||||||
Current portion, long-term debt | $ | 3,871 | $ | 2,295 | ||||
Accounts payable | 10,975 | 14,749 | ||||||
Amounts due to related parties | 1,099 | 9,651 | ||||||
Amounts payable to casinos to be transferred | — | 2,325 | ||||||
Accrued expenses and other liabilities | 17,580 | 18,198 | ||||||
Discontinued operations — current liabilities of casinos to be transferred | 5,287 | 6,912 | ||||||
Total current liabilities | 38,812 | 54,130 | ||||||
Long-term debt | 195,629 | 1,153,680 | ||||||
Related party note payable and accrued interest | — | 369,083 | ||||||
Other long-term liabilities | 521 | 237 | ||||||
Discontinued operations — other liabilities of casinos to be transferred | 251 | 177 | ||||||
Total liabilities | 235,213 | 1,577,307 | ||||||
Minority interest in consolidated subsidiaries | 13,038 | 9,853 | ||||||
Stockholder’s Equity | ||||||||
Common stock | 1 | 1 | ||||||
Paid in capital | 76,280 | 76,280 | ||||||
Retained earnings | 43,736 | 70,650 | ||||||
Total stockholder’s equity | 120,017 | 146,931 | ||||||
Total liabilities and stockholder’s equity | $ | 368,268 | $ | 1,734,091 | ||||
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(In thousands)
For the Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Operating Revenues: | ||||||||||||
Casino | $ | 100,240 | $ | 150,040 | $ | 239,490 | ||||||
Rooms | 18,032 | 28,381 | 39,731 | |||||||||
Food and beverage | 21,829 | 30,032 | 41,983 | |||||||||
Other casino and hotel | 5,845 | 8,373 | 12,323 | |||||||||
Total operating revenues | 145,946 | 216,826 | 333,527 | |||||||||
Less promotional allowances | (24,029 | ) | (30,184 | ) | (44,664 | ) | ||||||
Net operating revenues | 121,917 | 186,642 | 288,863 | |||||||||
Operating Expenses: | ||||||||||||
Casino | 19,822 | 27,658 | 40,482 | |||||||||
Rooms | 8,257 | 12,830 | 17,647 | |||||||||
Food and beverage | 17,829 | 25,962 | 34,579 | |||||||||
Other casino and hotel | 714 | 1,516 | 4,141 | |||||||||
Utilities | 4,721 | 7,008 | 10,074 | |||||||||
Marketing, advertising and casino promotions | 7,616 | 9,654 | 15,513 | |||||||||
Repairs and maintenance | 3,776 | 5,794 | 8,322 | |||||||||
Insurance | 1,710 | 2,211 | 2,908 | |||||||||
Property and local taxes | 1,267 | 1,958 | 3,824 | |||||||||
Gaming taxes and licenses | 10,369 | 18,788 | 39,869 | |||||||||
Casino and hotel administrative and general | 6,749 | 10,014 | 16,184 | |||||||||
Corporate overhead | 2,282 | 3,585 | 5,350 | |||||||||
Leased land and facilities | 4,653 | 7,559 | 10,771 | |||||||||
Depreciation and amortization | 6,615 | 9,646 | 18,033 | |||||||||
Write off of fixed assets, deposits and other costs related to abandoned acquisition | 79 | 2,742 | 2,588 | |||||||||
Total operating expenses | 96,459 | 146,925 | 230,285 | |||||||||
Income from operations | 25,458 | 39,717 | 58,578 | |||||||||
Other Income (Expense): | ||||||||||||
Interest income | 113 | 482 | 8,918 | |||||||||
Interest expense | (909 | ) | (5,993 | ) | (35,563 | ) | ||||||
Total other expense | (796 | ) | (5,511 | ) | (26,645 | ) | ||||||
Income before minority interest | 24,662 | 34,206 | 31,933 | |||||||||
Minority interest in net income of consolidated subsidiaries | (3,873 | ) | (3,433 | ) | (3,224 | ) | ||||||
Income from continuing operations | 20,789 | 30,773 | 28,709 | |||||||||
Discontinued operations, casinos to be transferred | (2,869 | ) | (8,929 | ) | 4,705 | |||||||
Net income | $ | 17,920 | $ | 21,844 | $ | 33,414 | ||||||
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(In thousands)
Common | Paid in | Retained | ||||||||||||||
Stock | Capital | Earnings | Total | |||||||||||||
Balance at January 1, 2004 | $ | 1 | $ | 41,280 | $ | 12,372 | $ | 53,653 | ||||||||
Net income for the year 2004 | — | — | 17,920 | 17,920 | ||||||||||||
Balance at December 31, 2004 | 1 | 41,280 | 30,292 | 71,573 | ||||||||||||
Contributions from stockholder in 2005 | — | 35,000 | — | 35,000 | ||||||||||||
Distribution to stockholder in 2005 | — | — | (8,400 | ) | (8,400 | ) | ||||||||||
Net income for the year 2005 | — | — | 21,844 | 21,844 | ||||||||||||
Balance at December 31, 2005 | 1 | 76,280 | 43,736 | 120,017 | ||||||||||||
Distribution to stockholder in 2006 | — | — | (6,500 | ) | (6,500 | ) | ||||||||||
Net income for the year 2006 | — | — | 33,414 | 33,414 | ||||||||||||
Balance at December 31, 2006 | $ | 1 | $ | 76,280 | $ | 70,650 | $ | 146,931 | ||||||||
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(In thousands)
Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income | $ | 17,920 | $ | 21,844 | $ | 33,414 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 7,435 | 10,724 | 18,978 | |||||||||
Non-cash portion of casualty loss — hurricane | — | 2,201 | 7,721 | |||||||||
Insurance proceeds for property and equipment | — | — | (13,626 | ) | ||||||||
Amortization of loan costs and other | 604 | 325 | ||||||||||
Increase in accrued interest on related party note payable | — | — | 18,931 | |||||||||
Increase (decrease) in deferred rent | 213 | 38 | (37 | ) | ||||||||
Write off of property and equipment | 79 | 821 | 4,207 | |||||||||
Write off of deposits and other costs related to abandoned acquisition | — | 2,014 | 4,000 | |||||||||
Minority interest in net income of consolidated subsidiary | 3,873 | 3,433 | 3,224 | |||||||||
Changes in current assets and current liabilities, net of effects from purchase of hotels and casinos: | ||||||||||||
Accounts receivable | (44 | ) | (2,951 | ) | (978 | ) | ||||||
Inventories, prepaids and other assets | 205 | 65 | (4,011 | ) | ||||||||
Accounts payable, accrued expenses and other liabilities | (6,509 | ) | 7,740 | 4,648 | ||||||||
Net cash provided by operating activities | 23,172 | 46,533 | 76,796 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Additions to property and equipment | (13,461 | ) | (24,213 | ) | (63,781 | ) | ||||||
Insurance proceeds for property and equipment | — | — | 13,626 | |||||||||
Deposits and other costs related to pending acquisitions | (6,601 | ) | (833 | ) | (1,310,896 | ) | ||||||
Acquisition of casinos, net of cash acquired | — | (203,956 | ) | — | ||||||||
Other | 31 | (231 | ) | (77 | ) | |||||||
Net cash used in investing activities | (20,031 | ) | (229,233 | ) | �� | (1,361,128 | ) | |||||
Cash Flows from Financing Activities: | ||||||||||||
Proceeds from issuance of long-term debt | — | 200,000 | 960,000 | |||||||||
Payments on debt | (2,750 | ) | (20,450 | ) | (3,525 | ) | ||||||
Financing costs | — | (6,274 | ) | (21,093 | ) | |||||||
Advances from related parties | 1,512 | 494 | 3,129 | |||||||||
Proceeds from related party note payable | — | — | 350,152 | |||||||||
Contribution by stockholder | — | 35,000 | — | |||||||||
Distribution to stockholder | — | (8,400 | ) | (6,500 | ) | |||||||
Contributions by minority interest holders | 3,926 | — | — | |||||||||
Distribution to minority interest holders | (2,014 | ) | (2,076 | ) | (6,407 | ) | ||||||
Net cash provided by financing activities | 674 | 198,294 | 1,275,756 | |||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 3,815 | 15,594 | (8,576 | ) | ||||||||
Cash and Cash Equivalents (Including Cash and Cash Equivalent of Casinos to be Transferred), Beginning of Period | 23,374 | 27,189 | 42,783 | |||||||||
Cash and Cash Equivalents (Including Cash and Cash Equivalent of Casinos to be Transferred), End of Period | $ | 27,189 | $ | 42,783 | $ | 34,207 | ||||||
Supplemental Disclosure — Cash Paid for Interest | $ | 914 | $ | 5,440 | $ | 13,747 | ||||||
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(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
1. | ORGANIZATION |
• | Columbia Properties Laughlin, LLC (Laughlin), which operates the River Palms Hotel and Casino and owns the gaming assets related to this operation. |
• | TCR’s 79% ownership interest (84% economic interest) in Greenville Riverboat, LLC (Greenville), which owns and operates the Lighthouse Point Casino. |
• | St. Louis Riverboat Entertainment, Inc. (SLRE), which owns the vessel used by Greenville. |
• | The Lake Tahoe Horizon Casino Resort (Horizon), a facility owned directly by TCR. |
• | Columbia Properties Tahoe, LLC (MontBleu), which owns and operates the MontBleu Casino Resort (see Note 2). |
• | CP Baton Rouge Casino, LLC (Baton Rouge) and its subsidiaries, which own and operate the Belle of Baton Rouge casino and the Sheraton Baton Rouge hotel (see Note 2). |
2. | ACQUISITIONS |
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Casino bankroll | $ | 121,416 | ||
Other current assets | 75,024 | |||
Property and equipment | 1,777,300 | |||
Goodwill | 617,139 | |||
Intangibles | 453,100 | |||
Other assets | 83,906 | |||
Liabilities assumed | (833,306 | ) | ||
Total | $ | 2,294,579 | ||
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Orleans | MontBleu | Baton Rouge | ||||||||||
Casino bankroll | $ | 3,403 | $ | 4,258 | $ | 7,464 | ||||||
Other current assets | 1,043 | 216 | 1,845 | |||||||||
Property and equipment | 13,237 | 45,275 | 81,361 | |||||||||
Goodwill(1) | — | — | 16,802 | |||||||||
Intangibles(1) | 10,613 | 100 | 51,007 | |||||||||
Other assets | — | — | — | |||||||||
Liabilities assumed(1) | (601 | ) | (2,610 | ) | (8,810 | ) | ||||||
Total | 27,695 | 47,239 | 149,669 | |||||||||
Less deposits in 2004 | (2,091 | ) | (3,430 | ) | — | |||||||
Invested in 2005 | $ | 25,604 | $ | 43,809 | $ | 149,669 | ||||||
(1) | Amounts shown for Orleans and Baton Rouge have been adjusted for final purchase price allocations that reflect revised valuations of the intangibles for gaming licenses and amount of liabilities assumed. Orleans reflects an increase in intangibles of $1,891 and a corresponding decrease in property and equipment. Baton Rouge reflects an increase in intangibles of $9,673 and a corresponding decrease in goodwill, as well as a decrease in goodwill of $667 due to a revision in the amount of liabilities assumed. |
Pro Forma | Pro Forma | |||||||
2004 | 2005 | |||||||
(Unaudited) | (Unaudited) | |||||||
Net operating revenues | $ | 298,343 | $ | 302,958 | ||||
Income from continuing operations | $ | 19,630 | $ | 30,852 | ||||
Net income | $ | 16,761 | $ | 21,923 |
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Current assets | $ | 803 | ||
Property and equipment | 5,083 | |||
Current liabilities assumed | (120 | ) | ||
Total | $ | 5,766 | ||
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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4. | PROPERTY AND EQUIPMENT |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Buildings and improvements | $ | 99,326 | $ | 101,183 | ||||
Leasehold improvements | 46,594 | 67,009 | ||||||
Equipment | 66,704 | 77,014 | ||||||
Riverboats and barges | 27,970 | 29,635 | ||||||
240,594 | 274,841 | |||||||
Less accumulated depreciation | (60,167 | ) | (73,649 | ) | ||||
180,427 | 201,192 | |||||||
Construction in progress | 6,062 | 6,250 | ||||||
Land | 18,796 | 18,796 | ||||||
Property and equipment, net | $ | 205,285 | $ | 226,238 | ||||
5. | INTANGIBLE ASSETS |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Amortizing intangibles: | ||||||||
Favorable leases (amortized over 25 to 77 years) | $ | 4,278 | $ | 4,278 | ||||
Other | 567 | 500 | ||||||
Accumulated amortization | (160 | ) | (274 | ) | ||||
Total amortizing intangible assets | 4,685 | 4,504 | ||||||
Non-amortizing intangible assets: | ||||||||
Gaming licenses | 37,156 | 46,946 | ||||||
Total intangibles | $ | 41,841 | $ | 51,450 | ||||
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2007 | $ | 125 | ||
2008 | $ | 125 | ||
2009 | $ | 125 | ||
2010 | $ | 125 | ||
2011 | $ | 125 |
6. | ACCRUED EXPENSES AND OTHER LIABILITIES |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Accrued payroll and employee benefits | $ | 4,254 | $ | 5,358 | ||||
Insurance reserves | 4,954 | 3,341 | ||||||
Gaming related accruals | 6,333 | 6,511 | ||||||
Accrued interest | 821 | 2,121 | ||||||
Other accruals | 1,218 | 867 | ||||||
$ | 17,580 | $ | 18,198 | |||||
7. | LONG-TERM DEBT |
As of December 31 | ||||||||
2005 | 2006 | |||||||
Senior Subordinated Notes due 2014 | $ | — | $ | 960,000 | ||||
Credit Facility, Term Loan A, due 2010 | 99,750 | 96,879 | ||||||
Credit Facility, Term Loan B, due 2011 | 99,750 | 98,750 | ||||||
Other | — | 346 | ||||||
199,500 | 1,155,975 | |||||||
Less current portion | (3,871 | ) | (2,295 | ) | ||||
Total long-term debt | $ | 195,629 | $ | 1,153,680 | ||||
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8. | RELATED PARTY TRANSACTIONS |
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Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Other casino and hotel revenues | $ | 69 | $ | 69 | $ | 84 | ||||||
Marketing, advertising and casino promotion | 669 | 352 | 157 | |||||||||
Insurance | 1,358 | — | — | |||||||||
Administrative and general | 898 | 930 | 1,199 | |||||||||
Leased land and facilities expense | 30 | 30 | 30 |
9. | LEASE COMMITMENTS |
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2007 | $ | 10,582 | ||
2008 | 10,554 | |||
2009 | 10,096 | |||
2010 | 9,630 | |||
2011 | 9,619 | |||
Thereafter | 203,369 | |||
Total | $ | 253,850 | ||
10. | DISCONTINUED OPERATIONS — CASINOS TO BE TRANSFERRED |
Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Net revenues | $ | 4,634 | $ | 14,059 | $ | 4,100 | ||||||
Operating income (expenses)(1) | (7,497 | ) | (22,988 | ) | 605 | |||||||
Income (loss) from operations | (2,863 | ) | (8,929 | ) | 4,705 | |||||||
Net income (loss) | $ | (2,869 | ) | $ | (8,929 | ) | $ | 4,705 | ||||
(1) | Operating expenses for 2006 are net of insurance proceeds of $22,625. |
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As of December 31, | ||||||||
2005 | 2006 | |||||||
Cash | $ | 1,550 | $ | 1,185 | ||||
Amounts due from related parties(2) | — | 6,754 | ||||||
Other current assets | 335 | 1,866 | ||||||
Current assets to be transferred | $ | 1,885 | $ | 9,805 | ||||
Property and equipment, net | $ | 23,223 | $ | 31,682 | ||||
Other assets | 8,804 | 10,696 | ||||||
Long-term assets to be transferred | $ | 32,027 | $ | 42,378 | ||||
Accounts payable and accrued expenses | $ | 1,957 | $ | 1,907 | ||||
Amounts due to related parties(3) | 3,330 | 5,005 | ||||||
Current liabilities to be transferred | $ | 5,287 | $ | 6,912 | ||||
Long-term liabilities to be transferred | $ | 251 | $ | 177 | ||||
(2) | Includes amounts due from the Company of $2,325 as of December 31, 2006. |
(3) | Includes amounts due to the Company of $3,033 and $3,635 as of December 31, 2005 and 2006, respectively. |
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11. | VARIABLE INTEREST ENTITY |
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12. | SEGMENT INFORMATION |
Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Net Operating Revenues | ||||||||||||
Nevada segment: | ||||||||||||
Tahoe Horizon | $ | 47,074 | $ | 47,614 | $ | 44,138 | ||||||
MontBleu Lake Tahoe(a) | — | 33,374 | 49,953 | |||||||||
River Palms Laughlin | 43,378 | 50,316 | 52,101 | |||||||||
Total Nevada segment | 94,452 | 131,304 | 146,192 | |||||||||
Mississippi River basin segment: | ||||||||||||
Lighthouse Point, Greenville, MS | 27,465 | 29,041 | 28,426 | |||||||||
Baton Rouge, LA(b) | — | 26,297 | 114,245 | |||||||||
Total Mississippi River basin segment | 27,465 | 55,338 | 142,671 | |||||||||
Total consolidated | $ | 121,917 | $ | 186,642 | $ | 288,863 | ||||||
Segment Adjusted EBITDA(c) | ||||||||||||
Nevada segment: | ||||||||||||
Tahoe Horizon | $ | 13,202 | $ | 13,051 | $ | 12,649 | ||||||
MontBleu Lake Tahoe(a) | — | 5,917 | 640 | |||||||||
River Palms Laughlin | 8,611 | 10,649 | 13,012 | |||||||||
Total Nevada segment | 21,813 | 29,617 | 26,301 | |||||||||
Mississippi River basin segment: | ||||||||||||
Lighthouse Point, Greenville, MS | 12,621 | 14,320 | 12,957 | |||||||||
Baton Rouge, LA(b) | — | 11,752 | 45,291 | |||||||||
Total Mississippi River basin segment | 12,621 | 26,072 | 58,248 | |||||||||
Segment Adjusted EBITDA | 34,434 | 55,689 | 84,549 | |||||||||
Corporate | (2,282 | ) | (3,584 | ) | (5,350 | ) | ||||||
EBITDA | 32,152 | 52,105 | 79,199 | |||||||||
Write off of fixed assets and deposits related to abandoned acquisition | (79 | ) | (2,742 | ) | (2,588 | ) | ||||||
Depreciation and amortization | (6,615 | ) | (9,646 | ) | (18,033 | ) | ||||||
Operating income | 25,458 | 39,717 | 58,578 | |||||||||
Interest income | 113 | 482 | 8,918 | |||||||||
