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Delaware | 6512 | 13-3398766 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Delaware | 6512 | 20-1059842 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Delaware | 6512 | 13-3398767 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Proposed Maximum | Proposed Maximum | |||||||
Title of Each Class of | Amount to be | Offering Price | Aggregate | Amount of | ||||
Securities to be Registered | Registered(1) | Per Unit(1) | Offering Price(1) | Registration Fee(2) | ||||
71/8% Senior Notes due 2013 | $480,000,000 | 100% | $480,000,000 | $56,496 | ||||
Guarantees(3) | — | — | — | — | ||||
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended. |
(2) | Pursuant to Rule 457(f)(2) of the Securities Act of 1933, as amended, the registration fee has been estimated based on the book value of the securities to be received by the registrant in exchange for the securities to be issued hereunder in the exchange offer described herein. |
(3) | Pursuant to Rule 457(n) under the Securities Act, no separate fee is payable with respect to the guarantees. |
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The information in this Preliminary Prospectus is not complete and may be changed. We may not exchange these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This Preliminary Prospectus is not an offer to exchange these securities and is not soliciting offers to exchange these securities in any State where the exchange is not permitted. |
• | The terms of the new notes are substantially identical to the outstanding notes, except that the transfer restrictions and registration rights relating to the outstanding notes will not apply to the new notes and the new notes will not provide for the payment of liquidated damages under circumstances related to the timing and completion of the exchange offer. |
• | Expires 5:00 p.m., New York City time, on , 2005, unless extended. |
• | We will exchange your validly tendered unregistered notes for an equal principal amount of a new series of notes which have been registered under the Securities Act of 1933. |
• | The exchange offer is not subject to any condition other than that the exchange offer not violate applicable law or any applicable interpretation of the staff of the Securities and Exchange Commission and other customary conditions. |
• | You may withdraw your tender of notes at any time before the exchange offer expires. |
• | The exchange of notes should not be a taxable exchange for U.S. federal income tax purposes. |
• | We will not receive any proceeds from the exchange offer. |
• | The new notes will not be traded on any national securities exchange and, therefore, we do not anticipate that an active public market in the new notes will develop. |
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NEG Holding LLC |
Panaco, Inc. |
GB Holdings, Inc. (The Sands) |
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Unitholder Approval |
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The Offering of the Private Notes | On February 7, 2005, we issued $480 million aggregate principal amount of our private notes in an offering not registered under the Securities Act of 1933. At the time we issued the private notes, we entered into a registration rights agreement in which we agreed to offer to exchange the private notes for new notes which have been registered under the Securities Act of 1933. This exchange offer is intended to satisfy that obligation. | |
The Exchange Offer | We are offering to exchange the new notes which have been registered under the Securities Act of 1933 for the private notes. As of this date, there is $480 million aggregate principal amount of private notes outstanding. | |
Required Representations | In order to participate in this exchange offer, you will be required to make certain representations to us in a letter of transmittal, including that: | |
• any new notes will be acquired by you in the ordinary course of your business; | ||
• you have not engaged in, do not intend to engage in, and do not have an arrangement or understanding with any person to participate in a distribution of the new notes; and | ||
• you are not an affiliate of our company. | ||
Resale of New Notes | We believe that, subject to limited exceptions, the new notes may be freely traded by you without compliance with the registration and prospectus delivery provisions of the Securities Act of 1933, provided that: | |
• you are acquiring new notes in the ordinary course of your business; | ||
• you are not participating, do not intend to participate and have no arrangement or understanding with any person to participate in the distribution of the new notes; and | ||
• you are not an affiliate of our company. | ||
If our belief is inaccurate and you transfer any new note issued to you in the exchange offer without delivering a prospectus meeting the requirements of the Securities Act of 1933 or without an exemption from registration of your new notes from such requirements, you may incur liability under the Securities Act of 1933. We do not assume, or indemnify you against, such liability. | ||
Each broker-dealer that is issued new notes for its own account in exchange for private notes which were acquired by such broker-dealer as a result of market-making or other trading activities also must acknowledge that it has not entered into any arrangement or understanding with us or any of our affiliates to distribute the new notes and will deliver a prospectus meeting the requirements of the Securities Act of 1933 in connection with any resale of the new notes issued in the exchange offer. |
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We have agreed in the registration rights agreement that a broker-dealer may use this prospectus for an offer to resell, resale or other retransfer of the new notes issued to it in the exchange offer. | ||
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on , 2005, unless extended, in which case the term “expiration date” shall mean the latest date and time to which we extend the exchange offer. | |
Conditions to the Exchange Offer | The exchange offer is subject to certain customary conditions, which may be waived by us. The exchange offer is not conditioned upon any minimum principal amount of private notes being tendered. | |
Procedures for Tendering Private Notes | If you wish to tender your private notes for exchange, you must transmit to Wilmington Trust Company, as exchange agent, at the address set forth in this prospectus under the heading “The Exchange Offer — Exchange Agent,” and on the front cover of the letter of transmittal, on or before the expiration date, a properly completed and duly executed letter of transmittal, which accompanies this prospectus, or a facsimile of the letter of transmittal and either: | |
• the private notes and any other required documentation, to the exchange agent; or | ||
• a computer generated message transmitted by means of The Depository Trust Company’s Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book entry transfer in which you acknowledge and agree to be bound by the terms of the letter of transmittal. | ||
If either of these procedures cannot be satisfied on a timely basis, then you should comply with the guaranteed delivery procedures described below. By executing the letter of transmittal, each holder of private notes will make certain representations to us described under “The Exchange Offer — Procedures for Tendering.” | ||
Special Procedures for Beneficial Owners | If you are a beneficial owner whose private notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your private notes in the exchange offer, you should contact such registered holder promptly and instruct such registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your private notes, either make appropriate arrangements to register ownership of the private notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date. | |
Guaranteed Delivery Procedures | If you wish to tender private notes and time will not permit the documents required by the letter of transmittal to reach the exchange agent prior to the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, you |
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must tender your private notes according to the guaranteed delivery procedures described under “The Exchange Offer — Guaranteed Delivery Procedures.” | ||
Acceptance of Private Notes and Delivery of New Notes | Subject to the conditions described under “The Exchange Offer — Conditions,” we will accept for exchange any and all private notes which are validly tendered in the exchange offer and not withdrawn, prior to 5:00 p.m., New York City time, on the expiration date. | |
Withdrawal Rights | You may withdraw your tender of private notes at any time prior to 5:00 p.m., New York City time, on the expiration date, subject to compliance with the procedures for withdrawal described in this prospectus under heading “The Exchange Offer — Withdrawal of Tenders.” | |
Federal Income Tax Consequences | For a discussion of the material federal income tax considerations relating to the exchange of private notes for the new notes as well as the ownership of the new notes, see “Certain U.S. Federal Income Tax Consequences.” | |
Exchange Agent | The Wilmington Trust Company is serving as the exchange agent. The address, telephone number and facsimile number of the exchange agent are set forth in this prospectus under the heading “The Exchange Offer — Exchange Agent.” | |
Consequences of Failure to Exchange Private Notes | If you do not exchange private notes for new notes, you will continue to be subject to the restrictions on transfer provided in the private notes and in the indenture governing the private notes. In general, the unregistered private notes may not be offered or sold, unless they are registered under the Securities Act of 1933, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act of 1933 and applicable state securities laws. |
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• | The new notes will be registered under the Securities Act of 1933; | |
• | The new notes will not contain transfer restrictions and registration rights that relate to the private notes. |
Issuer | AREP is a holding company. Its operations are conducted through its subsidiaries and substantially all of its assets consist of a 99% limited partnership interest in its subsidiary, American Real Estate Holdings Limited Partnership, or AREH, which is a holding company for its operating subsidiaries and investments. The new notes will be guaranteed by AREH. | |
Co-Issuer | American Real Estate Finance Corp., or AREP Finance, is a wholly-owned subsidiary of AREP. It was formed solely for the purpose of serving as a co-issuer of debt securities of AREP in order to facilitate offerings of the debt securities. Other than as a co-issuer of the notes, AREP Finance does not and will not have any operations or assets and will not have any revenues. As a result, holders of the notes should not expect AREP Finance to participate in servicing any obligations on the new notes. | |
Notes Offered | $480.0 million in aggregate principal amount of 71/8% senior notes due 2013. | |
Maturity | February 15, 2013. | |
Interest Payment Dates | February 15 and August 15 of each year, commencing August 15, 2005. | |
Ranking | The new notes and the guarantee will rank equally with all of our and the guarantor’s existing and future senior unsecured indebtedness, and will rank senior to all of our and the guarantor’s existing and future subordinated indebtedness. The new notes and the guarantee will be effectively subordinated to all of our and the guarantor’s existing and future secured indebtedness, to the extent of the collateral securing such indebtedness. The new notes and the guarantee also will be effectively subordinated to all indebtedness and other liabilities, including trade payables, of all our subsidiaries other than AREH. As of March 31, 2005, the new notes and the guarantee would have been effectively subordinated to an aggregate of $295.2 million of AREH’s secured debt and our subsidiaries’ debt, excluding trade payables. | |
Guarantee | If we cannot make payments on the new notes when they are due, AREH must make them instead. Other than AREH, none of our subsidiaries will guarantee payments on the new notes. | |
Optional Redemption | We may, at our option, redeem some or all of the new notes at any time on or after February 15, 2009, at the redemption prices listed under “Description of Notes — Optional Redemption.” |
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In addition, prior to February 15, 2008, we may, at our option, redeem up to 35% of the new notes with the proceeds of certain sales of our equity at the redemption price listed under “Description of Notes — Optional Redemption.” We may make the redemption only if, after the redemption, at least 65% of the aggregate principal amount of the notes issued remains outstanding. | ||
Redemption Based on Gaming Laws | The new notes are subject to mandatory disposition and redemption requirements following certain determinations by applicable gaming authorities. | |
Certain Covenants | We will issue the new notes under an indenture with AREH and Wilmington Trust Company, as trustee acting on your behalf. The indenture will, among other things, restrict our and AREH’s ability to: | |
• Incur additional debt; | ||
• Pay dividends and make distributions; | ||
• Repurchase equity securities; | ||
• Create liens; | ||
• Enter into transactions with affiliates; and | ||
• Merge or consolidate. | ||
Our subsidiaries other than AREH will not be restricted in their ability to incur debt, create liens or merge or consolidate. | ||
Absence of Established Market for Notes | The new notes will be new securities for which there is currently no market. We cannot assure you that a liquid market for the new notes will develop or be maintained. |
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(1) | Our partnership units consist of depositary units, representing limited partnership interests, and preferred units, representing preferred limited partnership interests. As of March 31, 2005, there were 46,098,284 depositary units outstanding and 10,800,397 preferred units outstanding. As consideration for the acquisition of the other managing membership interest in NEG Holding, of Panaco and of GB Holdings and Atlantic Holdings common stock, affiliates of Mr. Icahn will receive up to 16,068,966 depositary units. If all such units were issued, there would be 62,374,147 depositary units outstanding and 10,800,397 preferred units outstanding and Mr. Icahn would be the beneficial owner of 46,172,699 depositary units representing approximately 90.1% of the depositary units. The number of depositary units to be issued does not include up to an additional 206,897 depositary units which may be issued to affiliates of Mr. Icahn if Atlantic Holdings meets certain earnings targets during 2005 and 2006. |
(2) | Substantially all of our marketable debt and equity securities and rental real estate properties are owned, directly or indirectly, by AREH. |
(3) | We anticipate that AREH will contribute its 50.01% interest in NEG to its wholly-owned subsidiary, AREP Oil & Gas. NEG is a publicly held company, the stock of which currently trades on the OTC Bulletin Board. NEG owns a membership interest in NEG Holding. Upon completion of the Acquisitions, AREP Oil & Gas will, directly or indirectly, own the other membership interest in NEG Holding and 100% of the equity of TransTexas and Panaco. |
(4) | AREH, through direct and indirect wholly-owned subsidiaries, is engaged in real estate investment, management and development, focused primarily on the acquisition, development, construction and sale |
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of single-family homes, custom-built homes, multi-family homes and lots in subdivisions and planned communities. | |
(5) | AREH, through direct and indirect wholly-owned subsidiaries, owns Grand Harbor and Oak Harbor, waterfront communities located in Vero Beach, Florida. |
(6) | AREH, through direct and indirect wholly-owned subsidiaries, owns a 381 acre resort community in Cape Cod, Massachusetts. |
(7) | American Entertainment Properties Corp., through American Casino & Entertainment Properties LLC, or ACEP, and its indirect subsidiaries, owns three Las Vegas hotels and casinos. |
(8) | AREP Sands owns approximately 36.3% of the outstanding common stock of GB Holdings, 41.9% of the outstanding common stock of Atlantic Coast Entertainment Holdings, Inc. and approximately $35.0 million principal amount of the Atlantic Holdings 3% notes due 2008, or the Atlantic Holdings Notes, or approximately 93.5% of the outstanding principal amount of the notes. Upon completion of the Acquisitions, AREP Sands will own approximately 77.5% of the outstanding GB Holdings common stock, approximately 58.3% of the outstanding Atlantic Holdings common stock and approximately $35.0 million principal amount of the Atlantic Holdings Notes. If all outstanding Atlantic Holdings notes were converted and warrants exercised, AREP Sands would own approximately 63.4% of Atlantic Holdings common stock, GB Holdings would own approximately 28.8% of the Atlantic Holdings common stock and the remaining shares would be owned by the public. |
(9) | NEG and Gascon each owns a membership interest in NEG Holding. We have agreed to purchase from Gascon its membership interest in NEG Holding. Pursuant to the NEG Holding operating agreement, NEG is required to be paid guaranteed payments, calculated at an annual interest rate of 10.75% on the outstanding priority amount, which includes all outstanding debt owed to entities owned or controlled by Mr. Icahn, including the amount of the NEG Notes. As of March 31, 2005, the priority amount was $148.6 million. The NEG Holding operating agreement provides that the priority amount is required to be paid to NEG by November 6, 2006. After NEG is paid the guaranteed payments and the priority amount, Gascon is paid an amount equal to the guaranteed payments and the priority amount plus interest. After these distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts, as defined in the operating agreement. |
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• | exchanges its private notes in the exchange offer for the purpose of participating in a distribution of the new notes, or | |
• | resells new notes that were received by it for its own account in the exchange offer, |
• | the number of holders of the new notes; | |
• | our performance; and | |
• | the market for similar securities and the interest of securities dealers in making a market in the new notes. |
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• | received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and | |
• | was insolvent or rendered insolvent by reason of such incurrence; or | |
• | was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or | |
• | intended to incur, or believed that it would incur, debts beyond 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 all of its 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 debts as they become due. |
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• | to exercise, directly or through any trustee or nominee, any right conferred by such securities, or | |
• | to receive any dividends or interest upon such securities or any remuneration, in any form, from its affiliated casino licensee for services rendered or otherwise. |
• | pay to the unsuitable person any dividend, interest, or any distribution whatsoever; | |
• | recognize any voting right of the unsuitable person with respect to such securities; | |
• | pay the unsuitable person remuneration in any form; or | |
• | make any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction. |
• | the lesser of the cost paid by the holder or the fair market value of the notes, in each case, plus accrued and unpaid interest and liquidated damages, if any, to the earlier of the date of redemption, or earlier as may be required by the Nevada gaming authorities or the finding of unsuitability by the Nevada gaming authorities; or | |
• | such other lesser amount as may be ordered by the Nevada gaming authorities. |
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• | to exercise, directly or indirectly, any right conferred by the notes or the indenture; or | |
• | to receive from us any interest, dividends or any other distributions or payments, or any remuneration in any form, relating to the notes, except the redemption price we refer to above. |
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• | potential changes in the tax or regulatory environment which impose additional restrictions or increase operating costs; | |
• | our properties use significant amounts of electricity, natural gas and other forms of energy, and energy price increases may reduce our working capital; | |
• | our Nevada properties use significant amounts of water and a water shortage may adversely affect our operations; |
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• | an increase in the cost of health care benefits for our employees could have a negative impact on our profitability; | |
• | some of our employees are covered by collective bargaining agreements and we may incur higher costs or work slow-downs or stoppages due to union activities; | |
• | our reliance on slot machine revenues and the concentration of manufacturing of slot machines in certain companies could impose additional costs on us; and | |
• | our insurance coverage may not be adequate to cover all possible losses and our insurance costs may increase. |
• | we compete with many world class destination resorts with greater name recognition, different attractions, amenities and entertainment options; | |
• | we compete with the continued growth of gaming on Native American tribal lands; | |
• | the existence of legalized gambling in other jurisdictions may reduce the number of visitors to our properties; | |
• | certain states have legalized, and others may legalize, casino gaming in specific venues, including race tracks and/or in specific areas, including metropolitan areas from which we traditionally attract customers; and | |
• | our properties also compete and will in the future compete with all forms of legalized gambling. |
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• | unexpected drilling conditions; | |
• | pressure or irregularities in formation; | |
• | equipment failures or repairs; | |
• | fires or other accidents; | |
• | adverse weather conditions; | |
• | pipeline ruptures or spills; and | |
• | shortages or delays in the availability of drilling rigs and the delivery of equipment. |
We may experience difficulty finding and acquiring additional reserves and be unable to compensate for the depletion of our proved reserves. |
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Difficulties in exploration and development could adversely affect our financial condition. |
Oil and gas prices are likely to be volatile. |
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There is inherent uncertainty in estimates of reserves which may affect future net cash flows. |
Operating hazards and uninsured risks are inherent to the oil and gas industry. |
Our use of hedging arrangements could reduce our income. |
Government regulations impose costs on abandoning oil and gas facilities. |
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The oil and gas industry is highly competitive. |
We may not be able to identify suitable investments, and our investments may not result in favorable returns or may result in losses. |
Our investments may be subject to significant uncertainties. |
• | fluctuation of interest rates; | |
• | lack of control in minority investments; | |
• | worsening of general economic and market conditions; | |
• | lack of diversification; | |
• | inexperience with non-real estate areas; | |
• | fluctuation of U.S. dollar exchange rates; and | |
• | adverse legal and regulatory developments that may affect particular businesses. |
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• | file a registration statement with the Securities and Exchange Commission with respect to the exchange of the private notes for new notes, or the exchange offer registration statement, no later than 180 days after the date we issued the private notes; | |
• | use all commercially reasonable efforts to have the exchange offer registration statement declared effective by the SEC on or prior to 300 days after the issuance date; and | |
• | commence the offer to exchange new notes for the private notes and use all commercially reasonable efforts to issue on or prior to 30 business days, or longer if required by the federal securities laws, after the date on which the exchange offer registration statement was declared effective by the SEC, new notes in exchange for all private notes tendered prior to that date in the exchange offer. |
• | will not be able to tender its private notes in the exchange offer; | |
• | will not be able to rely on the interpretations of the staff of the SEC; and | |
• | must comply with the registration and prospectus delivery requirements of the Securities Act of 1933 in connection with any sale or transfer of the private notes unless such sale or transfer is made pursuant to an exemption from these requirements. |
• | you are not our “affiliate” (as defined in Rule 405 under the Securities Act of 1933); | |
• | any new notes to be received by you will be acquired in the ordinary course of your business; | |
• | you have no arrangement or understanding with any person to participate in the distribution of the new notes in violation of the provisions of the Securities Act of 1933; | |
• | if you are not a broker-dealer, you are not engaged in, and do not intend to engage in, a distribution of new notes; and | |
• | if you are a broker-dealer, you acquired the private notes for your own account as a result of market-making or other trading activities (and as such, you are a “participating broker-dealer”), you have not entered into any arrangement or understanding with American Real Estate Partners, L.P. or an affiliate |
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of American Real Estate Partners, L.P. to distribute the new notes and you will deliver a prospectus meeting the requirements of the Securities Act of 1933 in connection with any resale of the new notes. |