Interest expense | (909 | ) | (5,993 | ) | (35,563 | ) | ||||||
Minority interest in net income of consolidated subsidiary | (3,873 | ) | (3,433 | ) | (3,224 | ) | ||||||
Income from continuing operations | $ | 20,789 | $ | 30,773 | $ | 28,709 | ||||||
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(a) | Reflects results since its June 10, 2005 acquisition. During the year ended December 31, 2006, MontBleu incurred expenses totaling $4,150 related to (a) re-branding of the Casino. |
(b) | Reflects results since its October 25, 2005 acquisition. |
(c) | Segment Adjusted EBITDA is net income before interest expense, interest income, depreciation, amortization, corporate expenses, write offs of fixed assets and deposits related to abandoned acquisition and minority interest in net income of consolidated subsidiary. Segment Adjusted EBITDA should not be construed as a substitute for either operating income or net income as they are determined in accordance with generally accepted accounting principles (GAAP). The Company uses Segment Adjusted EBITDA as a measure to compare operating results between segments and accounting periods. The Company manages cash and finances its operations at the corporate level. The Company manages the allocation of capital among segments at the corporate level. The Company accordingly believes Segment Adjusted EBITDA is useful as a measure of operating results at the segment level because it reflects the results of operating decisions at that level separated from the effects of financing decisions that are managed at the corporate level. The Company also uses Segment Adjusted EBITDA as an important operating performance measure in its bonus programs for managers and executive officers. The Company also believes that Segment Adjusted EBITDA is a commonly used measure of operating performance in the gaming industry and is an important basis for the valuation of gaming companies. The Company’s calculation of Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies and, therefore, any such differences must be considered when comparing performance among different companies. While the Company believes Segment Adjusted EBITDA provides a useful perspective for some purposes, Segment Adjusted EBITDA has material limitations as an analytical tool. For example, among other things, although depreciation, amortization and write off of fixed assets and deposits related to abandoned acquisition are non-cash charges, the assets being depreciated, amortized and written off may have to be replaced in the future, and Segment Adjusted EBITDA does not reflect the requirements for such replacements. Interest expense, interest income, and minority interest in net income of consolidated subsidiary are also not reflected in Segment Adjusted EBITDA. Therefore, the Company does not consider Segment Adjusted EBITDA in isolation, and it should not be considered as a substitute for measures determined in accordance with GAAP. A reconciliation of Segment Adjusted EBITDA with operating income and net income as determined in accordance with GAAP is reflected in the above summary. |
Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Depreciation and amortization | ||||||||||||
Nevada | $ | 5,028 | $ | 7,111 | $ | 10,795 | ||||||
Mississippi River Basin | 1,587 | 2,535 | 7,237 | |||||||||
Total consolidated | $ | 6,615 | $ | 9,646 | $ | 18,032 | ||||||
Additions to property and equipment, including acquisition of casinos | ||||||||||||
Nevada | $ | 15,053 | $ | 53,874 | $ | 37,152 | ||||||
Mississippi River Basin | 2,442 | 144,500 | 3,601 | |||||||||
Total consolidated | $ | 17,495 | $ | 198,374 | $ | 40,753 | ||||||
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As of December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Property and equipment, goodwill and intangible assets Nevada | $ | 64,145 | $ | 115,968 | $ | 140,585 | ||||||
Mississippi River Basin | 9,568 | 158,300 | 153,906 | |||||||||
Total consolidated | $ | 73,713 | $ | 274,268 | $ | 294,491 | ||||||
Total assets | ||||||||||||
Nevada | $ | 90,406 | $ | 145,514 | $ | 180,641 | ||||||
Mississippi River Basin | 14,594 | 188,842 | 168,349 | |||||||||
Casinos to be transferred | 6,299 | 33,912 | 52,183 | |||||||||
Deposits for pending acquisitions | 4,509 | — | 1,310,026 | |||||||||
Other Corporate assets, primarily deferred loan costs | — | — | 22,892 | |||||||||
Total consolidated assets | $ | 115,808 | $ | 368,268 | $ | 1,734,091 | ||||||
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13. | SUMMARY FINANCIAL INFORMATION |
Non- | ||||||||||||||||||||||||||||||||
TE | Guarantors | Guarantor | TE | TCR | TCR | |||||||||||||||||||||||||||
TCR | Parent | Subsidiaries | Subsidiary | Elims. | Total | Elims. | Total | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 166 | $ | 29,112 | $ | 3,745 | $ | — | $ | 33,023 | $ | — | $ | 33,023 | ||||||||||||||||
Other current assets | 9,805 | 543 | 15,645 | 511 | — | 16,699 | — | 26,504 | ||||||||||||||||||||||||
Total current assets | 9,805 | 709 | 44,757 | 4,256 | — | 49,722 | — | 59,527 | ||||||||||||||||||||||||
Property and equipment, net | — | — | 222,640 | 3,598 | — | 226,238 | — | 226,238 | ||||||||||||||||||||||||
Deposit and costs for pending acquisition | — | 977,967 | 332,059 | — | — | 1,310,026 | — | 1,310,026 | ||||||||||||||||||||||||
Investments | 126,137 | — | — | — | — | — | (126,137 | ) | — | |||||||||||||||||||||||
Goodwill | — | — | 16,802 | — | — | 16,802 | — | 16,802 | ||||||||||||||||||||||||
Intangibleassets-net | — | — | 51,450 | — | — | 51,450 | — | 51,450 | ||||||||||||||||||||||||
Deferred charges and otherassets-net | — | 22,183 | 5,481 | 181 | (175 | ) | 27,670 | — | 27,670 | |||||||||||||||||||||||
Discontinued operations — long-term assets of casinos to be transferred | 42,378 | — | — | — | — | — | — | 42,378 | ||||||||||||||||||||||||
Total Assets | $ | 178,320 | $ | 1,000,859 | $ | 673,189 | $ | 8,035 | $ | (175 | ) | $ | 1,681,908 | $ | (126,137 | ) | $ | 1,734,091 | ||||||||||||||
Current Liabilities: | ||||||||||||||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | — | $ | 2,295 | $ | — | $ | — | $ | 2,295 | $ | — | $ | 2,295 | ||||||||||||||||
Accounts payable | — | 2,684 | 11,470 | 595 | — | 14,749 | — | 14,749 | ||||||||||||||||||||||||
Other current liabilities | 6,912 | 1,179 | 27,288 | 1,707 | — | 30,174 | — | 37,086 | ||||||||||||||||||||||||
Total current liabilities | 6,912 | 3,863 | 41,053 | 2,302 | — | 47,218 | — | 54,130 | ||||||||||||||||||||||||
Long-term debt | 25,494 | 960,000 | 168,186 | — | — | 1,128,186 | — | 1,153,680 | ||||||||||||||||||||||||
Related party notes payable and accrued Interest | 369,083 | — | — | — | — | — | — | 369,083 | ||||||||||||||||||||||||
Other long-term liabilities | 177 | — | 412 | — | (175 | ) | 237 | — | 414 | |||||||||||||||||||||||
Total liabilities | 401,666 | 963,863 | 209,651 | 2,302 | (175 | ) | 1,175,641 | — | 1,577,307 | |||||||||||||||||||||||
Minority interest in consolidated entities | 9,853 | — | — | — | — | — | — | 9,853 | ||||||||||||||||||||||||
Stockholder’s equity | (233,199 | ) | 36,996 | 463,538 | 5,733 | — | 506,267 | (126,137 | ) | 146,931 | ||||||||||||||||||||||
Total Liabilities and Stockholder’s Equity | $ | 178,320 | $ | 1,000,859 | $ | 673,189 | $ | 8,035 | $ | (175 | ) | $ | 1,681,908 | $ | (126,137 | ) | $ | 1,734,091 | ||||||||||||||
F-50
Table of Contents
(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
Non- | ||||||||||||||||||||||||||||||||
TE | Guarantors | Guarantor | TE | TCR | TCR | |||||||||||||||||||||||||||
TCR | Parent | Subsidiaries | Subsidiary | Elims. | Total | Elims. | Total | |||||||||||||||||||||||||
Operating Revenues: | ||||||||||||||||||||||||||||||||
Casino | $ | — | $ | — | $ | 206,785 | $ | 32,705 | $ | — | $ | 239,490 | $ | — | $ | 239,490 | ||||||||||||||||
Rooms | — | — | 39,731 | — | — | 39,731 | — | 39,731 | ||||||||||||||||||||||||
Food and beverage | — | — | 40,924 | 1,059 | — | 41,983 | — | 41,983 | ||||||||||||||||||||||||
Other casino and hotel | — | — | 13,051 | 181 | — | 12,323 | — | 12,323 | ||||||||||||||||||||||||
Total operating revenues | — | — | 300,491 | 33,945 | — | 333,527 | — | 333,527 | ||||||||||||||||||||||||
Less promotional allowances | — | — | (39,145 | ) | (5,519 | ) | (909 | ) | (44,664 | ) | — | (44,664 | ) | |||||||||||||||||||
Net operating revenues | — | — | 261,346 | 28,426 | (909 | ) | 288,863 | — | 288,863 | |||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||||||
Casino | — | — | 35,285 | 5,197 | — | 40,482 | — | 40,482 | ||||||||||||||||||||||||
Rooms | — | — | 17,647 | — | — | 17,647 | — | 17,647 | ||||||||||||||||||||||||
Food and beverage | — | — | 33,690 | 889 | — | 34,579 | — | 34,579 | ||||||||||||||||||||||||
Other casino and hotel | — | — | 4,136 | 5 | — | 4,141 | — | 4,141 | ||||||||||||||||||||||||
Utilities | — | — | 9,735 | 339 | — | 10,074 | — | 10,074 | ||||||||||||||||||||||||
Marketing, advertising and casino promotions | — | — | 14,278 | 1,235 | — | 15,513 | — | 15,513 | ||||||||||||||||||||||||
Repairs and maintenance | — | — | 7,734 | 588 | — | 8,322 | — | 8,322 | ||||||||||||||||||||||||
Insurance | — | — | 2,265 | 643 | — | 2,908 | — | 2,908 | ||||||||||||||||||||||||
Property and local taxes | — | — | 3,455 | 369 | — | 3,824 | — | 3,824 | ||||||||||||||||||||||||
Gaming taxes and licenses | — | — | 36,111 | 3,758 | — | 39,869 | — | 39,869 | ||||||||||||||||||||||||
Casino and hotel administrative and general | — | 2 | 14,822 | 1,360 | — | 16,184 | — | 16,184 | ||||||||||||||||||||||||
Corporate overhead | — | — | 4,643 | 707 | — | 5,350 | — | 5,350 | ||||||||||||||||||||||||
Leased land and facilities | — | — | 9,702 | 1,978 | (909 | ) | 10,771 | — | 10,771 | |||||||||||||||||||||||
Depreciation and amortization | — | — | 16,914 | 1,119 | — | 18,033 | — | 18,033 | ||||||||||||||||||||||||
Write off of fixed assets, deposits and other costs related to abandoned acquisitions | — | — | 2,588 | — | — | 2,588 | — | 2,588 | ||||||||||||||||||||||||
Total operating expenses | — | 2 | 213,005 | 18,187 | (909 | ) | 230,285 | — | 230,285 | |||||||||||||||||||||||
Income (loss) from operations | — | (2 | ) | 48,341 | 10,239 | — | 58,578 | — | 58,578 | |||||||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||||||||||
Interest income | 6,700 | 543 | 1,633 | 42 | — | 2,218 | — | 8,918 | ||||||||||||||||||||||||
Interest expense | (18,931 | ) | (1,013 | ) | (15,619 | ) | — | — | (16,632 | ) | (35,563 | ) | ||||||||||||||||||||
Total other income (expense) | (12,231 | ) | (470 | ) | (13,986 | ) | 42 | — | (14,414 | ) | — | (26,645 | ) | |||||||||||||||||||
Income (loss) before minority interest | (12,231 | ) | (472 | ) | 34,355 | 10,281 | — | 44,164 | — | 31,933 | ||||||||||||||||||||||
Minority interest in net income of Consolidated subsidiaries | 41,762 | — | — | — | — | — | (44,986 | ) | (3,224 | ) | ||||||||||||||||||||||
Income (loss) from continuing operations | 29,531 | (472 | ) | 34,355 | 10,281 | — | 44,164 | (44,986 | ) | 28,709 | ||||||||||||||||||||||
Discontinued operations, casinos to be transferred | 4,705 | — | — | — | — | — | — | 4,705 | ||||||||||||||||||||||||
Net income (loss) | $ | 34,236 | $ | (472 | ) | $ | 34,355 | $ | 10,281 | $ | — | $ | 44,164 | $ | (44,986 | ) | $ | 33,414 | ||||||||||||||
F-51
Table of Contents
(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
Non- | ||||||||||||||||||||||||||||||||
TE | Guarantors | Guarantor | TE | TCR | TCR | |||||||||||||||||||||||||||
TCR | Parent | Subsidiaries | Subsidiary | Elims. | Total | Elims. | Total | |||||||||||||||||||||||||
Cash flows from operating activities | $ | 48,830 | $ | 2,525 | $ | 55,767 | $ | 11,436 | $ | — | $ | 69,728 | $ | (41,762 | ) | $ | 76,796 | |||||||||||||||
Cash Flows From Investing Activities: | ||||||||||||||||||||||||||||||||
Additions to property and equipment | (22,857 | ) | — | (40,738 | ) | (186 | ) | — | (40,924 | ) | — | (63,781 | ) | |||||||||||||||||||
Deposits and costs related to pending acquisition | (331,780 | ) | (979,135 | ) | 19 | — | — | (979,116 | ) | — | (1,310,896 | ) | ||||||||||||||||||||
Other cash flows from investing activities | (64,469 | ) | — | 33,917 | — | — | 33,917 | 44,101 | 13,549 | |||||||||||||||||||||||
Net cash used in investing activities | (419,106 | ) | (979,135 | ) | (6,802 | ) | (186 | ) | — | (986,123 | ) | 44,101 | (1,361,128 | ) | ||||||||||||||||||
Cash Flows From Financing Activities: | ||||||||||||||||||||||||||||||||
Issuance of bonds | — | 960,000 | — | — | — | 960,000 | — | 960,000 | ||||||||||||||||||||||||
Repayments of debt | — | — | (3,525 | ) | — | — | (3,525 | ) | — | (3,525 | ) | |||||||||||||||||||||
Financing costs | — | (20,857 | ) | (236 | ) | — | — | (21,093 | ) | — | (21,093 | ) | ||||||||||||||||||||
Proceeds from related party note payable | 350,152 | — | — | — | — | — | — | 350,152 | ||||||||||||||||||||||||
Other cash flows from financing activities | 19,758 | 37,633 | (52,981 | ) | (11,849 | ) | — | (27,197 | ) | (2,339 | ) | (9,778 | ) | |||||||||||||||||||
Net cash provided by (used in) financing activities | 369,910 | 976,776 | (56,742 | ) | (11,849 | ) | — | 908,185 | (2,339 | ) | 1,275,756 | |||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (366 | ) | 166 | (7,777 | ) | (599 | ) | — | (8,210 | ) | — | (8,576 | ) | |||||||||||||||||||
Cash and cash equivalents, beginning of year | 1,550 | — | 36,889 | 4,344 | — | 41,233 | — | 42,783 | ||||||||||||||||||||||||
Cash and cash equivalents, end of year | $ | 1,184 | $ | 166 | $ | 29,112 | $ | 3,745 | $ | — | $ | 33,023 | $ | — | $ | 34,207 | ||||||||||||||||
F-52
Table of Contents
(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
Non- | ||||||||||||||||||||||||||||
Guarantors | Guarantor | TCR | TCR | |||||||||||||||||||||||||
TCR | Subsidiaries | Subsidiary | Elims. | Total | Elims. | Total | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 36,889 | $ | 4,344 | $ | — | $ | 41,233 | $ | — | $ | 41,233 | ||||||||||||||
Other current assets | 1,885 | 12,283 | 303 | — | 12,586 | — | 14,471 | |||||||||||||||||||||
Total current assets | 1,885 | 49,172 | 4,647 | — | 53,819 | — | 55,704 | |||||||||||||||||||||
Property and equipment, net | — | 200,754 | 4,531 | — | 205,285 | — | 205,285 | |||||||||||||||||||||
Investments | 82,037 | — | — | — | — | (82,037 | ) | — | ||||||||||||||||||||
Goodwill | — | 27,142 | — | — | 27,142 | — | 27,142 | |||||||||||||||||||||
Intangible assets | — | 41,841 | — | — | 41,841 | — | 41,841 | |||||||||||||||||||||
Deferred charges and other assets | — | 6,263 | 106 | (100 | ) | 6,269 | — | 6,269 | ||||||||||||||||||||
Discontinued operations — long-term assets of casinos to be transferred | 32,027 | — | — | — | — | — | 32,027 | |||||||||||||||||||||
Total Assets | $ | 115,949 | $ | 325,172 | $ | 9,284 | $ | (100 | ) | $ | 334,356 | $ | (82,037 | ) | $ | 368,268 | ||||||||||||
Current Liabilities: | ||||||||||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 3,871 | $ | — | $ | — | $ | 3,871 | $ | — | $ | 3,871 | ||||||||||||||
Accounts payable | — | 10,565 | 410 | — | 10,975 | — | 10,975 | |||||||||||||||||||||
Other current liabilities | 5,287 | 17,757 | 922 | — | 18,679 | — | 23,966 | |||||||||||||||||||||
Current liabilities | 5,287 | 32,193 | 1,332 | — | 33,525 | — | 38,812 | |||||||||||||||||||||
Long-term debt | 25,494 | 170,135 | — | — | 170,135 | — | 195,629 | |||||||||||||||||||||
Other long-term liabilities | — | (100 | ) | 521 | 521 | |||||||||||||||||||||||
Discontinued operations-other liabilities of casinos to be transferred | 251 | 621 | — | — | — | — | 251 | |||||||||||||||||||||
Total liabilities | 31,032 | 202,949 | 1,332 | (100 | ) | 204,181 | — | 235,213 | ||||||||||||||||||||
Minority interest in consolidated entities | 13,038 | — | — | — | — | — | 13,038 | |||||||||||||||||||||
Stockholder’s equity | 71,879 | 122,223 | 7,952 | — | 130,175 | (82,037 | ) | 120,017 | ||||||||||||||||||||
Total Liabilities and Stockholder’s Equity | $ | 115,949 | $ | 325,172 | $ | 9,284 | $ | (100 | ) | $ | 334,356 | $ | (82,037 | ) | $ | 368,268 | ||||||||||||
F-53
Table of Contents
(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
Non- | ||||||||||||||||||||||||||||
Guarantors | Guarantor | TCR | TCR | |||||||||||||||||||||||||
TCR | Subsidiaries | Subsidiary | Elims. | Total | Elims. | Total | ||||||||||||||||||||||