(1) the offering of the new notes has been registered under the Securities Act of 1933; | |
(2) the new notes generally will not be subject to transfer restrictions or have registration rights; and | |
(3) certain provisions relating to liquidated damages on the private notes provided for under certain circumstances will be eliminated. |
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• | notify the exchange agent of any extension orally or in writing; and | |
• | notify the registered holders of the private notes by means of a press release or other public announcement, each before 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. |
• | to delay accepting any private notes; | |
• | to extend the exchange offer; or | |
• | if any conditions listed below under “— Conditions” are not satisfied, to terminate the exchange offer by giving oral or written notice of the delay, extension or termination to the exchange agent. |
• | complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal; | |
• | have the signatures thereof guaranteed if required by the letter of transmittal; and | |
• | mail or otherwise deliver the letter of transmittal or such facsimile to the exchange agent, at the address listed below under “— Exchange Agent” for receipt prior to the expiration date. |
• | the exchange agent must receive certificates for the private notes along with the letter of transmittal into its account at the Depository Trust Company pursuant to the procedure described under “— Book-Entry Transfer” before the expiration date; | |
• | the exchange agent must receive a timely confirmation of a book-entry transfer, if the procedure is available, into its account at the Depository Trust Company pursuant to the procedure described under “— Book-Entry Transfer” before the expiration date; or | |
• | you must comply with the procedures described under “Guaranteed Delivery Procedures.” |
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• | make appropriate arrangements to register ownership of your private notes in your name; or | |
• | obtain a properly completed bond power from the registered holder. |
• | by a registered holder who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instruction” on the letter of transmittal; or | |
• | for the account of an “Eligible Institution” which is either: |
• | a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.; | |
• | a commercial bank or trust company located or having an office or correspondent in the United States; or | |
• | otherwise an “eligible guarantor institution” within meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934. |
• | All questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of the tendered private notes will be determined by us in our sole discretion, which determination will be final and binding; | |
• | We reserve the absolute right to reject any and all private notes not properly tendered or any private notes the acceptance of which would, in our judgment or the judgment of our counsel, be unlawful; | |
• | We also reserve the absolute right to waive any irregularities or conditions of tender as to particular private notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any |
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defects or irregularities in connection with tenders of private notes must be cured within such time as we shall determine; | ||
• | Although we intend to notify holders of defects or irregularities with respect to any tender of private notes, neither we, the exchange agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to tenders of private notes, nor shall any of them incur any liability for failure to give such notification; and | |
• | Tenders of private notes will not be deemed to have been made until such irregularities have been cured or waived. Any private notes received by the exchange agent that we determine are not properly tendered or the tender of which is otherwise rejected by us and as to which the defects or irregularities have not been cured or waived by us will be returned by the exchange agent to the tendering holder unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date. |
(1) the tender is made through an Eligible Institution; | |
(2) prior to the expiration date, the exchange agent receives from such Eligible Institution a properly completed and duly executed notice of guaranteed delivery, by facsimile transmittal, mail or hand delivery |
• | stating the name and address of the holder, the certificate number or numbers of such holder’s private notes and the principal amount of such private notes tendered; | |
• | stating that the tender is being made thereby; and |
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• | guaranteeing that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or a facsimile thereof, together with the certificate(s) representing the private notes to be tendered in proper form for transfer, or confirmation of a book-entry transfer into the exchange agent’s account at the Depository Trust Company of private notes delivered electronically, and any other documents required by the letter of transmittal, will be deposited by the Eligible Institution with the exchange agent; and |
(3) such properly completed and executed letter of transmittal, or a facsimile thereof, together with the certificate(s) representing all tendered private notes in proper form for transfer, or confirmation of a book-entry transfer into the exchange agent’s account at the Depository Trust Company of private notes delivered electronically 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 expiration date. |
• | specify the name of the person who deposited the private notes to be withdrawn; | |
• | identify the private notes to be withdrawn, including the certificate number or number and principal amount of such private notes or, in the case of private notes transferred by book-entry transfer, the name and number of the account at the Depository Trust Company to be credited; and | |
• | be signed in the same manner as the original signature on the letter of transmittal by which such private notes were tendered, including any required signature guarantee. |
• | the exchange offer violates applicable law, rules or regulations or an applicable interpretation of the staff of the SEC; | |
• | an action or proceeding has been instituted or threatened in any court or by any governmental agency which might materially impair our ability to proceed with the exchange offer; | |
• | there has been proposed, adopted or enacted any law, rule or regulation that, in our reasonable judgment would impair materially our ability to consummate the exchange offer; or | |
• | all governmental approvals which we deem necessary for the completion of the exchange offer have not been obtained. |
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• | refuse to accept any private notes and return all tendered private notes to you; | |
• | extend the exchange offer and retain all private notes tendered before the exchange offer expires, subject, however, to your rights to withdraw the private notes; or | |
• | waive the unsatisfied conditions with respect to the exchange offer and accept all properly tendered private notes that have not been withdrawn. |
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• | to a person whom the seller reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A under the Securities Act of 1933; | |
• | in a transaction meeting the requirements of Rule 144 under the Securities Act of 1933; | |
• | outside the United States to a foreign person in a transaction meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act of 1933; | |
• | in accordance with another exemption from the registration requirements of the Securities Act of 1933 and based upon an opinion of counsel if we so request; | |
• | to us; or | |
• | pursuant to an effective registration statement. |
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(i) The Acquisitions; and | |
(ii) The issuance of $480.0 million of Senior Notes due 2013 at an interest rate of 71/8% per annum in February 2005. |
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Historical(1) | ||||||||||||||||||||||||||||||||||||||
Pro Forma | Pro Forma | |||||||||||||||||||||||||||||||||||||
AREP | NEG | GB | Intercompany | Historical | Adjustments | Intercompany | ||||||||||||||||||||||||||||||||
(Supplemental)(2) | Holding | Panaco | Holdings | Adjustments | Combined | Acquisitions(1)(2) | Adjustments(3) | Pro Forma | ||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||
Current Assets | ||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,250,074 | $ | 10,999 | $ | 9,721 | $ | 14,929 | $ | $ | 1,285,723 | $ | (180,000 | ) | $ | $ | 1,105,723 | |||||||||||||||||||||
Investment in U.S. Government and Agency obligations | 68,894 | 68,894 | 68,894 | |||||||||||||||||||||||||||||||||||
Marketable equity and debt securities | 68,497 | 68,497 | 68,497 | |||||||||||||||||||||||||||||||||||
Due from brokers | 147,223 | 147,223 | 147,223 | |||||||||||||||||||||||||||||||||||
Restricted cash | 28,537 | 28,537 | 28,537 | |||||||||||||||||||||||||||||||||||
Receivables and other assets | 52,567 | 19,992 | 25,642 | 16,421 | (11,549 | ) | 103,073 | 103,073 | ||||||||||||||||||||||||||||||
Real estate leased to others under the financing method | 3,740 | 3,740 | 3,740 | |||||||||||||||||||||||||||||||||||
Properties held for sale | 33,995 | 33,995 | 33,995 | |||||||||||||||||||||||||||||||||||
Current portion of investment in debt securities of affiliates | 5,429 | (5,429 | ) | — | — | |||||||||||||||||||||||||||||||||
Current portion of deferred tax asset | 2,685 | 3,567 | 6,252 | 6,252 | ||||||||||||||||||||||||||||||||||
Total current assets | 1,661,641 | 30,991 | 38,930 | 31,350 | (16,978 | ) | 1,745,934 | (180,000 | ) | — | 1,565,934 | |||||||||||||||||||||||||||
Investment in U.S. Government and Agency obligations | 5,533 | 5,533 | 5,533 | |||||||||||||||||||||||||||||||||||
Other investments | 244,602 | 244,602 | 466,000 | (466,000 | ) | 244,602 | ||||||||||||||||||||||||||||||||
Land and construction-in- progress | 106,000 | 106,000 | 106,000 | |||||||||||||||||||||||||||||||||||
Real estate leased to others: | ||||||||||||||||||||||||||||||||||||||
Accounted for under the financing method | 75,949 | 75,949 | 75,949 | |||||||||||||||||||||||||||||||||||
Accounted for under the operating method, net | 51,127 | 51,127 | 51,127 | |||||||||||||||||||||||||||||||||||
Oil and gas properties, net | 180,241 | 245,216 | 96,319 | 521,776 | 521,776 | |||||||||||||||||||||||||||||||||
Hotel, casino and resort operating properties, net: | ||||||||||||||||||||||||||||||||||||||
Hotel and Casino | 288,890 | 168,237 | 457,127 | 457,127 | ||||||||||||||||||||||||||||||||||
Hotel and resorts | 46,041 | 46,041 | 46,041 | |||||||||||||||||||||||||||||||||||
Deferred finance costs and other assets | 24,831 | 4,052 | 19,632 | 17,467 | 65,982 | 65,982 | ||||||||||||||||||||||||||||||||
Long-term portion of investment in debt securities of affiliates | 91,864 | (91,864 | ) | — | — | |||||||||||||||||||||||||||||||||
Investment in NEG Holding LLC | 97,693 | (97,693 | ) | — | — | |||||||||||||||||||||||||||||||||
Equity interest in GB Holdings, Inc. | 9,138 | (9,138 | ) | — | — | |||||||||||||||||||||||||||||||||
Equity investment | — | 2,170 | 2,170 | 2,170 | ||||||||||||||||||||||||||||||||||
Deferred tax asset | 52,147 | 21,340 | 73,487 | 73,487 | ||||||||||||||||||||||||||||||||||
Total | $ | 2,935,697 | $ | 282,429 | $ | 176,221 | $ | 217,054 | $ | (215,673 | ) | $ | 3,395,728 | $ | 286,000 | $ | (466,000 | ) | $ | 3,215,728 | ||||||||||||||||||
39
Table of Contents
Historical(1) | ||||||||||||||||||||||||||||||||||||||
Pro Forma | Pro Forma | |||||||||||||||||||||||||||||||||||||
AREP | NEG | GB | Intercompany | Historical | Adjustments | Intercompany | ||||||||||||||||||||||||||||||||
(Supplemental)(2) | Holding | Panaco | Holdings | Adjustments | Combined | Acquisitions(1)(2) | Adjustments(3) | Pro Forma | ||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||
LIABILITIES AND PARTNERS’/ SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||||
Current Liabilities | ||||||||||||||||||||||||||||||||||||||
Current portion of mortgages payable | $ | 4,205 | $ | $ | $ | $ | $ | 4,205 | $ | $ | $ | 4,205 | ||||||||||||||||||||||||||
Mortgages on properties held for sale | 20,372 | 20,372 | 20,372 | |||||||||||||||||||||||||||||||||||
Due to affiliate | 10,000 | (10,000 | ) | — | — | |||||||||||||||||||||||||||||||||
Line of credit | — | 4,000 | 4,000 | 4,000 | ||||||||||||||||||||||||||||||||||
Current portion note payable | — | 43,741 | 43,741 | 43,741 | ||||||||||||||||||||||||||||||||||
Current portion of long-term debt | — | 5,429 | (5,429 | ) | — | — | ||||||||||||||||||||||||||||||||
Accounts payable and other liabilities | 96,814 | 35,699 | 15,029 | 22,500 | (207 | ) | 169,835 | 169,835 | ||||||||||||||||||||||||||||||
Securities sold not yet purchased | 83,750 | 83,750 | 83,750 | |||||||||||||||||||||||||||||||||||
Total current liabilities | 215,141 | 35,699 | 20,458 | 70,241 | (15,636 | ) | 325,903 | — | — | 325,903 | ||||||||||||||||||||||||||||
Other liabilities | 28,133 | 13,782 | 2,258 | 5,881 | (1,342 | ) | 48,712 | 48,712 | ||||||||||||||||||||||||||||||
Mortgages payable: | ||||||||||||||||||||||||||||||||||||||
Real estate leased to others | 55,614 | 55,614 | 55,614 | |||||||||||||||||||||||||||||||||||
Senior secured notes payable and credit facility | 215,000 | 215,000 | 215,000 | |||||||||||||||||||||||||||||||||||
Senior unsecured notes payable, net | 350,679 | 350,679 | 350,679 | |||||||||||||||||||||||||||||||||||
Senior unsecured notes payable | 480,000 | 480,000 | 480,000 | |||||||||||||||||||||||||||||||||||
Long-term debt, net of current portion | — | 66,834 | 31,214 | 66,259 | (95,138 | ) | 69,169 | 69,169 | ||||||||||||||||||||||||||||||
Asset retirement obligation | 3,999 | 3,116 | 33,600 | 40,715 | 40,715 | |||||||||||||||||||||||||||||||||
Preferred limited partnership units | 108,006 | 108,006 | 108,006 | |||||||||||||||||||||||||||||||||||
Total long-term liabilities | 1,241,431 | 83,732 | 67,072 | 72,140 | (96,480 | ) | 1,367,895 | — | — | 1,367,895 | ||||||||||||||||||||||||||||
Warrants in Atlantic Coast Entertainment Holdings, Inc. | — | 43,587 | (43,587 | ) | — | — | ||||||||||||||||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||||||||||||
Minority interests | — | 16,808 | 16,808 | 16,808 | ||||||||||||||||||||||||||||||||||
Partners’/Shareholders Equity | ’ | |||||||||||||||||||||||||||||||||||||
Limited partners equity | 1,383,913 | 1,383,913 | 466,000 | (6,773 | ) | 1,843,140 | ||||||||||||||||||||||||||||||||
General partner equity | 107,133 | 107,133 | (433,230 | ) | (326,097 | ) | ||||||||||||||||||||||||||||||||
Treasury units at cost | (11,921 | ) | (11,921 | ) | (11,921 | ) | ||||||||||||||||||||||||||||||||
Shareholders’ equity | — | 162,998 | 88,691 | 31,086 | (76,778 | ) | 205,997 | (180,000 | ) | (25,997 | ) | — | ||||||||||||||||||||||||||
Partners’/ Shareholders’ equity | 1,479,125 | 162,998 | 88,691 | 31,086 | (76,778 | ) | 1,685,122 | 286,000 | (466,000 | ) | 1,505,122 | |||||||||||||||||||||||||||
Total | $ | 2,935,697 | $ | 282,429 | $ | 176,221 | $ | 217,054 | $ | (215,673 | ) | $ | 3,395,728 | $ | 286,000 | $ | (466,000 | ) | $ | 3,215,728 | ||||||||||||||||||
40
Table of Contents
Historical(1) | |||||||||||||||||||||||||||||||||
AREP | NEG | GB | Intercompany | Historical | Debt | ||||||||||||||||||||||||||||
(Supplemental)(2) | Holding | Panaco | Holdings | Adjustments | Combined | Offering(5) | Pro Forma | ||||||||||||||||||||||||||
(In thousands, except unit and per unit data) | |||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||
Hotel and casino operating income | $ | 82,838 | $ | $ | $ | 39,965 | $ | (136 | ) | $ | 122,667 | $ | $ | 122,667 | |||||||||||||||||||
Land, house and condominium sales | 8,279 | 8,279 | 8,279 | ||||||||||||||||||||||||||||||
Interest income on financing leases | 1,966 | 1,966 | 1,966 | ||||||||||||||||||||||||||||||
Interest income on U.S. Government and Agency obligations and other investments | 12,902 | 132 | 107 | (602 | ) | 12,539 | 12,539 | ||||||||||||||||||||||||||
Rental income | 2,035 | 2,035 | 2,035 | ||||||||||||||||||||||||||||||
Hotel and resort operating income | 5,563 | 5,563 | 5,563 | ||||||||||||||||||||||||||||||
Oil and gas operating income | 15,422 | 25,490 | 12,707 | 53,619 | 53,619 | ||||||||||||||||||||||||||||
Accretion of investment in NEG Holding LLC | 9,893 | (9,893 | ) | — | — | ||||||||||||||||||||||||||||
NEG management fee | 2,108 | (2,108 | ) | — | — | ||||||||||||||||||||||||||||
Dividend and other income | 4,206 | 4,206 | 4,206 | ||||||||||||||||||||||||||||||
Equity in losses of equity method investees | (986 | ) | 986 | — | — | ||||||||||||||||||||||||||||
144,226 | 25,490 | 12,839 | 40,072 | (11,753 | ) | 210,874 | — | 210,874 | |||||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||||||||||
Hotel and casino operating expenses | 57,624 | 37,468 | (304 | ) | 94,788 | 94,788 | |||||||||||||||||||||||||||
Cost of land, house and condominium sales | 7,047 | 7,047 | 7,047 | ||||||||||||||||||||||||||||||
Hotel and resort operating expenses | 5,405 | 5,405 | 5,405 | ||||||||||||||||||||||||||||||
Oil and gas operating expenses | 2,866 | 6,449 | 5,551 | (2,108 | ) | 12,758 | 12,758 | ||||||||||||||||||||||||||
Interest expense | 19,265 | 916 | 604 | 2,451 | (1,074 | ) | 22,162 | 3,575 | 25,737 | ||||||||||||||||||||||||
Depreciation, depletion and amortization | 16,167 | 6,688 | 4,842 | 4,026 | 31,723 | 31,723 | |||||||||||||||||||||||||||
General and administrative expenses | 7,610 | 7,610 | 7,610 | ||||||||||||||||||||||||||||||
Property expenses | 952 | 952 | 952 | ||||||||||||||||||||||||||||||
116,936 | 14,053 | 10,997 | 43,945 | (3,486 | ) | 182,445 | 3,575 | 186,020 | |||||||||||||||||||||||||
Operating income (loss) | 27,290 | 11,437 | 1,842 | (3,873 | ) | (8,267 | ) | 28,429 | (3,575 | ) | 24,854 | ||||||||||||||||||||||
Other gains and (losses): | |||||||||||||||||||||||||||||||||
Other losses | (180 | ) | (180 | ) | (180 | ) | |||||||||||||||||||||||||||
Unrealized gains on securities sold short | 21,704 | 21,704 | 21,704 | ||||||||||||||||||||||||||||||
Gain on sales and disposition of real estate and other assets | 186 | 4 | 190 | 190 | |||||||||||||||||||||||||||||
Debt restructuring/ reorganization costs | — | (24 | ) | (24 | ) | (24 | ) | ||||||||||||||||||||||||||
Change in fair value of derivative contracts | (9,813 | ) | (22,620 | ) | (6,336 | ) | (38,769 | ) | (38,769 | ) | |||||||||||||||||||||||
Minority interest | — | 932 | 932 | 932 | |||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 39,187 | (11,183 | ) | (4,494 | ) | (3,893 | ) | (7,335 | ) | 12,282 | (3,575 | ) | 8,707 | ||||||||||||||||||||
Income tax (expense) benefit | (4,782 | ) | 1,624 | (247 | ) | (3,405 | ) | (3,405 | ) | ||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 34,405 | $ | (11,183 | ) | $ | (2,870 | ) | $ | (4,140 | ) | $ | (7,335 | ) | $ | 8,877 | $ | (3,575 | ) | $ | 5,302 | ||||||||||||
Income from continuing operations attributable to: | |||||||||||||||||||||||||||||||||
Limited partners | $ | 38,940 | $ | 10,416 | |||||||||||||||||||||||||||||
General partner | (4,535 | ) | (5,114 | ) | |||||||||||||||||||||||||||||
$ | 34,405 | $ | 5,302 | ||||||||||||||||||||||||||||||
Income from continuing operations per LP unit: | |||||||||||||||||||||||||||||||||
Basic earnings: | |||||||||||||||||||||||||||||||||
Income from continuing operations per LP unit | $ | 0.84 | $ | 0.17 | |||||||||||||||||||||||||||||
Weighted average units outstanding | 46,098,284 | 62,167,250 | |||||||||||||||||||||||||||||||
Diluted earnings: | |||||||||||||||||||||||||||||||||
Income from continuing operations per LP unit | $ | 0.81 | $ | 0.17 | |||||||||||||||||||||||||||||
Weighted average units and equivalent partnership units outstanding | 49,857,622 | 62,167,250 | |||||||||||||||||||||||||||||||
41
Table of Contents
Other Pro Forma Adjustments | |||||||||||||||||||||||||||||||||||||||||
Panaco | |||||||||||||||||||||||||||||||||||||||||
Historical(1) | Intercompany | ||||||||||||||||||||||||||||||||||||||||
and | |||||||||||||||||||||||||||||||||||||||||
AREP | NEG | GB | Intercompany | Historical | Bankruptcy | Debt | Prior Debt | ||||||||||||||||||||||||||||||||||
(Supplemental)(2) | Holding | Holdings | Adjustments | Combined | Panaco(1) | Adjustment(4) | Offering(5) | Offering(6) | Pro Forma | ||||||||||||||||||||||||||||||||
(In thousands, except unit and per unit data) | |||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||
Hotel and casino operating income | $ | 299,981 | $ | $ | 171,243 | $ | (359 | ) | $ | 470,865 | $ | $ | $ | $ | $ | 470,865 | |||||||||||||||||||||||||
Land, house and condominium sales | 26,591 | 26,591 | 26,591 | ||||||||||||||||||||||||||||||||||||||
Interest income on financing leases | 9,880 | 9,880 | 9,880 | ||||||||||||||||||||||||||||||||||||||
Interest income on U.S. Government and Agency obligations and other investments | 44,376 | 449 | 422 | (156 | ) | 45,091 | 684 | (684 | ) | 45,091 | |||||||||||||||||||||||||||||||
Rental income | 7,916 | 7,916 | 7,916 | ||||||||||||||||||||||||||||||||||||||
Hotel and resort operating income | 16,211 | 16,211 | 16,211 | ||||||||||||||||||||||||||||||||||||||
Accretion of investment in NEG Holding LLC | 34,432 | (34,432 | ) | — | — | ||||||||||||||||||||||||||||||||||||
NEG management fee | 6,887 | (6,887 | ) | — | — | ||||||||||||||||||||||||||||||||||||
Dividend and other income | 3,616 | 3,616 | 48 | 3,664 | |||||||||||||||||||||||||||||||||||||
Equity in losses of equity method investees | (2,113 | ) | (519 | ) | 2,113 | (519 | ) | (519 | ) | ||||||||||||||||||||||||||||||||
Oil and gas operating income | 58,419 | 78,727 | 137,146 | 51,234 | 188,380 | ||||||||||||||||||||||||||||||||||||
506,196 | 78,657 | 171,665 | (39,721 | ) | 716,797 | �� | 51,966 | (684 | ) | — | — | 768,079 | |||||||||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||||||||||||||||||
Hotel and casino operating expenses | 227,603 | 154,252 | (639 | ) | 381,216 | 381,216 | |||||||||||||||||||||||||||||||||||
Cost of land, house and condominium sales | 18,486 | 18,486 | 18,486 | ||||||||||||||||||||||||||||||||||||||
Hotel and resort operating expenses | 12,730 | 12,730 | 12,730 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 49,669 | 2,716 | 11,115 | (4,754 | ) | 58,746 | 2,517 | (2,321 | ) | 35,263 | 12,285 | 106,490 | |||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 68,291 | 21,647 | 14,898 | 104,836 | 25,965 | 130,801 | |||||||||||||||||||||||||||||||||||
General and administrative expenses | 20,952 | 20,952 | 20,952 | ||||||||||||||||||||||||||||||||||||||
Property expenses | 4,340 | 4,340 | 4,340 | ||||||||||||||||||||||||||||||||||||||
Oil and gas operating expenses | 13,816 | 25,172 | (6,162 | ) | 32,826 | 18,095 | (725 | ) | 50,196 | ||||||||||||||||||||||||||||||||
Provision for loss on real estate | 3,150 | 3,150 | 3,150 | ||||||||||||||||||||||||||||||||||||||
419,037 | 49,535 | 180,265 | (11,555 | ) | 637,282 | 46,577 | (3,046 | ) | 35,263 | 12,285 | 728,361 | ||||||||||||||||||||||||||||||
Operating income (loss) | 87,159 | 29,122 | (8,600 | ) | (28,166 | ) | 79,515 | 5,389 | 2,362 | (35,263 | ) | (12,285 | ) | 39,718 | |||||||||||||||||||||||||||
Other gains and (losses): | |||||||||||||||||||||||||||||||||||||||||
Gain on sale of other assets | 1,680 | 1,680 | 1,680 | ||||||||||||||||||||||||||||||||||||||
Gain on sale of marketable equity and debt securities and other investments | 40,159 | 40,159 | 40,159 | ||||||||||||||||||||||||||||||||||||||
Unrealized losses on securities sold short | (23,619 | ) | (23,619 | ) | (23,619 | ) | |||||||||||||||||||||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | (15,600 | ) | (15,600 | ) | (15,600 | ) | |||||||||||||||||||||||||||||||||||
Gain on retirement/ restructuring of debt | — | — | 51,268 | (51,268 | ) | — | |||||||||||||||||||||||||||||||||||
Gain on restructuring of payables | — | — | 12,495 | (12,495 | ) | — | |||||||||||||||||||||||||||||||||||
Gain (loss) on sale and disposition of real estate and other assets | 5,262 | (152 | ) | 5,110 | (76 | ) | 5,034 | ||||||||||||||||||||||||||||||||||
Severance tax refund | 4,468 | 4,468 | 4,468 | ||||||||||||||||||||||||||||||||||||||
Debt restructuring/ reorganization costs | — | (3,084 | ) | (3,084 | ) | (7,355 | ) | 7,355 | (3,084 | ) | |||||||||||||||||||||||||||||||
Minority interest | (812 | ) | 2,886 | 2,074 | 2,074 | ||||||||||||||||||||||||||||||||||||
42
Table of Contents
Other Pro Forma Adjustments | |||||||||||||||||||||||||||||||||||||||||
Panaco | |||||||||||||||||||||||||||||||||||||||||
Historical(1) | Intercompany | ||||||||||||||||||||||||||||||||||||||||
and | |||||||||||||||||||||||||||||||||||||||||
AREP | NEG | GB | Intercompany | Historical | Bankruptcy | Debt | Prior Debt | ||||||||||||||||||||||||||||||||||
(Supplemental)(2) | Holding | Holdings | Adjustments | Combined | Panaco(1) | Adjustment(4) | Offering(5) | Offering(6) | Pro Forma | ||||||||||||||||||||||||||||||||
(In thousands, except unit and per unit data) | |||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 98,697 | 29,122 | (11,836 | ) | (25,280 | ) | 90,703 | 61,721 | (54,046 | ) | (35,263 | ) | (12,285 | ) | 50,830 | ||||||||||||||||||||||||||
Income tax (expense) benefit | (17,326 | ) | (986 | ) | (18,312 | ) | 22,877 | 4,565 | |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 81,371 | $ | 29,122 | $ | (12,822 | ) | $ | (25,280 | ) | $ | 72,391 | $ | 84,598 | $ | (54,046 | ) | $ | (35,263 | ) | $ | (12,285 | ) | $ | 55,395 | ||||||||||||||||
Income from continuing operations attributable to: | |||||||||||||||||||||||||||||||||||||||||
Limited partners | $ | 71,456 | $ | 45,997 | |||||||||||||||||||||||||||||||||||||
General partner | 9,915 | 9,398 | |||||||||||||||||||||||||||||||||||||||
$ | 81,371 | $ | 55,395 | ||||||||||||||||||||||||||||||||||||||
Income from continuing operations per LP unit: | |||||||||||||||||||||||||||||||||||||||||
Basic earnings: | |||||||||||||||||||||||||||||||||||||||||
Income from continuing operations per LP unit | $ | 1.55 | $ | 0.74 | |||||||||||||||||||||||||||||||||||||
Weighted average units outstanding | 46,098,284 | 62,167,250 | |||||||||||||||||||||||||||||||||||||||
Diluted earnings: | |||||||||||||||||||||||||||||||||||||||||
Income from continuing operations per LP unit | $ | 1.48 | $ | 0.74 | |||||||||||||||||||||||||||||||||||||
Weighted average units and equivalent partnership units outstanding | 51,542,312 | 62,167,250 | |||||||||||||||||||||||||||||||||||||||
43
Table of Contents
Historical(1) | |||||||||||||||||||||
AREP | NEG | Intercompany | Historical | ||||||||||||||||||
(Supplemental)(2) | Holding | GB Holdings | Adjustments | Combined | |||||||||||||||||
(In $000’s) | |||||||||||||||||||||
Revenues: | |||||||||||||||||||||
Hotel and casino operating income | $ | 262,811 | $ | $ | 167,749 | $ | (191 | ) | $ | 430,369 | |||||||||||
Land, house and condominium sales | 13,265 | 13,265 | |||||||||||||||||||
Interest income on financing leases | 13,115 | 13,115 | |||||||||||||||||||
Interest income on U.S. Government and Agency | — | ||||||||||||||||||||
obligations and other investments | 22,592 | 587 | 627 | (115 | ) | 23,691 | |||||||||||||||
Rental income | 7,092 | 7,092 | |||||||||||||||||||
Hotel and resort operating income | 12,376 | 12,376 | |||||||||||||||||||
Accretion of investment in NEG Holding LLC | 30,142 | (30,142 | ) | — | |||||||||||||||||
NEG management fee | 6,629 | (6,629 | ) | — | |||||||||||||||||
Dividend and other income | 3,211 | 125 | 3,336 | ||||||||||||||||||
Equity in losses of equity method investees | (3,466 | ) | (102 | ) | 3,466 | (102 | ) | ||||||||||||||
Oil and gas operating income | 20,899 | 77,606 | 98,505 | ||||||||||||||||||
388,666 | 78,216 | 168,376 | (33,611 | ) | 601,647 | ||||||||||||||||
Expenses: | |||||||||||||||||||||
Hotel and casino operating expenses | 216,857 | 156,556 | (191 | ) | 373,222 | ||||||||||||||||
Cost of land, house and condominium sales | 9,129 | 9,129 | |||||||||||||||||||
Hotel and resort operating expenses | 8,773 | 8,773 | |||||||||||||||||||
Interest expense | 27,057 | 1,538 | 12,581 | (7,147 | ) | 34,029 | |||||||||||||||
Depreciation, depletion and amortization | 40,571 | 23,686 | 14,123 | 78,380 | |||||||||||||||||
General and administrative expenses | 14,081 | 14,081 | |||||||||||||||||||
Property expenses | 4,472 | 4,472 | |||||||||||||||||||
Oil and gas operating expenses | 5,028 | 23,080 | (6,629 | ) | 21,479 | ||||||||||||||||
Provision for loss on real estate | 750 | 750 | |||||||||||||||||||
326,718 | 48,304 | 183,260 | (13,967 | ) | 544,315 | ||||||||||||||||
Operating income (loss) | 61,948 | 29,912 | (14,884 | ) | (19,644 | ) | 57,332 | ||||||||||||||
Other gains and (losses): | |||||||||||||||||||||
Gain (loss) on sale of marketable equity and debt securities and other investments | 2,607 | (954 | ) | 1,653 | |||||||||||||||||
Loss on sale of other assets | (1,503 | ) | (28 | ) | (1,531 | ) | |||||||||||||||
Write-down of equity securities available for sale | (19,759 | ) | (19,759 | ) | |||||||||||||||||
Gain on sale and disposition of real estate | 7,121 | 7,121 | |||||||||||||||||||
Debt restructuring/reorganization costs | — | (1,843 | ) | (1,843 | ) | ||||||||||||||||
Minority interest | (1,266 | ) | 3,987 | 2,721 | |||||||||||||||||
Income (loss) from continuing operations before income taxes | 49,148 | 28,958 | (16,755 | ) | (15,657 | ) | 45,694 | ||||||||||||||
Income tax benefit (expense) | 16,750 | (958 | ) | 15,792 | |||||||||||||||||
Income (loss) from continuing operations | $ | 65,898 | $ | 28,958 | $ | (17,713 | ) | $ | (15,657 | ) | $ | 61,486 | |||||||||
Income from continuing operations attributable to: | |||||||||||||||||||||
Limited partners | $ | 48,573 | $ | 44,249 | |||||||||||||||||
General partner | 17,325 | 17,237 | |||||||||||||||||||
$ | 65,898 | $ | 61,486 | ||||||||||||||||||
Income from continuing operations per LP unit: | |||||||||||||||||||||
Basic earnings: | |||||||||||||||||||||
Income from continuing operations per LP unit | $ | 1.00 | $ | 0.72 | |||||||||||||||||
Weighted average units outstanding | 46,098,284 | 57,856,905 | |||||||||||||||||||
Diluted earnings: | |||||||||||||||||||||
Income from continuing operations per LP unit | $ | 0.94 | $ | 0.70 | |||||||||||||||||
Weighted average units and equivalent partnership units outstanding | 54,489,943 | 66,248,564 | |||||||||||||||||||
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Historical(1) | ||||||||||||||||||||||
Intercompany | Historical | |||||||||||||||||||||
AREP | NEG Holding | GB Holdings | Adjustments | Combined | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Hotel and casino operating income | $ | 250,023 | $ | $ | $189,917 | $ | (28 | ) | 439,912 | |||||||||||||
Land, house and condominium sales | 76,024 | 76,024 | ||||||||||||||||||||
Interest income on financing leases | 14,722 | 14,722 | ||||||||||||||||||||
Interest income on U.S. Government and Agency obligations and other investments | 30,569 | 1,791 | 1,067 | (546 | ) | 32,881 | ||||||||||||||||
Rental income | 6,852 | 6,852 | ||||||||||||||||||||
Hotel and resort operating income | 12,921 | 12,921 | ||||||||||||||||||||
Accretion of investment in NEG Holding LLC | 32,879 | (32,879 | ) | — | ||||||||||||||||||
NEG management fee | 7,637 | (7,637 | ) | — | ||||||||||||||||||
Dividend and other income | 2,720 | 175 | 2,895 | |||||||||||||||||||
Equity in earnings of equity method investees | 305 | (305 | ) | — | ||||||||||||||||||
Oil and gas operating income | — | 35,901 | 35,901 | |||||||||||||||||||
434,652 | 37,867 | 190,984 | (41,395 | ) | 622,108 | |||||||||||||||||
Expenses: | ||||||||||||||||||||||
Hotel and casino operating expenses | 217,938 | 170,567 | (28 | ) | 388,477 | |||||||||||||||||
Cost of land, house and condominium sales | 54,640 | 54,640 | ||||||||||||||||||||
Hotel and resort operating expenses | 10,536 | 10,536 | ||||||||||||||||||||
Interest expense | 27,297 | 96 | 12,195 | (7,578 | ) | 32,010 | ||||||||||||||||
Depreciation, depletion and amortization | 23,646 | 15,509 | 13,292 | 52,447 | ||||||||||||||||||
General and administrative expenses | 14,134 | 14,134 | ||||||||||||||||||||
Property expenses | 3,862 | 3,862 | ||||||||||||||||||||
Oil and gas operating expenses | — | 16,556 | (7,637 | ) | 8,919 | |||||||||||||||||
Provision for loss on real estate | 3,212 | 3,212 | ||||||||||||||||||||
Loss on impairment of fixed assets | — | 1,282 | 1,282 | |||||||||||||||||||
355,265 | 32,161 | 197,336 | (15,243 | ) | 569,519 | |||||||||||||||||
Operating income(loss) | 79,387 | 5,706 | (6,352 | ) | (26,152 | ) | 52,589 | |||||||||||||||
Other gains and (losses): | ||||||||||||||||||||||
Gain on sale of marketable equity and debt securities and other investments | — | 8,712 | 8,712 | |||||||||||||||||||
Loss on sale of other assets | (353 | ) | (185 | ) | (538 | ) | ||||||||||||||||
Write-down of equity securities available for sale | (8,476 | ) | (8,476 | ) | ||||||||||||||||||
Gain on sale and disposition of real estate | 8,990 | 8,990 | ||||||||||||||||||||
Unrealized loss on financial instruments/short sale | — | (347 | ) | (347 | ) | |||||||||||||||||
Loss on limited partnership interests | (3,750 | ) | (3,750 | ) | ||||||||||||||||||
Dividend expense | — | (145 | ) | (145 | ) | |||||||||||||||||
Minority interest | (1,943 | ) | 1,648 | (295 | ) | |||||||||||||||||
Income(loss) from continuing operations before income taxes | 73,855 | 13,926 | (6,537 | ) | (24,504 | ) | 56,740 | |||||||||||||||
Income tax expense | (10,096 | ) | (784 | ) | (10,880 | ) | ||||||||||||||||
Income(loss) from continuing operations | $ | 63,759 | $ | 13,926 | $ | (7,321 | ) | $ | (24,504 | ) | $ | 45,860 | ||||||||||
Income(loss) from continuing operations attributable to: | ||||||||||||||||||||||
Limited partners | $ | 56,369 | $ | 38,826 | ||||||||||||||||||
General partner | 7,390 | 7,034 | ||||||||||||||||||||
$ | 63,759 | $ | 45,860 | |||||||||||||||||||
Income(loss) from continuing operations per LP unit: | ||||||||||||||||||||||
Basic earnings: | ||||||||||||||||||||||
Income from continuing operations | $ | 1.12 | $ | 0.59 | ||||||||||||||||||
Weighted average units outstanding | 46,098,284 | 57,856,905 | ||||||||||||||||||||
Diluted earnings: | ||||||||||||||||||||||
Income(loss) from continuing operations per LP unit | $ | 1.00 | $ | 0.57 | ||||||||||||||||||
Weighted average units and equivalent partnership units outstanding | 56,466,698 | 68,225,319 | ||||||||||||||||||||
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• | The membership interest in NEG Holding for 11,344,828 Depositary Units valued at $329.0 million. | |
• | 100% of the equity of Panaco for 4,310,345 Depositary Units valued at $125.0 million. | |
• | Approximately 41.2% of the outstanding common stock of GB Holdings and approximately 11.3% of the fully diluted common stock of Atlantic Holdings for 413,793 Depositary Units valued at $12.0 million, plus 206,897 units valued at $6.0 million if certain earnings targets are met during 2005 and 2006. |
(a) | Pro Forma Condensed Consolidated Balance Sheet at March 31, 2005 |
• | The elimination of AREP’s $97.7 million investment in NEG Holding, since NEG Holding is now consolidated. | |
• | The elimination of AREP’s $9.1 million equity interest in GB Holdings, since GB Holdings is now consolidated. | |
• | The elimination of AREP’s $63.9 million investment in the Atlantic Holdings 3% Notes due 2008 or the Atlantic Holdings Notes, and the elimination of the corresponding debt of Atlantic Holdings. | |
• | The elimination of $2.2 million of deferred consent fees for both AREP and GB Holdings related to AREP’s consent, in July 2004, to an exchange of GB Holdings 11% notes due 2005 for the Atlantic Holdings Notes. | |
• | The elimination of AREP’s share of warrants in Atlantic Holdings, valued at $33.8 million. The warrants owned by AREP after the Acquisitions represent approximately 77.5% of the outstanding warrants. The remaining approximate 22.5% of the warrants in Atlantic Holdings, valued at $9.8 million, have been reclassified to minority interests. | |
• | The recording of the minority interest in GB Holdings of $7.0 million. | |
• | The elimination of AREP’s $36.6 million investment in the outstanding term loans of Panaco, Inc., or the Panaco Debt, plus accrued interest and the elimination of the corresponding debt of Panaco. | |
• | The elimination of a $10.0 million receivable/payable between AREP and Panaco. |
(b) | Pro Forma Condensed Consolidated Statement of Earnings for the Three Months Ended March 31, 2005 |
• | The elimination of AREP’s $9.9 million accretion of investment in NEG Holding, since NEG Holding is now consolidated. |
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• | The elimination of AREP’s $1.0 million equity in losses of GB Holdings, since GB Holdings is now consolidated. | |
• | The elimination of AREP’s $2.1 million management fee from NEG Holding, since NEG Holding is now consolidated. | |
• | The elimination of a $0.1 million administrative charge between ACEP and GB Holdings. | |
• | The elimination of $0.2 million of amortization of deferred consent fees between AREP and GB Holdings. | |
• | The elimination of $0.5 million of related party interest expense paid by GB Holdings to Mr. Icahn and affiliates. | |
• | The recording of a credit to minority interest expense on GB Holdings of $0.9 million. | |
• | The elimination of $0.6 million of interest expense/income recorded by Panaco/ AREP on the term loans of Panaco. |
(c) | Pro Forma Condensed Consolidated Statement of Earnings for the Year Ended December 31, 2004 |
• | The elimination of AREP’s $34.4 million accretion of investment in NEG Holding, since NEG Holding is now consolidated. | |
• | The elimination of AREP’s $2.1 million equity in losses of GB Holdings, since GB Holdings is now consolidated. | |
• | The elimination of AREP’s $6.2 million management fee from NEG Holding, since NEG Holding is now consolidated. | |
• | The elimination of a $0.3 million administrative charge between ACEP and GB Holdings. | |
• | The elimination of $0.3 million of amortization of deferred consent fees between AREP and GB Holdings. | |
• | The elimination of $4.8 million of related party interest expense paid by GB Holdings to Mr. Icahn and affiliates. | |
• | The recording of a credit to minority interest expense on GB Holdings of $2.9 million. |
(d) | Pro Forma Condensed Consolidated Statement of Earnings for the Year Ended December 31, 2003 |
• | The elimination of AREP’s $30.1 million accretion of investment in NEG Holding, since NEG Holding is now consolidated. | |
• | The elimination of AREP’s $3.5 million equity in losses of GB Holdings, since GB Holdings is now consolidated. | |
• | The elimination of AREP’s $6.6 million management fee from NEG Holding, since NEG Holding is now consolidated. | |
• | The elimination of a $0.2 million administrative charge between ACEP, a consolidated subsidiary of AREP and GB Holdings. | |
• | The elimination of $0.1 million of interest income and expense between NEG Holding and NEG, Inc., a consolidated subsidiary of AREP. | |
• | The elimination of $7.0 million of related party interest expense paid by GB Holdings to Mr. Icahn and affiliates. | |
• | The recording of a credit to minority interest expense on GB Holdings of $4.0 million, representing 22.5% of the loss of GB Holdings. |
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• | The elimination of AREP’s $32.9 million accretion of investment in NEG Holding, since NEG Holding is now consolidated. | |
• | The elimination of AREP’s $0.3 million equity in earnings of GB Holdings, since GB Holdings is now consolidated. | |
• | The elimination of AREP’s $7.6 million management fee from NEG Holding, since NEG Holding is now consolidated. | |
• | The elimination of $0.5 million of interest income and expense between NEG Holding and NEG. | |
• | The elimination of $7.0 million of related party interest expense paid by GB Holdings to Mr. Icahn and affiliates. | |
• | The recording of a debit to minority interest on GB Holdings of $2.9 million, representing 22.5% of the loss of GB Holdings. |
Pro Forma Condensed Consolidated Balance Sheet at March 31, 2005 |
• | The elimination of AREP’s $466 million pro forma investment in the Acquisitions. | |
• | The allocation of the change in equity as a result of the transaction between the general partner and the limited partners. |
• | The reduction of interest expense and interest income that results from the effect of its bankruptcy. | |
• | The elimination of related party interest expense following emergence from bankruptcy in November 2004. | |
• | The elimination of $0.7 million management fee paid to AREP, following emergence from bankruptcy. | |
• | The elimination of $51.3 million of gain on retirement/restructuring of debt, $12.5 million gain on restructuring of payables and $7.4 million debt restructuring/reorganization costs related to the emergence from bankruptcy. |
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Three Months Ended | |||||||||||||||||||||||||||||
March 31, | Year Ended December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
(In $000’s, except per unit amounts) | |||||||||||||||||||||||||||||
Total revenues | $ | 130,623 | $ | 102,219 | $ | 452,012 | $ | 368,946 | $ | 434,652 | $ | 414,545 | $ | 378,179 | |||||||||||||||
Operating income | $ | 25,670 | $ | 24,142 | $ | 88,837 | $ | 68,979 | $ | 79,387 | $ | 63,938 | $ | 66,356 | |||||||||||||||
Other gains (losses): | |||||||||||||||||||||||||||||
Gain on sale of marketable equity and debt securities | — | 28,857 | 40,159 | 2,607 | — | 6,749 | — | ||||||||||||||||||||||
Unrealized gains (losses) on securities sold short | 21,704 | — | (23,619 | ) | — | — | — | — | |||||||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | (15,600 | ) | — | — | — | — | |||||||||||||||||||||
(Loss) gain on sale of other assets | (180 | ) | (4 | ) | — | (1,503 | ) | (353 | ) | 27 | — | ||||||||||||||||||
Gain on sales and disposition of real estate | 186 | 6,047 | 5,262 | 7,121 | 8,990 | 1,737 | 6,763 | ||||||||||||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | (19,759 | ) | (8,476 | ) | — | — | ||||||||||||||||||||
(Loss) gain on limited partnership interests | — | — | — | — | (3,750 | ) | — | 3,461 | |||||||||||||||||||||
Minority interest | — | — | — | — | (1,943 | ) | (450 | ) | (2,747 | ) | |||||||||||||||||||
Income from continuing operations before income taxes | 47,380 | 59,042 | 95,039 | 57,445 | 73,855 | 72,001 | 73,833 | ||||||||||||||||||||||
Income tax (expense) benefit | (7,650 | ) | (6,169 | ) | (16,763 | ) | 1,573 | (10,096 | ) | 25,664 | 379 | ||||||||||||||||||
Income from continuing operations | 39,730 | 52,873 | 78,276 | 59,018 | 63,759 | 97,655 | 74,212 | ||||||||||||||||||||||
Discontinued operations: | |||||||||||||||||||||||||||||
Income from discontinued operations | 957 | 3,218 | 7,500 | 7,653 | 6,937 | 7,944 | 6,260 | ||||||||||||||||||||||
Gain on sales and disposition of real estate | 18,723 | 6,929 | 75,197 | 3,353 | — | — | — | ||||||||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | 7,944 | 6,260 | ||||||||||||||||||||||
Net earnings | $ | 59,410 | $ | 63,020 | $ | 160,973 | $ | 70,024 | $ | 70,696 | $ | 105,609 | $ | 80,472 | |||||||||||||||
Net Earnings Attributable to: | |||||||||||||||||||||||||||||
Limited partners | $ | 58,228 | $ | 57,608 | $ | 152,507 | $ | 59,360 | $ | 63,168 | $ | 66,190 | $ | 72,225 | |||||||||||||||
General partner | 1,182 | 5,412 | 8,466 | 10,664 | 7,528 | 39,419 | 8,247 | ||||||||||||||||||||||
Net earnings | $ | 59,410 | $ | 63,020 | $ | 160,973 | $ | 70,024 | $ | 70,696 | $ | 105,609 | $ | 80,472 | |||||||||||||||
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Table of Contents
Three Months Ended | ||||||||||||||||||||||||||||||
March 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002(1) | 2001(1) | 2000(1) | ||||||||||||||||||||||||
(In $000’s except per unit amounts) | ||||||||||||||||||||||||||||||
Net earnings per limited partnership unit: | ||||||||||||||||||||||||||||||
Basic earnings: | ||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.84 | $ | 1.03 | $ | 1.55 | $ | 1.00 | $ | 1.12 | $ | 1.17 | $ | 1.35 | ||||||||||||||||
Income from discontinued operations | 0.42 | 0.22 | 1.76 | 0.24 | 0.15 | 0.17 | 0.13 | |||||||||||||||||||||||
Basic earnings per LP Unit | $ | 1.26 | $ | 1.25 | $ | 3.31 | $ | 1.24 | $ | 1.27 | $ | 1.34 | $ | 1.48 | ||||||||||||||||
Weighted average limited partnership units outstanding | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | |||||||||||||||||||||||
Diluted earnings: | ||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.81 | $ | 0.93 | $ | 1.48 | $ | 0.94 | $ | 1.00 | $ | 1.05 | $ | 1.18 | ||||||||||||||||
Income from discontinued operations | 0.39 | 0.19 | 1.57 | 0.19 | 0.12 | 0.14 | 0.11 | |||||||||||||||||||||||
Diluted earnings per LP Unit | $ | 1.20 | $ | 1.12 | $ | 3.05 | $ | 1.13 | $ | 1.12 | $ | 1.19 | $ | 1.29 | ||||||||||||||||
Weighted average limited partnership units and equivalent partnership units outstanding | 49,857,622 | 52,499,303 | 51,542,312 | 54,489,943 | 56,466,698 | 55,599,112 | 56,157,079 | |||||||||||||||||||||||
Other financial data: | ||||||||||||||||||||||||||||||
Capital expenditures (excluding property acquisitions) | $ | 4,781 | $ | 1,658 | $ | 16,221 | $ | 33,324 | $ | 21,896 | $ | 68,199 | $ | 52,598 |
At December 31, | ||||||||||||||||||||||||
At March 31, | ||||||||||||||||||||||||
2005 | 2004 | 2003 | 2002(1) | 2001(1) | 2000(1) | |||||||||||||||||||
(In $000’s) | ||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,245,762 | $ | 762,708 | $ | 487,498 | $ | 79,540 | $ | 83,975 | $ | 172,621 | ||||||||||||
Hotel, casino and resort operating properties | 334,931 | 339,492 | 340,229 | 335,121 | 339,201 | 264,566 | ||||||||||||||||||
Investment in U.S. Government and Agency obligations | 5,533 | 102,331 | 61,573 | 336,051 | 313,641 | 475,267 | ||||||||||||||||||
Other investments | 244,602 | 245,948 | 50,328 | 54,216 | 10,529 | 4,289 | ||||||||||||||||||
Total assets | 2,775,685 | 2,263,057 | 1,646,606 | 1,706,031 | 1,721,100 | 1,566,597 | ||||||||||||||||||
Mortgages payable | 4,205 | 91,896 | 180,989 | 171,848 | 166,808 | 182,049 | ||||||||||||||||||
Senior secured notes payable — 7.85% | 215,000 | 215,000 | — | — | — | — | ||||||||||||||||||
Senior unsecured notes payable — 8 1/8% | 830,679 | 350,598 | — | — | — | — | ||||||||||||||||||
Senior unsecured notes payable — 7 1/8% | 480,000 | — | — | — | — | — | ||||||||||||||||||
Liability for preferred limited partnership units(1) | 108,006 | 106,731 | 101,649 | — | — | — | ||||||||||||||||||
Partners’ equity | $ | 1,360,142 | $ | 1,303,126 | $ | 1,270,214 | $ | 1,245,437 | $ | 1,136,452 | $ | 1,154,400 |
(1) | On July 1, 2003, we adopted Statement of Financial Accounting Standards No. 150 (SFAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 requires that a financial instrument, which is an unconditional obligation, be classified as a liability. Previous guidance required an entity to include in equity financial instruments that the entity could redeem in either cash or stock. Pursuant to SFAS 150, our preferred units, which are an unconditional obligation, have been reclassified from “Partners’ equity” to a liability account in the consolidated balance sheets and the preferred pay-in-kind distribution for the period from July 1, 2003 to December 31, 2003 of $2.4 million and all future distributions have been and will be recorded as “Interest expense” in the consolidated statements of earnings. |
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Three Months Ended March 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2004 | 2003 | 2003 | 2002 | ||||||||||||||||||||||||||
(Supplemental) | (Supplemental) | (Pro Forma) | (Supplemental) | (Pro Forma) | (Supplemental) | (Pro Forma) | (Pro Forma) | ||||||||||||||||||||||||||
(In $000’s, except per unit amounts) | |||||||||||||||||||||||||||||||||
Total revenues | $ | 144,226 | $ | 116,452 | $ | 210,874 | $ | 506,196 | $ | 768,079 | $ | 388,666 | $ | 601,647 | $ | 622,108 | |||||||||||||||||
Operating income | $ | 27,290 | $ | 22,533 | $ | 24,854 | $ | 87,159 | $ | 39,718 | $ | 61,948 | $ | 57,332 | $ | 52,589 | |||||||||||||||||
Other gains (losses): | |||||||||||||||||||||||||||||||||
Gain on sale of marketable equity and debt securities | — | 28,857 | — | 40,159 | 40,159 | 2,607 | 1,653 | 8,712 | |||||||||||||||||||||||||
Unrealized gains (losses) on securities sold short | 21,704 | — | 21,704 | (23,619 | ) | (23,619 | ) | — | — | (347 | ) | ||||||||||||||||||||||
Change in fair market value of derivative contract | (9,813 | ) | — | (38,769 | ) | — | — | — | — | — | |||||||||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | — | (15,600 | ) | (15,600 | ) | — | — | — | |||||||||||||||||||||||
(Loss) gain on sale of other assets | (180 | ) | (4 | ) | (180 | ) | 1,680 | 1,680 | (1,503 | ) | (1,531 | ) | (538 | ) | |||||||||||||||||||
Gain on sales and disposition of real estate | 186 | 6,047 | 190 | 5,262 | 5,034 | 7,121 | 7,121 | 8,990 | |||||||||||||||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | — | — | (19,759 | ) | (19,759 | ) | (8,476 | ) | ||||||||||||||||||||||
Loss on limited partnership interests | — | — | — | — | — | — | — | (3,750 | ) | ||||||||||||||||||||||||
Debt restructuring/ reorganization costs | — | — | (24 | ) | — | (3,084 | ) | — | (1,843 | ) | — | ||||||||||||||||||||||
Severance tax refund | — | — | — | 4,468 | 4,468 | — | — | — | |||||||||||||||||||||||||
Dividend expense | — | — | — | — | — | — | — | (145 | ) | ||||||||||||||||||||||||
Minority interest | — | (39 | ) | 932 | (812 | ) | 2,074 | (1,266 | ) | 2,721 | (295 | ) | |||||||||||||||||||||
Income from continuing operations before income taxes | 39,187 | 57,394 | 8,707 | 98,697 | 50,830 | 49,148 | 45,694 | 56,740 | |||||||||||||||||||||||||
Income tax (expense) benefit | (4,782 | ) | (5,966 | ) | (3,405 | ) | (17,326 | ) | 4,565 | 16,750 | 15,792 | (10,880 | ) | ||||||||||||||||||||
Income from continuing operations | $ | 34,405 | $ | 51,428 | $ | 5,302 | $ | 81,371 | $ | 55,395 | $ | 65,898 | $ | 61,486 | $ | 45,860 | |||||||||||||||||
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Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2004 | 2003 | 2003 | 2002 | |||||||||||||||||||||||||||
(Supplemental) | (Supplemental) | (Pro Forma) | (Supplemental) | (Pro Forma) | (Supplemental) | (Pro Forma) | (Pro Forma) | |||||||||||||||||||||||||||
(In $000’s, except per unit amounts) | ||||||||||||||||||||||||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||||||||
Income from discontinued operations | 957 | 3,218 | 7,500 | 7,653 | ||||||||||||||||||||||||||||||
Gain on sales and disposition of real estate | 18,723 | 6,929 | 75,197 | 3,353 | ||||||||||||||||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | ||||||||||||||||||||||||||||||
Net earnings | $ | 54,085 | $ | 61,575 | $ | 164,068 | $ | 76,904 | ||||||||||||||||||||||||||
Net earnings attributable to: | ||||||||||||||||||||||||||||||||||
Limited partners | $ | 58,228 | $ | 57,608 | $ | 152,507 | $ | 59,360 | ||||||||||||||||||||||||||
General partner | (4,143 | ) | 3,967 | 11,561 | 17,544 | |||||||||||||||||||||||||||||
Net earnings | $ | 54,085 | $ | 61,575 | $ | 164,068 | $ | 76,904 | ||||||||||||||||||||||||||
Net earnings per limited partnership unit: | ||||||||||||||||||||||||||||||||||
Basic earnings: | ||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.84 | $ | 1.03 | $ | 0.17 | $ | 1.55 | $ | 0.74 | $ | 1.00 | $ | 0.72 | $ | 0.59 | ||||||||||||||||||
Income from discontinued operations | 0.42 | 0.22 | 1.76 | 0.24 | ||||||||||||||||||||||||||||||
Basic earnings per LP unit | $ | 1.26 | $ | 1.25 | $ | 3.31 | $ | 1.24 | ||||||||||||||||||||||||||
Weighted average limited partnership units outstanding | 46,098,284 | 46,098,284 | 62,167,250 | 46,098,284 | 62,167,250 | 46,098,284 | 57,856,905 | 57,856,905 | ||||||||||||||||||||||||||
Diluted earnings: | ||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.81 | $ | 0.93 | $ | 0.17 | $ | 1.48 | $ | 0.74 | $ | 0.94 | $ | 0.70 | $ | 0.57 | ||||||||||||||||||
Income from discontinued operations | 0.39 | 0.19 | 1.57 | 0.19 | ||||||||||||||||||||||||||||||
Diluted earnings per LP unit | $ | 1.20 | $ | 1.12 | $ | 3.05 | $ | 1.13 | ||||||||||||||||||||||||||
Weighted average limited partnership units outstanding | 49,857,622 | 52,499,303 | 62,167,250 | 51,542,312 | 62,167,250 | 54,489,942 | 66,248,564 | 68,225,319 | ||||||||||||||||||||||||||
Other financial data: | ||||||||||||||||||||||||||||||||||
Capital expenditures (excluding property acquisitions) | $ | 25,852 | $ | 6,106 | $ | 63,749 | $ | 150,854 | $ | 33,957 | $ | 86,841 | $ | 60,776 | ||||||||||||||||||||