Operating Revenues: | ||||||||||||||||||||||||||||
Casino | $ | — | $ | 117,251 | $ | 32,789 | $ | — | $ | 150,040 | $ | — | $ | 150,040 | ||||||||||||||
Rooms | — | 28,469 | (88 | ) | — | 28,381 | — | 28,381 | ||||||||||||||||||||
Food and beverage | — | 29,270 | 762 | — | 30,032 | — | 30,032 | |||||||||||||||||||||
Other casino and hotel | — | 9,015 | 301 | (943 | ) | 8,373 | — | 8,373 | ||||||||||||||||||||
Total operating revenues | — | 184,005 | 33,764 | (943 | ) | 216,826 | — | 216,826 | ||||||||||||||||||||
Less promotional allowances | — | (25,460 | ) | (4,724 | ) | — | (30,184 | ) | — | (30,184 | ) | |||||||||||||||||
Net operating revenues | — | 158,545 | 29,040 | (943 | ) | 186,642 | — | 186,642 | ||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||
Casino | — | 22,563 | 5,095 | — | 27,658 | — | 27,658 | |||||||||||||||||||||
Rooms | — | 12,830 | — | — | 12,830 | — | 12,830 | |||||||||||||||||||||
Food and beverage | — | 25,421 | 541 | — | 25,962 | — | 25,962 | |||||||||||||||||||||
Other casino and hotel | — | 1,510 | 6 | — | 1,516 | — | 1,516 | |||||||||||||||||||||
Utilities | — | 6,667 | 341 | — | 7,008 | — | 7,008 | |||||||||||||||||||||
Marketing, advertising and casino promotions | — | 8,473 | 1,181 | — | 9,654 | — | 9,654 | |||||||||||||||||||||
Repairs and maintenance | — | 5,177 | 617 | — | 5,794 | — | 5,794 | |||||||||||||||||||||
Insurance | — | 1,772 | 439 | — | 2,211 | — | 2,211 | |||||||||||||||||||||
Property and local taxes | — | 1,630 | 328 | — | 1,958 | — | 1,958 | |||||||||||||||||||||
Gaming taxes and licenses | — | 14,764 | 4,024 | — | 18,788 | — | 18,788 | |||||||||||||||||||||
Casino and hotel administrative and general | — | 8,645 | 1,369 | — | 10,014 | — | 10,014 | |||||||||||||||||||||
Corporate overhead | — | 2,952 | 633 | — | 3,585 | — | 3,585 | |||||||||||||||||||||
Leased land and facilities | — | 6,520 | 1,982 | (943 | ) | 7,559 | — | 7,559 | ||||||||||||||||||||
Depreciation and amortization | — | 8,497 | 1,149 | — | 9,646 | — | 9,646 | |||||||||||||||||||||
Write off of fixed assets, deposits and other costs related to abandoned acquisitions | — | 2,650 | 92 | — | 2,742 | — | 2,742 | |||||||||||||||||||||
Total operating expenses | — | 130,071 | 17,797 | (943 | ) | 146,925 | — | 146,925 | ||||||||||||||||||||
Income from operations | — | 28,474 | 11,243 | — | 39,717 | — | 39,717 | |||||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||||||
Interest income | — | 463 | 19 | — | 482 | — | 482 | |||||||||||||||||||||
Interest expense | — | (5,993 | ) | — | — | (5,993 | ) | (5,993 | ) | |||||||||||||||||||
Total other income (expense) | — | (5,530 | ) | 19 | — | (5,511 | ) | — | (5,511 | ) | ||||||||||||||||||
Income (loss) before minority interest | — | 22,944 | 11,262 | — | 34,206 | — | 34,206 | |||||||||||||||||||||
Minority interest in net income (loss) of Consolidated subsidiary | 17,676 | — | — | — | — | (21,109 | ) | (3,433 | ) | |||||||||||||||||||
Income (loss) from continuing operations | 17,676 | 22,944 | 11,262 | — | 34,206 | (21,109 | ) | 30,773 | ||||||||||||||||||||
Discontinued operations, casinos to be transferred | (8,929 | ) | — | — | — | — | — | (8,929 | ) | |||||||||||||||||||
Net income (loss) | $ | 8,747 | $ | 22,944 | $ | 11,262 | $ | — | $ | 34,206 | $ | (21,109 | ) | $ | 21,844 | |||||||||||||
F-54
Table of Contents
(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
Non- | ||||||||||||||||||||||||||||
Guarantors | Guarantor | TCR | TCR | |||||||||||||||||||||||||
TCR | Subsidiaries | Subsidiary | Elims. | Total | Elims. | Total | ||||||||||||||||||||||
Cash flows from operating activities | $ | 12,452 | $ | 41,729 | $ | 11,836 | $ | — | $ | 53,565 | $ | (19,484 | ) | $ | 46,533 | |||||||||||||
Cash Flows From Investing Activities: | ||||||||||||||||||||||||||||
Additions to property and equipment | (8,428 | ) | (14,986 | ) | (799 | ) | — | (15,785 | ) | — | (24,213 | ) | ||||||||||||||||
Acquisition of casino, net of cash acquired | (22,201 | ) | (185,185 | ) | — | — | (185,185 | ) | 3,430 | (203,956 | ) | |||||||||||||||||
Other cash flows from investing activities | (69,188 | ) | (951 | ) | — | — | (951 | ) | 69,075 | (1,064 | ) | |||||||||||||||||
Net cash used in investing activities | (99,817 | ) | (201,122 | ) | (799 | ) | — | (201,921 | ) | 72,505 | (229,233 | ) | ||||||||||||||||
Cash Flows From Financing Activities: | ||||||||||||||||||||||||||||
Proceeds from long-term debt | 25,494 | 174,506 | — | — | 174,506 | — | 200,000 | |||||||||||||||||||||
Financing costs | — | (6,274 | ) | — | — | (6,274 | ) | — | (6,274 | ) | ||||||||||||||||||
Other cash flows from financing activities | 62,571 | 5,768 | (10,750 | ) | — | (4,982 | ) | (53,021 | ) | 4,568 | ||||||||||||||||||
Net cash provided by (used in) financing activities | 88,065 | 174,000 | (10,750 | ) | — | 163,250 | (53,021 | ) | 198,294 | |||||||||||||||||||
Net increase in cash and cash equivalents | 700 | 14,607 | 287 | — | 14,894 | — | 15,594 | |||||||||||||||||||||
Cash and cash equivalents, beginning of year | 850 | 22,282 | 4,057 | — | 26,339 | — | 27,189 | |||||||||||||||||||||
Cash and cash equivalents, end of year | $ | 1,550 | $ | 36,889 | $ | 4,344 | $ | — | $ | 41,233 | $ | — | $ | 42,783 | ||||||||||||||
F-55
Table of Contents
(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
Non- | ||||||||||||||||||||||||||||
Guarantors | Guarantor | TE | TCR | TCR | ||||||||||||||||||||||||
TCR | Subsidiaries | Subsidiary | Elims. | Total | Elims. | Total | ||||||||||||||||||||||
Operating Revenues: | ||||||||||||||||||||||||||||
Casino | $ | — | $ | 68,961 | $ | 31,279 | $ | — | $ | 100,240 | $ | — | $ | 100,240 | ||||||||||||||
Rooms | — | 18,077 | (45 | ) | — | 18,032 | — | 18,032 | ||||||||||||||||||||
Food and beverage | — | 20,557 | 1,272 | — | 21,829 | — | 21,829 | |||||||||||||||||||||
Other casino and hotel | — | 6,462 | 326 | (943 | ) | 5,845 | — | 5,845 | ||||||||||||||||||||
Total operating revenues | — | 114,057 | 32,832 | (943 | ) | 145,946 | — | 145,946 | ||||||||||||||||||||
Less promotional allowances | — | (18,661 | ) | (5,368 | ) | — | (24,029 | ) | — | (24,029 | ) | |||||||||||||||||
Net operating revenues | — | 95,396 | 27,464 | (943 | ) | 121,917 | — | 121,917 | ||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||
Casino | — | 14,867 | 4,955 | — | 19,822 | — | 19,822 | |||||||||||||||||||||
Rooms | — | 8,257 | — | — | 8,257 | — | 8,257 | |||||||||||||||||||||
Food and beverage | — | 17,301 | 528 | — | 17,829 | — | 17,829 | |||||||||||||||||||||
Other casino and hotel | — | 712 | 2 | — | 714 | — | 714 | |||||||||||||||||||||
Utilities | — | 4,404 | 317 | — | 4,721 | — | 4,721 | |||||||||||||||||||||
Marketing, advertising and casino promotions | — | 6,079 | 1,537 | — | 7,616 | — | 7,616 | |||||||||||||||||||||
Repairs and maintenance | — | 3,264 | 512 | — | 3,776 | — | 3,776 | |||||||||||||||||||||
Insurance | — | 1,351 | 359 | — | 1,710 | — | 1,710 | |||||||||||||||||||||
Property and local taxes | — | 957 | 310 | — | 1,267 | — | 1,267 | |||||||||||||||||||||
Gaming taxes and licenses | — | 6,527 | 3,842 | — | 10,369 | — | 10,369 | |||||||||||||||||||||
Casino and hotel administrative and general | — | 5,214 | 1,535 | — | 6,749 | — | 6,749 | |||||||||||||||||||||
Corporate overhead | — | 1,519 | 763 | — | 2,282 | — | 2,282 | |||||||||||||||||||||
Leased land and facilities | — | 3,715 | 1,881 | (943 | ) | 4,653 | — | 4,653 | ||||||||||||||||||||
Depreciation and amortization | — | 5,490 | 1,125 | — | 6,615 | — | 6,615 | |||||||||||||||||||||
Write off of fixed assets, deposits and other costs related to abandoned acquisitions | — | (13 | ) | 92 | — | 79 | — | 79 | ||||||||||||||||||||
Total operating expenses | — | 79,644 | 17,758 | (943 | ) | 96,459 | — | 96,459 | ||||||||||||||||||||
Income from operations | — | 15,752 | 9,706 | — | 25,458 | — | 25,458 | |||||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||||||
Interest income | — | 100 | 13 | — | 113 | — | 113 | |||||||||||||||||||||
Interest expense | — | (907 | ) | (2 | ) | — | (909 | ) | — | (909 | ) | |||||||||||||||||
Total other income (expense) | — | (807 | ) | 11 | — | (796 | ) | — | (796 | ) | ||||||||||||||||||
Income before minority interest | — | 14,945 | 9,717 | — | 24,662 | — | 24,662 | |||||||||||||||||||||
Minority interest in net income of consolidated subsidiary | 7,620 | — | — | — | — | (11,493 | ) | (3,873 | ) | |||||||||||||||||||
Income (loss) from continuing operations | 7,620 | 14,945 | 9,717 | — | 24,662 | (11,493 | ) | 20,789 | ||||||||||||||||||||
Discontinued operations, casinos to be transferred | (2,869 | ) | — | — | — | — | — | (2,869 | ) | |||||||||||||||||||
Net income (loss) | $ | 4,751 | $ | 14,945 | $ | 9,717 | $ | — | $ | 24,662 | $ | (11,493 | ) | $ | 17,920 | |||||||||||||
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(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
Non- | ||||||||||||||||||||||||||||
Guarantors | Guarantor | TE | TCR | TCR | ||||||||||||||||||||||||
TCR | Subsidiaries | Subsidiary | Elims. | Total | Elims. | Total | ||||||||||||||||||||||
Cash flows from operating activities | $ | 3,223 | $ | 16,469 | $ | 11,100 | $ | — | $ | 27,569 | $ | (7,620 | ) | $ | 23,172 | |||||||||||||
Cash Flows From Investing Activities: | ||||||||||||||||||||||||||||
Additions to property and equipment | (476 | ) | (11,688 | ) | (1,297 | ) | — | (12,985 | ) | — | (13,461 | ) | ||||||||||||||||
Deposits on pending acquisition | (5,521 | ) | (1,080 | ) | — | — | (1,080 | ) | — | (6,601 | ) | |||||||||||||||||
Other cash flows from investing activities | (2,080 | ) | (1,091 | ) | 104 | — | (987 | ) | 3,098 | 31 | ||||||||||||||||||
Net cash used in investing activities | (8,077 | ) | (13,859 | ) | (1,193 | ) | — | (15,052 | ) | 3,098 | (20,031 | ) | ||||||||||||||||
Cash Flows From Financing Activities: | 4,214 | 2,940 | (11,000 | ) | — | (8,060 | ) | 4,520 | 674 | |||||||||||||||||||
Net increase in cash and cash equivalents | (640 | ) | 5,550 | (1,093 | ) | — | 4,457 | (2 | ) | 3,815 | ||||||||||||||||||
Cash and cash equivalents, beginning of year | 1,490 | 16,734 | 5,150 | — | 21,884 | — | 23,374 | |||||||||||||||||||||
Cash and cash equivalents, end of year | $ | 850 | $ | 22,284 | $ | 4,057 | $ | — | $ | 26,341 | $ | (2 | ) | $ | 27,189 | |||||||||||||
14. | SUBSEQUENT EVENTS — ACQUISITIONS AND FINANCINGS |
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(fka WIMAR TAHOE CORPORATION) AND SUBSIDIARIES
F-58
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F-59
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ASSETS | ||||
Current Assets: | ||||
Cash and cash equivalents | $ | 6,850 | ||
Accounts receivable | 518 | |||
Inventories | 170 | |||
Prepaid expenses and other assets | 344 | |||
Total current assets | 7,882 | |||
Property and Equipment — Net | 89,885 | |||
Goodwill | 19,930 | |||
Other Assets | 125 | |||
Total Assets | $ | 117,822 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||
Current liabilities: | ||||
Accounts payable | $ | 1,135 | ||
Accrued payroll and related expenses | 2,474 | |||
Accrued income taxes | 2,581 | |||
Amounts due to affiliates | 4,873 | |||
Other accrued liabilities | 5,253 | |||
Notes payable current — related party | 762 | |||
Total current liabilities | 17,078 | |||
Long-term debt — related party | 97,839 | |||
Long-term debt — other | 1,703 | |||
Deferred income taxes | 5,989 | |||
Other long-term obligations | 56 | |||
Total liabilities | 122,665 | |||
Stockholders’ Equity (Deficit) | (4,843 | ) | ||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 117,822 | ||
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For the Period | ||||||||
For The Year Ended | January 1, 2005 to | |||||||
December 31, 2004 | October 24, 2005 | |||||||
Operating Revenues: | ||||||||
Casino | $ | 82,940 | $ | 80,719 | ||||
Rooms | 6,298 | 7,586 | ||||||
Food and beverage | 6,564 | 7,845 | ||||||
Other casino and hotel revenue | 1,511 | 1,586 | ||||||
Total operating revenues | 97,313 | 97,736 | ||||||
Less promotional allowances | (12,074 | ) | (10,704 | ) | ||||
Net operating revenues | 85,239 | 87,032 | ||||||
Operating Expenses: | ||||||||
Casino | 15,347 | 13,629 | ||||||
Rooms | 2,647 | 2,735 | ||||||
Food and beverage | 6,841 | 7,837 | ||||||
Utilities | 1,754 | 1,740 | ||||||
Repairs and maintenance | 1,430 | 1,397 | ||||||
Insurance | 2,248 | 1,474 | ||||||
Marketing, advertising and casino promotion | 5,494 | 3,790 | ||||||
Property and local taxes | 1,761 | 1,081 | ||||||
Gaming taxes and licenses | 21,096 | 20,418 | ||||||
Administrative and general | 6,248 | 5,246 | ||||||
Other operating expenses | — | 16 | ||||||
Leased land and facilities | 2,098 | 2,246 | ||||||
Depreciation and amortization | 8,923 | 8,154 | ||||||
Total operating expenses | 75,887 | 69,763 | ||||||
Income from Operations | 9,352 | 17,269 | ||||||
Other Income (Expenses): | ||||||||
Interest income | 23 | 62 | ||||||
Interest expense | (522 | ) | (285 | ) | ||||
Total other expense | (499 | ) | (223 | ) | ||||
Income Before Income Taxes | 8,853 | 17,046 | ||||||
Income Taxes | (4,449 | ) | (5,969 | ) | ||||
Net Income | $ | 4,404 | $ | 11,077 | ||||
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 1, 2004 TO OCTOBER 24, 2005
(In thousands)
Common | Retained | |||||||||||
Stock | Earnings | Total | ||||||||||
Balance, January 1, 2004 | $ | 1 | $ | (9,417 | ) | $ | (9,416 | ) | ||||
Stockholders’ contributions 2004 | 169 | 169 | ||||||||||
Net income 2004 | — | 4,404 | 4,404 | |||||||||
Balance, December 31, 2004 | 1 | (4,844 | ) | (4,843 | ) | |||||||
Net income through October 24, 2005 | — | 11,077 | 11,077 | |||||||||
Balance, October 24, 2005 | $ | 1 | $ | 6,233 | $ | 6,234 | ||||||
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For the Period | ||||||||
For The Year Ended | January 1, 2005 to | |||||||
December 31, 2004 | October 24, 2005 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 4,404 | $ | 11,077 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 8,923 | 8,154 | ||||||
Deferred taxes | 1,812 | 259 | ||||||
Changes in current assets and current liabilities: | ||||||||
Accounts receivable | 314 | (678 | ) | |||||
Inventories, prepaids and other assets | (61 | ) | (182 | ) | ||||
Accounts payable, accrued expenses and other liabilities | 3,354 | 4,177 | ||||||
Net cash provided by operating activities | 18,746 | 22,807 | ||||||
Cash Flows from Investing Activities: | ||||||||
Additions to property and equipment | (5,302 | ) | (4,996 | ) | ||||
Net cash used in investing activities | (5,302 | ) | (4,996 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Repayments on long-term debt | (9,105 | ) | (29 | ) | ||||
Stockholders’ contributions | 169 | — | ||||||
Payments to related parties — Argosy | (3,966 | ) | (17,218 | ) | ||||
Net cash used in financing activities | (12,902 | ) | (17,247 | ) | ||||
Net Increase in Cash and Cash Equivalents | 542 | 564 | ||||||
Cash and Cash Equivalents, Beginning of Period | 6,308 | 6,850 | ||||||
Cash and Cash Equivalents, End of Period | $ | 6,850 | $ | 7,414 | ||||
F-63
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1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-64
Table of Contents
F-65
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3. | RELATED PARTY TRANSACTIONS |
F-66
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4. | INCOME TAXES |
2004 | 2005 | |||||||
Current: | ||||||||
Federal | $ | 2,307 | $ | 5,008 | ||||
State | 330 | 702 | ||||||
Total current tax expense | 2,637 | 5,710 | ||||||
Deferred: | ||||||||
Federal | 1,586 | 227 | ||||||
State | 226 | 32 | ||||||
Total deferred tax expense | 1,812 | 259 | ||||||
Total income tax expense | $ | 4,449 | $ | 5,969 | ||||
2004 | 2005 | |||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | ||||
State and local — net of federal benefit | 5.0 | 5.0 | ||||||
Other — flow through entity loss | 10.3 | 1.8 | ||||||
Effective income tax rate | 50.3 | % | 41.8 | % | ||||
5. | LEASE COMMITMENTS |
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Period Ended December 31 | ||||
2006 | $ | 298 | ||
2007 | 298 | |||
2008 | 285 | |||
2009 | 259 | |||
2010 | 259 | |||
Thereafter | 330 |
F-68
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F-69
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(A Wholly-Owned Indirect Subsidiary of Caesars Entertainment, Inc.)