Book value per unit | $ | 30.97 | $ | 23.76 |
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At March 31, | At December 31, | ||||||||||||||||||||
2005 | 2005 (Pro | 2004 | 2004 (Pro | 2003 | |||||||||||||||||
(Supplemental) | Forma) | (Supplemental) | Forma) | (Supplemental) | |||||||||||||||||
(In $000’s) | |||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||
Cash and cash equivalents | $ | 1,250,074 | $ | 1,105,723 | $ | 768,918 | $ | 1,097,810 | $ | 504,369 | |||||||||||
Hotel, casino and resort operating properties | 334,931 | 503,168 | 339,492 | 511,132 | 340,229 | ||||||||||||||||
Oil and gas properties | 180,241 | 521,776 | 168,136 | 506,900 | 168,921 | ||||||||||||||||
Investment in U.S. Government and Agency Obligations | 74,427 | 74,427 | 102,331 | 102,331 | 61,573 | ||||||||||||||||
Other investments | 244,602 | 244,602 | 245,948 | 245,948 | 50,328 | ||||||||||||||||
Total assets | 2,935,697 | 3,215,728 | 2,408,189 | 3,179,167 | 1,831,573 | ||||||||||||||||
Mortgages payable | 80,191 | 80,191 | 91,896 | 91,896 | 180,989 | ||||||||||||||||
Senior secured note payable 7.85% due 2012 | 215,000 | 215,000 | 215,000 | 215,000 | — | ||||||||||||||||
Senior unsecured notes payable 81/8% due 2012 | 350,679 | 350,679 | 350,598 | 830,598 | — | ||||||||||||||||
Senior unsecured notes payable 71/8% due 2013 | 480,000 | 480,000 | — | — | — | ||||||||||||||||
Liability for preferred limited partnership units | 108,006 | 108,006 | 106,731 | 106,731 | 101,649 | ||||||||||||||||
Partner’s equity | 1,479,125 | 1,505,122 | 1,427,435 | 1,477,355 | 1,393,347 | ||||||||||||||||
Capital Expenditures: | |||||||||||||||||||||
As reported | $ | 25,852 | N/A | $ | 63,750 | $ | 63,750 | $ | 33,957 | ||||||||||||
Panaco | N/A | N/A | 1,994 | N/A | N/A | ||||||||||||||||
GB Holdings, Inc. | N/A | N/A | 17,378 | N/A | N/A | ||||||||||||||||
NEG Holding | N/A | N/A | 67,732 | N/A | N/A | ||||||||||||||||
$ | 25,852 | N/A | $ | 63,750 | $ | 150,854 | $ | 33,957 | |||||||||||||
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Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004 |
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Less Than | After | ||||||||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | |||||||||||||||||
Mortgages payable | $ | 4.2 | $ | 8.9 | $ | 29.3 | $ | 37.8 | $ | 80.2 | |||||||||||
Acquisition of TransTexas | 180.0 | — | — | — | 180.0 | ||||||||||||||||
Senior secured notes payable | — | — | — | 215.0 | 215.0 | ||||||||||||||||
Senior unsecured notes payable | — | — | — | 833.0 | 833.0 | ||||||||||||||||
Senior debt interest | 78.3 | 159.5 | 159.5 | 211.3 | 608.6 | ||||||||||||||||
Construction and development obligations | 44.5 | 15.8 | — | — | 60.3 | ||||||||||||||||
Total | $ | 307.0 | $ | 184.2 | $ | 188.8 | $ | 1,297.1 | $ | 1,977.1 | |||||||||||
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Distributions |
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Cash and Cash Equivalents |
Acquisitions |
• | $27.5 million aggregate principal amount of term notes issued by TransTexas, or the TransTexas Notes, for $28.2 million in cash, which included $0.7 million of accrued interest through December 6, 2004; | |
• | All of the membership interests of Mid River, the assets of which consist of $38.0 million principal amount of term loans outstanding under the term loan and security agreement, dated as of November 16, 2004, among Panaco, as borrower, the lenders (as defined therein) and Mid River as administrative agent, or the Panaco Debt, and $0.1 million of accrued interest, through December 6, 2004, for $38.1 million in cash; and |
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• | $37.0 million principal amount of 3% notes due 2008 issued by Atlantic Coast Entertainment Holdings LLC, or Atlantic Holdings, or the Atlantic Holdings Notes, for $36.0 million in cash. |
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of |
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Commitments and Contingencies — Litigation |
Marketable Equity and Debt Securities and Investment in U.S. Government and Agency Obligations |
Mortgages and Notes Receivable |
Revenue Recognition |
Casino Revenues and Promotional Allowances |
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Natural Gas Production Imbalances |
Hedging Agreements |
Oil and Natural Gas Properties |
Accounting for Asset Retirement Obligations |
Income Taxes |
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Properties |
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• | American Casino & Entertainment Properties LLC. On May 26, 2004, our subsidiary, American Casino & Entertainment Properties LLC, or ACEP, acquired two Las Vegas hotels and casinos, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder for aggregate consideration of $125.9 million. At that date, AREH transferred 100% of the common stock of Stratosphere Corporation, which owns and operates the Stratosphere Hotel in Las Vegas, Nevada, to ACEP. | |
• | Grand Harbor and Oak Harbor. In July 2004, we acquired Grand Harbor and Oak Harbor, two waterfront communities in Vero Beach, Florida. The communities include three golf courses, a tennis complex, fitness center, beach club and an assisted living facility. In addition, we acquired approximately 400 acres of land to the north of Grand Harbor which currently has entitlements to build approximately 600 homes and an 18 hole golf course. The total purchase price was approximately $75.0 million. | |
• | NEG Holding LLC. We currently own 50.01% of the outstanding common stock of NEG, and all of its approximately $148.6 million aggregate principal amount of notes. NEG owns a membership interest in NEG Holding LLC. NEG Holding owns 100% of NEG Operating LLC, an oil and gas exploration and production company. We have entered into an agreement to acquire the other membership interest in NEG Holding for an aggregate of up to 11,344,828 of depositary units, valued at $29.00 per unit, or an aggregate of up to $329 million. The number of depositary units is subject to reduction based upon NEG Holding’s oil and gas reserve reports, as of January 21, 2005, to be prepared by an independent reserve engineering firm. | |
• | TransTexas Gas Corporation. On December 6, 2004, we purchased $27.5 million aggregate principal amount of term notes issued by TransTexas, or the TransTexas Notes, which constitutes 100% of the outstanding term notes of TransTexas. On April 6, 2005, we completed the acquisition of 100% of the equity of TransTexas, an oil and gas exploration and production company, for a purchase price of $180.0 million in cash. | |
• | Panaco, Inc. On December 6, 2004, we purchased $38.0 million aggregate principal amount of term loans issued by Panaco, which constitutes 100% of the outstanding term loans of Panaco, or the Panaco Debt. We have entered into an agreement to acquire 100% of the equity of Panaco, an oil and gas exploration and production company, for up to 4,310,345 depositary units, valued at $29.00 per unit, or an aggregate of up to $125.0 million. | |
• | GB Holdings, Inc. We currently own approximately 36.3% of the outstanding common stock of GB Holdings. On December 27, 2004, we purchased $37.0 million principal amount of the 3% notes due September 2008 issued by GB Holdings’ subsidiary, Atlantic Holdings, bringing our ownership of that debt to approximately $63.9 million principal amount, or approximately 96.4% of the principal amount outstanding. The notes may be paid in full, at the option of the holders of a majority of their principal amount, with common stock of Atlantic Holdings. Atlantic Holdings owns 100% of ACE Gaming LLC, the owner and operator of The Sands Hotel and Casino located in Atlantic City, New Jersey. We have entered into an agreement to acquire an additional approximate 41.2% of the outstanding |
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common stock of GB Holdings and approximately 11.3% of the fully diluted common stock of Atlantic Holdings for an aggregate of 413,793 depositary units, valued at $29.00 per unit, or an aggregate of $12.0 million plus up to an additional 206,897 depositary units, valued at $29.00 per unit, or an additional $6.0 million, if Atlantic Holdings meets certain earnings targets during 2005 and 2006. On May 17, 2005, we (1) converted $28.8 million in principal amount of the Atlantic Holdings Notes into 1,898,181 shares of Atlantic Holdings common stock and (2) exercised warrants to acquire 997,620 shares of Atlantic Holdings common stock. Also on May 17, 2005, affiliates of Mr. Icahn exercised warrants to acquire 1,133,283 shares of Atlantic Holdings common stock. As a result of these transactions AREP and the affiliates of Mr. Icahn collectively own approximately 58.3% of the outstanding common stock of Atlantic Holding. Upon completion of this acquisition, we will own approximately 77.5% of the outstanding GB Holdings common stock and approximately 58.3% of the common stock of Atlantic Holdings. |
Oil and Gas |
NEG Holding LLC |
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Panaco, Inc. |
Gaming and Entertainment |
GB Holdings, Inc. (The Sands) |
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Unitholder Approval |
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Stratosphere |
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Arizona Charlie’s Decatur |
Arizona Charlie’s Boulder |
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The Sands Hotel and Casino |
• | The indenture for the 11% secured notes due September 2005 was amended to remove certain provisions and covenants and release the liens on The Sands Hotel and Casino’s assets that secured the notes; | |
• | The Sands Hotel and Casino’s assets were transferred to a wholly-owned subsidiary of Atlantic Holdings, ACE Gaming; and | |
• | The 3% notes due September 2008 were secured by a pledge of all of the assets of ACE Gaming, including The Sands Hotel and Casino. |
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National Energy Group, Inc. |
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Oil (including | ||||||||||||||||||
Natural Gas | Natural Gas | |||||||||||||||||
Liquids) | Natural Gas | Equivalent | ||||||||||||||||
(MBbls) | (MMcf) | (MMcfe) | % of Total | |||||||||||||||
Area: | ||||||||||||||||||
Eagle Bay | 2,210 | 8,909 | 22,166 | 37.4 | % | |||||||||||||
Southwest Bonus | 264 | 12,994 | 14,579 | 24.6 | ||||||||||||||
Other Areas | 44 | 22,209 | 22,475 | 38.0 | ||||||||||||||
Total | 2,518 | 44,112 | 59,220 | 100.0 | % | |||||||||||||
Oil (including | ||||||||||||||||||
Natural Gas | Natural Gas | |||||||||||||||||
Liquids) | Natural Gas | Equivalent | ||||||||||||||||
(MBbls) | (MMcf) | (MMcfe) | % of Total | |||||||||||||||
Area: | ||||||||||||||||||
Eagle Bay | 869 | 3,122 | 8,336 | 73.8 | % | |||||||||||||
Southwest Bonus | 44 | 2,143 | 2,407 | 21.3 | ||||||||||||||
Other Areas | 6 | 523 | 559 | 4.9 | ||||||||||||||
Total | 919 | 5,788 | 11,302 | 100.0 | % | |||||||||||||
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Oil (including | |||||||||||||||||
Natural Gas | Natural Gas | ||||||||||||||||
Liquids) | Natural Gas | Equivalent | |||||||||||||||
(in MBbls) | (in MMcf) | (MMcfe) | PV 10% | ||||||||||||||
(in thousands) | |||||||||||||||||
Proved Developed Reserves | 2,411 | 26,179 | 40,645 | $ | 143,750 | ||||||||||||
Proved Undeveloped Reserves | 107 | 17,933 | 18,575 | 21,397 | |||||||||||||
Total Proved Reserves | 2,518 | 44,112 | 59,220 | $ | 165,147 | ||||||||||||
Year Ended | Year Ended | ||||||||||||||||
January 31, | December 31, | ||||||||||||||||
2002 | 2003 | 2003 | 2004 | ||||||||||||||
Production: | |||||||||||||||||
Natural Gas (MMcf) | 22.5 | 10.7 | 6.5 | 5.8 | |||||||||||||
Natural Gas Liquids (MMgals) | 40.1 | 31.3 | 12.7 | 13.1 | |||||||||||||
Condensate and oil (MBbls) | 1,286.0 | 860.0 | 454.0 | 370.0 | |||||||||||||
Average sales prices: | |||||||||||||||||
Gas (dry) (per Mcf) | $ | 3.89 | $ | 3.38 | $ | 5.03 | 5.33 | ||||||||||
Natural Gas Liquids (per gallon) | 0.36 | 0.33 | 0.50 | .64 | |||||||||||||
Condensate and oil (per Bbl) | 23.63 | 25.93 | 31.12 | 31.21 | |||||||||||||
Average lifting cost per Mcfe(1) | 0.49 | 0.59 | 0.61 | .58 |
(1) | Condensate and oil are converted to a common unit of measure on the basis of six Mcf of natural gas to one barrel of condensate or oil. The components of production costs may vary substantially among wells depending on the methods of recovery employed and other factors. |
Oil | Natural Gas | Total | ||||||||||||||||||||||||
Gross | Net | Gross | Net | Gross | Net | |||||||||||||||||||||
Area: | ||||||||||||||||||||||||||
Eagle Bay | 1 | .75 | 7 | 5.25 | 8 | 6.0 | ||||||||||||||||||||
Southwest Bonus | 0 | 0 | 23 | 21.00 | 23 | 21.0 | ||||||||||||||||||||
Other areas | 3 | .42 | 11 | 7.98 | 14 | 8.40 | ||||||||||||||||||||
Total | 4 | 1.17 | 41 | 34.23 | 45 | 35.40 | ||||||||||||||||||||
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Leasehold Acreage |
Undeveloped | ||||||||||||||||||
Developed Acreage | Acreage | |||||||||||||||||
Gross | Net | Gross | Net | |||||||||||||||
Area: | ||||||||||||||||||
Eagle Bay | 3,231 | 2,412 | 6,227 | 3,799 | ||||||||||||||
Southwest Bonus | 4,434 | 4,300 | 529 | 352 | ||||||||||||||
Other areas | 7,825 | 5,532 | 28,744 | 22,069 | ||||||||||||||
Total | 15,490 | 12,244 | 35,500 | 26,220 | ||||||||||||||
Drilling Activity |
Year Ended January 31, | Eleven Months | |||||||||||||||||||||||||||||||||
Ended | Year Ended | |||||||||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||||||||
2002 | 2003 | 2003 | 2004 | |||||||||||||||||||||||||||||||
Gross | Net | Net | Gross | Net | Gross | Net | Gross | |||||||||||||||||||||||||||
Exploratory Wells(1): | ||||||||||||||||||||||||||||||||||
Productive(2) | 1 | 1 | — | — | 0 | 0 | 4.55 | 5 | ||||||||||||||||||||||||||
Non-Productive | 1 | 1 | — | — | 0 | 0 | .79 | 3 | ||||||||||||||||||||||||||
Total | 2 | 2 | — | — | 0 | 0 | 5.34 | 8 | ||||||||||||||||||||||||||
Development Wells(1): | ||||||||||||||||||||||||||||||||||
Productive(2) | 12 | 11 | — | — | 1.4 | 2 | 1 | 1 | ||||||||||||||||||||||||||
Non-Productive | 1 | 1 | — | — | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Total | 13 | 12 | — | — | 1.4 | 2 | 1 | 1 | ||||||||||||||||||||||||||
(1) | The number of net wells is the sum of the fractional working interests owned in gross wells. |
(2) | Productive wells consist of producing wells and wells capable of production, including gas wells awaiting pipeline connection. Wells that are completed in more than one producing zone are counted as one well. |
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Transportation, Processing and Marketing |
Panaco |
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• | the purchase for approximately $205.8 million of an aggregate of approximately $278.1 million principal amount of secured bank debt of WestPoint Stevens Inc. Approximately $193.6 million principal amount is secured by a first priority lien of certain assets of WestPoint, and approximately $84.5 million principal amount is secured by a second priority lien. WestPoint currently is operating as a debtor in possession under Chapter 11 of the U.S. Bankruptcy Code; | |
• | the purchase of an aggregate of approximately $71.8 million of secured bank debt of Union Power Partners L.P. and Panda Gila River L.P., independent power producers, for a purchase price of approximately $39.3 million. No interest is currently being received on this debt; | |
• | the sale, for $82.3 million, of approximately $86.9 million principal amount of corporate debt securities which we purchased for approximately $45.1 million, recognizing a gain of $37.2 million; and | |
• | the short sale of approximately 2.5 million shares of common stock of a company in bankruptcy. |
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Real Estate |
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Hotel and Casino Operations |
Rental Real Estate |
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Number of | Average Net Effective | |||||||
Type of Property | Properties | Rent Per Square Foot(1) | ||||||
Retail | 27 | $ | 4.54 | |||||
Industrial | 11 | $ | 2.51 | |||||
Office | 18 | $ | 10.01 | |||||
Supermarkets | 4 | $ | 6.44 | |||||
Banks | 3 | $ | 3.11 | |||||
Other | 4 | N/A |
(1) | Based on net-lease rentals. |
Number of | |||||
Location of Property | Properties | ||||
United States: | |||||
Southeast | 34 | ||||
Northeast | 13 | ||||
South Central | 3 | ||||
Southwest | 1 | ||||
North Central | 15 | ||||
Northwest | 1 |
Real Estate Development |
Hotel and Casino Operations |
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Rental Real Estate and Real Estate Development |
Environmental Matters |
Other Property Matters |
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Nevada |
Introduction |
Policy Concerns of Gaming Laws |
• | preventing unsavory or unsuitable persons from being directly or indirectly involved with gaming at any time or in any capacity; | |
• | establishing and maintaining responsible accounting practices and procedures; | |
• | maintaining effective controls over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs, and safeguarding assets and revenue, providing reliable recordkeeping and requiring the filing of periodic reports with the Nevada Gaming Authorities; | |
• | preventing cheating and fraudulent practices; and | |
• | providing a source of state and local revenue through taxation and licensing fees. |
Owner and Operator Licensing Requirements |
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Our Registration Requirements |
Individual Licensing Requirements |
Consequences of Violating Gaming Laws |
Requirements for Beneficial Securities Holders |
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• | voting on all matters voted on by stockholders or interest holders; | |
• | making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and | |
• | other activities that the Nevada Gaming Commission may determine to be consistent with such investment intent. |
Consequences of Being Found Unsuitable |
• | pay that person any dividend or interest upon any voting securities; | |
• | allow that person to exercise, directly or indirectly, any voting right held by that person; | |
• | pay remuneration in any form to that person for services rendered or otherwise; or | |
• | fail to pursue all lawful efforts to require the unsuitable person to relinquish such person’s voting securities including, if necessary, the immediate purchase of the voting securities for cash at fair market value. |
Gaming Laws Relating to Securities Ownership |
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• | pays to the unsuitable person any dividend, interest or any distribution whatsoever; | |
• | recognizes any voting right by the unsuitable person in connection with the securities; | |
• | pays the unsuitable person remuneration in any form; or | |
• | makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction. |
Approval of Public Offerings |
Approval of Changes in Control |
• | merger; | |
• | consolidation; | |
• | stock or asset acquisitions; | |
• | management or consulting agreements; or | |
• | any act or conduct by a person by which the person obtains control of us. |
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Approval of Defensive Tactics |
• | assure the financial stability of corporate gaming operators and their affiliates; | |
• | preserve the beneficial aspects of conducting business in the corporate form; and | |
• | promote a neutral environment for the orderly governance of corporate affairs. |
Fees and Taxes |
• | a percentage of gross revenues received; | |
• | the number of gaming devices operated; or | |
• | the number of table games operated. |
Foreign Gaming Investigations |
• | knowingly violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation; | |
• | fails to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations; |
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• | engages in any activity or enters into any association that is unsuitable because it poses an unreasonable threat to the control of gaming in Nevada, reflects, or tends to reflect, discredit or disrepute upon the State of Nevada or gaming in Nevada, or is contrary to the gaming policies of Nevada; | |
• | engages in activities or enters into associations that are harmful to the State of Nevada or its ability to collect gaming taxes and fees; or | |
• | employs, contracts with or associates with a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the ground of unsuitability. |
License for Conduct of Gaming and Sale of Alcoholic Beverages |
New Jersey |
Introduction |
New Jersey Gaming Regulations |
• | the granting and renewal of casino licenses; | |
• | the suitability of the approved hotel facility, and the amount of authorized casino space and gaming units permitted therein; | |
• | the qualification of natural persons and entities related to the casino licensee; | |
• | the licensing of certain employees and vendors of casino licensees; | |
• | the rules of the games; | |
• | the selling and redeeming of gaming chips; | |
• | the granting and duration of credit and the enforceability of gaming debts; | |
• | management control procedures, accounting and cash control methods and reports to gaming agencies; | |
• | the security standards; |
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• | the manufacture and distribution of gaming equipment; and | |
• | the simulcasting of horse races by casino licensees, advertising, entertainment and alcoholic beverages. |
Casino Control Commission |
Casino License |
Control Persons |
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Financial Sources |
Institutional Investors |
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Ownership and Transfer of Securities |
Conservatorship |
Oil and Gas |
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Exploration and Production |
Environmental Protection and Occupational Safety |
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Name | Age | Position | ||||
Carl C. Icahn | 69 | Chairman of the Board | ||||
William A. Leidesdorf | 59 | Director | ||||
James L. Nelson | 55 | Director | ||||
Jack G. Wasserman | 68 | Director | ||||
Keith A. Meister | 31 | Chief Executive Officer of API and Chief Executive Officer and President of AREP Finance | ||||
Jon F. Weber | 46 | President of API | ||||
Martin L. Hirsch | 49 | Executive Vice President and Director of Acquisitions and Development | ||||
John P. Saldarelli | 63 | Vice President, Chief Financial Officer, Secretary and Treasurer |
Name | Age | Position | ||||
Bob Alexander | 72 | President and Chief Executive Officer, National Energy Group, Inc. | ||||
Richard P. Brown | 57 | President, Chief Executive Officer and Director, American Casino & Entertainment Properties LLC |
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Executive Compensation |
Annual Compensation | |||||||||||||||||
All Other | |||||||||||||||||
(a) | Salary | Bonus | Compensation | ||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($)(3) | |||||||||||||
Keith A. Meister(2) | 2004 | 227,308 | — | — | |||||||||||||
President and Chief Executive Officer | 2003 | 73,150 | — | — | |||||||||||||
2002 | — | — | — | ||||||||||||||
Martin L. Hirsch(2)(3) | 2004 | 295,000 | 200,000 | 4,000 | |||||||||||||
Executive Vice President and Director of Acquisitions and Development | 2003 | 269,923 | 50,000 | 4,000 | |||||||||||||
2002 | 231,000 | 24,500 | 3,667 | ||||||||||||||
John P. Saldarelli(2)(3) | 2004 | 191,100 | 22,932 | 3,819 | |||||||||||||
Vice President, Chief Financial Officer, Secretary and | 2003 | 182,200 | 18,200 | 4,000 | |||||||||||||
Treasurer | 2002 | 182,000 | 8,400 | 3,666 | |||||||||||||
Richard P. Brown | 2004 | 461,155 | 250,000 | 8,335 | |||||||||||||
President and Chief Executive Officer, | 2003 | 316,154 | 20,000 | 8,315 | |||||||||||||
American Casino & Entertainment Properties LLC | 2002 | 274,988 | 20,000 | 6,459 | |||||||||||||
Bob Alexander | 2004 | 300,000 | 175,000 | — | |||||||||||||
President and Chief Executive Officer, National Energy | 2003 | 300,000 | 150,000 | — | |||||||||||||
Group, Inc. | 2002 | 300,000 | — | — |
(1) | Pursuant to applicable regulations, certain columns of the Summary Compensation Table and each of the remaining tables have been omitted, as there has been no compensation awarded to, earned by or paid to any of the named executive officers by us, or by API, which was subsequently reimbursed by us, required to be reported in those columns or tables, excepted as noted below. |
(2) | On August 18, 2003, Keith A. Meister was elected President and Chief Executive Officer. Mr. Meister devotes approximately 50% of his time to the performance of services for AREP and its subsidiaries. Messrs. Saldarelli and Hirsch devote all of their time to the performance of services for AREP and its subsidiaries. |
(3) | Represent matching contributions under AREP’s 401(k) plan. In 2004, AREP made matching contributions to the employee’s individual plan account in the amount of one-third (1/3) of the first six (6%) percent of gross salary contributed by the employee. |
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Beneficial | Beneficial | |||||||||||||||
Ownership of | Percent | Ownership of | Percent | |||||||||||||
Name of Beneficial Owner | Depositary Units | of Class | Preferred Units | of Class | ||||||||||||
Carl C. Icahn(1) | 39,896,836 | (2) | 86.5% | 9,346,044 | 86.5% | (2) | ||||||||||
William A. Leidesdorf | — | — | — | — | ||||||||||||
James L. Nelson | — | — | — | — | ||||||||||||
Jack G. Wasserman | — | — | — | — | ||||||||||||
Keith A. Meister | — | — | — | — | ||||||||||||
Jon F. Weber | — | — | — | — | ||||||||||||
Martin L. Hirsch | — | — | — | — | ||||||||||||
John P. Saldarelli | — | — | — | — | ||||||||||||
Bob Alexander | — | — | — | — | ||||||||||||
Richard P. Brown | — | — | — | — | ||||||||||||
All directors and executive officers, as a group (ten persons) | 39,896,836 | (2) | 86.5% | 9,346,044 | 86.5% | (2) |
(1) | Carl C. Icahn, through affiliates, is the beneficial owner of the 39,896,836 depositary units set forth above and may also be deemed to be the beneficial owner of the 700 depositary units owned of record by API Nominee Corp., which in accordance with state law are in the process of being turned over to the relevant state authorities as unclaimed property; however, Mr. Icahn disclaims such beneficial ownership. The foregoing is exclusive of a 1.99% ownership interest which API holds by virtue of its 1% general partner interest in each of us and AREH. Furthermore, pursuant to a registration rights agreement entered into by affiliates of Mr. Icahn we have agreed to pay any expenses incurred in connection with two demand and unlimited piggy-back registrations requested by affiliates of Mr. Icahn. |