Period from | ||||
January 1, | ||||
2005 | ||||
through | ||||
June 10, | ||||
2005 | ||||
Operating Revenues | ||||
Casino | $ | 16,312 | ||
Rooms | 4,963 | |||
Food and beverage | 5,416 | |||
Other revenue | 2,650 | |||
Total operating revenues | 29,341 | |||
Operating Expenses | ||||
Casino | 11,178 | |||
Rooms | 1,521 | |||
Food and beverage | 5,367 | |||
Other expense | 3,287 | |||
General and administrative | 12,804 | |||
Management fee to parent | 938 | |||
Depreciation and amortization | 2,063 | |||
Total operating expenses | 37,158 | |||
Operating expense in excess of operating revenue | $ | (7,817 | ) | |
F-70
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(A Wholly-Owned Indirect Subsidiary of Caesars Entertainment, Inc.)
1. | BASIS OF PRESENTATION AND OPERATIONS |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-71
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through June 10, 2005 — (Continued)
(In thousands) | ||||
Rooms | $ | 1,692 | ||
Food and beverage | 2,263 | |||
Other revenue | 467 | |||
Total complimentary revenues | $ | 4,422 | ||
(In thousands) | ||||
Rooms | $ | 516 | ||
Food and beverage | 2,130 | |||
Other expenses | 622 | |||
Total complimentary revenues | $ | 3,268 | ||
F-72
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through June 10, 2005 — (Continued)
3. | RELATED PARTY TRANSACTIONS |
4. | COMMITMENTS AND CONTINGENCIES |
5. | SUBSEQUENT EVENT |
F-73
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(In thousands)
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Audited | Unaudited | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 209 | $ | 209 | ||||
Deferred rent — current portion | 1,093 | 1,093 | ||||||
Amount due from related parties | 2,125 | 4,675 | ||||||
Total current assets | 3,427 | 5,977 | ||||||
Property and equipment — net | 21,586 | 20,980 | ||||||
Deferred rent, net of current portion | 820 | 273 | ||||||
Intangible assets — net | 333 | 308 | ||||||
Total Assets | $ | 26,166 | $ | 27,538 | ||||
Current Liabilities: | ||||||||
Current portion, long-term debt | $ | 2,000 | $ | — | ||||
Amounts due to related parties | 1,179 | 1,789 | ||||||
Total current liabilities | 3,179 | 1,789 | ||||||
Long-term debt, net of current portion | 193,629 | — | ||||||
Long-term loan from affiliate | — | 15,750 | ||||||
Total liabilities | 196,808 | 17,539 | ||||||
Members’ Equity (Deficit) | (170,642 | ) | 9,999 | |||||
Total Liabilities and Members’ Equity | $ | 26,166 | $ | 27,538 | ||||
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For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
(Unaudited) | ||||||||||||||||
Operating Revenue: | ||||||||||||||||
Rental income — related party | $ | 1,002 | $ | 1,002 | $ | 2,004 | $ | 2,004 | ||||||||
Operating Expenses: | ||||||||||||||||
Depreciation and amortization | 433 | 314 | 637 | 631 | ||||||||||||
Income from Operations | 569 | 688 | 1,367 | 1,373 | ||||||||||||
Interest expense | 3,738 | 308 | 7,466 | 725 | ||||||||||||
Interest allocated to co-borrower | (3,439 | ) | — | (6,877 | ) | (115 | ) | |||||||||
Net interest expense | 299 | 308 | 589 | 610 | ||||||||||||
Net Income | $ | 270 | $ | 380 | $ | 778 | $ | 763 | ||||||||
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For the Six Months Ended June 30, | ||||||||
2006 | 2007 | |||||||
(Unaudited) | ||||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 778 | $ | 763 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 637 | 631 | ||||||
Decrease in deferred rent | 546 | 547 | ||||||
Net cash provided by operating activities | 1,961 | 1,941 | ||||||
Cash Flows from Financing Activities: | ||||||||
Repayment of debt | — | (15,750 | ) | |||||
Distribution to member | (900 | ) | — | |||||
Loan from affiliate | — | 15,750 | ||||||
Advances to related parties | (1,961 | ) | (1,941 | ) | ||||
Net cash used in financing activities | (2,861 | ) | (1,941 | ) | ||||
Net decrease in cash and cash equivalents | (900 | ) | — | |||||
Cash and cash equivalents, beginning of period | 1,784 | 209 | ||||||
Cash and cash equivalents, end of period | $ | 884 | $ | 209 | ||||
F-76
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Notes to Condensed Financial Statements
Quarter and Six Months Ended June 30, 2007
(In thousands, except where noted otherwise)
(Unaudited)
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-77
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3. | PROPERTY AND EQUIPMENT |
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Audited | Unaudited | |||||||
Buildings | $ | 15,264 | $ | 15,264 | ||||
Equipment | 4,988 | 4,988 | ||||||
20,252 | 20,252 | |||||||
Less accumulated depreciation | (3,666 | ) | (4,272 | ) | ||||
16,586 | 15,980 | |||||||
Land | 5,000 | 5,000 | ||||||
Property and equipment, net | $ | 21,586 | $ | 20,980 | ||||
4. | INTANGIBLE ASSETS |
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Audited | Unaudited | |||||||
Trade name | $ | 500 | $ | 500 | ||||
Accumulated amortization | (167 | ) | (192 | ) | ||||
$ | 333 | $ | 308 | |||||
2007 (six months) | $ | 25 | ||
2008 | 50 | |||
2009 | 50 | |||
2010 | 50 | |||
2011 | 50 | |||
Thereafter | 83 | |||
$ | 308 | |||
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5. | LONG-TERM DEBT: |
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Audited | Unaudited | |||||||
Credit Facility, Term Loan A due 2010 | $ | 96,879 | $ | — | ||||
Credit Facility, Term Loan B due 2011 | 98,750 | — | ||||||
195,629 | — | |||||||
Less current portion of term loan | (2,000 | ) | — | |||||
Total long-term debt | $ | 193,629 | $ | — | ||||
6. | GUARANTEE AGREEMENT |
F-79
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CP Laughlin Realty, LLC
F-80
Table of Contents
As of December 31, | ||||||||
2005 | 2006 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 1,784 | $ | 209 | ||||
Deferred rent, current portion | 1,093 | 1,093 | ||||||
Amounts due from related party | 425 | 2,125 | ||||||
Total Current Assets | 3,302 | 3,427 | ||||||
Property andEquipment-Net | 22,802 | 21,586 | ||||||
Deferred Rent, Net of Current Portion | 1,913 | 820 | ||||||
IntangibleAssets-Net | 383 | 333 | ||||||
Total Assets | $ | 28,400 | $ | 26,166 | ||||
Current Liabilities: | ||||||||
Current portion of long-term debt | $ | 3,871 | $ | 2,000 | ||||
Accounts payable | 9 | — | ||||||
Amounts due to related party | 576 | 1,179 | ||||||
Total Current Liabilities | 4,456 | 3,179 | ||||||
Long-Term Debt, Net of Current Portion | 195,629 | 193,629 | ||||||
Total Liabilities | 200,085 | 196,808 | ||||||
Member’s Deficit | (171,685 | ) | (170,642 | ) | ||||
Total Liabilities and Member’s Deficit | $ | 28,400 | $ | 26,166 | ||||
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Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Operating Revenues: | ||||||||||||
Rental income — related party | $ | 4,007 | $ | 4,007 | $ | 4,007 | ||||||
Operating Expenses: | ||||||||||||
Guarantee fees — related party | 178 | 84 | — | |||||||||
Other | 50 | — | (9 | ) | ||||||||
Depreciation and amortization | 976 | 1,268 | 1,266 | |||||||||
Total operating expenses | 1,204 | 1,352 | 1,257 | |||||||||
Income from operations | 2,803 | 2,655 | 2,750 | |||||||||
Interest expense | 731 | 5,437 | 14,950 | |||||||||
Interest allocated to co-borrower | — | (4,406 | ) | (13,772 | ) | |||||||
Net interest expense | 731 | 1,031 | 1,178 | |||||||||
Net income | $ | 2,072 | $ | 1,624 | $ | 1,572 | ||||||
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Balance, January 1, 2004 | $ | 4,792 | ||
Net income for 2004 | 2,072 | |||
Contribution from member in 2004 | 3,926 | |||
Balance, December 31, 2004 | 10,790 | |||
Net income for 2005 | 1,624 | |||
Distribution to member in 2005 | (349 | ) | ||
Net equity adjustment for debt under co-borrower arrangement | (183,750 | ) | ||
Deficit, December 31, 2005 | (171,685 | ) | ||
Net income for 2006 | 1,572 | |||
Distribution to member in 2006 | (4,400 | ) | ||
Net equity adjustment for debt under co-borrower arrangement | 3,871 | |||
Deficit, December 31, 2006 | $ | (170,642 | ) | |
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Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income | $ | 2,072 | $ | 1,624 | $ | 1,572 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 1,007 | 1,383 | 1,266 | |||||||||
(Increase) decrease in deferred rent | (2,282 | ) | 267 | 1,093 | ||||||||
Changes in current assets and current liabilities: | ||||||||||||
Accounts payable, accrued expenses and other liabilities | (81 | ) | (101 | ) | (9 | ) | ||||||
Net cash provided by operating activities | 716 | 3,173 | 3,922 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Additions to property and equipment | (2,944 | ) | — | — | ||||||||
Net cash used in investing activities | (2,944 | ) | — | — | ||||||||
Cash Flows from Financing Activities: | ||||||||||||
Payments on debt | (750 | ) | (17,250 | ) | — | |||||||
Proceeds from issuance of long-term debt | — | 15,750 | — | |||||||||
Advances from (repayments to) related parties | (1,147 | ) | 460 | (1,097 | ) | |||||||
Distribution to member | — | (349 | ) | (4,400 | ) | |||||||
Contributions by member | 3,926 | — | — | |||||||||
Net cash provided by (used in) financing activities | 2,029 | (1,389 | ) | (5,497 | ) | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (199 | ) | 1,784 | (1,575 | ) | |||||||
Cash and Cash Equivalents at Beginning of Year | 199 | — | 1,784 | |||||||||
Cash and Cash Equivalents at End of Year | $ | — | $ | 1,784 | $ | 209 | ||||||
Supplemental Disclosure— Cash Paid for Interest | $ | 762 | $ | 965 | $ | 1,178 | ||||||
F-84
Table of Contents
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-85
Table of Contents
As of December 31, | ||||||||
2005 | 2006 | |||||||
Trade name | $ | 500 | $ | 500 | ||||
Accumulated amortization | (117 | ) | (167 | ) | ||||
$ | 383 | $ | 333 | |||||
2007 | $ | 50 | ||
2008 | 50 | |||
2009 | 50 | |||
2010 | 50 | |||
2011 | 50 | |||
Thereafter | 83 |
3. | PROPERTY AND EQUIPMENT |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Buildings | $ | 15,264 | $ | 15,264 | ||||
Equipment | 4,988 | 4,988 | ||||||
20,252 | 20,252 | |||||||
Less accumulated depreciation | (2,450 | ) | (3,666 | ) | ||||
17,802 | 16,586 | |||||||
Land | 5,000 | 5,000 | ||||||
Property and equipment, net | $ | 22,802 | $ | 21,586 | ||||
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4. | LONG-TERM DEBT: |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Credit Facility, Term Loan A due 2010 | $ | 99,750 | $ | 96,879 | ||||
Credit Facility, Term Loan B due 2011 | 99,750 | 98,750 | ||||||
199,500 | 195,629 | |||||||
Less current portion of term loan | (3,871 | ) | (2,000 | ) | ||||
Total long-term debt | $ | 195,629 | $ | 193,629 | ||||
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5. | RELATED PARTY TRANSACTIONS |
6. | SUBSEQUENT EVENTS — ACQUISITIONS AND FINANCING |
F-88
Table of Contents
December 31, 2006 | June 30, 2007 | |||||||
Audited | Unaudited | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 3,705 | $ | 3,990 | ||||
Accounts receivable | 39 | 58 | ||||||
Amount due from related parties | 152 | 181 | ||||||
Prepaid expenses and other assets | 490 | 361 | ||||||
Total current assets | 4,386 | 4,590 | ||||||
Property and equipment — net | 30,289 | 29,052 | ||||||
Goodwill | 590 | 590 | ||||||
Intangible assets — net | 1,146 | 927 | ||||||
Loans to Tropicana Entertainment, LLC, an affiliate | — | 3,000 | ||||||
Other assets — net | 129 | 130 | ||||||
Total assets | $ | 36,540 | $ | 38,289 | ||||
Current Liabilities: | ||||||||
Accounts payable | $ | 1,058 | $ | 1,126 | ||||
Accrued expenses and other liabilities | 3,243 | 3,252 | ||||||
Amounts due to related parties | 857 | 796 | ||||||
Total current liabilities | 5,158 | 5,174 | ||||||
Long-term portion of lease liability | 2,406 | 2,330 | ||||||
Total liabilities | 7,564 | 7,504 | ||||||
Members’ Equity | 28,976 | 30,785 | ||||||
Total Liabilities and Members’ Equity | $ | 36,540 | $ | 38,289 | ||||
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For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
Operating Revenues: | ||||||||||||||||
Casino | $ | 8,315 | $ | 6,665 | $ | 18,006 | $ | 14,898 | ||||||||
Rooms | 530 | 406 | 1,068 | 751 | ||||||||||||
Food and beverage | 1,174 | 815 | 2,419 | 1,655 | ||||||||||||
Other casino and hotel | 329 | 124 | 511 | 238 | ||||||||||||
Total operating revenues | 10,348 | 8,010 | 22,004 | 17,542 | ||||||||||||
Less promotional allowances | (1,618 | ) | (932 | ) | (3,232 | ) | (1,953 | ) | ||||||||
Net operating revenues | 8,730 | 7,078 | 18,772 | 15,589 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Casino | 2,491 | 1,225 | 3,648 | 2,326 | ||||||||||||
Rooms | 137 | 422 | 483 | 722 | ||||||||||||
Food and beverage | 985 | 720 | 2,116 | 1,580 | ||||||||||||
Other casino and hotel | 82 | 24 | 93 | 31 | ||||||||||||
Utilities | 305 | 227 | 676 | 465 | ||||||||||||
Marketing, advertising and casino promotions | 1,081 | 604 | 1,915 | 1,131 | ||||||||||||
Repairs and maintenance | 272 | 51 | 493 | 207 | ||||||||||||
Insurance | 176 | 240 | 262 | 436 | ||||||||||||
Property and local taxes | 175 | 175 | 350 | 351 | ||||||||||||
Gaming taxes and licenses | 1,005 | 826 | 2,204 | 1,836 | ||||||||||||
Administrative and general | 528 | 1,293 | 1,564 | 2,250 | ||||||||||||
Leased land and facilities | 283 | 342 | 566 | 652 | ||||||||||||
Loss on disposition of assets | 18 | 29 | 18 | 29 | ||||||||||||
Depreciation and amortization | 760 | 837 | 1,522 | 1,764 | ||||||||||||
Total operating expenses | 8,298 | 7,015 | 15,910 | 13,780 | ||||||||||||
Income from Operations | 432 | 63 | 2,862 | 1,809 | ||||||||||||
Interest expense | (485 | ) | — | (1,007 | ) | — | ||||||||||
Net Income (Loss) | $ | (53 | ) | $ | 63 | $ | 1,855 | $ | 1,809 | |||||||
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For the Six Months Ended June 30, | ||||||||
2006 | 2007 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 1,855 | $ | 1,809 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,535 | 1,764 | ||||||
Decrease in lease liability | 76 | 76 | ||||||
Loss from disposition of assets | 18 | 29 | ||||||
Changes in current assets and current liabilities: | ||||||||
Accounts receivable | 9 | (19 | ) | |||||
Prepaid expenses and other assets | (476 | ) | 128 | |||||
Accounts payable, accrued expenses and other liabilities | (880 | ) | (74 | ) | ||||
Net cash provided by operating activities | 2,137 | 3,713 | ||||||
Cash Flows from Investing Activities: | ||||||||
Additions of property and equipment | (800 | ) | (337 | ) | ||||
Proceeds from disposition of equipment | 250 | — | ||||||
Net cash used in investing activities | (550 | ) | (337 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Payments on long-term debt | (1,429 | ) | — | |||||
Advances from (to) related parties | 977 | (91 | ) | |||||
Loans to Tropicana Entertainment, LLC, an affiliate | — | (3,000 | ) | |||||
Contribution by members | 150 | — | ||||||
Net cash used in financing activities | (302 | ) | (3,091 | ) | ||||
Net Increase in Cash and Cash Equivalents | 1,285 | 285 | ||||||
Cash and Cash Equivalents, Beginning of Period | 5,072 | 3,705 | ||||||
Cash and Cash Equivalents, End of Period | $ | 6,357 | $ | 3,990 | ||||
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Table of Contents
(Unaudited)
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Recently Issued Accounting and Reporting Standards |
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3. | PROPERTY AND EQUIPMENT |
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Audited | Unaudited | |||||||
Barge | $ | 2,309 | $ | 2,309 | ||||
Buildings and improvements | 22,939 | 22,993 | ||||||
Furniture and equipment | 10,425 | 10,656 | ||||||
35,673 | 35,958 | |||||||
Less accumulated depreciation | (8,010 | ) | (9,532 | ) | ||||
27,663 | 26,426 | |||||||
Land | 2,626 | 2,626 | ||||||
Property and equipment, net | $ | 30,289 | $ | 29,052 | ||||
4. | GOODWILL AND INTANGIBLE ASSETS |
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Audited | Unaudited | |||||||
Goodwill | $ | 590 | $ | 590 | ||||
Amortizing intangible assets: | ||||||||
Player lists (5 year useful life) | $ | 1,795 | $ | 1,795 | ||||