(2) | Does not include up to 16,275,863 depositary units that may be issued upon the closing of the pending Acquisitions. If all such units were issued, then Mr. Icahn would be the beneficial owner of 46,172,699 depositary units, representing approximately 90.1% of the depositary units. |
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Preferred and Depositary Units |
Oil and Gas |
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Purchase Agreements |
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Hotel and Casino Operations |
Partnership Provisions Concerning Property Management |
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• | Property Management and Asset Management Services. To the extent that we acquire any properties requiring active management (e.g., operating properties that are not net-leased) or asset management services, including on site services, we may enter into management or other arrangements with API or its affiliates. Generally, it is contemplated that under property management arrangements, the entity managing the property would receive a property management fee (generally 3% to 6% of gross rentals for direct management, depending upon the location) and under asset management arrangements, the entity managing the asset would receive an asset management fee (generally .5% to 1% of the appraised value of the asset for asset management services, depending upon the location) in payment for its services and reimbursement for costs incurred. | |
• | Brokerage and Leasing Commissions. We also may pay affiliates of API real estate brokerage and leasing commissions (which generally may range from 2% to 6% of the purchase price or rentals depending on location; this range may be somewhat higher for problem properties or lesser-valued properties). | |
• | Lending Arrangements. API or its affiliates may lend money to, or arrange loans for, us. Fees payable to API or its affiliates in connection with such activities include mortgage brokerage fees (generally .5% to 3% of the loan amount), mortgage origination fees (generally .5% to 1.5% of the loan amount) and loan servicing fees (generally .10% to .12% of the loan amount), as well as interest on any amounts loaned by API or its affiliates to us. | |
• | Development and Construction Services. API or its affiliates may also receive fees for development services, generally 1% to 4% of development costs, and general contracting services or construction management services, generally 4% to 6% of construction costs. |
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• | will be the general unsecured obligation of each of the Issuers; | |
• | will be pari passu in right of payment to all existing and future senior Indebtedness of each of the Issuers; | |
• | will be senior in right of payment to any future subordinated Indebtedness of each of the Issuers; and | |
• | will be effectively subordinated to the secured Indebtedness of the Issuers to the extent of the value of the collateral securing such Indebtedness. As of March 31, 2005, the Issuers did not have any secured Indebtedness. |
• | will be the general unsecured obligation of AREH; | |
• | will be pari passu in right of payment to all existing and future senior Indebtedness of AREH; | |
• | will be senior in right of payment to any future subordinated Indebtedness of AREH; and | |
• | will be effectively subordinated to the secured Indebtedness of AREH to the extent of the value of the collateral securing such Indebtedness. As of March 31, 2005, AREH had $80.2 million of secured Indebtedness. |
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(1) upon the substitution of a successor to AREH or other release as described under the heading “Certain Covenants — Merger, Consolidation or Sale of Assets”; and | |
(2) upon legal defeasance or satisfaction and discharge of the indenture as provided below under the captions “— Covenant Defeasance” and “— Satisfaction and Discharge.” |
(1) at least 65% of the aggregate principal amount of notes issued under the indenture remains outstanding immediately after the occurrence of such redemption (excluding notes held by AREP and its Subsidiaries (including any Guarantor)); and | |
(2) the redemption occurs within 60 days of the date of the closing of such Equity Offering. |
Year | Percentage | |||
2009 | 103.563 | % | ||
2010 | 101.781 | % | ||
2011 and thereafter | 100.000 | % |
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(1) fails to apply for a license, qualification or a finding of suitability within 30 days (or such shorter period as may be required by the applicable Gaming Authority) after being requested to do so by the Gaming Authority; or | |
(2) is denied such license or qualification or not found suitable; AREP shall then have the right, at its option: | |
(1) to require each 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 the occurrence of the event described in clause (1) or (2) above, or | |
(2) to redeem the notes of each such holder or Beneficial Owner, in accordance with Rule 14e-1 of the Exchange Act, if applicable, at a redemption price equal to the lowest of: |
(a) the principal amount thereof, together with accrued and unpaid interest and Liquidated Damages, if any, to the earlier of the date of redemption, the date 30 days after such holder or Beneficial Owner is required to apply for a license, qualification or finding of suitability (or such shorter period that may be required by any applicable Gaming Authority) if such holder or Beneficial Owner fails to do so (“Application Date”) or of the date of denial of license or qualification or of the finding of unsuitability by such Gaming Authority; | |
(b) the price at which such holder or Beneficial Owner acquired the notes, together with accrued and unpaid interest and Liquidated Damages, if any, to the earlier of the date of redemption, the Application Date or the date of the denial of license or qualification or of the finding of unsuitability by such Gaming Authority; and | |
(c) such other lesser amount as may be required by any Gaming Authority. |
(1) to exercise, directly or indirectly, through any trustee or nominee or any other person or entity, any right conferred by the notes, the Note Guarantee or the indenture; or | |
(2) to receive any interest, Liquidated Damages, dividend, economic interests or any other distributions or payments with respect to the notes and the Note Guarantee or any remuneration in any form with respect to the notes and the Note Guarantee from the Issuers, any Note Guarantor or the trustee, except the redemption price referred to above. |
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(1) accept for payment all notes or portions of notes properly tendered and not withdrawn pursuant to the Change of Control offer; | |
(2) deposit with the paying agent an amount equal to the Change of Control payment in respect of all notes or portions of notes properly tendered; and | |
(3) deliver or cause to be delivered to the trustee the notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of notes or portions of notes being purchased by the Issuers. |
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(1) declare or pay any dividend or make any other distribution on account of AREP’s or any of its Subsidiaries’ (including any Guarantor’s) Equity Interests or to the holders of AREP’s or any of its Subsidiaries’ (including AREH’s) Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of AREP or to AREP or a Subsidiary of AREP (including AREH)); | |
(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving AREP) any Equity Interests of AREP; or | |
(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of AREP or any Guarantor that is contractually subordinated to the notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among AREP and any of its Subsidiaries (including any Guarantor)), except a payment of interest, Other Liquidated Damages or principal at the Stated Maturity on such subordinated Indebtedness (all such payments and other actions set forth in these clauses (1) through (3) (except as excluded therein) above being collectively referred to as “Restricted Payments”), |
(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; | |
(2) AREP or any Guarantor would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four-quarter period for which financial statements are available, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock”; and | |
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by AREP and its Subsidiaries (including any Guarantor) after May 12, 2004 (excluding Restricted Payments permitted by clauses (2), (3), (4), (6) and (8) of the next succeeding paragraph) is less than the sum, without duplication, of: |
(a) 50% of the Consolidated Net Income of AREP for the period (taken as one accounting period) from July 1, 2006 to the end of AREP’s most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); provided, however, that to the extent any payments of Tax Amounts were not deducted in the calculation of Consolidated Net Income during the applicable period, for purposes of this clause (a), such payments of Tax Amounts will be deducted from Consolidated Net Income, plus | |
(b) 100% of the aggregate net cash proceeds received by AREP since May 12, 2004 as a contribution to its equity capital or from the issue or sale of Equity Interests of AREP (excluding Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of AREP that have been converted into or exchanged for such Equity Interests (other than Equity Interests or Disqualified Stock or debt securities sold to a Subsidiary of AREP (including AREH)). |
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(1) the payment of any dividend or the consummation of any irrevocable redemption or payment within 60 days after the date of declaration of the dividend or giving of the redemption notice or becoming irrevocably obligated to make such payment, as the case may be, if at the date of declaration or notice or becoming irrevocably obligated to make such payment, the dividend or payment would have complied with the provisions of the indenture; | |
(2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of AREP (including any Guarantor)) of, Equity Interests (other than Disqualified Stock) or from the substantially concurrent contribution of equity capital to AREP; provided, however, that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3)(b) of the preceding paragraph; | |
(3) the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of AREP or any Guarantor that is contractually subordinated to the notes with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness; | |
(4) the declaration or payment of any dividend or distribution by a Subsidiary of AREP (including any Guarantor) to the holders of its Equity Interests; provided, that if any such dividend or distribution is paid to an Affiliate of the Principal (other than AREP or any of its Subsidiaries (including any Guarantor)), that any such dividend or distribution is paid on a pro rata basis to all holders (including AREP or any of its Subsidiaries (including any Guarantor)) that hold securities whose terms (either contractually or by law) entitle them to the same distribution upon which such dividend or distribution is paid; | |
(5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of AREP or any Subsidiary of AREP (including any Guarantor) held by any member of AREP’s (or any of its Subsidiaries’ (including any Guarantors)) management pursuant to any management equity subscription agreement, stock option agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.0 million; | |
(6) for so long as AREP is a partnership or otherwise a pass-through entity for federal income tax purposes for any period, AREP may make cash distributions to its equity holders or partners in an amount not to exceed the Tax Amount for such period; provided that a distribution of the Tax Amount shall be made no earlier than 20 days prior to the due date for such tax (or the date that quarterly estimated taxes are required to be paid) that would be payable by AREP if it were a Delaware corporation; | |
(7) the purchase, redemption or retirement for value of Capital Stock of AREP not owned by the Principal or any Affiliate of the Principal, provided that (a) AREP would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four-quarter period for which financial statements are available, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock” and (b) after giving effect to such purchase, redemption or retirement, the Partners’ Equity is at least $1.0 billion; | |
(8) the payment of dividends on the Preferred Units in the form of additional Preferred Units or other Capital Stock of AREP (that is not Disqualified Stock) or the payment of cash dividends on the Preferred Units in lieu of fractional Preferred Units; provided that the aggregate amount of cash under this clause (8) does not exceed $100,000 in any calendar year; |
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(9) the purchase, redemption or retirement for value of the Preferred Units on or before March 31, 2010, provided that (a) AREP would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four-quarter period for which financial statements are available, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock” and (b) after giving effect to such purchase, redemption or retirement, the Partners’ Equity is at least $1.0 billion; and | |
(10) other Restricted Payments in an aggregate amount not to exceed $50.0 million since the date of the indenture. |
(1) the incurrence by AREP or any Guarantor of Indebtedness represented by the notes to be issued on the date of the indenture and the exchange notes to be issued pursuant to the registration rights agreement; | |
(2) the incurrence by AREP or any Guarantor of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was incurred under the first paragraph of this covenant or clauses (1), (2) or (9) of this paragraph or any Existing Indebtedness; | |
(3) the incurrence by AREP or any Guarantor of intercompany Indebtedness between or among AREP and any of its Subsidiaries (including AREH) or the issuance of Disqualified Stock by any Guarantor to AREP; | |
(4) the incurrence by AREP or any Guarantor of Hedging Obligations that are incurred in the normal course of business; |
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(5) the incurrence by AREP or any Guarantor of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; | |
(6) the incurrence by AREP or any Guarantor of the Existing Indebtedness; | |
(7) Indebtedness arising from any agreement entered into by AREP or AREH providing for indemnification, purchase price adjustment or similar obligations, in each case, incurred or assumed in connection with an asset sale; | |
(8) Indebtedness of AREP or any Guarantor attributable to Bad Boy Guarantees; and | |
(9) the incurrence by AREP or any Guarantor of additional Indebtedness in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (9), not to exceed $10.0 million at any one time outstanding. |
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; |
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(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and | |
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: |
(a) the Fair Market Value of such assets at the date of determination; and | |
(b) the amount of the Indebtedness of the other Person. |
(1) Liens on any Principal Property acquired after the Issuance Date to secure or provide for the payment of the purchase price or acquisition cost thereof; | |
(2) Liens on Principal Property acquired after the Issuance Date existing at the time such Principal Property is acquired; | |
(3) Liens on any Principal Property acquired from a corporation merged with or into AREP or any Guarantor; | |
(4) Liens in favor of AREP or any Guarantor; | |
(5) Liens in existence on any Principal Property on the Issuance Date; | |
(6) Liens on any Principal Property constituting unimproved real property constructed or improved after the Issuance Date to secure or provide for the payment or cost of such construction or improvement; | |
(7) Liens in favor of, or required by, governmental authorities; | |
(8) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation and deposits securing liability to insure carriers under insurance arrangements; | |
(9) Liens for taxes, assessments or governmental charges or statutory liens of landlords, carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business or in the improvement or repair of any Principal Property not yet due or which are being contested in good faith by appropriate proceedings; | |
(10) any judgment attachment or judgment Lien not constituting an Event of Default; | |
(11) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business and in the improvement or repair of any Principal Property and which obligations are not expressly prohibited by the indenture; | |
(12) Liens to secure Indebtedness of AREP or any Guarantor attributable to Bad Boy Guarantees; | |
(13) Liens in favor of the trustee and required by the covenant “Maintenance of Interest Coverage”; | |
(14) Liens to secure margin Indebtedness; provided that such Liens are secured solely by the applicable margin securities; or | |
(15) any extension, renewal, substitution or replacement (or successive extensions, renewals, substitutions or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (i) through (xiv), inclusive; |
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(1) either: (a) AREP is the surviving entity, or (b) the Person formed by or surviving any such consolidation or merger (if other than AREP) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company or limited partnership entity organized or existing under the laws of the United States, any state of the United States or the District of Columbia; | |
(2) the Person formed by or surviving any such consolidation or merger (if other than AREP) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of AREP under the notes, the indenture and the registration rights agreement and upon such assumption such Person will become the successor to, and be substituted for, AREP thereunder and all references to AREP in each thereof shall then become references to such Person and such Person shall thereafter be able to exercise every right and power of AREP thereunder; | |
(3) immediately after such transaction no Default or Event of Default exists; |
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(4) AREP or the Person formed by or surviving any such consolidation or merger (if other than AREP), or to which such sale, assignment, transfer, conveyance or other disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock; and | |
(5) AREP has delivered to the trustee an Officers’ Certificate and opinion of counsel, which may be an opinion of in-house counsel of AREP or an Affiliate, each stating that such transaction complies with the terms of the indenture. |
(1) an Affiliate that has no material assets or liabilities where the primary purpose of such transaction is to change AREP into a corporation or other form of business entity or to change the jurisdiction of formation of AREP and such transaction does not cause the realization of any material federal or state tax liability that will be paid by AREP or any of its Subsidiaries (including AREH). For purposes of this paragraph, the term material refers to any assets, liabilities or tax liabilities that are greater than 5.0% of the Tangible Net Worth of AREP and its Subsidiaries (including AREH) on a consolidated basis; or | |
(2) any Person; provided that AREP receives consideration in Cash Equivalents and marketable securities with an aggregate Fair Market Value determined at the time of the execution of such relevant agreement of at least $1.0 billion for such merger or consolidation or the sale, assignment, transfer, conveyance or other disposition of all or substantially all of AREP’s properties or assets. In any transaction referred to in this clause (2), and subject to the terms and conditions thereof, the trustee shall, without the need of any action by the noteholders, (x) confirm that such Person shall not be liable for and release such Person from, any obligation of AREP’s under the indenture and the notes and (y) release any Guarantor from all obligations under its Note Guarantee if such Guarantor was directly or indirectly sold, assigned, transferred, conveyed or otherwise disposed of to such Person in such transaction. |
(1) either: (a) AREH is the surviving entity, or (b) the Person formed by or surviving any such consolidation or merger (if other than AREH) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company or limited partnership entity organized or existing under the laws of the United States, any state of the United States or the District of Columbia; |
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(2) the Person formed by or surviving any such consolidation or merger (if other than AREH) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of AREH under the Note Guarantee (and becomes a Guarantor), the notes, the indenture and the registration rights agreement, and upon such assumption such Person will become the successor to, and be substituted for, AREH thereunder, and all references to AREH in each thereof shall than become references to such Person and such Person shall thereafter be able to exercise every right and power of AREH thereunder; | |
(3) immediately after such transaction no Default or Event of Default exists; | |
(4) AREH or the Person formed by or surviving any such consolidation or merger (if other than AREP), or to which such sale, assignment, transfer, conveyance or other disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock; and | |
(5) AREH has delivered to the trustee an Officers’ Certificate and opinion of counsel which may be an opinion of in-house counsel of AREP or an Affiliate, each stating that such transaction complies with the terms of the indenture. |
(1) an Affiliate that has no material assets or liabilities where the primary purpose of such transaction is to change AREH into a corporation or other form of business entity or to change the jurisdiction of formation of AREH and such transaction does not cause the realization of any material federal or state tax liability that will be paid by AREH or any of its Subsidiaries. For purposes of this paragraph, the term material refers to any assets, liabilities or tax liabilities that are greater than 5.0% of the Tangible Net Worth of AREP and its Subsidiaries (including AREH) on a consolidated basis; | |
(2) any Person; provided that AREP receives consideration in Cash Equivalents and marketable securities with an aggregate Fair Market Value determined at the time of the execution of such relevant agreement of at least $1.0 billion for such merger or consolidation or the sale, assignment, transfer, conveyance or other disposition of all or substantially all of AREH’s properties or assets; or | |
(3) any Person; provided that AREH receives consideration in Cash Equivalents and marketable securities with an aggregate Fair Market Value determined at the time of the execution of such relevant agreement of at least $1.0 billion for such merger or consolidation or the sale, assignment, transfer, conveyance or other disposition of all or substantially all of AREH’s properties or assets and AREH remains a Subsidiary of AREP. |
(1) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among AREP, AREH or any one or more Guarantors; or |
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(2) any sale, assignment, transfer, conveyance or other disposition of Cash Equivalents, including, without limitation, any investment or capital contribution of Cash Equivalents, or any purchase of property and assets, including, without limitation, securities, debt obligations or Capital Stock, with Cash Equivalents. |
(1) the Affiliate Transaction is on terms that are not materially less favorable to AREP or the relevant Subsidiary (including any Guarantor) than those that would have been obtained in a comparable transaction by AREP or such Subsidiary (including any Guarantor) with an unrelated Person as determined in good faith by the Board of Directors of AREP; and | |
(2) AREP delivers to the trustee: |
(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.0 million, a resolution of the Board of Directors of AREP set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of AREP; and | |
(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to AREP or such Subsidiary (including any Guarantor) of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of recognized standing. |
(1) any employment agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by AREP or any of its Subsidiaries (including any Guarantor) in the ordinary course of business and payments pursuant thereto including payments or reimbursement of payments by API with respect to any such agreement, plan or arrangement entered into by API with respect to or for the benefit of officers or directors of API (other than any such agreements, plans or arrangements entered into by AREP or any of its Subsidiaries (including AREH) with Carl Icahn (other than employee benefit plans and officer or director indemnification agreements generally applicable to officers and directors of API, AREP or its Subsidiaries (including AREH)); | |
(2) transactions between or among AREP, any Guarantor and/or their respective Subsidiaries (except any Subsidiaries of which Carl Icahn or Affiliates of Carl Icahn (other then AREP, AREH or their Subsidiaries) own more than 10% of the Voting Stock); | |
(3) payment (or reimbursement of payments by API) of directors’ fees to Persons who are not otherwise Affiliates of AREP; | |
(4) any issuance of Equity Interests (other than Disqualified Stock) and Preferred Unit Distributions of AREP to Affiliates of AREP; | |
(5) Restricted Payments that do not violate the provisions of the indenture described above under the caption “— Restricted Payments”; | |
(6) transactions between AREP and/or any of its Subsidiaries (including any Guarantor), on the one hand, and other Affiliates, on the other hand, for the provision of goods or services in the ordinary course of business by such other Affiliates; provided that such other Affiliate is in the business of providing such goods or services in the ordinary course of business to unaffiliated third parties and the terms and pricing for such goods and services overall are not less favorable to AREP and/or its |
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Subsidiaries (including AREH) than the terms and pricing upon which such goods and services are provided to unaffiliated third parties; | |
(7) the provision or receipt of accounting, financial, management, information technology and other ancillary services to or from Affiliates, provided that AREP or its Subsidiaries (including any Guarantor) in the case of the provision of such services, are paid a fee not less than its out of pocket costs and allocated overhead (including a portion of salaries and benefits) and in the case of the receipt of such services, paid a fee not more than such Person’s out-of-pocket costs and allocated overhead (including a portion of salaries and benefits), in each case, as determined by AREP in its reasonable judgment; | |
(8) the license of a portion of office space pursuant to a license agreement, dated as of February 1, 1997, between AREP and an Affiliate of API and any renewal thereof; | |
(9) the payment to API and reimbursements of payments made by API of expenses relating to AREP’s, AREH’s or any Guarantors’ status as a public company; | |
(10) services provided and payments received by NEG from NEG Operating LLC, TransTexas Gas Corporation and Panaco, Inc. pursuant to the NEG Management Agreements; | |
(11) the pledge by NEG of its interest in the Capital Stock of NEG Holding LLC pursuant to the NEG Credit Agreement; | |
(12) the exchange by AREH of its GB Securities for other securities of GB Holdings, Inc.; provided that such exchange is on terms no less favorable to AREH as the exchange of GB Securities offered to other non-Affiliated Persons; | |
(13) payments by AREH, AREP or any Subsidiary to API in connection with services provided to AREH, AREP or any Subsidiary in accordance with the AREP Partnership Agreement; and | |
(14) the Acquisitions. |
(1) all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if the Issuers were required to file such reports; and | |
(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Issuers were required to file such reports. |
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(1) default in payment when due and payable, upon redemption or otherwise, of principal or premium, if any, on the notes; | |
(2) default for 30 days or more in the payment when due of interest or Liquidated Damages on the notes; | |
(3) failure by the Issuers to call or cause to be called for redemption or to purchase or cause to be called any notes, in each case when required under the indenture; | |
(4) failure by AREP or any Guarantor for 30 days after written notice from the trustee to comply with the provisions described under the captions “— Restricted Payments” or “— Incurrence of Indebtedness and Issuance of Preferred Stock”; | |
(5) failure by AREP or any Guarantor for 30 days after written notice from the trustee to comply with the provisions described under the captions “— Maintenance of Interest Coverage” or “— Maintenance of Total Unencumbered Assets”; | |
(6) failure by the Issuers or any Guarantor for 60 days after notice from the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding to comply with any of their other agreements in the indenture or the notes or the Note Guarantee; | |
(7) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Issuers or any Guarantor or default on any Guarantee by the Issuers or AREH of Indebtedness, whether such Indebtedness or Guarantee now exists or is created after the Issuance Date, which default (a) is caused by a failure to pay when due at final maturity (giving effect to any grace period or waiver related thereto) the principal of such Indebtedness (a “Payment Default”) or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness as to which AREP or any Guarantor is obligated to pay, together with the principal amount of any other such Indebtedness under which a Payment Default then exists or with respect to which the maturity thereof has been so accelerated or which has not been paid at maturity as to which AREP or any Guarantor is obligated to pay, aggregates $10.0 million or more; | |
(8) failure by the Issuers or any Guarantor to pay final judgments aggregating in excess of $10.0 million, which final judgments remain unpaid, undischarged or unstayed for a period of more than 60 days after such judgment becomes a final judgment; | |
(9) except as permitted by the indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or AREH or any other Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee; and | |
(10) certain events of bankruptcy or insolvency with respect to AREP or any Guarantor that is a Significant Subsidiary. |
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(1) the Issuers must irrevocably deposit, or cause to be deposited, with the trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient to pay the principal of, premium, if any, interest and Liquidated Damages, if any, due on the outstanding notes on the stated maturity date or on the applicable redemption date, as the case may be, in accordance with the terms of the indenture; | |
(2) no Default or Event of Default shall have occurred and be continuing with respect to certain Events of Default on the date of such deposit; | |
(3) such Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which the Issuers or any of their Subsidiaries is a party or by which the Issuers or any of their Subsidiaries is bound; |
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(4) the Issuers shall have delivered to the trustee an opinion of counsel, which may be an opinion of in-house counsel to AREP or an Affiliate, containing customary assumptions and exceptions, to the effect that upon and immediately following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally under any applicable law; | |
(5) the Issuers shall have delivered to the trustee an Officers’ Certificate stating that the deposit was not made by the Issuers with the intent of defeating, hindering, delaying or defrauding any creditors of AREP or others; and | |
(6) the Issuers shall have delivered to the trustee an Officers’ Certificate and an opinion of counsel in the United States, which may be an opinion of in-house counsel to AREP or an Affiliate (which opinion of counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Covenant Defeasance have been complied with. |
(1) either: |
(a) all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to AREP, have been delivered to the trustee for cancellation; or | |
(b) all notes that have not been delivered to the trustee for cancellation (1) have become due and payable by reason of the mailing of a notice of redemption or otherwise, (2) will become due and payable within one year or (3) are to be called for redemption within 12 months under arrangements reasonably satisfactory to the trustee for the giving of notice of redemption by the trustee in the name, and at the reasonable expense of the Issuers, and the Issuers or any Guarantor have irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the notes not delivered to the trustee for cancellation for principal and premium, if any, and accrued but unpaid interest to the date of maturity or redemption; |
(2) no Default of Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default under, any other material instrument to which the Issuers are a party or by which the Issuers are bound; | |
(3) the Issuers have paid or caused to be paid all sums payable by it under the indenture; and | |
(4) the Issuers or any Guarantor have delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be. |
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(1) reduce the principal amount of notes whose holders must consent to an amendment, supplement or waiver; | |
(2) reduce the principal of or change the fixed maturity of any note or alter or waive the provisions with respect to the redemption of the notes; | |
(3) reduce the rate of or change the time for payment of interest on any note; | |
(4) waive a Default or Event of Default in the payment of principal of, premium or interest on the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration); | |
(5) make any note payable in money other than that stated in the notes; | |
(6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of or premium, if any, or interest on the notes; | |
(7) release AREH or any other Guarantor from any of its obligations under its Note Guarantee or the indenture, except in accordance with the terms of the indenture; or | |
(8) make any change in the foregoing amendment and waiver provisions. |
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(1) any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or | |
(2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. |
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(1) DTC (a) notifies the Issuers that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, the Issuers fail to appoint a successor depositary; | |
(2) the Issuers, at their option, notify the trustee in writing that it elects to cause the issuance of the Certificated Notes; or | |
(3) there has occurred and is continuing a Default or Event of Default with respect to the notes. |
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(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and | |
(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. |
(1) AREP’s purchase of Gascon Partners’ membership interest of NEG Holding LLC pursuant to a purchase agreement with Gascon Partners dated January 21, 2005 or, alternatively, if AREP does not obtain the consent of NEG Operating’s bank lenders or refinance such debt, AREP’s purchase of all of the general partnership interests of Gascon Partners; | |
(2) National Onshore LP’s merger with TransTexas Gas Corporation pursuant to an agreement and plan of Merger dated January 21, 2005; | |
(3) National Offshore LP’s merger with Panaco, Inc. pursuant to an agreement and plan of merger dated January 21, 2005; | |
(4) AREP’s purchase of approximately 41.2% of the outstanding common stock of GB Holdings, Inc. and warrants to purchase approximately 11.3% of the fully diluted common stock of Atlantic Coast Entertainment Holdings, Inc. pursuant to a purchase agreement with Cyrus, LLC dated January 21, 2005; and | |
(5) the transactions contemplated by clauses (1) through (4), above, including but not limited to the registration rights agreement to be entered into between AREP and the other signatories thereto. |
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(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; | |
(2) with respect to a partnership, the Board of Directors of the general partner of the partnership; | |
(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof or the Board of Directors of the managing member; and | |
(4) with respect to any other Person, the board or committee of such Person serving a similar function. |
(1) in the case of a corporation, corporate stock; | |
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; | |
(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and | |
(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. |
(1) United States dollars; | |
(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition; | |
(3) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better; |
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(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; | |
(5) commercial paper having one of the two highest ratings obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and, in each case, maturing within one year after the date of acquisition; and | |
(6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition. |
(1) provision for taxes based on income or profits of AREP and the Guarantors or any payments of Tax Amounts by AREP for such period, to the extent that such provision for taxes or such payments of Tax Amounts were deducted in computing such Net Income of AREP or any Guarantor; plus | |
(2) the Fixed Charges of AREP or any Guarantor for such period, to the extent that such Fixed Charges of AREP and such Guarantor were deducted in computing such Net Income of AREP and such Guarantor; plus | |
(3) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of AREP and any Guarantor for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Net Income of AREP and any Guarantor; minus | |
(4) non-cash items increasing such Net Income of AREP and any Guarantor for such period, other than the accrual of revenue in the ordinary course of business, |
(1) the sale, lease, transfer, conveyance or other disposition by AREP or AREH (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of AREP or AREH to any “person” (as that term is used in Section 13(d) of the Exchange Act) other than the Principal or a Related Party; provided, however, that (x) if AREP or AREH receives consideration in Cash Equivalents and marketable securities with an aggregate Fair Market Value determined at the time of the execution of each relevant agreement of at least $1.0 billion for such sale, lease, transfer, conveyance or other disposition of properties or assets, then such transaction shall not be deemed a Change of Control and (y) any sale, assignment, transfer or other disposition of Cash Equivalents, including, without limitation, any investment or capital contribution of Cash Equivalents or purchase of property, assets or Capital Stock with Cash Equivalents, will not constitute a sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets for purposes of this clause (1); | |
(2) the adoption of a plan relating to the liquidation or dissolution of AREP; | |
(3) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any “person” (as defined above), other than the Principal or the Related |
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Parties, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of a Controlling Entity of AREP, measured by voting power rather than number of shares; | |
(4) the first day on which a majority of the members of the Board of Directors of the Controlling Entity are not Continuing Directors; or | |
(5) for so long as AREP is a partnership, upon any general partner of AREP ceasing to be an Affiliate of the Principal or a Related Party. |
(1) the Net Income of any Person that is accounted for by the equity method of accounting or that is a Subsidiary will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Subsidiary of the Person; | |
(2) the Net Income of any of its Subsidiaries will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders; and | |
(3) the cumulative effect of a change in accounting principles will be excluded. |
(1) was a member of such Board of Directors on the date of the indenture; or | |
(2) was nominated for election or elected to such Board of Directors with the approval of the Principal or any of the Related Parties or with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. |
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(1) acquisitions that have been made by the specified Person, including through mergers or consolidations, or any Person acquired by the specified Person, and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect (in accordance with Regulation S-X under the Securities Act) as if they had occurred on the first day of the four-quarter reference period; | |
(2) the Cash Flow of AREP and the Guarantors attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded; | |
(3) the Fixed Charges of AREP and the Guarantors attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that such Fixed Charges of AREP and the Guarantors are equal to or less than the Cash Flow of AREP and the Guarantors from the related discontinued operation excluded under clause (3) for such period; and | |
(4) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the |
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entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). |
(1) the interest expense of AREP, and any Guarantor for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus | |
(2) the interest expense of AREP and any Guarantor that was capitalized during such period; plus | |
(3) any interest on Indebtedness of another Person that is guaranteed by AREP or any Guarantor (other than Bad Boy Guarantees unless such Bad Boy Guarantee is called upon) or secured by a Lien on assets of AREP or any additional Guarantor, whether or not such Guarantee or Lien is called upon; provided that for purposes of calculating interest with respect to Indebtedness that is Guaranteed or secured by a Lien, the principal amount of Indebtedness will be calculated in accordance with the last two paragraphs of the definition of Indebtedness; plus | |
(4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred equity of AREP, other than dividends on preferred stock to the extent payable in Equity Interests of AREP (other than Disqualified Stock) or dividends on preferred equity payable to AREP, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory income tax rate of AREP (however, for so long as AREP is a partnership or otherwise a pass-through entity for federal income tax purposes, the combined federal, state and local income tax rate shall be the rate that was utilized to calculate the Tax Amount of AREP to the extent that the Tax Amount was actually distributed with respect to such period (and if less than the Tax Amount is distributed, such rate shall be proportionately reduced) and if no Tax Amount was actually distributed with respect to such period, such combined federal, state and local income tax rate shall be zero), expressed as a decimal; provided that this clause (4) will not include any Preferred Unit Distribution paid in additional Preferred Units, |
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(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; | |
(2) other agreements or arrangements designed to manage interest rates or interest rate risk; and | |
(3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices. |
(1) in respect of borrowed money; | |
(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); | |
(3) in respect of banker’s acceptances; | |
(4) representing Capital Lease Obligations; | |
(5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed; or | |
(6) representing any Hedging Obligations, |
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(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, and Other Liquidated Damages, incurred in connection therewith); | |
(2) in the case of any Indebtedness other than notes redeemed in accordance with “— Mandatory Disposition Pursuant to Gaming Laws,” such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; and | |
(3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes on terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged. |
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(1) any corporation, association or other business entity of which more than 50% of the total Voting Stock is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and | |
(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). |
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(1) acquired the private notes at their original issue price for cash, | |
(2) exchange the private notes for new notes in this exchange offer, and | |
(3) held the private notes and hold the new notes as “capital assets” (generally, for investment) as defined in the Internal Revenue Code of 1986, as amended, the Code. |
• | A broker-dealer, a dealer in securities or a financial institution; | |
• | An S corporation; | |
• | A bank; | |
• | A thrift; | |
• | An insurance company; | |
• | A tax-exempt organization; | |
• | A partnership or other pass-through entity; | |
• | Subject to the alternative minimum tax provisions of the Code; | |
• | Holding the private notes or the new notes as part of a hedge, straddle or other risk reduction or constructive sale transaction; | |
• | A person with a “functional currency” other than the U.S. dollar; or | |
• | A United States expatriate. |
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• | a citizen or resident of the United States; | |
• | a corporation organized under the laws of the United States or any political subdivision thereof; | |
• | an estate the income of which is subject to U.S. federal income tax regardless of its sources; or | |
• | a trust if a court within the United States can exercise primary supervision over the administration of the trust and one or more U.S. persons has authority to control all substantial decisions of the trust, or if the trust was in existence on August 20, 1996, and treated as a domestic trust on August 19, 1996, and it has elected to continue to be treated as a U.S. person. |
• | when it accrues, if you use the accrual method of accounting for United States federal income tax purposes; or | |
• | when you receive it, if you use the cash method of accounting for United States federal income tax purposes. |
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• | the IRS notifies us or our paying agent that the TIN you provided is incorrect; | |
• | you underreport interest and dividend payments that you receive on your tax return and the IRS notifies us or our paying agent that withholding is required; or | |
• | you fail to certify under penalties of perjury that you are not subject to backup withholding. |
• | you do not own, actually or constructively, 10% or more of our capital or profits interests; | |
• | you are not a controlled foreign corporation with respect to which we are a “related person” within the meaning of Section 864(d)(4) of the Code; | |
• | you are not a bank receiving interest described in Section 881(c)(3)(A) of the Code; | |
• | such interest is not effectively connected with the conduct by you of a trade or business in the United States; and | |
• | either (i) you represent that you are not a United States person for United States federal income tax purposes and you provide your name and address to us or our paying agent on a properly executed IRS Form W-8BEN (or a suitable substitute form) signed under penalties of perjury, or (ii) a securities clearing organization, bank, or other financial institution that holds customers’ securities in the ordinary course of its business holds the new note on your behalf, certifies to us or our paying agent under penalties of perjury that it has received IRS Form W-8BEN (or a suitable substitute form) from you or from another qualifying financial institution intermediary, and provides a copy of the Form W-8BEN (or a suitable substitute form) to us or our paying agent. United States Federal Income or Withholding Tax If Interest Is Not Portfolio Interest. If you do not claim, or do not qualify for, the benefit of the portfolio interest exemption described above, you may be subject to a 30% withholding tax on the gross amount of interest payments, unless reduced or eliminated by an applicable income tax treaty. |
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• | may not rely on the applicable interpretation of the staff of the Commission’s position contained in Exxon Capital Holdings Corp., SEC no-action letter (May 13, 1988), Morgan, Stanley & Co. Inc., SEC no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1983); and | |
• | must also be named as a selling noteholder in connection with the registration and prospectus delivery requirements of the Securities Act relating to any resale transaction. |
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• | Annual Report on Form 10-K for the year ended December 31, 2004, filed on March 15, 2005. | |
• | Amended Annual Report on Form 10-K/ A for the year ended December 31, 2004, filed on April 14, 2005. | |
• | Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, filed on May 10, 2005. | |
• | Current Reports on Form 8-K, filed on AREP on January 5, 2005, January 27, 2005, February 2, 2005, February 10, 2005, April 7, 2005, May 10, 2005, May 27, 2005, June 3, 2005, and June 20, 2005. |
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American Real Estate Partners, L.P. | |||||
F-4 | |||||
F-5 | |||||
F-6 | |||||
F-7 | |||||
F-8 | |||||
F-9 | |||||
F-14 | |||||
F-52 | |||||
American Real Estate Partners, L.P. Supplemental Consolidated Financial Statements | |||||
F-63 | |||||
F-64 | |||||
F-65 | |||||
F-66 | |||||
F-68 | |||||
F-70 | |||||
F-75 | |||||
American Real Estate Holdings Limited Partnership | |||||
F-118 | |||||
F-119 | |||||
F-120 | |||||
F-121 | |||||
F-122 | |||||
F-123 | |||||
F-125 | |||||
American Real Estate Holdings Limited Partnership Supplemental Consolidated Financial Statements | |||||
F-159 | |||||
F-160 | |||||
F-161 | |||||
F-162 |
F-1
Table of Contents
F-163 | |||||
F-164 | |||||
F-166 | |||||
American Property Investors, Inc. | |||||
F-207 | |||||
F-208 | |||||
F-209 | |||||
NEG Holding LLC | |||||
F-212 | |||||
F-213 | |||||
F-214 | |||||
F-215 | |||||
F-216 | |||||
F-217 | |||||
F-218 | |||||
F-233 | |||||
F-234 | |||||
F-235 | |||||
F-236 | |||||
F-237 | |||||
Panaco, Inc. | |||||
F-242 | |||||
F-243 | |||||
F-244 | |||||
F-245 | |||||
F-246 | |||||
F-247 | |||||
F-264 | |||||
F-265 | |||||
F-266 | |||||
F-267 | |||||
F-268 | |||||
GB Holdings, Inc. and Subsidiaries | |||||
F-274 | |||||
F-275 | |||||
F-276 |
F-2
Table of Contents
F-277 | ||||
F-278 | ||||
F-279 | ||||
F-294 | ||||
F-295 | ||||
F-296 | ||||
F-297 | ||||
F-298 |
F-3
Table of Contents
/s/ GRANT THORNTON LLP |
F-4
Table of Contents
/s/ KPMG LLP |
F-5
Table of Contents
March 31, | December 31, | |||||||||||||
2005 | 2004 | 2003 | ||||||||||||
(Unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents (Note 2) | $ | 1,245,762 | $ | 762,708 | $ | 487,498 | ||||||||
Investment in U.S. government and agency obligations (Note 4) | 68,894 | 96,840 | 52,583 | |||||||||||
Marketable equity and debt securities (Note 5) | 68,497 | 2,248 | 55,826 | |||||||||||
Due from brokers (Note 6) | 147,223 | 123,001 | — | |||||||||||
Restricted cash | 28,537 | 19,856 | 15,058 | |||||||||||
Receivables and other current assets | 43,066 | 51,575 | 43,420 | |||||||||||
Real estate leased to others: | ||||||||||||||