Other amortizing intangibles (5 to 35 year useful life) | 738 | 738 | ||||||
Less accumulated amortization | (1,387 | ) | (1,606 | ) | ||||
Total intangible assets, net | $ | 1,146 | $ | 927 | ||||
2007 (six months) | $ | 218 | ||
2008 | 368 | |||
2009 | 20 | |||
2010 | 20 | |||
2011 | 20 | |||
Thereafter | 281 | |||
$ | 927 | |||
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5. | LONG-TERM DEBT |
6. | LEASE COMMITMENTS |
7. | GUARANTEE AGREEMENT |
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Columbia Properties Vicksburg, LLC
F-95
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December 31, | ||||||||
2005 | 2006 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 5,072 | $ | 3,705 | ||||
Accounts receivable | 53 | 39 | ||||||
Inventories | 58 | 55 | ||||||
Deposits | 126 | 126 | ||||||
Amounts due from related parties | 40 | 152 | ||||||
Prepaid expenses and other assets | 245 | 435 | ||||||
Total current assets | 5,594 | 4,512 | ||||||
Property and Equipment — Net | 32,441 | 30,289 | ||||||
Goodwill | 590 | 590 | ||||||
Intangible Assets — Net | 1,556 | 1,146 | ||||||
Other Assets — Net | 85 | 3 | ||||||
Total Assets | $ | 40,266 | $ | 36,540 | ||||
LIABILITIES AND MEMBERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Current portion of long-term debt | $ | 2,857 | $ | — | ||||
Account payable | 1,720 | 1,058 | ||||||
Accrued expenses and other liabilities | 3,254 | 3,243 | ||||||
Amounts due to related parties | 128 | 857 | ||||||
Total current liabilities | 7,959 | 5,158 | ||||||
Long-Term Portion of Lease Liability | 2,719 | 2,406 | ||||||
Long-Term Debt | 14,286 | — | ||||||
Total Liabilities | 24,964 | 7,564 | ||||||
Members’ Equity | 15,302 | 28,976 | ||||||
Total Liabilities and Members’ Equity | $ | 40,266 | $ | 36,540 | ||||
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For The Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Operating Revenues: | ||||||||||||
Casino | $ | 24,093 | $ | 31,364 | $ | 32,427 | ||||||
Rooms | 1,751 | 1,738 | 1,921 | |||||||||
Food and beverage | 3,272 | 4,088 | 4,423 | |||||||||
Other casino and hotel | 385 | 559 | 731 | |||||||||
Total operating revenues | 29,501 | 37,749 | 39,502 | |||||||||
Less promotional allowances | (3,968 | ) | (4,978 | ) | (5,903 | ) | ||||||
Net operating revenues | 25,533 | 32,771 | 33,599 | |||||||||
Operating Expenses: | ||||||||||||
Casino | 6,703 | 6,948 | 7,201 | |||||||||
Rooms | 1,085 | 974 | 981 | |||||||||
Food and beverage | 3,007 | 3,660 | 4,048 | |||||||||
Other casino and hotel | 76 | 116 | 133 | |||||||||
Utilities | 940 | 1,010 | 1,202 | |||||||||
Marketing, advertising and casino promotions | 2,199 | 3,090 | 3,167 | |||||||||
Repairs and maintenance | 1,121 | 1,195 | 1,347 | |||||||||
Insurance | 332 | 352 | 733 | |||||||||
Property and local taxes | 704 | 504 | 596 | |||||||||
Gaming taxes and licenses | 3,163 | 3,994 | 4,040 | |||||||||
Administrative and general | 2,489 | 2,606 | 3,075 | |||||||||
Leased land and facilities | 745 | 1,011 | 748 | |||||||||
Write off of fixed and other assets | — | — | 273 | |||||||||
Depreciation and amortization | 2,724 | 3,033 | 3,413 | |||||||||
Total operating expenses | 25,288 | 28,493 | 30,957 | |||||||||
Income from Operations | 245 | 4,278 | 2,642 | |||||||||
Interest Expense | (877 | ) | (1,168 | ) | (1,118 | ) | ||||||
Net Income (Loss) | $ | (632 | ) | $ | 3,110 | $ | 1,524 | |||||
�� |
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Balance, January 1, 2004 | $ | 14,274 | ||
Net loss for 2004 | (632 | ) | ||
Balance, December 31, 2004 | 13,642 | |||
Distributions to members in 2005 | (1,450 | ) | ||
Net income for 2005 | 3,110 | |||
Balance, December 31, 2005 | 15,302 | |||
Distributions to members in 2006 | (350 | ) | ||
Contributions by members in 2006 | 12,500 | |||
Net income for 2006 | 1,524 | |||
Balance December 31, 2006 | $ | 28,976 | ||
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Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income (loss) | $ | (632 | ) | $ | 3,110 | $ | 1,524 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 2,753 | 3,061 | 3,441 | |||||||||
Loss on disposal and write off of assets | — | — | 273 | |||||||||
Decrease in lease liability | (101 | ) | (101 | ) | (314 | ) | ||||||
Changes in current assets and current liabilities: | ||||||||||||
Accounts receivable | (26 | ) | (5 | ) | 14 | |||||||
Inventories, deposits, prepaid expenses and other assets | (80 | ) | (41 | ) | (187 | ) | ||||||
Accounts payable, accrued expenses and other liabilities | 448 | 2,044 | (673 | ) | ||||||||
Net cash provided by operating activities | 2,362 | 8,068 | 4,078 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Purchase of property and equipment | (2,826 | ) | (3,368 | ) | (1,176 | ) | ||||||
Proceeds from sale of equipment | — | — | 94 | |||||||||
Other | 17 | — | 13 | |||||||||
Net cash used in investing activities | (2,809 | ) | (3,368 | ) | (1,069 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||||
Advances from (repayments to) related parties | 31 | (256 | ) | 617 | ||||||||
Repayments of debt | — | (2,857 | ) | (17,143 | ) | |||||||
Distributions to members | — | (1,450 | ) | (350 | ) | |||||||
Contributions by members | — | — | 12,500 | |||||||||
Net cash provided by (used in) financing activities | 31 | (4,563 | ) | (4,376 | ) | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (416 | ) | 137 | (1,367 | ) | |||||||
Cash and Cash Equivalents, Beginning of Period | 5,351 | 4,935 | 5,072 | |||||||||
Cash and Cash Equivalents, End of Period | $ | 4,935 | $ | 5,072 | $ | 3,705 | ||||||
Supplemental Disclosure-Cash Paid for Interest | $ | 830 | $ | 1,095 | $ | 1,294 | ||||||
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1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Barge | 10 years | |||
Buildings and improvements | 15-45 years | |||
Furniture and equipment | 5-10 years |
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As of December 31, | ||||||||
2005 | 2006 | |||||||
Goodwill | $ | 590 | $ | 590 | ||||
Amortizing intangible assets: | ||||||||
Player lists (5 year useful life) | 1,795 | 1,795 | ||||||
Other amortizing intangibles (5 to 35 year useful life) | 738 | 738 | ||||||
Less accumulated amortization | (977 | ) | (1,387 | ) | ||||
Total intangible assets, net | $ | 1,556 | $ | 1,146 | ||||
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Amortization | ||||
Expense | ||||
2007 | $ | 438 | ||
2008 | 368 | |||
2009 | 20 | |||
2010 | 20 | |||
2011 | 20 | |||
Thereafter | 280 | |||
$ | 1,146 | |||
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3. | PROPERTY AND EQUIPMENT |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Barge | $ | 2,286 | $ | 2,309 | ||||
Buildings and improvements | 22,733 | 22,939 | ||||||
Furniture and equipment | 9,933 | 10,425 | ||||||
Total | 34,952 | 35,673 | ||||||
Less accumulated depreciation | (5,137 | ) | (8,010 | ) | ||||
Total | 29,815 | 27,663 | ||||||
Land | 2,626 | 2,626 | ||||||
Property and equipment, net | $ | 32,441 | $ | 30,289 | ||||
4. | ACCRUED EXPENSES AND OTHER LIABILITIES |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Accrued payroll and employee benefits | $ | 858 | $ | 669 | ||||
Insurance reserves | 430 | 755 | ||||||
Gaming related accruals | 951 | 1,023 | ||||||
Real estate taxes | 596 | 596 | ||||||
Accrued lease liability | 101 | 152 | ||||||
Accrued interest | 204 | — | ||||||
Other accruals | 114 | 48 | ||||||
$ | 3,254 | $ | 3,243 | |||||
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5. | LONG-TERM DEBT |
As of December 31, | ||||||||
2005 | 2006 | |||||||
First mortgage note, due October 27, 2008, variable interest rate (6.99% at December 31, 2005) | $ | 17,143 | $ | — | ||||
Less current portion | (2,857 | ) | — | |||||
Long-term portion | $ | 14,286 | $ | — | ||||
6. | RELATED PARTY TRANSACTIONS |
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Year Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Insurance | $ | 185 | $ | — | $ | — | ||||||
Administrative and general | $ | 332 | $ | 322 | $ | 293 |
7. | LEASE COMMITMENTS |
2007 | $ | 576 | ||
2008 | 576 | |||
2009 | 576 | |||
2010 | 576 | |||
2011 | 576 | |||
Thereafter | 12,669 | |||
Total minimum operating lease payments | $ | 15,549 | ||
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8. | SUBSEQUENT EVENTS — ACQUISITIONS AND FINANCING |
F-106
Table of Contents
Audited | Unaudited | |||||||
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 4,031 | $ | 4,227 | ||||
Accounts receivable | 29 | 29 | ||||||
Amount due from related parties | 133 | 140 | ||||||
Prepaid expenses and other assets | 509 | 385 | ||||||
Total current assets | 4,702 | 4,781 | ||||||
Property and equipment — net | 15,899 | 15,364 | ||||||
Goodwill | 16,732 | 16,732 | ||||||
Intangible assets — net | 120 | 20 | ||||||
Other assets — net | 359 | 359 | ||||||
Loan to Tropicana Entertainment, LLC, an affiliate | — | 4,000 | ||||||
Assets of discontinued operations | 100 | — | ||||||
Total Assets | $ | 37,912 | $ | 41,256 | ||||
Current Liabilities: | ||||||||
Accounts payable | $ | 686 | $ | 193 | ||||
Accrued expenses and other liabilities | 1,585 | 1,192 | ||||||
Amounts due to related parties | 84 | 109 | ||||||
Total current liabilities | 2,355 | 1,494 | ||||||
Members’ equity | 35,557 | 39,762 | ||||||
Total Liabilities and Members’ equity | $ | 37,912 | $ | 41,256 | ||||
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For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
Operating Revenues: | ||||||||||||||||
Casino | $ | 7,246 | $ | 7,012 | $ | 16,235 | $ | 15,662 | ||||||||
Rooms | 101 | 104 | 173 | 172 | ||||||||||||
Food and beverage | 183 | 122 | 398 | 283 | ||||||||||||
Other casino and hotel | 39 | 74 | 72 | 90 | ||||||||||||
Total operating revenues | 7,569 | 7,312 | 16,878 | 16,207 | ||||||||||||
Less promotional allowances | (1,199 | ) | (845 | ) | (2,484 | ) | (1,742 | ) | ||||||||
Net operating revenues | 6,370 | 6,467 | 14,394 | 14,465 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Casino | 1,076 | 1,190 | 2,025 | 2,396 | ||||||||||||
Rooms | 63 | 98 | 112 | 195 | ||||||||||||
Food and beverage | 167 | 158 | 338 | 331 | ||||||||||||
Other casino and hotel | — | 2 | — | 7 | ||||||||||||
Utilities | 166 | 126 | 383 | 255 | ||||||||||||
Marketing, advertising and casino promotions | 132 | 6 | 280 | 234 | ||||||||||||
Repairs and maintenance | 67 | 108 | 135 | 172 | ||||||||||||
Insurance | 232 | 183 | 321 | 438 | ||||||||||||
Property and local taxes | 144 | 144 | 287 | 287 | ||||||||||||
Gaming taxes and licenses | 711 | 734 | 1,839 | 1,804 | ||||||||||||
Administrative and general | 806 | 830 | 1,522 | 1,466 | ||||||||||||
Leased land and facilities | 253 | 233 | 473 | 447 | ||||||||||||
Loss (gain) on disposition of assets | (40 | ) | 117 | (40 | ) | 117 | ||||||||||
Depreciation and amortization | 680 | 463 | 1,409 | 1,117 | ||||||||||||
Total operating expenses | 4,457 | 4,392 | 9,084 | 9,266 | ||||||||||||
Income from Operations | 1,913 | 2,075 | 5,310 | 5,199 | ||||||||||||
Other Income (Expense): | ||||||||||||||||
Interest income | 34 | 29 | 57 | 55 | ||||||||||||
Interest expense | (122 | ) | — | (235 | ) | — | ||||||||||
Total other income (expense) | (88 | ) | 29 | (178 | ) | 55 | ||||||||||
Net Income | $ | 1,825 | $ | 2,104 | $ | 5,132 | $ | 5,254 | ||||||||
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For the Six Months Ended June 30, | ||||||||
2006 | 2007 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 5,132 | $ | 5,254 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,409 | 1,117 | ||||||
Loss (gain) on disposition of assets | (40 | ) | 117 | |||||
Changes in current assets and current liabilities: | ||||||||
Accounts receivable | (107 | ) | — | |||||
Prepaid expenses and other assets | (1,109 | ) | 124 | |||||
Accounts payable, accrued expenses and other liabilities | (250 | ) | (886 | ) | ||||
Net cash provided by operating activities | 5,035 | 5,726 | ||||||
Cash Flows from Investing Activities: | ||||||||
Additions of property and equipment | (2 | ) | (599 | ) | ||||
Proceeds from disposition of equipment | 40 | — | ||||||
Proceeds from sale of assets of discontinued operations | — | 100 | ||||||
Net cash provided by (used in) investing activities | 38 | (499 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
Payments on long-term debt | (1,913 | ) | — | |||||
Advances from related parties | 917 | 18 | ||||||
Loan to Tropicana Entertainment, LLC, an affiliate | — | (4,000 | ) | |||||
Distributions to members | (4,725 | ) | (1,049 | ) | ||||
Net cash used in financing activities | (5,721 | ) | (5,031 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (648 | ) | 196 | |||||
Cash and cash equivalents, beginning of period | 5,435 | 4,031 | ||||||
Cash and cash equivalents, end of period | $ | 4,787 | $ | 4,227 | ||||
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1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-110
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3. | PROPERTY AND EQUIPMENT |
Audited | Unaudited | |||||||
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Barge | $ | 15,007 | $ | 15,013 | ||||
Buildings and improvements | 2,753 | 2,853 | ||||||
Furniture and equipment | 7,847 | 7,892 | ||||||
Total | 25,607 | 25,758 | ||||||
Less accumulated depreciation | (10,148 | ) | (10,834 | ) | ||||
Land | 440 | 440 | ||||||
Property and equipment, net | $ | 15,899 | $ | 15,364 | ||||
4. | GOODWILL AND INTANGIBLE ASSETS |
Audited | Unaudited | |||||||
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
Goodwill | $ | 16,732 | $ | 16,732 | ||||
Intangible assets: | ||||||||
Amortizing intangible assets: | ||||||||
Non-compete agreement (five year useful life) | $ | 3,000 | $ | 3,000 | ||||
Accumulated amortization | (2,900 | ) | (3,000 | ) | ||||
Net amortizing intangible assets | 100 | — | ||||||
Non-amortizing intangible assets-trademark and other | 20 | 20 | ||||||
Total intangible assets, net | $ | 120 | $ | 20 | ||||
5. | LONG-TERM DEBT |
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6. | RELATED PARTY TRANSACTIONS |
7. | GUARANTEE AGREEMENT |
F-112
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F-113
Table of Contents
December 31, | ||||||||
2005 | 2006 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 5,435 | $ | 4,031 | ||||
Accounts receivable | 40 | 29 | ||||||
Inventories | 43 | 22 | ||||||
Amounts due from related parties | 39 | 133 | ||||||
Prepaid expenses and other assets | 187 | 487 | ||||||
Total current assets | 5,744 | 4,702 | ||||||
Property and Equipment — Net | 18,091 | 15,899 | ||||||
Goodwill | 16,732 | 16,732 | ||||||
Intangible Assets — Net | 720 | 120 | ||||||
Other Assets — Net | 451 | 359 | ||||||
Assets of Discontinued Operations | 144 | 100 | ||||||
Total Assets | $ | 41,882 | $ | 37,912 | ||||
Current Liabilities: | ||||||||
Current portion of long-term debt | $ | 3,825 | $ | — | ||||
Accounts payable | 391 | 686 | ||||||
Accrued expenses and other liabilities | 1,608 | 1,585 | ||||||
Amounts due to related parties | 22 | 84 | ||||||
Total current liabilities | 5,846 | 2,355 | ||||||
Long-Term Debt | 3,241 | — | ||||||
Total liabilities | 9,087 | 2,355 | ||||||
Member’s Equity | 32,795 | 35,557 | ||||||
Total Liabilities and Member’s Equity | $ | 41,882 | $ | 37,912 | ||||
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For The Years Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Operating Revenues: | ||||||||||||
Casino | $ | 34,656 | $ | 30,607 | $ | 30,545 | ||||||
Rooms | 502 | 428 | 353 | |||||||||
Food and beverage | 1,289 | 929 | 757 | |||||||||
Other casino and hotel | 247 | 141 | 183 | |||||||||
Total operating revenues | 36,694 | 32,105 | 31,838 | |||||||||
Less promotional allowances | (5,786 | ) | (4,295 | ) | (4,221 | ) | ||||||
Net operating revenues | 30,908 | 27,810 | 27,617 | |||||||||
Operating Expenses: | ||||||||||||
Casino | 5,355 | 5,107 | 5,740 | |||||||||
Rooms | 176 | 204 | 201 | |||||||||
Food and beverage | 628 | 497 | 529 | |||||||||
Utilities | 638 | 592 | 667 | |||||||||
Marketing, advertising and casino promotion | 1,705 | 909 | 913 | |||||||||
Repairs and maintenance | 613 | 677 | 714 | |||||||||
Insurance | 431 | 356 | 568 | |||||||||