Current portion of lease amortization for leases accounted for under the financing method (Note 8) | 3,740 | 3,912 | 5,738 | |||||||||||
Properties held for sale (Notes 9 and 15) | 33,995 | 58,021 | 128,813 | |||||||||||
Current portion of investment in debt securities of affiliates (Note 12) | 10,429 | 10,429 | — | |||||||||||
Current portion of deferred tax asset (Note 23) | 2,685 | 2,685 | 2,982 | �� | ||||||||||
Total current assets | 1,652,828 | 1,131,275 | 791,918 | |||||||||||
Investment in U.S. government and agency obligations (Note 4) | 5,533 | 5,491 | 8,990 | |||||||||||
Other investments (Note 7) | 244,602 | 245,948 | 50,328 | |||||||||||
Land and construction-in-progress (Note 15) | 106,000 | 106,537 | 43,459 | |||||||||||
Real estate leased to others: | ||||||||||||||
Accounted for under the financing method (Notes 8, 15 and 16) | 75,949 | 85,281 | 131,618 | |||||||||||
Accounted for under the operating method, net of accumulated depreciation (Notes 9, 15 and 16) | 51,127 | 49,118 | 76,443 | |||||||||||
Hotel, casino and resort operating properties, net of accumulated depreciation: | ||||||||||||||
American Casino & Entertainment Properties LLC (Notes 10 and 17) | 288,890 | 289,360 | 298,703 | |||||||||||
Hotel and resorts (Notes 9 and 11) | 46,041 | 50,132 | 41,526 | |||||||||||
Deferred finance costs and other assets, net | 24,669 | 21,038 | 3,833 | |||||||||||
Long-term portion of investment in debt securities of affiliates (Note 12) | 114,364 | 115,075 | 24,696 | |||||||||||
Investment in NEG Holding LLC (Note 14) | 97,693 | 87,800 | 69,346 | |||||||||||
Equity interest in GB Holdings, Inc. (The Sands Hotel and Casino)(Note 13) | 9,138 | 10,603 | 30,854 | |||||||||||
Deferred tax asset (Note 23) | 58,851 | 65,399 | 74,892 | |||||||||||
Total | $ | 2,775,685 | $ | 2,263,057 | $ | 1,646,606 | ||||||||
LIABILITIES AND PARTNERS’ EQUITY | ||||||||||||||
Current Liabilities: | ||||||||||||||
Current portion of mortgages payable (Notes 8, 9 and 16) | $ | 4,205 | $ | 3,700 | $ | 4,892 | ||||||||
Mortgages on properties held for sale (Notes 9 and 16) | 20,372 | 27,477 | 82,861 | |||||||||||
Accounts payable, accrued expenses and other current liabilities (Note 20) | 76,100 | 81,793 | 45,774 | |||||||||||
Securities sold not yet purchased (Note 6) | 83,750 | 90,674 | — | |||||||||||
Credit facility due affiliates (Notes 14 and 17) | — | — | 25,000 | |||||||||||
Total current liabilities | 184,427 | 203,644 | 158,527 | |||||||||||
Other liabilities | 21,817 | 23,239 | 22,980 | |||||||||||
Long-term portion of mortgages payable (Notes 8, 9 and 16) | 55,614 | 60,719 | 93,236 | |||||||||||
Senior secured notes payable and credit facility (Note 18) | 215,000 | 215,000 | — | |||||||||||
Senior unsecured notes payable-81/8% due 2012-net of unamortized discount of $2,321 and $2,402 at March 31, 2005 and December 31, 2004 (Note 19) | 350,679 | 350,598 | — | |||||||||||
Senior unsecured notes payable-71/8% due 2013 | 480,000 | — | — | |||||||||||
Preferred limited partnership units: | ||||||||||||||
$10 liquidation preference, 5% cumulative pay-in-kind; 10,900,000 authorized; 10,800,397, 10,286,264 and 9,796,607 issued and outstanding as of March 31, 2005 and December 31, 2004 and 2003 (Note 24) | 108,006 | 106,731 | 101,649 | |||||||||||
Total long-term liabilities | 1,231,116 | 756,287 | 217,865 | |||||||||||
Commitments and contingencies (Notes 3 and 24): | ||||||||||||||
Partners’ Equity: | ||||||||||||||
Limited partners: | ||||||||||||||
Depositary units; 47,850,000 authorized; 47,235,484 outstanding | 1,383,913 | 1,328,031 | 1,184,870 | |||||||||||
General partner | (11,850 | ) | (12,984 | ) | 97,265 | |||||||||
Treasury units at cost: | ||||||||||||||
1,137,200 depositary units (Note 28) | (11,921 | ) | (11,921 | ) | (11,921 | ) | ||||||||
Partners’ equity (Notes 2 and 3) | 1,360,142 | 1,303,126 | 1,270,214 | |||||||||||
Total | $ | 2,775,685 | $ | 2,263,057 | $ | 1,646,606 | ||||||||
F-6
Table of Contents
Three Months Ended | |||||||||||||||||||||
March 31, | Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Revenues: | |||||||||||||||||||||
Hotel and casino operating income (Note 10) | $ | 82,838 | $ | 75,009 | $ | 299,981 | $ | 262,811 | $ | 250,023 | |||||||||||
Land, house and condominium sales | 8,279 | 5,014 | 26,591 | 13,265 | 76,024 | ||||||||||||||||
Interest income on financing leases | 1,966 | 2,936 | 9,880 | 13,115 | 14,722 | ||||||||||||||||
Interest income on U.S. Government and Agency obligations and other investments (Notes 2 and 7) | 13,554 | 4,889 | 44,418 | 22,583 | 30,569 | ||||||||||||||||
Rental income | 2,035 | 2,027 | 7,916 | 7,092 | 6,852 | ||||||||||||||||
Hotel and resort operating income (Note 11) | 5,563 | 1,335 | 16,211 | 12,376 | 12,921 | ||||||||||||||||
Accretion of investment in NEG Holding LLC (Note 14) | 9,893 | 7,904 | 34,432 | 30,142 | 32,879 | ||||||||||||||||
NEG management fee | 3,275 | 2,619 | 11,563 | 7,967 | 7,637 | ||||||||||||||||
Dividend and other income (Notes 5 and 7) | 4,206 | 834 | 3,133 | 3,061 | 2,720 | ||||||||||||||||
Equity in (loss) earnings of GB Holdings, Inc. (Note 13) | (986 | ) | (348 | ) | (2,113 | ) | (3,466 | ) | 305 | ||||||||||||
130,623 | 102,219 | 452,012 | 368,946 | 434,652 | |||||||||||||||||
Expenses: | |||||||||||||||||||||
Hotel and casino operating expenses (Note 10) | 57,624 | 54,243 | 227,603 | 216,857 | 217,938 | ||||||||||||||||
Cost of land, house and condominium sales | 7,047 | 3,358 | 18,486 | 9,129 | 54,640 | ||||||||||||||||
Hotel and resort operating expenses (Note 11) | 5,405 | 1,424 | 12,730 | 8,773 | 10,536 | ||||||||||||||||
Interest expense (Notes 15, 16, 17, 18, 19 and 22) | 19,161 | 6,181 | 46,099 | 21,103 | 27,297 | ||||||||||||||||
Depreciation and amortization | 7,154 | 7,422 | 29,815 | 24,802 | 23,646 | ||||||||||||||||
General and administrative expenses (Note 3) | 7,610 | 4,364 | 20,952 | 14,081 | 14,134 | ||||||||||||||||
Property expenses | 952 | 1,085 | 4,340 | 4,472 | 3,862 | ||||||||||||||||
Provision for losses on real estate | — | — | 3,150 | 750 | 3,212 | ||||||||||||||||
104,953 | 78,077 | 363,175 | 299,967 | 355,265 | |||||||||||||||||
Operating income | 25,670 | 24,142 | 88,837 | 68,979 | 79,387 | ||||||||||||||||
Other gains and (losses): | |||||||||||||||||||||
(Loss) on sale of other assets | (180 | ) | (4 | ) | — | (1,503 | ) | (353 | ) | ||||||||||||
Gain on sale of marketable equity and debt securities | — | 28,857 | 40,159 | 2,607 | — | ||||||||||||||||
Unrealized losses on securities sold short (Note 6) | 21,704 | — | (23,619 | ) | — | — | |||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. (Note 13) | — | — | (15,600 | ) | — | — | |||||||||||||||
Write-down of marketable equity and debt securities and other investments (Note 5) | — | — | — | (19,759 | ) | (8,476 | ) | ||||||||||||||
Gain on sales and disposition of real estate (Note 15) | 186 | 6,047 | 5,262 | 7,121 | 8,990 | ||||||||||||||||
Loss on limited partnership interests | — | — | — | — | (3,750 | ) | |||||||||||||||
Minority interest in net earnings of Stratosphere Corporation (Note 10) | — | — | — | — | (1,943 | ) | |||||||||||||||
Income from continuing operations before income taxes | 47,380 | 59,042 | 95,039 | 57,445 | 73,855 | ||||||||||||||||
Income tax (expense) benefit (Note 23) | (7,650 | ) | (6,169 | ) | (16,763 | ) | 1,573 | (10,096 | ) | ||||||||||||
Income from continuing operations | 39,730 | 52,873 | 78,276 | 59,018 | 63,759 | ||||||||||||||||
Discontinued operations: | |||||||||||||||||||||
Income from discontinued operations | 957 | 3,218 | 7,500 | 7,653 | 6,937 | ||||||||||||||||
Gain on sales and disposition of real estate | 18,723 | 6,929 | 75,197 | 3,353 | — | ||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | ||||||||||||||||
Net earnings | $ | 59,410 | $ | 63,020 | $ | 160,973 | $ | 70,024 | $ | 70,696 | |||||||||||
Net earnings attributable to (Note 1): | |||||||||||||||||||||
Limited partners | $ | 58,228 | $ | 57,608 | $ | 152,507 | $ | 59,360 | $ | 63,168 | |||||||||||
General partner | 1,182 | 5,412 | 8,466 | 10,664 | 7,528 | ||||||||||||||||
$ | 59,410 | $ | 63,020 | $ | 160,973 | $ | 70,024 | $ | 70,696 | ||||||||||||
Net earnings per limited partnership unit (Notes 2 and 21): | |||||||||||||||||||||
Basic earnings: | |||||||||||||||||||||
Income from continuing operations | $ | 0.84 | $ | 1.03 | $ | 1.55 | $ | 1.00 | $ | 1.12 | |||||||||||
Income from discontinued operations | $ | 0.42 | 0.22 | 1.76 | 0.24 | 0.15 | |||||||||||||||
Basic earnings per LP unit | $ | 1.26 | $ | 1.25 | $ | 3.31 | $ | 1.24 | $ | 1.27 | |||||||||||
Weighted average limited partnership units outstanding | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | ||||||||||||||||
Diluted earnings: | |||||||||||||||||||||
Income from continuing operations | $ | 0.81 | $ | 0.93 | $ | 1.48 | $ | 0.94 | $ | 1.00 | |||||||||||
Income from discontinued operations | 0.39 | 0.19 | 1.57 | 0.19 | 0.12 | ||||||||||||||||
Diluted earnings per LP unit | $ | 1.20 | $ | 1.12 | $ | 3.05 | $ | 1.13 | $ | 1.12 | |||||||||||
Weighted average limited partnership units and equivalent partnership units outstanding | 49,857,622 | 52,499,303 | 51,542,312 | 54,489,943 | 56,466,698 | ||||||||||||||||
F-7
Table of Contents
Limited Partners’ | |||||||||||||||||||||||||
Equity | |||||||||||||||||||||||||
General | |||||||||||||||||||||||||
Partner’s | Held in Treasury | Total | |||||||||||||||||||||||
Equity | Depositary | Preferred | Partners’ | ||||||||||||||||||||||
(Deficit) | Units | Units | Amounts | Units | Equity | ||||||||||||||||||||
(In $000’s) | |||||||||||||||||||||||||
Balance, December 31, 2001 | $ | 58,846 | $ | 996,701 | $ | 92,198 | $ | (11,921 | ) | 1,137 | 1,135,824 | ||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net earnings | 7,528 | 63,168 | — | — | — | 70,696 | |||||||||||||||||||
Reclassification of unrealized loss on sale of debt securities | 211 | 10,384 | — | — | — | 10,595 | |||||||||||||||||||
Adjustment to reverse unrealized loss on investment securities reclassified to notes receivable | 131 | 6,451 | — | — | — | 6,582 | |||||||||||||||||||
Net unrealized losses on securities available for sale | (5 | ) | (237 | ) | — | — | — | (242 | ) | ||||||||||||||||
Comprehensive income | 7,865 | 79,766 | — | — | — | 87,631 | |||||||||||||||||||
Net adjustment for acquisition of minority interest (Note 10) | 21,151 | — | — | — | — | 21,151 | |||||||||||||||||||
Pay-in-kind distribution (Note 22) | — | (4,610 | ) | 4,610 | — | — | — | ||||||||||||||||||
Capital contribution to American Casino (Note 10) | 831 | — | — | — | — | 831 | |||||||||||||||||||
Balance, December 31, 2002 | 88,693 | 1,071,857 | 96,808 | (11,921 | ) | 1,137 | 1,245,437 | ||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net earnings | 10,664 | 59,360 | — | — | — | 70,024 | |||||||||||||||||||
Reclassification of unrealized loss on sale of debt securities | 15 | 746 | — | — | — | 761 | |||||||||||||||||||
Net unrealized gains on securities available for sale | 183 | 8,991 | — | — | — | 9,174 | |||||||||||||||||||
Sale of marketable equity securities available for sale | (6 | ) | (274 | ) | — | — | — | (280 | ) | ||||||||||||||||
Comprehensive income | 10,856 | 68,823 | — | — | — | 79,679 | |||||||||||||||||||
Pay-in-kind distribution (Note 22) | — | (2,391 | ) | 2,391 | — | — | — | ||||||||||||||||||
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy (Note 23) | 524 | 46,581 | — | — | — | 47,105 | |||||||||||||||||||
Capital distribution (Note 10) | (2,808 | ) | — | — | — | — | (2,808 | ) | |||||||||||||||||
Reclassification of Preferred LP units to liabilities (Note 22) | — | — | (99,199 | ) | — | — | (99,199 | ) | |||||||||||||||||
Balance, December 31, 2003 | 97,265 | 1,184,870 | — | (11,921 | ) | 1,137 | 1,270,214 | ||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net earnings | 8,466 | 152,507 | — | — | — | 160,973 | |||||||||||||||||||
Reclassification of unrealized gains on marketable securities sold | (190 | ) | (9,378 | ) | — | — | — | (9,568 | ) | ||||||||||||||||
Net unrealized gains on securities available for sale | 1 | 32 | — | — | — | 33 | |||||||||||||||||||
Comprehensive income | 8,277 | 143,161 | — | — | — | 151,438 | |||||||||||||||||||
Capital distribution from American Casino (Note 10) | (17,916 | ) | — | — | — | — | (17,916 | ) | |||||||||||||||||
Capital contribution to American Casino (Note 10) | 22,800 | — | — | — | — | 22,800 | |||||||||||||||||||
Arizona Charlie’s acquisition (Note 10) | (125,900 | ) | — | — | — | — | (125,900 | ) | |||||||||||||||||
Change in deferred tax asset related to acquisition of Arizona Charlie’s | 2,490 | — | — | — | — | 2,490 | |||||||||||||||||||
Balance, December 31, 2004 | (12,984 | ) | 1,328,031 | — | (11,921 | ) | 1,137 | 1,303,126 | |||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net earnings | 1,182 | 58,228 | — | — | — | 59,410 | |||||||||||||||||||
Net unrealized losses on securities available for sale | (48 | ) | (2,346 | ) | — | — | — | (2,394 | ) | ||||||||||||||||
Comprehensive income | 1,134 | 55,882 | — | — | — | 57,016 | |||||||||||||||||||
Balance, March 31, 2005 | $ | (11,850 | ) | $ | 1,383,913 | $ | — | $ | (11,921 | ) | $ | 1,137 | $ | 1,360,142 | |||||||||||
F-8
Table of Contents
Three Months Ended | ||||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||
Income from continuing operations | $ | 39,730 | $ | 52,873 | $ | 78,276 | $ | 59,018 | $ | 63,759 | ||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||||||||||
Depreciation and amortization | 7,154 | 7,422 | 29,815 | 24,802 | 23,646 | |||||||||||||||||
Preferred LP unit interest expense | 1,286 | 1,225 | 5,082 | 2,450 | — | |||||||||||||||||
Gain on sale of marketable equity securities | — | (28,857 | ) | (40,159 | ) | (2,607 | ) | — | ||||||||||||||
Unrealized losses on securities sold short | (21,704 | ) | — | 23,619 | — | — | ||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | 15,600 | — | — | |||||||||||||||||
Gain on sales and disposition of real estate | (186 | ) | (6,047 | ) | (5,262 | ) | (7,121 | ) | (8,990 | ) | ||||||||||||
Loss on limited partnership interests | — | — | 3,750 | |||||||||||||||||||
Loss on sale of assets | 180 | 4 | 96 | 1,503 | 353 | |||||||||||||||||
Provision for loss on real estate | — | — | 3,150 | 750 | 3,212 | |||||||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | 19,759 | 8,476 | |||||||||||||||||
Minority interest in net earnings of Stratosphere Corporation | — | — | — | — | 1,943 | |||||||||||||||||
Equity in losses (earnings) of GB Holdings, Inc. | 986 | 348 | 2,113 | 3,466 | (305 | ) | ||||||||||||||||
Deferred gain amortization | (510 | ) | (510 | ) | (2,038 | ) | (2,038 | ) | (2,038 | ) | ||||||||||||
Accretion of investment in NEG Holding LLC | (9,893 | ) | (7,904 | ) | (34,432 | ) | (30,142 | ) | (32,879 | ) | ||||||||||||
Deferred income tax expense (benefit) | 6,548 | 1,615 | 13,946 | (5,875 | ) | 9,785 | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||
(Increase) decrease in receivables and other assets | 8,457 | (6,755 | ) | (10,234 | ) | (299 | ) | 2,944 | ||||||||||||||
Increase in due from brokers | (2,518 | ) | — | (123,001 | ) | — | — | |||||||||||||||
Increase (decrease) in land and construction-in-progress | 5,950 | (455 | ) | (1,626 | ) | (4,106 | ) | 24,215 | ||||||||||||||
Increase in restricted cash | (8,682 | ) | — | (4,798 | ) | (13,095 | ) | — | ||||||||||||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | (505 | ) | 12,717 | 92,476 | (37,328 | ) | 271 | |||||||||||||||
F-9
Table of Contents
Three Months Ended | ||||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Net cash provided by continuing operations | 26,293 | 25,676 | 42,623 | 9,137 | 98,142 | |||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | |||||||||||||||||
Depreciation and amortization | 31 | 210 | 1,244 | 5,129 | 4,464 | |||||||||||||||||
Net gain from property transactions | (18,723 | ) | (6,929 | ) | (75,197 | ) | (3,353 | ) | — | |||||||||||||
Net cash provided by discontinued operations | 988 | 3,428 | 8,744 | 12,782 | 11,401 | |||||||||||||||||
Net cash provided by operating activities | 27,281 | 29,104 | 51,367 | 21,919 | 109,543 | |||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||
Increase (decrease) in other investments | — | 351 | 2,942 | (28,491 | ) | (23,200 | ) | |||||||||||||||
Repayments of mezzanine loans included in other investments | — | — | 49,130 | 12,200 | 23,000 | |||||||||||||||||
Net proceeds from the sales and disposition of real estate | 4,650 | 11,346 | 16,790 | 15,290 | 20,513 | |||||||||||||||||
Principal payments received on leases accounted for under the financing method | 908 | 1,112 | 4,219 | 5,310 | 5,941 | |||||||||||||||||
Principal payments received on investments in debt securities of affiliates | 2,700 | — | — | — | — | |||||||||||||||||
Purchase of debt securities included in other investments | — | — | (245,166 | ) | — | — | ||||||||||||||||
Purchase of debt securities of affiliates | — | — | (65,500 | ) | — | — | ||||||||||||||||
Purchase of Atlantic Holdings debt included in debt securities due from affiliates | — | — | (36,000 | ) | — | — | ||||||||||||||||
Acquisition of Arizona Charlies’ | — | — | (125,900 | ) | — | — | ||||||||||||||||
Additions to hotel, casino and resort operating property | (4,781 | ) | (1,492 | ) | (16,203 | ) | (32,911 | ) | (21,715 | ) | ||||||||||||
Acquisition of hotel and resort operating property | — | — | (16,463 | ) | — | — | ||||||||||||||||
Acquisitions of rental real estate | — | (14,583 | ) | (14,583 | ) | — | (18,226 | ) | ||||||||||||||
Acquisition of land and construction in progress | — | — | (61,845 | ) | — | — | ||||||||||||||||
Additions to rental real estate | — | (166 | ) | (18 | ) | (413 | ) | (181 | ) | |||||||||||||
(Increase) decrease in investment in U.S. Government and Agency Obligations (Note 2) | 27,903 | (61,077 | ) | (40,757 | ) | 274,478 | (22,410 | ) |
F-10
Table of Contents
Three Months Ended | ||||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Increase in marketable equity and debt securities | (66,250 | ) | — | — | (45,140 | ) | (4,415 | ) | ||||||||||||||
Increase in restricted cash | — | (219,313 | ) | — | — | — | ||||||||||||||||
Proceeds from sale of marketable equity and debt securities | — | 64,471 | 90,614 | 3,843 | — | |||||||||||||||||
Decrease in note receivable from affiliate | — | — | — | 250,000 | — | |||||||||||||||||
Decrease in minority interest in Stratosphere Corp. | — | — | — | — | (44,744 | ) | ||||||||||||||||
Decrease in investment in Stratosphere Corp. | — | — | — | 788 | — | |||||||||||||||||
Investment in NEG, Inc. | — | — | — | (148,101 | ) | — | ||||||||||||||||
Guaranteed payment from NEG Holding LLC | — | — | 15,979 | 18,229 | 21,653 | |||||||||||||||||
Priority distribution from NEG Holding LLC | — | — | — | 40,506 | — | |||||||||||||||||
Decrease in due to affiliate | — | — | — | — | (68,491 | ) | ||||||||||||||||
Other | — | (50 | ) | (194 | ) | 560 | 197 | |||||||||||||||
Net cash (used in) provided by investing activities from continuing operations | (34,870 | ) | (219,401 | ) | (442,955 | ) | 366,148 | (132,078 | ) | |||||||||||||
Cash flows from investing activities from discontinued operations: | ||||||||||||||||||||||
Net proceeds from the sales and disposition of real estate | 36,582 | 7,392 | 134,789 | 5,336 | — | |||||||||||||||||
Net cash (used in) provided by investing activities | 1,712 | (212,009 | ) | (308,166 | ) | 371,484 | (132,078 | ) | ||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||
Partners’ Equity: | ||||||||||||||||||||||
Distributions to members | — | — | (17,916 | ) | — | — | ||||||||||||||||
Member’s contribution | — | — | 22,800 | — | — | |||||||||||||||||
Contributions to American Casino | — | — | — | — | 598 | |||||||||||||||||
Debt: | ||||||||||||||||||||||
Repayment of credit facilities | — | — | — | (2,904 | ) | (5,000 | ) | |||||||||||||||
Proceeds from credit facility | — | — | — | 7,780 | 17,220 | |||||||||||||||||
Proceeds from Senior Notes Payable | 480,000 | 215,000 | 565,409 | — | — | |||||||||||||||||
Decrease in due to affiliates | (16,602 | ) | — | (24,925 | ) | — | — | |||||||||||||||
Proceeds from mortgages payable | — | — | 10,000 | 20,000 | 12,700 | |||||||||||||||||
Payments on mortgages payable | — | — | — | (3,837 | ) | (462 | ) |
F-11
Table of Contents
Three Months Ended | ||||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Periodic principal payments | (1,003 | ) | (1,738 | ) | (5,248 | ) | (6,484 | ) | (7,198 | ) | ||||||||||||
Debt issuance costs | (8,334 | ) | (7,515 | ) | (18,111 | ) | — | — | ||||||||||||||
Other | — | — | — | — | 242 | |||||||||||||||||
Net cash provided by financing activities | 454,061 | 205,747 | 532,009 | 14,555 | 18,100 | |||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 483,054 | 22,842 | 275,210 | 407,958 | (4,435 | ) | ||||||||||||||||
Cash and cash equivalents, beginning of year | 762,708 | 500,593 | 487,498 | 79,540 | 83,975 | |||||||||||||||||
Cash and cash equivalents at end of year | $ | 1,245,762 | $ | 523,435 | $ | 762,708 | $ | 487,498 | $ | 79,540 | ||||||||||||
Supplemental information: | ||||||||||||||||||||||
Cash payments for interest, net of amounts capitalized | $ | 9,517 | $ | 5,667 | $ | 44,258 | $ | 65,110 | $ | 37,176 | ||||||||||||
Supplemental schedule of noncash investing and financing activities: | ||||||||||||||||||||||
Reclassification of real estate to operating lease | $ | 3,068 | $ | — | $ | — | $ | 5,065 | $ | 13,403 | ||||||||||||
Reclassification from hotel and resort operating properties | — | (6,395 | ) | (6,428 | ) | — | — | |||||||||||||||
Reclassification of real estate from financing lease | (358 | ) | — | (1,920 | ) | (5,065 | ) | (13,503 | ) | |||||||||||||
Reclassification of real estate from operating lease | (411 | ) | (14,353 | ) | (38,452 | ) | (126,263 | ) | — | |||||||||||||
Reclassification of real estate to property held for sale | 716 | 20,748 | 46,800 | 126,263 | 100 | |||||||||||||||||
Reclassification from properties held for sale | (3,015 | ) | — | — | — | — | ||||||||||||||||
Decrease in other investments | — | — | — | (3,453 | ) | — | ||||||||||||||||
Decrease in deferred income | — | — | — | 2,565 | — | |||||||||||||||||
Increase in real estate accounted for under the operating method | — | — | — | 888 | — | |||||||||||||||||
Reclassification from marketable equity and debt securities | — | — | — | — | (20,494 | ) | ||||||||||||||||
Reclassification from receivable and other assets | — | — | — | (1,631 | ) | — | ||||||||||||||||
Reclassification to other investments | — | — | — | 1,631 | 20,494 | |||||||||||||||||
$ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
F-12
Table of Contents
Three Months Ended | ||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Net unrealized gains (losses) on securities available for sale | $ | (2,394 | ) | $ | 2,378 | $ | 33 | $ | 9,174 | $ | (242 | ) | ||||||||
Increase in equity and debt securities | $ | 805 | $ | 300 | $ | 1,740 | $ | 1,200 | $ | 2,890 | ||||||||||
Contribution of note from NEG Holding LLC | $ | — | $ | — | $ | — | $ | 10,940 | $ | — | ||||||||||
Change in tax asset related to acquisition | $ | — | $ | — | $ | 2,490 | $ | — | $ | — | ||||||||||
F-13
Table of Contents
1. | Description of Business and Basis of Presentation |
2. | Summary of Significant Accounting Policies |
F-14
Table of Contents
F-15
Table of Contents
Other investments |
F-16
Table of Contents
Revenue and Expense Recognition |
F-17
Table of Contents
3. | Related Party Transactions |
F-18
Table of Contents
4. | Investment in U.S. Government and Agency Obligations |
March 31, | December 31, | |||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||||||||||||||
Cost | Carrying | Cost | Carrying | Cost | Carrying | |||||||||||||||||||
Basis | Value | Basis | Value | Basis | Value | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Available for Sale: | ||||||||||||||||||||||||
Matures in: | ||||||||||||||||||||||||
less than 1 year | $ | 68.9 | $ | 68.9 | $ | 96.8 | $ | 96.8 | $ | 52.8 | $ | 52.6 | ||||||||||||
2-5 years | 5.6 | 5.5 | 5.6 | 5.5 | 9.0 | 9.0 | ||||||||||||||||||
$ | 74.5 | $ | 74.4 | $ | 102.4 | $ | 102.3 | $ | 61.8 | $ | 61.6 | |||||||||||||
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Table of Contents
5. | Marketable Equity and Debt Securities (in $millions) |
March 31, | December 31, | ||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||
Cost | Carrying | Cost | Carrying | Cost | Carrying | ||||||||||||||||||||
Basis | Value | Basis | Value | Basis | Value | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||||
Philip Service Corporation(a): | |||||||||||||||||||||||||
Equity | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Corporate bonds(b) | — | — | — | — | 45.1 | 51.6 | |||||||||||||||||||
Other | 72.4 | 68.5 | 2.2 | 2.2 | 1.3 | 4.2 | |||||||||||||||||||
Total | $ | 72.4 | $ | 68.5 | $ | 2.2 | $ | 2.2 | $ | 46.4 | $ | 55.8 | |||||||||||||
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Table of Contents
6. | Due from Brokers |
7. | Other Investments (in $000’s) |
Balance at | Balance at | |||||||||||
March 31, | December 31, | |||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Peninsula/ Hampton & Alex Hotel(a) and(b) | $ | — | $ | — | $ | 42,030 | ||||||
WestPoint Stevens(c) | 205,850 | 205,850 | — | |||||||||
Union Power Partners L.P. and Panda Gila River L.P.(d) | 37,973 | 39,316 | — | |||||||||
Other | 779 | 782 | 8,298 | |||||||||
$ | 244,602 | $ | 245,948 | $ | 50,328 | |||||||
F-21
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F-22
Table of Contents
8. | Real Estate Leased to Others Accounted for Under the Financing Method |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Minimum lease payments receivable | $ | 87,846 | $ | 97,725 | $ | 161,785 | ||||||
Unguaranteed residual value | 43,422 | 48,980 | 74,651 | |||||||||
131,268 | 146,705 | 236,436 | ||||||||||
Less unearned income | 51,579 | 57,512 | 99,080 | |||||||||
79,689 | 89,193 | 137,356 | ||||||||||
Less current portion of lease amortization | 3,740 | 3,912 | 5,738 | |||||||||
$ | 75,949 | $ | 85,281 | $ | 131,618 | |||||||
Year Ending December 31, | Amount | |||
2005 | $ | 11,941 | ||
2006 | 11,746 | |||
2007 | 10,832 | |||
2008 | 9,476 | |||
2009 | 9,255 | |||
Thereafter | 44,475 | |||
$ | 97,725 | |||
F-23
Table of Contents
9. | Real Estate Leased to Others Accounted for Under the Operating Method |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Land | $ | 13,286 | $ | 13,666 | $ | 24,040 | ||||||
Commercial Buildings | 52,672 | 45,972 | 83,252 | |||||||||
65,958 | 59,638 | 107,292 | ||||||||||