Property and local taxes | 598 | 531 | 523 | |||||||||
Gaming taxes and licenses | 4,239 | 3,771 | 3,709 | |||||||||
Administrative and general | 1,562 | 1,925 | 1,694 | |||||||||
Leased land and facilities | 830 | 909 | 914 | |||||||||
Depreciation and amortization | 2,709 | 2,915 | 2,918 | |||||||||
Total operating expenses | 19,484 | 18,393 | 19,090 | |||||||||
Income from Operations | 11,424 | 9,417 | 8,527 | |||||||||
Other income (loss) | — | — | (10 | ) | ||||||||
Interest income | 18 | 33 | 80 | |||||||||
Interest expense | (572 | ) | (565 | ) | (416 | ) | ||||||
Total other expense | (554 | ) | (532 | ) | (346 | ) | ||||||
Income from Continuing Operations | 10,870 | 8,885 | 8,181 | |||||||||
Loss from Discontinued Operations | (568 | ) | (430 | ) | (44 | ) | ||||||
Net Income | $ | 10,302 | $ | 8,455 | $ | 8,137 | ||||||
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Balance, January 1, 2004 | $ | 30,768 | ||
Net income for 2004 | 10,302 | |||
Distributions to member in 2004 | (7,000 | ) | ||
Balance, December 31, 2004 | 34,070 | |||
Net income for 2005 | 8,455 | |||
Distributions to member in 2005 | (9,730 | ) | ||
Balance, December 31, 2005 | 32,795 | |||
Net income for 2006 | 8,137 | |||
Distributions to member in 2006 | (6,125 | ) | ||
Contributions by member in 2006 | 750 | |||
Balance, December 31, 2006 | $ | 35,557 | ||
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Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income | $ | 10,302 | $ | 8,455 | $ | 8,137 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 2,788 | 2,975 | 2,978 | |||||||||
Impairment loss on discontinued operations | 500 | 430 | 44 | |||||||||
Changes in current assets and current liabilities: | ||||||||||||
Accounts receivable | 200 | (3 | ) | 11 | ||||||||
Inventories, prepaid expenses and other assets | 183 | 26 | (187 | ) | ||||||||
Accounts payable, accrued expenses and other liabilities | 175 | 1 | 272 | |||||||||
Net cash provided by operating activities | 14,148 | 11,884 | 11,255 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Purchase of property and equipment | (1,097 | ) | (109 | ) | (167 | ) | ||||||
Other | 14 | — | (19 | ) | ||||||||
Net cash used in investing activities | (1,083 | ) | (109 | ) | (186 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||||
Advances from (repayments to) related parties | 108 | (125 | ) | (32 | ) | |||||||
Repayments of debt | (3,825 | ) | (3,506 | ) | (7,066 | ) | ||||||
Distributions to member | (7,000 | ) | (9,730 | ) | (6,125 | ) | ||||||
Contributions by member | — | — | 750 | |||||||||
Net cash used in financing activities | �� | (10,717 | ) | (13,361 | ) | (12,473 | ) | |||||
Net Increase (Decrease) in Cash and Cash Equivalents | 2,348 | (1,586 | ) | (1,404 | ) | |||||||
Cash and Cash Equivalents, Beginning of Period | 4,673 | 7,021 | 5,435 | |||||||||
Cash and Cash Equivalents, End of Period | $ | 7,021 | $ | 5,435 | $ | 4,031 | ||||||
Supplemental Disclosure — Cash Paid for Interest | $ | 599 | $ | 581 | $ | 400 | ||||||
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1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Barge | 10 years | |
Buildings and land improvements | 10-30 years | |
Furniture and equipment | 5-10 years |
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As of December 31, | ||||||||
2005 | 2006 | |||||||
Goodwill | $ | 16,732 | $ | 16,732 | ||||
Intangible assets: | ||||||||
Amortizing intangible assets: | ||||||||
Non-compete agreement (five year useful life) | $ | 3,000 | $ | 3,000 | ||||
Accumulated amortization | (2,300 | ) | (2,900 | ) | ||||
Net amortizing intangible assets | 700 | 100 | ||||||
Non-amortizing intangible assets-trademark | 20 | 20 | ||||||
Total intangible assets, net | $ | 720 | $ | 120 | ||||
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3. | PROPERTY AND EQUIPMENT |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Barge | $ | 14,986 | $ | 15,007 | ||||
Buildings and improvements | 2,752 | 2,753 | ||||||
Furniture and equipment | 7,831 | 7,847 | ||||||
Total | 25,569 | 25,607 | ||||||
Less accumulated depreciation | (7,918 | ) | (10,148 | ) | ||||
Total | 17,651 | 15,459 | ||||||
Land | 440 | 440 | ||||||
Property and equipment, net | $ | 18,091 | $ | 15,899 | ||||
4. | ACCRUED EXPENSES AND OTHER LIABILITIES |
As of December 31, | ||||||||
2005 | 2006 | |||||||
Accrued payroll and employee benefits | $ | 462 | $ | 406 | ||||
Reserve for insurance claims | 290 | 192 | ||||||
Real estate taxes | 530 | 523 | ||||||
Casino related | 218 | 349 | ||||||
Other accruals | 108 | 115 | ||||||
$ | 1,608 | $ | 1,585 | |||||
5. | DISCONTINUED OPERATIONS |
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As of December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Operating revenues | $ | 86 | $ | — | $ | — | ||||||
Operating expenses, including depreciation of $19 in 2004 | (154 | ) | — | — | ||||||||
Loss from operations | (68 | ) | — | — | ||||||||
Impairment loss | (500 | ) | (430 | ) | (44 | ) | ||||||
Loss from discontinued operations | $ | (568 | ) | $ | (430 | ) | $ | (44 | ) | |||
6. | LONG-TERM DEBT |
As of December 31, | ||||||||
2005 | 2006 | |||||||
First mortgage note, due June 20, 2007, variable interest rate (6.54% at December 31, 2005) | $ | 7,066 | $ | — | ||||
Less current portion | (3,825 | ) | — | |||||
Long-term portion | $ | 3,241 | $ | — | ||||
7. | SELF INSURANCE AND RELATED PARTY TRANSACTIONS |
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8. | LEASE COMMITMENTS |
2007 | $ | 862 | ||
2008 | 682 | |||
2009 | 452 | |||
2010 | 298 | |||
2011 | 12 | |||
Thereafter | 17 | |||
Total future minimum operating lease payments | $ | 2,323 | ||
9. | SUBSEQUENT EVENTS — ACQUISITIONS AND FINANCINGS |
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CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND 2005
(In thousands, except share data)
2006 | 2005 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 121,416 | $ | 86,361 | ||||
Accounts receivable, net | 26,347 | 26,469 | ||||||
Construction accident receivables | 1,599 | 2,949 | ||||||
Refundable income taxes | 6,205 | 1,288 | ||||||
Inventories | 8,782 | 7,350 | ||||||
Prepaid expenses | 18,218 | 13,394 | ||||||
Assets held for sale | 35,998 | — | ||||||
Deferred income taxes | 8,322 | 11,026 | ||||||
Total current assets | 226,887 | 148,837 | ||||||
Investments | 25,129 | 25,215 | ||||||
Assets held for sale | — | 33,559 | ||||||
Property and equipment: | ||||||||
Buildings, riverboats and equipment, net | 991,746 | 986,025 | ||||||
Land | 207,513 | 207,514 | ||||||
Construction in progress | 22,432 | 18,339 | ||||||
Leased under capital leases, net | 81 | 9 | ||||||
1,221,772 | 1,211,887 | |||||||
Intangible assets | 32,999 | 33,331 | ||||||
Other assets | 66,465 | 102,505 | ||||||
$ | 1,573,252 | $ | 1,555,334 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accruals | $ | 68,524 | $ | 91,369 | ||||
Accrued payroll and employee benefits | 24,060 | 25,765 | ||||||
Accrued interest payable | 7,330 | 7,577 | ||||||
Accrued rent | 1 | 760 | ||||||
Current portion of long-term debt | 7,046 | 1,293 | ||||||
Current portion of other long-term liabilities | 949 | 824 | ||||||
Merger termination fee reimbursement | 78,000 | — | ||||||
Liabilities related to assets held for sale | 2,634 | 2,495 | ||||||
Total current liabilities | 188,544 | 130,083 | ||||||
Long-term debt | 695,665 | 721,676 | ||||||
Other long-term liabilities | 21,418 | 16,419 | ||||||
Deferred income taxes | 41,469 | 46,006 | ||||||
Contingencies and commitments | ||||||||
Series B convertible preferred stock (redemption value $23,713 and $15,107) | 4,182 | 4,620 | ||||||
Shareholders’ equity: | ||||||||
Common stock, $.01 par value (36,876,814 and 35,778,952 shares outstanding) | 559 | 546 | ||||||
Paid-in capital | 514,106 | 474,637 | ||||||
Retained earnings | 332,075 | 373,897 | ||||||
Accumulated other comprehensive loss | (4,712 | ) | (1,899 | ) | ||||
Less: Treasury stock | (220,054 | ) | (210,651 | ) | ||||
Total shareholders’ equity | 621,974 | 636,530 | ||||||
$ | 1,573,252 | $ | 1,555,334 | |||||
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2006 | 2005 | 2004 | ||||||||||
Revenues | ||||||||||||
Casino | $ | 673,929 | $ | 673,342 | $ | 587,114 | ||||||
Rooms | 107,289 | 104,051 | 85,713 | |||||||||
Food and beverage | 58,773 | 59,438 | 54,677 | |||||||||
Other | 54,345 | 50,833 | 39,310 | |||||||||
894,336 | 887,664 | 766,814 | ||||||||||
Costs and expenses | ||||||||||||
Casino | 265,823 | 268,346 | 246,445 | |||||||||
Rooms | 48,258 | 47,495 | 42,602 | |||||||||
Food and beverage | 57,313 | 56,886 | 53,729 | |||||||||
Other | 29,200 | 29,844 | 27,891 | |||||||||
Marketing | 82,025 | 90,980 | 74,102 | |||||||||
General and administrative | 88,338 | 89,900 | 81,824 | |||||||||
Utilities | 25,234 | 25,864 | 19,844 | |||||||||
Repairs and maintenance | 27,254 | 26,926 | 25,535 | |||||||||
Provision for doubtful accounts | 2,475 | 1,687 | 967 | |||||||||
Property taxes and insurance | 38,078 | 32,956 | 29,589 | |||||||||
Rent | 11,590 | 7,856 | 8,711 | |||||||||
Construction accident related | 5,420 | 4,276 | 3,956 | |||||||||
Construction accident insurance recoveries, net | (12,229 | ) | (871 | ) | (12,217 | ) | ||||||
Merger related | 92,972 | — | — | |||||||||
Depreciation and amortization | 70,027 | 64,381 | 52,213 | |||||||||
Preopening costs | — | — | 2,893 | |||||||||
Tropicana Las Vegas capitalized development costs write-off | 26,021 | — | — | |||||||||
857,799 | 746,526 | 658,084 | ||||||||||
Operating income | 36,537 | 141,138 | 108,730 | |||||||||
Other income | 2,640 | 6,001 | 3,907 | |||||||||
Interest income | 1,849 | 1,390 | 807 | |||||||||
Interest expense | (55,935 | ) | (56,366 | ) | (37,012 | ) | ||||||
Loss on early retirement of debt | — | — | (10,372 | ) | ||||||||
Income(loss) from continuing operations before income taxes | (14,909 | ) | 92,163 | 66,060 | ||||||||
Income taxes | (29,247 | ) | (38,598 | ) | (38,973 | ) | ||||||
Income(loss) from continuing operations | (44,156 | ) | 53,565 | 27,087 | ||||||||
Discontinued operations, net of income taxes | 4,351 | 2,395 | 1,388 | |||||||||
Net income(loss) | $ | (39,805 | ) | $ | 55,960 | $ | 28,475 | |||||
Earnings per common share assuming no dilution: | ||||||||||||
Income(loss) from continuing operations | $ | (1.27 | ) | $ | 1.48 | $ | .75 | |||||
Discontinued operations, net of income taxes | .12 | .07 | .04 | |||||||||
Net income(loss) | $ | (1.15 | ) | $ | 1.55 | $ | .79 | |||||
Earnings per common share assuming dilution: | ||||||||||||
Income(loss) from continuing operations | $ | (1.27 | ) | $ | 1.42 | $ | .72 | |||||
Discontinued operations, net of income taxes | .12 | .07 | .04 | |||||||||
Net income(loss) | $ | (1.15 | ) | $ | 1.49 | $ | .76 | |||||
Weighted-average common shares applicable to: | ||||||||||||
Earnings per common share assuming no dilution | 36,281 | 35,332 | 34,547 | |||||||||
Earnings per common share assuming dilution | 36,281 | 37,111 | 36,038 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006, DECEMBER 31, 2005 AND DECEMBER 30, 2004
(In thousands)
2006 | 2005 | 2004 | ||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net income(loss) | $ | (39,805 | ) | $ | 55,960 | $ | 28,475 | |||||
Adjustments to reconcile net income(loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 73,666 | 69,786 | 56,950 | |||||||||
Tropicana Las Vegas capitalized development costs write-off | 26,021 | — | — | |||||||||
Stock options compensation expense | 3,739 | 462 | — | |||||||||
Provision for losses on accounts receivable | 2,475 | 1,687 | 967 | |||||||||
Loss on early retirement of debt | — | — | 10,372 | |||||||||
Loss on reinvestment obligation | 1,122 | 1,885 | 991 | |||||||||
Amortization of prepaid rent | 504 | 591 | 470 | |||||||||
Deferred income taxes | (1,833 | ) | 5,323 | 17,140 | ||||||||
Proceeds from insurance | (7,602 | ) | (6,706 | ) | (10,879 | ) | ||||||
Stock options excess tax benefit | (11,606 | ) | — | — | ||||||||
Change in operating assets and liabilities: | ||||||||||||
(Increase) decrease in receivables | (932 | ) | (8,778 | ) | (5,275 | ) | ||||||
(Increase) decrease in refundable income taxes | (4,917 | ) | 18,169 | (13,870 | ) | |||||||
(Increase) decrease in inventories and prepaid expenses | (3,332 | ) | (3,390 | ) | (1,745 | ) | ||||||
Increase (decrease) in accounts payable, accrued expenses and income taxes payable | 6,272 | (2,567 | ) | 19,879 | ||||||||
Other items, net | 2,273 | (7,823 | ) | 1,791 | ||||||||
Net cash provided by operating activities | 46,045 | 124,599 | 105,266 | |||||||||
Cash Flows from Investing Activities | ||||||||||||
Reduction in investments | 3,714 | 3,747 | 1,930 | |||||||||
Return of insurance deposits | — | 6,000 | — | |||||||||
Proceeds from sale of other assets | 8,499 | — | — | |||||||||
Proceeds from insurance | 7,602 | 6,706 | 10,879 | |||||||||
Reduction in other assets | 7,758 | 8,330 | 1,575 | |||||||||
Purchases of property and equipment | (76,114 | ) | (85,936 | ) | (160,327 | ) | ||||||
Additions to other long-term assets | (20,636 | ) | (38,693 | ) | (44,624 | ) | ||||||
Net cash used in investing activities | $ | (69,177 | ) | $ | (99,846 | ) | $ | (190,567 | ) | |||
Cash Flows from Financing Activities | ||||||||||||
Proceeds from issuance of long-term debt | $ | 645,050 | $ | 446,980 | $ | 1,018,572 | ||||||
Proceeds from issuance of common stock | 20,675 | 10,120 | 3,613 | |||||||||
Merger termination fee reimbursement | 78,000 | — | — | |||||||||
Stock options excess tax benefit | 11,606 | — | — | |||||||||
Principal payments on long-term debt | (683,987 | ) | (439,359 | ) | (930,921 | ) | ||||||
Premium paid on early retirement of debt | — | — | (7,616 | ) | ||||||||
Principal payments on other long-term liabilities | (23 | ) | (22 | ) | (22 | ) | ||||||
Debt issuance costs | — | — | (12,768 | ) | ||||||||
Repurchase of common stock | (9,403 | ) | (5,799 | ) | (1,858 | ) | ||||||
Preferred stock dividend | (349 | ) | (383 | ) | (406 | ) | ||||||
Redemption of preferred stock | (2,115 | ) | (999 | ) | (971 | ) | ||||||
Net cash provided by financing activities | 59,454 | 10,538 | 67,623 | |||||||||
Net increase (decrease) in cash and cash equivalents | 36,322 | 35,291 | (17,678 | ) | ||||||||
Less the change related to assets held for sale | (1,267 | ) | (283 | ) | 28 | |||||||
Cash and cash equivalents at beginning of year | 86,361 | 51,353 | 69,003 | |||||||||
Cash and cash equivalents at end of year | $ | 121,416 | $ | 86,361 | $ | 51,353 | ||||||
Supplemental Cash Flow Disclosures | ||||||||||||
Summary of non-cash investing and financing activities: | ||||||||||||
Other assets reduced for property and equipment | $ | 2,236 | $ | — | $ | — | ||||||
Investments reduced for property and equipment | 1,680 | — | — | |||||||||
Contract payable incurred for intangible assets | 307 | — | — | |||||||||
Contract payable incurred for property and equipment | — | 356 | — | |||||||||
Accounts payable and accruals incurred for property and equipment | 543 | — | — | |||||||||
Capital lease obligations incurred for property and equipment | 94 | — | — | |||||||||
Other long-term liabilities incurred for property and equipment | — | 1,087 | — | |||||||||
Other long-term liabilities reduced for property and equipment | 795 | — | ||||||||||
Exchange of common stock in lieu of cash payments in connection with the exercise of stock options | — | 3,447 | 2,050 | |||||||||
Cash flow during the year for the following: | ||||||||||||
Interest paid, net of amount capitalized | $ | 53,858 | $ | 55,549 | $ | 35,639 | ||||||
Income taxes paid | 21,616 | 7,596 | 30,806 |
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2006, DECEMBER 31, 2005 AND DECEMBER 30, 2004
(In thousands)
Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Comprehensive | ||||||||||||||||||||||||
Common | Paid-in | Retained | Loss-Pension | Treasury | ||||||||||||||||||||
Stock | Capital | Earnings | Adjustment | Stock | Total | |||||||||||||||||||
Balance, January 1, 2004 | $ | 526 | $ | 441,498 | $ | 291,573 | $ | (1,526 | ) | $ | (197,497 | ) | $ | 534,574 | ||||||||||
Net income | 28,475 | 28,475 | ||||||||||||||||||||||
Minimum pension liability adjustment, net of income tax | (1,733 | ) | (1,733 | ) | ||||||||||||||||||||
Total comprehensive income | 26,742 | |||||||||||||||||||||||
Stock options exercised | 7 | 5,656 | (3,908 | ) | 1,755 | |||||||||||||||||||
Tax benefit from stock options exercised | 4,250 | 4,250 | ||||||||||||||||||||||
Preferred stock dividend and losses on redemption | (1,030 | ) | (1,030 | ) | ||||||||||||||||||||
Balance, December 30, 2004 | 533 | 451,404 | 319,018 | (3,259 | ) | (201,405 | ) | 566,291 | ||||||||||||||||
Net income | 55,960 | 55,960 | ||||||||||||||||||||||
Minimum pension liability adjustment, net of income tax | 1,360 | 1,360 | ||||||||||||||||||||||
Total comprehensive income | 57,320 | |||||||||||||||||||||||
Stock options exercised | 13 | 14,016 | (9,246 | ) | 4,783 | |||||||||||||||||||
Tax benefit from stock options exercised | 9,217 | 9,217 | ||||||||||||||||||||||
Preferred stock dividend and losses on redemption | (1,081 | ) | (1,081 | ) | ||||||||||||||||||||
Balance, December 31, 2005 | 546 | 474,637 | 373,897 | (1,899 | ) | (210,651 | ) | 636,530 | ||||||||||||||||
Net income(loss) | (39,805 | ) | (39,805 | ) | ||||||||||||||||||||
Minimum pension liability adjustment, net of income tax | (109 | ) | (109 | ) | ||||||||||||||||||||
Total comprehensive income(loss) | (39,914 | ) | ||||||||||||||||||||||
Adjustment to initially apply FASB Statement No. 158, net of income tax | (2,704 | ) | (2,704 | ) | ||||||||||||||||||||
Stock options compensation expense | 3,739 | 3,739 | ||||||||||||||||||||||
Stock options exercised | 13 | 20,662 | (9,403 | ) | 11,272 | |||||||||||||||||||
Tax benefit from stock options exercised | 15,068 | 15,068 | ||||||||||||||||||||||
Preferred stock dividend and losses on redemption | (2,017 | ) | (2,017 | ) | ||||||||||||||||||||
Balance, December 31, 2006 | $ | 559 | $ | 514,106 | $ | 332,075 | $ | (4,712 | ) | $ | (220,054 | ) | $ | 621,974 | ||||||||||
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NOTE 1. | SIGNIFICANT ACCOUNTING POLICIES |
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2005 | 2004 | |||||||
Net income, as reported | $ | 55,960 | $ | 28,475 | ||||
Add: Stock-based employee compensation expense included in reported net income, net of income tax benefit | 300 | — | ||||||
Deduct: Total stock-based employee compensation expense determined under the fair-value-based method of accounting, net of income tax benefit | (4,122 | ) | (3,977 | ) | ||||
Pro forma net income | $ | 52,138 | $ | 24,498 | ||||
Net income per common share assuming no dilution: | ||||||||
As reported | $ | 1.55 | $ | .79 | ||||
Pro forma | $ | 1.45 | $ | .68 | ||||
Net income per common share assuming dilution: | ||||||||
As reported | $ | 1.49 | $ | .76 | ||||
Pro forma | $ | 1.38 | $ | .65 |
2006 | 2005 | 2004 | ||||||||||
Net income(loss), as reported | $ | (39,805 | ) | $ | 55,960 | $ | 28,475 | |||||
Add: Stock-based employee compensation expense included in reported net income, net of income tax benefit | — | 300 | — | |||||||||
Add(Deduct): Impact of stock-based employee compensation expense if the non-substantive approach had been used to amortize compensation expense determined under thefair-value-based method of accounting, net of income tax | 927 | (3,652 | ) | (4,782 | ) | |||||||
Pro forma net income(loss) | $ | (38,878 | ) | $ | 52,608 | $ | 23,693 | |||||
Net income(loss) per common share assuming no dilution: | ||||||||||||
As reported | $ | (1.15 | ) | $ | 1.55 | $ | .79 | |||||
Pro forma | $ | (1.13 | ) | $ | 1.46 | $ | .66 | |||||
Net income(loss) per common share assuming dilution: | ||||||||||||
As reported | $ | (1.15 | ) | $ | 1.49 | $ | .76 | |||||
Pro forma | $ | (1.13 | ) | $ | 1.39 | $ | .63 |
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2006 | 2005 | 2004 | ||||||||||
Rooms | $ | 20,215 | $ | 20,511 | $ | 18,451 | ||||||
Food and beverage | 53,416 | 55,137 | 48,289 | |||||||||
Other | 2,303 | 1,849 | 2,702 | |||||||||
$ | 75,934 | $ | 77,497 | $ | 69,442 | |||||||
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NOTE 2. | CONCENTRATIONS OF CREDIT RISK |
NOTE 3. | INVESTMENTS |
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
CRDA deposits, net of a valuation allowance of $4,894 and $4,148 | $ | 13,736 | $ | 11,872 | ||||
CRDA bonds, net of a valuation allowance of $1,958 and $1,943 and an unamortized discount of $3,297 and $3,481 | 6,411 | 6,679 | ||||||
CRDA other investments, net of a valuation allowance of $1,297 and $2,073 | 4,982 | 6,664 | ||||||
$ | 25,129 | $ | 25,215 | |||||
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NOTE 4: | INTANGIBLE ASSETS |
December 31, 2006 | December 31, 2005 | |||||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Subject to amortization: | ||||||||||||||||
Gaming license renewal costs | $ | 2,653 | $ | 2,092 | $ | 2,636 | $ | 1,560 | ||||||||
Other | 422 | 117 | 211 | 89 | ||||||||||||
$ | 3,075 | $ | 2,209 | $ | 2,847 | $ | 1,649 | |||||||||
Not subject to amortization: | ||||||||||||||||
Tropicana trademark | $ | 22,172 | $ | 22,172 | ||||||||||||
Initial gaming licenses | 9,961 | 9,961 | ||||||||||||||
$ | 32,133 | $ | 32,133 | |||||||||||||
2007 | $ | 505 | ||
2008 | 58 | |||
2009 | 58 | |||
2010 | 55 | |||
2011 | 51 |
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NOTE 5. | LONG-TERM DEBT |
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
9% Senior Subordinated Notes Due 2011; redeemable at a defined premium | $ | 175,000 | $ | 175,000 | ||||
77/8% Senior Subordinated Notes due 2014; redeemable at a defined premium | 300,000 | 300,000 | ||||||
Revolver; floating rate, 8.5% at December 31, 2006; matures July 22, 2009 | 105,220 | 124,500 | ||||||
Term Loan; floating rate, 8.5% at December 31, 2006; matures July 22, 2009 | 121,875 | 123,125 | ||||||
Contracts payable; 4.3% to 9.5%; maturities to 2014 | 545 | 328 | ||||||
Obligations under capital leases | 71 | 16 | ||||||
702,711 | 722,969 | |||||||
Less current portion | (7,046 | ) | (1,293 | ) | ||||
$ | 695,665 | $ | 721,676 | |||||
2007 | $ | 7,046 | ||
2008 | 16,413 | |||
2009 | 204,046 | |||
2010 | 36 | |||
2011 | 175,039 |
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NOTE 6. | LEASE OBLIGATIONS |
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
Furniture and equipment | $ | 1,447 | $ | 1,367 | ||||
Less accumulated amortization | (1,366 | ) | (1,358 | ) | ||||
$ | 81 | $ | 9 | |||||
Year | Capital | Operating | ||||||
2007 | $ | 64 | $ | 3,911 | ||||
2008 | 34 | 2,513 | ||||||
2009 | 6 | 1,275 | ||||||
2010 | — | 1,131 | ||||||
2011 | — | 215 | ||||||
Thereafter | — | 53 | ||||||
104 | $ | 9,098 | ||||||
Amount representing executory costs | (17 | ) | ||||||
Amount representing interest | (16 | ) | ||||||
Net present value | 71 | |||||||
Less current portion | (41 | ) | ||||||
Long-term portion | $ | 30 | ||||||
2006 | 2005 | 2004 | ||||||||||
Minimum rentals | $ | 6,814 | $ | 6,555 | $ | 6,431 | ||||||
Contingent rentals | 4,776 | 1,301 | 2,280 | |||||||||
$ | 11,590 | $ | 7,856 | $ | 8,711 | |||||||
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NOTE 7. | OTHER LONG-TERM LIABILITIES |
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
Deferred compensation and retirement plans | $ | 21,528 | $ | 15,630 | ||||
Asset retirement obligations | 592 | 1,342 | ||||||
Las Vegas Boulevard beautification assessment | 247 | 271 | ||||||
22,367 | 17,243 | |||||||
Less current portion | (949 | ) | (824 | ) | ||||
$ | 21,418 | $ | 16,419 | |||||
NOTE 8. | REDEEMABLE PREFERRED STOCK |
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NOTE 9. | CAPITAL STOCK |
NOTE 10. | STOCK OPTIONS |
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Weighted- | ||||||||||||||||
Average | ||||||||||||||||
Weighted- | Remaining | Aggregate | ||||||||||||||
Shares | Average | Contractual | Intrinsic Value | |||||||||||||
Options | (000) | Exercise Price | Term | ($000) | ||||||||||||
Outstanding at January 1, 2006 | 3,750 | $ | 17.72 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (1,298 | ) | $ | 15.93 | ||||||||||||
Forfeited or expired | (30 | ) | $ | 30.90 | ||||||||||||
Outstanding at December 31, 2006 | 2,422 | $ | 18.52 | 5.4 years | $ | 86,954 | ||||||||||
Exercisable at December 31, 2006 | 1,963 | $ | 15.96 | 4.8 years | $ | 75,490 | ||||||||||
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NOTE 11. | BENEFIT PLANS |
Before | ||||||||||||
Application of | After Application | |||||||||||
Statement 158 | Adjustments | of Statement 158 | ||||||||||
Accrued benefit liability | $ | 17,390 | $ | 4,138 | $ | 21,528 | ||||||
Deferred income taxes | 42,925 | (1,456 | ) | 41,469 | ||||||||
Accumulated other comprehensive loss, net of income taxes | (2,008 | ) | (2,704 | ) | (4,712 | ) | ||||||
Total stockholders’ equity | 624,678 | (2,704 | ) | 621,974 |
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Defined Benefit Plans | Deferred Compensation Plan | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Projected benefit obligation at beginning of year | $ | 13,022 | $ | 18,508 | $ | 6,522 | $ | 6,609 | ||||||||
Service cost | 137 | 177 | 2 | 4 | ||||||||||||
Interest cost | 695 | 597 | 338 | 352 | ||||||||||||
Actuarial (gain) loss | 1,778 | 2,249 | (153 | ) | 56 | |||||||||||
Benefits paid | (271 | ) | (8,509 | ) | (542 | ) | (499 | ) | ||||||||
Projected benefit obligation at end of year | 15,361 | 13,022 | 6,167 | 6,522 | ||||||||||||
Plan assets | — | — | — | — | ||||||||||||
Funded status at year end | $ | (15,361 | ) | (13,022 | ) | $ | (6,167 | ) | (6,522 | ) | ||||||
Unrecognized actuarial loss | 5,893 | 622 | ||||||||||||||
Unrecognized prior service cost | 96 | — | ||||||||||||||
Net amount recognized | $ | (7,033 | ) | $ | (5,900 | ) | ||||||||||
Amounts recognized in the Consolidated Balance Sheet before the adoption of SFAS 158 consist of: | ||||||||||||||||
Accrued benefit liability | $ | (9,108 | ) | $ | (6,522 | ) | ||||||||||
Intangible asset | 96 | — | ||||||||||||||
Accumulated other comprehensive loss(a) | 1,979 | 622 | ||||||||||||||
Net amount recognized | $ | (7,033 | ) | $ | (5,900 | ) | ||||||||||
(a) | In the Consolidated Statements of Shareholders’ Equity, accumulated other comprehensive loss relating to a minimum pension liability adjustment during the year is reported net of an income tax (provision)benefit of $(735) and $871 in 2005 and 2004, respectively. |
Defined Benefit | Deferred | |||||||
Plans | Compensation Plan | |||||||
2006 | 2006 | |||||||
Amounts recognized in the Consolidated Balance Sheet after the adoption of SFAS 158 consist of: | ||||||||
Current liabilities | $ | 354 | $ | 571 | ||||
Noncurrent liabilities | 15,007 | 5,596 | ||||||
Amount recognized | $ | 15,361 | $ | 6,167 | ||||
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Defined Benefit | Deferred | |||||||
Plans | Compensation Plan | |||||||
2006 | 2006 | |||||||
Amounts recognized in accumulated other comprehensive loss consist of: | ||||||||
Actuarial loss | $ | 6,535 | $ | 469 | ||||
Prior service cost | 22 | — | ||||||
Amount recognized(a) | $ | 6,557 | $ | 469 | ||||
(a) | In the Consolidated Statement of Shareholders’ Equity, accumulated other comprehensive loss relating to a minimum pension liability adjustment during the year 2006 is net of an income tax benefit of $156. In addition, in the Consolidated Statement of Shareholders’ Equity, accumulated other comprehensive loss relating to the adjustment to initially adopt SFAS 158 is reported net of an income tax benefit of $1,456 in 2006. |
Defined Benefit Plans | Deferred Compensation Plan | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Discount rate(a) | 5.70 | % | 5.40 | % | 5.70 | % | 5.40 | % | ||||||||
Rate of compensation increase | 5.00 | % | 5.00 | % | N/A | N/A |
(a) | In selecting a discount rate for the Company’s benefit obligation as of December 31, 2006, the Company reviewed a number of high-grade corporate bond indices and spot-rate discount curves. It was determined that the spot-rate discount curves provide the more direct recognition of the expected timing of cash flows and therefore a pension discount curve was the preferred choice. The Citigroup Pension Discount Curve was chosen and was used to determine the present value of expected benefit payments under each plan. For each plan a single discount rate was found that produced the same liabilities as determined using the discount curve. These single discount rates were weighted with the projected benefit obligations under each plan to determine a single discount rate to be applied to all plans rounded to the nearest 10 basis points. The resulting single discount rate used for all plans as of December 31, 2006 is 5.70%. |
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Defined Benefit Plans | Deferred Compensation Plan | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
Service cost | $ | 137 | $ | 177 | $ | 95 | $ | 2 | $ | 4 | $ | 11 | ||||||||||||
Interest cost | 695 | 597 | 963 | 338 | 352 | 384 | ||||||||||||||||||
Amortization of prior service cost | 74 | 74 | 113 | — | — | — | ||||||||||||||||||
Recognized net actuarial loss | 1,136 | 537 | 898 | — | — | — | ||||||||||||||||||
Settlement loss(a) | — | 2,851 | — | — | — | — | ||||||||||||||||||
Cash surrender value increase net of premium expense | — | — | — | (375 | ) | (344 | ) | (340 | ) | |||||||||||||||
$ | 2,042 | $ | 4,236 | $ | 2,069 | $ | (35 | ) | $ | 12 | $ | 55 | ||||||||||||
(a) | During 2005, the Company made a lump-sum cash payment of $8,239 to a defined benefit plan participant in exchange for the participant’s right to receive specified pension benefits. As a result, the Company recognized a settlement loss of $2,851. The recognition of this settlement loss resulted in a reduction of $1,556, net of income taxes of $838 in the accumulated other comprehensive loss relating to the minimum pension liability adjustment in the Consolidated Statement of Shareholders’ Equity for the year ended December 31, 2005. |
Deferred Compensation | ||||||||||||||||||||||||
Defined Benefit Plans | Plan | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
Discount rate | 5.40 | % | 5.50 | % | 6.00 | % | 5.40 | % | 5.50 | % | 6.00 | % | ||||||||||||
Rate of compensation increase | 5.00 | % | 5.00 | % | 5.00 | % | N/A | N/A | N/A |
Defined | Deferred | |||||||
Benefit | Compensation | |||||||
Plans | Plan | |||||||
2007 | $ | 353 | $ | 571 | ||||
2008 | 347 | 590 | ||||||
2009 | 340 | 548 | ||||||
2010 | 1,340 | 571 | ||||||
2011 | 1,419 | 556 | ||||||
2012 to 2016 | 7,367 | 2,778 |
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NOTE 12. | ACCOUNTING FOR THE IMPACT OF THE OCTOBER 30, 2003 CONSTRUCTION ACCIDENT |
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NOTE 13. | MERGER RELATED |
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NOTE 14. | TROPICANA LAS VEGAS CAPITALIZED DEVELOPMENT COSTS WRITE-OFF |
NOTE 15. | LOSS ON EARLY RETIREMENT OF DEBT |
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NOTE 16. | INCOME TAXES |
2006 | 2005 | 2004 | ||||||||||
Current: | ||||||||||||
Federal | $ | (26,797 | ) | $ | (23,155 | ) | $ | 2,189 | ||||
State | (4,809 | ) | (9,885 | ) | (24,876 | ) | ||||||
(31,606 | ) | (33,040 | ) | (22,687 | ) | |||||||
Deferred: | ||||||||||||
Federal | 3,850 | (5,509 | ) | (16,089 | ) | |||||||
State | (1,491 | ) | (49 | ) | (197 | ) | ||||||
2,359 | (5,558 | ) | (16,286 | ) | ||||||||
$ | (29,247 | ) | $ | (38,598 | ) | $ | (38,973 | ) | ||||
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2006 | 2005 | 2004 | ||||||||||
Tax (provision) benefit at U.S. federal income tax rate | $ | 5,218 | $ | (32,257 | ) | $ | (23,121 | ) | ||||
State income taxes, net | (3,966 | ) | (6,461 | ) | (16,222 | ) | ||||||
Nondeductible merger-related expenses | (31,730 | ) | — | — | ||||||||
Nondeductible business expenses | (113 | ) | (51 | ) | (259 | ) | ||||||
IRS examination | 1,383 | — | 358 | |||||||||
General business credits | 577 | 416 | 442 | |||||||||
Other, net | (616 | ) | (245 | ) | (171 | ) | ||||||
$ | (29,247 | ) | $ | (38,598 | ) | $ | (38,973 | ) | ||||
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
Net operating loss carryforward | $ | 281 | $ | 296 | ||||
Accrued bad debt expense | 6,533 | 8,136 | ||||||
Accrued compensation | 11,005 | 6,861 | ||||||
Accrued liabilities | 8,885 | 9,569 | ||||||
Income tax credit carryforward | 967 | 1,396 | ||||||
Other | 34 | 31 | ||||||
Gross deferred tax assets | 27,705 | 26,289 | ||||||
Deferred tax asset valuation allowance | (281 | ) | (296 | ) | ||||
Deductible prepaids | (4,960 | ) | (4,462 | ) | ||||
Depreciation and amortization | (55,611 | ) | (56,511 | ) | ||||
Gross deferred tax liabilities | (60,571 | ) | (60,973 | ) | ||||
Net deferred tax liabilities | $ | (33,147 | ) | $ | (34,980 | ) | ||
NOTE 17. | DISCONTINUED OPERATIONS |
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2006 | 2005 | 2004 | ||||||||||
Revenues | $ | 29,086 | $ | 27,778 | $ | 23,179 | ||||||
Operating income | $ | 6,100 | $ | 3,367 | $ | 1,612 | ||||||
Termination fee income | 550 | — | — | |||||||||
Income taxes | (2,299 | ) | (972 | ) | (224 | ) | ||||||
Income from discontinued operations | $ | 4,351 | $ | 2,395 | $ | 1,388 | ||||||
2006 | 2005 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 3,105 | $ | 1,838 | ||||
Accounts receivable, net | 212 | 21 | ||||||
Inventories | 27 | 32 | ||||||
Prepaid expenses | 293 | 149 | ||||||
Property and equipment, net | 31,965 | 31,123 | ||||||
Intangible assets | 391 | 391 | ||||||
Other assets | 5 | 5 | ||||||
Total assets held for sale | $ | 35,998 | $ | 33,559 | ||||
Liabilities | ||||||||
Accounts payable and accruals | $ | 1,723 | $ | 1,466 | ||||
Accrued payroll and employee benefits | 911 | 1,029 | ||||||
Total liabilities related to assets held for sale | $ | 2,634 | $ | 2,495 | ||||
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NOTE 18. | EARNINGS PER SHARE |
2006 | 2005 | 2004 | ||||||||||
Income(loss) from continuing operations | $ | (44,156 | ) | $ | 53,565 | $ | 27,087 | |||||
Less: preferred stock dividend and losses on redemption | (2,017 | ) | (1,081 | ) | (1,030 | ) | ||||||
Income(loss) from continuing operations available to common shareholders | (46,173 | ) | 52,484 | 26,057 | ||||||||
Plus: income impact of assumed conversion of dilutive preferred stock | — | 370 | — | |||||||||
Income(loss) from continuing operations available to common shareholders plus dilutive potential common shares | $ | (46,173 | ) | $ | 52,854 | $ | 26,057 | |||||
Weighted-average common shares applicable to income(loss) from continuing operations per common share assuming no dilution | 36,281 | 35,332 | 34,547 | |||||||||
Effect of dilutive securities: | ||||||||||||
Stock option incremental shares | * | 1,290 | 1,491 | |||||||||
Assumed conversion of preferred stock | * | 489 | * | |||||||||
Dilutive potential common shares | * | 1,779 | 1,491 | |||||||||
Weighted-average common shares applicable to income(loss) from continuing operations per common share assuming dilution | 36,281 | 37,111 | 36,038 | |||||||||
Income(loss) from continuing operations per common share assuming no dilution | $ | (1.27 | ) | $ | 1.48 | $ | .75 | |||||
Income(loss) from continuing operations per common share assuming dilution | $ | (1.27 | ) | $ | 1.42 | $ | .72 | |||||
* | Antidilutive |
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NOTE 19. | SEGMENT INFORMATION |
2006 | 2005 | 2004 | ||||||||||
Revenues | ||||||||||||
Tropicana Atlantic City | $ | 496,178 | $ | 490,159 | $ | 384,618 | ||||||
Tropicana Las Vegas | 162,879 | 163,771 | 162,006 | |||||||||
Ramada Express Laughlin | 97,650 | 97,161 | 91,008 | |||||||||
Casino Aztar Evansville | 137,629 | 136,573 | 129,182 | |||||||||
Total consolidated | $ | 894,336 | $ | 887,664 | $ | 766,814 | ||||||
Segment Adjusted EBITDA(a) | ||||||||||||
Tropicana Atlantic City | $ | 144,389 | $ | 118,717 | $ | 81,820 | ||||||
Tropicana Las Vegas | 37,698 | 38,952 | 36,156 | |||||||||
Ramada Express Laughlin | 26,530 | 27,304 | 23,031 | |||||||||
Casino Aztar Evansville | 37,546 | 41,341 | 37,390 | |||||||||
Total Segment Adjusted EBITDA | 246,163 | 226,314 | 178,397 | |||||||||
Corporate | (139,599 | ) | (20,795 | ) | (17,454 | ) | ||||||
Depreciation and amortization | (70,027 | ) | (64,381 | ) | (52,213 | ) | ||||||
Operating income | 36,537 | 141,138 | 108,730 | |||||||||
Other income | 2,640 | 6,001 | 3,907 | |||||||||
Interest income | 1,849 | 1,390 | 807 | |||||||||
Interest expense | (55,935 | ) | (56,366 | ) | (37,012 | ) | ||||||
Loss on early retirement of debt | — | — | (10,372 | ) | ||||||||
Income taxes | (29,247 | ) | (38,598 | ) | (38,973 | ) | ||||||
Income(loss) from continuing operations | (44,156 | ) | 53,565 | 27,087 | ||||||||
Discontinued operations, net of income taxes | 4,351 | 2,395 | 1,388 | |||||||||
Net income(loss) | $ | (39,805 | ) | $ | 55,960 | $ | 28,475 | |||||
(a) | Segment Adjusted EBITDA is net income(loss) before discontinued operations, income taxes, loss on early retirement of debt, interest expense, interest income, other income, depreciation and amortization and corporate. Segment Adjusted EBITDA should not be construed as a substitute for either operating income or net income(loss) as they are determined in accordance with generally accepted accounting principles (GAAP). Segment Adjusted EBITDA, which is computed in accordance with SFAS No. 131, does not represent a non-GAAP financial measure as it is presented in the above summary. The use of Segment Adjusted EBITDA for any other purpose would constitute a non-GAAP financial measure. The Company uses Segment Adjusted EBITDA as a measure to compare operating results among its properties and between accounting periods. The Company manages cash and finances its operations at the corporate level. The Company manages the allocation of capital among properties at the corporate level. The Company also files a consolidated income tax return. The Company accordingly believes Segment Adjusted EBITDA is useful as a measure of operating results at the property level because it reflects the results of operating decisions at that level separated from the effects of tax |
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and financing decisions that are managed at the corporate level. The Company also believes that Segment Adjusted EBITDA is a commonly used measure of operating performance in the gaming industry and is an important basis for the valuation of gaming companies. The Company’s calculation of Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies and, therefore, any such differences must be considered when comparing performance among different companies. While the Company believes Segment Adjusted EBITDA provides a useful perspective for some purposes, Segment Adjusted EBITDA has material limitations as an analytical tool. For example, among other things, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Segment Adjusted EBITDA does not reflect the requirements for such replacements. Corporate, other income, interest expense, net of interest income, loss on early retirement of debt, income taxes and discontinued operations are also not reflected in Segment Adjusted EBITDA. Therefore, the Company does not consider Segment Adjusted EBITDA in isolation, and it should not be considered as a substitute for measures determined in accordance with GAAP. A reconciliation of Segment Adjusted EBITDA with operating income and net income(loss) as determined in accordance with GAAP is reflected in the above summary. |
2006 | 2005 | 2004 | ||||||||||
Depreciation and amortization | ||||||||||||
Tropicana Atlantic City | $ | 49,578 | $ | 44,520 | $ | 33,370 | ||||||
Tropicana Las Vegas | 5,598 | 5,805 | 5,914 | |||||||||
Ramada Express Laughlin | 7,406 | 6,900 | 6,298 | |||||||||
Casino Aztar Evansville | 7,388 | 7,115 | 6,588 | |||||||||
Corporate | 57 | 41 | 43 | |||||||||
Total consolidated | $ | 70,027 | $ | 64,381 | $ | 52,213 | ||||||
2006 | 2005 | 2004 | ||||||||||
Additions to property and equipment, intangible assets and other assets Tropicana Atlantic City | $ | 31,733 | $ | 71,918 | $ | 162,678 | ||||||
Tropicana Las Vegas | 7,867 | 3,385 | 3,024 | |||||||||
Ramada Express Laughlin | 7,766 | 6,071 | 6,259 | |||||||||
Casino Aztar Evansville | 28,207 | 28,199 | 12,099 | |||||||||
Corporate | 13,259 | 7,284 | 14,802 | |||||||||
Total consolidated | $ | 88,832 | $ | 116,857 | $ | 198,862 | ||||||
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
Total assets | ||||||||
Tropicana Atlantic City | $ | 994,095 | $ | 1,007,700 | ||||
Tropicana Las Vegas | 217,737 | 210,771 | ||||||
Ramada Express Laughlin | 116,378 | 115,845 | ||||||
Casino Aztar Evansville | 162,832 | 136,154 | ||||||
Corporate | 46,212 | 51,305 | ||||||
Discontinued operations | 35,998 | 33,559 | ||||||
Total consolidated | $ | 1,573,252 | $ | 1,555,334 | ||||
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NOTE 20. | CONTINGENCIES AND COMMITMENTS |
NOTE 21. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
2006 | 2005 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Assets | ||||||||||||||||
Investments | $ | 25,129 | $ | 25,129 | 25,215 | $ | 25,215 | |||||||||
Other assets | 9,408 | 9,408 | 5,138 | 5,138 | ||||||||||||
Liabilities | ||||||||||||||||
Current portion of long-term debt | 7,046 | 7,046 | 1,293 | 1,293 | ||||||||||||
Long-term debt | 695,665 | 730,915 | 721,676 | 747,614 | ||||||||||||
Series B convertible preferred stock | 4,182 | 23,713 | 4,620 | 15,107 | ||||||||||||
Off-Balance-Sheet Letters of credit | — | 7,169 | — | 57,165 |
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NOTE 22. | UNAUDITED QUARTERLY RESULTS/COMMON STOCK PRICES |
First | Second | Third | Fourth | |||||||||||||
2006 | ||||||||||||||||
Revenues | $ | 221,270 | $ | 221,926 | $ | 233,964 | $ | 217,176 | ||||||||
Operating income(loss)(a)(b)(c) | 9,999 | (42,139 | ) | 48,156 | 20,521 | |||||||||||
Income(loss) from continuing operations before income taxes(d) | (1,103 | ) | (56,158 | ) | 37,157 | 5,195 | ||||||||||
Income taxes(b)(e) | 3,613 | (10,880 | ) | (15,310 | ) | (6,670 | ) | |||||||||
Net income(loss) | 3,214 | (66,107 | ) | 23,263 | (175 | ) | ||||||||||
Earnings per share: | ||||||||||||||||
Net income(loss) per common share | .08 | (1.84 | ) | .62 | (.02 | ) | ||||||||||
Net income(loss) per common share assuming dilution | .08 | (1.84 | ) | .60 | (.02 | ) | ||||||||||
2005(f) | ||||||||||||||||
Revenues | $ | 215,915 | $ | 221,399 | $ | 234,254 | $ | 216,096 | ||||||||
Operating income(g) | 28,309 | 36,815 | 45,903 | 30,111 | ||||||||||||
Income from continuing operations before income taxes(h) | 16,262 | 25,758 | 31,845 | 18,298 | ||||||||||||
Income taxes | (7,106 | ) | (10,848 | ) | (13,075 | ) | (7,569 | ) | ||||||||
Net income | 9,911 | 15,453 | 19,383 | 11,213 | ||||||||||||
Earnings per share: | ||||||||||||||||
Net income per common share | .28 | .43 | .54 | .30 | ||||||||||||
Net income per common share assuming dilution | .27 | .41 | .51 | .29 | ||||||||||||
Common Stock Prices | ||||||||||||||||
2006 — High | $ | 42.90 | $ | 52.42 | $ | 53.25 | $ | 54.42 | ||||||||
— Low | 28.82 | 43.87 | 51.50 | 52.94 | ||||||||||||
2005 — High | 35.18 | 35.15 | 35.67 | 32.75 | ||||||||||||
— Low | 27.55 | 25.99 | 29.92 | 28.50 |
(a) | During the first, second, third and fourth quarters of 2006, the Company incurred $1,644, $1,997, $1,019 and $760, respectively, of construction accident related costs and expenses that may not be |
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reimbursed by insurance. These costs and expenses primarily consist of professional fees incurred as a result of the accident. |
During the first, second and third quarters of 2006, the Company recorded $4,789, $3,569 and $3,871, respectively, of insurance recoveries due to the delay of the opening of the expansion, which represent a portion of the anticipated profit that the Company would have recognized had the expansion opened as originally projected as well as some reimbursement for costs incurred as a result of the delay. Profit recovery from insurance is recorded when the amount of recovery, which may be different from the amount claimed, is agreed to by the insurers. |
(b) | During the first, second, third and fourth quarters of 2006, the Company recorded $884, $80,476, $1,176 and $10,436, respectively, of merger-related costs and expenses. These costs and expenses primarily consist of the Pinnacle termination fee and expenses of $78,000 recorded during the second quarter of 2006 and professional fees. For the most part merger-related costs and expenses are not deductible for income tax purposes. |
(c) | During the first quarter of 2006, the Company concluded that it was not probable that it would implement its plan for redevelopment of Tropicana Las Vegas. As a result, the Company wrote off $26,021 of capitalized development costs. |
(d) | During the first and third quarters of 2006, the Company recorded $2,640 and $2,712, respectively, of insurance recoveries associated with the rebuilding of the expansion, net of direct costs to obtain the recoveries. During the second and fourth quarters of 2006, the Company recorded $398 and $2,314, respectively, of direct costs to obtain insurance recoveries associated with the rebuild. |
(e) | In the first quarter of 2006, the Company reached a favorable settlement with the Internal Revenue Service on the only remaining issue in dispute for the examinations of the Company’s federal income tax returns for the years 1994 through 2003. The issue involved the deductibility of a portion of payments on certain liabilities related to the Restructuring. As a result of the settlement, the Company recorded an income tax benefit of $1,383. Also in the first quarter of 2006, the Company’s application for tax credits available from New Jersey was approved. As a result of the approval, the Company recognized, net of a federal income tax effect, a non-recurring income tax benefit of $1,993. |
(f) | On December 7, 2005, the Board of Directors of the Company adopted a resolution changing the Company’s 52/53 week fiscal year (ending on the Thursday nearest December 31) to a calendar year. The change is effective for the reporting period ended December 31, 2005. The period ended December 31, 2005 reflects the Company’s results of operations for a366-day period beginning December 31, 2004 and covers thetwo-day transition period of December 30 and 31, 2005. The period ended December 31, 2006 reflects the Company’s results of operations for a365-day calendar year. The first, second and third quarters of 2005 included 92 days; the fourth quarter included 93 days. The first quarter of 2006 included 90 days; the second quarter included 91 days; and the third and fourth quarters each included 92 days. |
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(g) | During the first, second, third and fourth quarters of 2005, the Company incurred $409, $860, $1,383 and $1,624, respectively, of construction accident related costs and expenses that may not be reimbursed by insurance. These costs and expenses primarily consist of professional fees incurred as a result of the accident. During the first, second and fourth quarters of 2005, the Company recorded $225, $301 and $345, respectively, of insurance recoveries due to the delay of the opening of the expansion, which represent a portion of the anticipated profit that the Company would have recognized had the expansion opened as originally projected as well as some reimbursement for costs incurred as a result of the delay. Profit recovery from insurance is recorded when the amount of recovery, which may be different from the amount claimed, is agreed to by the insurers. |
(h) | During the first, second and fourth quarters of 2005, the Company recorded $1,573, $2,855 and $1,840, respectively, of insurance recoveries associated with the rebuilding of the expansion, net of direct costs to obtain the recoveries. During the third quarter of 2005, the Company recorded $267 of direct costs to obtain insurance recoveries associated with the rebuild. |
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By Regular Mail, Overnight Courier or in Person (By Hand Only):
West Side Flats
60 Livingston Avenue
St. Paul, MN 55107
Attention: Specialized Finance
By Facsimile Transmission
(for Eligible Institutions only):
(651) 495-8158
Confirm Facsimile Transmission by Telephone:
(800) 934-6802