Less accumulated depreciation | 14,831 | 10,520 | 30,849 | |||||||||
$ | 51,127 | $ | 49,118 | $ | 76,443 | |||||||
Year Ending December 31, | Amount | |||
2005 | $ | 7,186 | ||
2006 | 6,232 | |||
2007 | 5,649 | |||
2008 | 5,383 | |||
2009 | 5,001 | |||
Thereafter | 19,753 | |||
$ | 49,204 | |||
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Leased to others | $ | 40,035 | $ | 74,444 | $ | 146,416 | ||||||
Vacant | 450 | 450 | 2,550 | |||||||||
40,485 | 74,894 | 148,966 | ||||||||||
Less accumulated depreciation | 6,490 | 16,873 | 20,153 | |||||||||
$ | 33,995 | $ | 58,021 | $ | 128,813 | |||||||
F-24
Table of Contents
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Rental income | $ | 1,462 | $ | 5,871 | $ | 15,658 | $ | 23,093 | $ | 21,073 | ||||||||||
Hotel and resort operating income | 709 | 1,064 | 3,868 | 6,128 | 5,676 | |||||||||||||||
2,171 | 6,935 | 19,526 | 29,221 | 26,749 | ||||||||||||||||
Mortgage interest expense | 399 | 1,726 | 3,858 | 7,208 | 6,737 | |||||||||||||||
Depreciation and amortization | 31 | 210 | 1,244 | 5,130 | 4,464 | |||||||||||||||
Property expenses | 147 | 1,107 | 3,123 | 3,549 | 3,409 | |||||||||||||||
Hotel and resort operating expenses | 637 | 674 | 3,801 | 5,681 | 5,202 | |||||||||||||||
1,214 | 3,717 | 12,026 | 21,568 | 19,812 | ||||||||||||||||
Income from discontinued operations | $ | 957 | $ | 3,218 | $ | 7,500 | $ | 7,653 | $ | 6,937 | ||||||||||
10. | Hotel and Casino Operating Properties |
F-25
Table of Contents
F-26
Table of Contents
Three Months Ended | ||||||||||||||||||||||
March 31, | Year Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Unaudited) | (In $000’s) | |||||||||||||||||||||
Hotel and casino operating income: | ||||||||||||||||||||||
Casino | $ | 47,729 | $ | 42,592 | $ | 167,972 | $ | 147,888 | $ | 143,057 | ||||||||||||
Hotel | 15,793 | 13,888 | 54,653 | 47,259 | 44,263 | |||||||||||||||||
Food and beverage | 17,076 | 16,701 | 66,953 | 59,583 | 56,349 | |||||||||||||||||
Tower, retail, and other income | 8,206 | 7,976 | 33,778 | 30,336 | 28,247 | |||||||||||||||||
Gross revenues | 88,804 | 81,157 | 323,356 | 285,066 | 271,916 | |||||||||||||||||
Less promotional allowances | (5,966 | ) | (6,148 | ) | (23,375 | ) | (22,255 | ) | (21,893 | ) | ||||||||||||
Net revenues | $ | 82,838 | $ | 75,009 | $ | 299,981 | $ | 262,811 | $ | 250,023 | ||||||||||||
Hotel and casino operating expenses: | ||||||||||||||||||||||
Casino | $ | 15,900 | $ | 15,696 | $ | 61,985 | $ | 61,284 | $ | 59,879 | ||||||||||||
Hotel | 6,023 | 5,596 | 24,272 | 22,074 | 20,142 | |||||||||||||||||
Food and beverage | 12,376 | 11,620 | 48,495 | 44,990 | 43,393 | |||||||||||||||||
Other operating expenses | 3,619 | 3,151 | 14,131 | 13,524 | 14,505 | |||||||||||||||||
Selling, general, and administrative | 19,706 | 18,180 | 78,720 | 74,985 | 80,019 | |||||||||||||||||
Total expenses | $ | 57,624 | $ | 54,243 | $ | 227,603 | $ | 216,857 | $ | 217,938 | ||||||||||||
March 31, | December 31, | |||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Land and improvements, including land held for development | $ | 47,274 | $ | 47,210 | $ | 47,041 | ||||||
Building and improvements | 221,847 | 221,314 | 220,280 | |||||||||
Furniture, fixtures and equipment | 112,379 | 108,595 | 98,586 | |||||||||
Construction in progress | 7,577 | 7,348 | 7,224 | |||||||||
389,077 | 384,467 | 373,131 | ||||||||||
Less accumulated depreciation and amortization | 100,187 | 95,107 | 74,428 | |||||||||
$ | 288,890 | $ | 289,360 | $ | 298,703 | |||||||
F-27
Table of Contents
Years Ending December 31, | (In $000s) | |||
2005 | $ | 5,877 | ||
2006 | 4,778 | |||
2007 | 3,615 | |||
2008 | 2,177 | |||
2009 | 1,224 | |||
Thereafter | 959 | |||
Total Payments | $ | 18,630 | ||
11. | Hotel and Resort Operating Properties |
F-28
Table of Contents
12. | Investment in Debt Securities of Affiliates (in $000’s): |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Atlantic Holdings/GB Holdings(a) | $ | 60,650 | $ | 60,004 | $ | 24,696 | ||||||
TransTexas(b) | 27,500 | 27,500 | — | |||||||||
Panaco(c) | 36,643 | 38,000 | — | |||||||||
$ | 124,793 | $ | 125,504 | $ | 24,696 | |||||||
Less current portion | (10,429 | ) | (10,429 | ) | — | |||||||
$ | 114,364 | $ | 115,075 | $ | 24,696 | |||||||
F-29
Table of Contents
13. | Equity Interest in GB Holdings, Inc. |
F-30
Table of Contents
• | $26,914,500 principal amount of the Atlantic Holdings Notes; | |
• | $3,620,753 in cash representing accrued interest on the GB Notes and $100 per $1,000 in principal amount of the GB Notes; and | |
• | 3,627,711 warrants, which under certain conditions will allow the Company to purchase approximately 998,000 shares of common stock at $.01 per share of Atlantic Holdings, representing approximately 10% of the outstanding common stock of Atlantic Holdings, on a fully diluted basis. |
14. | National Energy Group |
a. | National Energy Group, Inc. |
F-31
Table of Contents
b. | Investment in NEG Holding LLC |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Current assets | $ | 30,991 | $ | 23,146 | $ | 33,415 | ||||||
Noncurrent assets(1) | 251,438 | 237,127 | 190,389 | |||||||||
Total assets | $ | 282,429 | $ | 260,273 | $ | 223,804 | ||||||
Current liabilities | $ | 35,699 | $ | 22,456 | $ | 14,253 | ||||||
Noncurrent liabilities | 83,732 | 63,636 | 48,514 | |||||||||
Total liabilities | 119,431 | 86,092 | 62,767 | |||||||||
Members’ equity | 162,998 | 174,181 | 161,037 | |||||||||
Total liabilities and members’ equity | $ | 282,429 | $ | 260,273 | $ | 223,804 | ||||||
(1) | Primarily oil and gas properties |
F-32
Table of Contents
Three Months Ended | �� | |||||||||||||||||||
March 31, | Year Ended December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | (in $000’s) | |||||||||||||||||||
Total revenues | $ | 2,870 | $ | 25,569 | $ | 78,727 | $ | 77,606 | $ | 35,900 | ||||||||||
Costs and expenses | (13,137 | ) | (11,044 | ) | (47,313 | ) | (46,766 | ) | (32,064 | ) | ||||||||||
Operating income | (10,267 | ) | 14,525 | 31,414 | 30,840 | 3,836 | ||||||||||||||
Other income (expense) | (916 | ) | (358 | ) | (2,292 | ) | 30 | 10,090 | ||||||||||||
Net income | $ | (11,183 | ) | $ | 14,167 | $ | 29,122 | $ | 30,870 | $ | 13,926 | |||||||||
F-33
Table of Contents
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Investment in Holding LLC at beginning of period | $ | 87,800 | $ | 69,346 | $ | 108,880 | ||||||
Priority distribution from Holding LLC | — | — | (51,446 | ) | ||||||||
Guaranteed payment from Holding LLC | — | (15,978 | ) | (18,230 | ) | |||||||
Accretion of investment in Holding LLC | 9,893 | 34,432 | 30,142 | |||||||||
Investment in Holding LLC at end of period | $ | 97,693 | $ | 87,800 | $ | 69,346 | ||||||
1. Guaranteed payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding priority distribution amount. The priority distribution amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of NEG’s 10.75% Senior Notes. As of March 31, 2005 (unaudited) and December 31, 2004, the priority distribution amount was $148.6 million which equals the amount of NEG’s 10.75% Senior Notes due the Company. The guaranteed payments will be made on a semi-annual basis. | |
2. The priority distribution amount is to be paid to NEG. Such payment is to occur by November 6, 2006. | |
3. An amount equal to the priority distribution amount and all guaranteed payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by NEG to Gascon, is to be paid to Gascon. | |
4. An amount equal to the aggregate annual interest (calculated at prime plus 1/2% on the sum of the guaranteed payments), plus any unpaid interest for prior years (calculated at prime plus 1/2% on the sum of the guaranteed payments), less any distributions previously made by NEG to Gascon, is to be paid to Gascon. | |
5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts. |
F-34
Table of Contents
15. | Significant Property Transactions |
F-35
Table of Contents
16. | Mortgages Payable |
Balance at | ||||||||||||||||||||
Balance at | December 31, | |||||||||||||||||||
Annual Principal | March 31, | |||||||||||||||||||
Range of Interest Rates | Range of Maturities | and Interest Payment | 2005 | 2004 | 2003 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
5.630%-8.250% | 10/15/07-10/01/14 | $ | 9,373 | $ | 80,191 | $ | 91,896 | $ | 180,989 | |||||||||||
Less current portion and mortgages on properties held for sale | (24,577 | ) | (31,177 | ) | (87,753 | ) | ||||||||||||||
$ | 55,614 | $ | 60,719 | $ | 93,236 | |||||||||||||||
F-36
Table of Contents
Year Ending December 31, | Amount | |||
2005 | $ | 4,759 | ||
2006 | 5,116 | |||
2007 | 11,428 | |||
2008 | 24,385 | |||
2009 | 7,211 | |||
2010-2014 | 38,997 | |||
$ | 91,896 | |||
17. | Senior Notes and Credit Facilities Due Affiliates |
F-37
Table of Contents
18. | Senior Secured Notes Payable and Credit Facility |
F-38
Table of Contents
19. | Senior Unsecured Notes Payable |
F-39
Table of Contents
20. | Accounts Payable, Accrued Expenses and Other Current Liabilities |
March 31, | December 31, | |||||||||||
2005 | 2004 | 2003 | ||||||||||
Accrued liabilities | $ | 11,617 | $ | 11,463 | $ | 11,951 | ||||||
Accrued payroll | 10,984 | 11,113 | 12,507 | |||||||||
Due to Panaco, Inc. | — | 16,242 | — | |||||||||
Other | 53,499 | 42,975 | 21,316 | |||||||||
$ | 76,100 | $ | 81,793 | $ | 45,774 | |||||||
21. | Earnings Per Limited Partnership Unit |
Net Income Per Unit |
F-40
Table of Contents
Three Months Ended | |||||||||||||||||||||
March 31, | Year Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
In $000’s (except per unit data) | |||||||||||||||||||||
Attributable to Limited Partners: | |||||||||||||||||||||
Basic income from continuing operations | $ | 38,940 | $ | 47,663 | $ | 71,476 | $ | 48,588 | $ | 56,380 | |||||||||||
Add Preferred LP Unit distribution | 1,259 | 1,201 | 4,981 | 4,792 | 4,518 | ||||||||||||||||
Income before discontinued operations | 40,199 | 48,864 | 76,457 | 53,380 | 60,898 | ||||||||||||||||
Income from discontinued operations | 19,288 | 9,945 | 81,031 | 10,772 | 6,788 | ||||||||||||||||
Diluted earnings | $ | 59,487 | $ | 58,809 | $ | 157,488 | $ | 64,152 | $ | 67,686 | |||||||||||
Weighted average limited partnership units outstanding | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | ||||||||||||||||
Dilutive effect of redemption of Preferred LP Units | 3,759,338 | 6,401,019 | 5,444,028 | 8,391,659 | 10,368,414 | ||||||||||||||||
Weighed average limited partnership units and equivalent partnership units outstanding | 49,857,622 | 52,499,303 | 51,542,312 | 54,489,943 | 56,466,698 | ||||||||||||||||
Basic earnings: | |||||||||||||||||||||
Income from continuing operations | $ | 0.84 | $ | 1.03 | $ | 1.55 | $ | 1.00 | $ | 1.12 | |||||||||||
Income from discontinued operations | 0.42 | 0.22 | 1.76 | 0.24 | 0.15 | ||||||||||||||||
Basic earnings per LP unit | $ | 1.26 | $ | 1.25 | $ | 3.31 | $ | 1.24 | $ | 1.27 | |||||||||||
Diluted earnings: | |||||||||||||||||||||
Income from continuing operations | $ | 0.81 | $ | 0.93 | $ | 1.48 | $ | 0.94 | $ | 1.00 | |||||||||||
Income from discontinued operations | 0.39 | 0.19 | 1.57 | 0.19 | 0.12 | ||||||||||||||||
Diluted earnings per LP unit | $ | 1.20 | $ | 1.12 | $ | 3.05 | $ | 1.13 | $ | 1.12 | |||||||||||
22. | Preferred Units |
F-41
Table of Contents
23. | Income Taxes (in $000’s) |
December 31, | |||||||||
2004 | 2003 | ||||||||
The difference between the book basis and the tax basis of the net assets of the Company, not directly subject to income taxes, is as follows: | |||||||||
Book basis of AREH net assets excluding American Casino and NEG | $ | 1,319,566 | $ | 1,149,418 | |||||
Excess of tax over book | 120,820 | 79,238 | |||||||
Tax basis of net assets | $ | 1,440,386 | $ | 1,228,656 | |||||
F-42
Table of Contents
a. | Corporate Income Taxes |
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Current | $ | (1,102 | ) | $ | (4,554 | ) | $ | (2,626 | ) | $ | (4,302 | ) | $ | (311 | ) | |||||
Deferred | (6,548 | ) | (1,615 | ) | (14,137 | ) | 5,875 | (9,785 | ) | |||||||||||
$ | (7,650 | ) | $ | (6,169 | ) | $ | (16,763 | ) | $ | 1,573 | $ | (10,096 | ) | |||||||
December 31, | |||||||||||||
March 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Deferred tax assets: | |||||||||||||
Depreciation | $ | 38,424 | $ | 39,209 | $ | 39,858 | |||||||
Net operating loss carryforwards | 30,741 | 32,176 | 30,942 | ||||||||||
Investment in Holding LLC | 1,927 | 5,333 | 18,845 | ||||||||||
Other | 5,032 | 5,954 | 5,962 | ||||||||||
76,124 | 82,672 | 95,607 | |||||||||||
Valuation allowance | (14,588 | ) | (14,588 | ) | (17,733 | ) | |||||||
Subtotal | 61,536 | 68,084 | 77,874 | ||||||||||
Less current portion | (2,685 | ) | (2,685 | ) | (2,982 | ) | |||||||
Net deferred tax assets | $ | 58,851 | $ | 65,399 | $ | 74,892 | |||||||
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Federal statutory rate | 35.0% | 35.0% | 35.0% | |||||||||
Tax deduction not given book benefit | 0.0% | 5.0% | 0.0% | |||||||||
Income not subject to taxation | (25.3)% | (15.0)% | (22.9)% | |||||||||
Valuation allowance | (1.7)% | (27.3)% | (0.5)% | |||||||||
Other | 1.2% | 0.1% | 0.3% | |||||||||
9.2% | (2.2)% | 11.9% | ||||||||||
F-43
Table of Contents
Corporate Income Taxes |
24. | Commitments and Contingencies |
F-44
Table of Contents
25. | Employee Benefit Plans |
F-45
Table of Contents
26. | Fair Value of Financial Instruments |
Other Investments |
At March 31, 2005 | At December 31, 2004 | At December 31, 2003 | ||||||||||||||||||||||
Net | Estimated | Net | Estimated | Net | Estimated | |||||||||||||||||||
Investment | Fair Value | Investment | Fair Value | Investment | Fair Value | |||||||||||||||||||
Total | $ | 244,602 | $ | 247,600 | $ | 245,948 | $ | 248,900 | $ | 50,328 | $ | 55,000 | ||||||||||||
Mortgages Payable |
At March 31, 2005 | At December 31, 2004 | At December 31, 2003 | ||||||||||||||||||||
Carrying | Estimated | Carrying | Estimated | Carrying | Estimated | |||||||||||||||||
Value | Value | Value | Fair Value | Value | Fair Value | |||||||||||||||||
Total | $ | 80,191 | $ | 81,955 | $ | 91,896 | $ | 93,900 | $180,989 | $ | 185,000 | |||||||||||
Limitations |
27. | Segment Reporting |
F-46
Table of Contents
Three Months Ended | Year Ended | |||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Hotel & casino operating properties | $ | 81,852 | $ | 74,661 | $ | 297,868 | $ | 259,345 | $ | 250,328 | ||||||||||||
Land, house and condominium sales | 8,279 | 5,014 | 26,591 | 13,265 | 76,024 | |||||||||||||||||
Rental real estate | 4,001 | 4,963 | 17,796 | 20,207 | 21,574 | |||||||||||||||||
Hotel & resort operating properties | 5,563 | 1,335 | 16,211 | 12,376 | 12,921 | |||||||||||||||||
Oil & gas operating properties | 13,168 | 10,523 | 45,995 | 38,109 | 40,516 | |||||||||||||||||
Other investments | 11,092 | 4,763 | 34,241 | 13,874 | 15,283 | |||||||||||||||||
Subtotal | 123,955 | 101,259 | 438,702 | 357,176 | 416,646 | |||||||||||||||||
Reconciling items | 6,668 | (1) | 960 | (1) | 13,310 | (1) | 11,770 | (1) | 18,006 | (1) | ||||||||||||
Total revenues | $ | 130,623 | $ | 102,219 | $ | 452,012 | $ | 368,946 | $ | 434,652 | ||||||||||||
Net earnings: | ||||||||||||||||||||||
Segment earnings: | ||||||||||||||||||||||
Hotel & casino operating properties | $ | 24,228 | $ | 20,418 | $ | 70,265 | $ | 42,488 | $ | 32,390 | ||||||||||||
Land, house and condominium sales | 1,232 | 1,656 | 6,355 | 4,136 | 21,384 | |||||||||||||||||
Oil & gas operating properties | 10,113 | 8,092 | 34,849 | 30,879 | 33,411 | |||||||||||||||||
Rental real estate | 3,049 | 3,878 | 12,863 | 14,368 | 14,206 | |||||||||||||||||
Hotel and resort operating properties | 158 | (89 | ) | 2,674 | 4,220 | 2,679 | ||||||||||||||||
Other investments | 11,092 | 4,763 | 34,241 | 13,874 | 15,283 | |||||||||||||||||
Total segment earnings | 49,872 | 38,718 | 161,247 | 109,965 | 119,353 | |||||||||||||||||
Interest income | 6,668 | 960 | 13,310 | 11,770 | 18,006 | |||||||||||||||||
Interest expense | (19,161 | ) | (6,181 | ) | (46,099 | ) | (21,103 | ) | (27,297 | ) | ||||||||||||
General and administrative expenses | (4,555 | ) | (1,933 | ) | (9,806 | ) | (6,851 | ) | (7,029 | ) | ||||||||||||
Depreciation and amortization | $ | (7,154 | ) | $ | (7,422 | ) | $ | (29,815 | ) | $ | (24,802 | ) | $ | (23,646 | ) | |||||||
Operating Income | $ | 25,670 | $ | 24,142 | $ | 88,837 | $ | 68,979 | $ | 79,387 | ||||||||||||
Gain on sales and disposition of real estate from continuing operations | 186 | 6,047 | 5,262 | 7,121 | 8,990 | |||||||||||||||||
(Loss) gain on sale of assets | (180 | ) | (4 | ) | — | (1,503 | ) | (353 | ) | |||||||||||||
Loss on sale of limited partnership interests | — | — | — | — | (3,750 | ) | ||||||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | (19,759 | ) | (8,476 | ) | |||||||||||||||
Gain on sale of marketable equity securities | — | 28,857 | 40,159 | 2,607 | — | |||||||||||||||||
Unrealized losses on securities sold short | 21,704 | — | (23,619 | ) | — | — | ||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | (15,600 | ) | — | — |
F-47
Table of Contents
Three Months Ended | Year Ended | |||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
Minority interest in net earnings of Stratosphere Corp. | — | — | — | — | (1,943 | ) | ||||||||||||||
Income tax (expense) benefit | (7,650 | ) | (6,169 | ) | (16,763 | ) | 1,573 | (10,096 | ) | |||||||||||
Income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | |||||||||||||||
General partner’s share of net income | 1,182 | 5,412 | (8,466 | ) | (10,664 | ) | (7,528 | ) | ||||||||||||
Net earnings-limited partners’ unitholders | $ | 58,228 | $ | 57,608 | $ | 152,507 | $ | 59,360 | $ | 63,168 | ||||||||||
(1) | Primarily interest income on U.S. Government and Agency obligations and other short-term investments and Icahn note receivable. |
December 31, | |||||||||||||||||
March 31, | |||||||||||||||||
2005 | 2004 | 2003 | 2002 | ||||||||||||||
(Unaudited) | |||||||||||||||||
Assets: | |||||||||||||||||
Rental real estate | $ | 164,811 | $ | 196,332 | $ | 340,062 | $ | 359,700 | |||||||||
Hotel and casino operating properties | 288,890 | 289,360 | 298,703 | 290,775 | |||||||||||||
Land and construction-in-progress | 106,000 | 106,537 | 43,459 | 40,415 | |||||||||||||
Hotel and resort operating properties | 46,041 | 50,132 | 41,526 | 44,346 | |||||||||||||
Other investments | 466,252 | 472,103 | 231,050 | 479,104 | |||||||||||||
1,071,994 | 1,114,464 | 954,800 | 1,214,340 | ||||||||||||||
Reconciling items | 1,703,691 | 1,148,593 | 691,806 | 491,691 | |||||||||||||
Total | $ | 2,775,685 | $ | 2,263,057 | $ | 1,646,606 | $ | 1,706,031 | |||||||||
Real estate investment capital expenditures: | |||||||||||||||||
Acquisitions: | |||||||||||||||||
Rental real estate | $ | — | $ | 14,583 | $ | — | $ | 18,226 | |||||||||
Land and construction-in-progress | — | 61,845 | — | — | |||||||||||||
Hotel and casino operating properties | — | 125,900 | — | — | |||||||||||||
Hotel and resort operating properties | — | 16,463 | — | — | |||||||||||||
$ | — | $ | 218,791 | $ | — | $ | 18,226 | ||||||||||
Developments: | |||||||||||||||||
Rental real estate | $ | — | $ | 18 | $ | 413 | $ | 181 | |||||||||
Land and construction-in-progress | — | 17,947 | — | 1,138 | |||||||||||||
Hotel and casino operating properties | 4,711 | 13,589 | 31,844 | 19,133 | |||||||||||||
Hotel and resort operating properties | 70 | 2,614 | 1,067 | 2,582 | |||||||||||||
$ | 4,781 | $ | 34,168 | $ | 33,324 | $ | 23,034 | ||||||||||
28. | Repurchase of Depositary Units |
29. | Subsequent Events |
F-48
Table of Contents
F-49
Table of Contents
F-50
Table of Contents
30. | Quarterly Financial Data (unaudited) (in $000’s, Except Per Unit Data) |
Three Months Ended(1) | |||||||||||||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||||||||||
Revenues | $ | 102,218 | $ | 92,416 | $ | 117,367 | $ | 89,531 | $ | 118,487 | $ | 94,423 | $ | 113,940 | $ | 92,576 | |||||||||||||||||
Operating Income | $ | 24,138 | $ | 16,110 | $ | 26,629 | $ | 15,635 | $ | 23,968 | $ | 16,962 | $ | 14,102 | $ | 20,272 | |||||||||||||||||
Gains (losses) on property transactions | 6,047 | 1,138 | (226 | ) | (272 | ) | (10 | ) | 501 | (549 | ) | 5,754 | |||||||||||||||||||||
Loss on sale of assets | — | — | — | — | — | (311 | ) | — | (1,192 | ) | |||||||||||||||||||||||
Gain on sale of marketable equity and debt securities | 28,857 | — | 8,310 | — | — | 2,168 | 2,992 | 439 | |||||||||||||||||||||||||
Unrealized losses on securities sold short | — | — | — | — | — | — | (23,619 | ) | — | ||||||||||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | — | — | — | — | (15,600 | ) | — | ||||||||||||||||||||||||
Write-down of marketable equity and debt securities | — | (961 | ) | — | (18,798 | ) | — | — | — | — | |||||||||||||||||||||||
Income (loss) from continuing operations before income tax | 59,042 | 16,287 | 34,713 | (3,435 | ) | 23,958 | 19,320 | (22,674 | ) | 25,273 | |||||||||||||||||||||||
Income tax (expense) benefit | (6,169 | ) | (3,892 | ) | (3,088 | ) | (3,167 | ) | (3,637 | ) | (3,577 | ) | (3,869 | ) | 12,209 | ||||||||||||||||||
Income (loss) from continuing operations | 52,873 | 12,395 | 31,625 | (6,602 | ) | 20,321 | 15,743 | (26,543 | ) | 37,482 | |||||||||||||||||||||||
Income from discontinued operations | 10,147 | 1,997 | 50,161 | 3,815 | 10,702 | 3,210 | 11,687 | 1,984 | |||||||||||||||||||||||||
Net earnings (loss) | $ | 63,020 | $ | 14,392 | $ | 81,786 | $ | (2,787 | ) | $ | 31,023 | $ | 18,953 | $ | (14,856 | ) | $ | 39,466 | |||||||||||||||
Net Earnings (loss) per limited Partnership unit(2): | |||||||||||||||||||||||||||||||||
Basic earnings: | |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 1.03 | $ | 0.15 | $ | 0.65 | $ | (0.21 | ) | $ | 0.43 | $ | 0.25 | $ | (0.56 | ) | $ | 0.81 | |||||||||||||||
Income from discontinued operations | 0.22 | 0.05 | 1.06 | 0.08 | 0.23 | 0.07 | 0.24 | 0.04 | |||||||||||||||||||||||||
Basic earnings (loss) per LP unit | $ | 1.25 | $ | 0.20 | $ | 1.71 | $ | (0.13 | ) | $ | 0.66 | $ | 0.32 | $ | (0.32 | ) | $ | 0.85 | |||||||||||||||
Diluted earnings: | |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 0.93 | $ | 0.15 | $ | 0.60 | $ | (0.21 | ) | $ | 0.41 | $ | 0.23 | $ | (0.56 | ) | $ | 0.71 | |||||||||||||||
Income from discontinued operations | 0.19 | 0.03 | 0.94 | 0.08 | 0.20 | 0.06 | 0.24 | 0.04 | |||||||||||||||||||||||||
Diluted earnings (loss) per LP unit | $ | 1.12 | $ | 0.18 | $ | 1.54 | $ | (0.13 | ) | $ | 0.61 | $ | 0.29 | $ | (0.32 | ) | $ | 0.75 | |||||||||||||||
(1) | All quarterly amounts have been reclassified for the effects of reporting discontinued operations. |
(2) | Net earnings (loss) per unit is computed separately for each period and, therefore, the sum of such quarterly per unit amounts may differ from the total for the year. |
F-51
Table of Contents
Part 2 — Revenues earned for the Year Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Part 1 — Real Estate Owned at December 31, 2004 — Accounted for Under the: | December 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Method | Financing Method | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Rent due and | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued or | Expended for | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Received in | Minimum Lease | Total | Interest, | |||||||||||||||||||||||||||||||||||||||||||||||||
Carried at | Advance at | Payments Due | Revenue | Depreciation, | Net Income | ||||||||||||||||||||||||||||||||||||||||||||||||
No. of | Amount of | Initial Cost | Cost of | Close of | Reserve for | End of | Net | and Accrued at | Applicable | Taxes, and | Applicable | ||||||||||||||||||||||||||||||||||||||||||
State | Locations | Encumbrances | to Company | Improvements | Period | Depreciation | Period | Investment | End of Period | to Period | Other Expenses | to Period | |||||||||||||||||||||||||||||||||||||||||
COMMERCIAL PROPERTY LAND AND BUILDING | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acme Markets, Inc. and FPBT of Penn | PA | 1 | $ | 329,559 | (3) | $ | 13,739 | (3) | $ | 315,820 | |||||||||||||||||||||||||||||||||||||||||||
Alabama Power Company | AL | 5 | 44,889 | (13,675 | ) | 58,564 | |||||||||||||||||||||||||||||||||||||||||||||||
Amer Stores, Eckerd & Marburn | NJ | 1 | 45,454 | (3) | 8,518 | (3) | 36,936 | ||||||||||||||||||||||||||||||||||||||||||||||
Atrium | VA | 1 | 2,002,409 | (3) | 1,682,710 | (3) | 319,699 | ||||||||||||||||||||||||||||||||||||||||||||||
Best Products Co., Inc. | VA | 1 | $ | 3,376,815 | $ | (350,000 | ) | $ | 3,026,815 | $ | 257,538 | 114,217 | 487,522 | (373,305 | ) | ||||||||||||||||||||||||||||||||||||||
Chesebrough-Pond ’s Inc. | CT | 1 | 54,839 | (3) | (9,000 | )(3) | 63,839 | ||||||||||||||||||||||||||||||||||||||||||||||
Collins Foods International, Inc. | OR | 3 | 10,379 | (3) | 1,300 | (3) | 9,079 | ||||||||||||||||||||||||||||||||||||||||||||||
Collins Foods International, Inc. | CA | 1 | 5,637 | (3) | 0 | (3) | 5,637 | ||||||||||||||||||||||||||||||||||||||||||||||
Dillon Companies, Inc. | MO | 1 | 23,369 | (3) | 0 | (3) | 23,369 | ||||||||||||||||||||||||||||||||||||||||||||||
Dragon court | MA | 1 | 3,744,706 | 37,571 | 3,782,277 | 308,037 | 143,148 | 718,750 | (575,602 | ) | |||||||||||||||||||||||||||||||||||||||||||
Duke Power Co. | NC | 1 | 3,464,225 | 3,464,225 | 458,819 | 797,177 | 114,705 | 682,472 | |||||||||||||||||||||||||||||||||||||||||||||
Easco Corp. | NC | 1 | 1,046,012 | 1,046,012 | (2) | 66,634 | 396,250 | 8,244 | 388,006 | ||||||||||||||||||||||||||||||||||||||||||||
European American Bank and Trust Co. | NY | 1 | 158,491 | (3) | 175,603 | (3) | (17,112 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Farwell Bldg | MN | 1 | 600,675 | (3) | (215,173 | )(3) | 815,848 | ||||||||||||||||||||||||||||||||||||||||||||||
First National Supermarkets, Inc. | CT | 1 | $ | 19,576,538 | $ | 18,937,655 | 1,779,799 | 1,148,329 | 631,470 | ||||||||||||||||||||||||||||||||||||||||||||
Fisher Scientific Company | IL | 1 | 56,086 | (3) | 0 | (3) | 56,086 | ||||||||||||||||||||||||||||||||||||||||||||||
Forte Hotels International, Inc. | NJ | 1 | 441,288 | (3) | 7,747 | (3) | 433,541 | ||||||||||||||||||||||||||||||||||||||||||||||
Fox Grocery Company | WV | 1 | 1,919,486 | 1,919,486 | 13,375 | 211,197 | 13,375 | 197,822 | |||||||||||||||||||||||||||||||||||||||||||||
Gino’s, Inc. | OH | 1 | 314,012 | 314,012 | 28,019 | 34,489 | 10,090 | 24,399 | |||||||||||||||||||||||||||||||||||||||||||||
Golf Road | IL | 1 | 364,321 | (3) | (9,173 | )(3) | 373,494 | ||||||||||||||||||||||||||||||||||||||||||||||
Grand Union Co. | NY | 1 | 874,765 | 874,765 | 104,090 | $ | 45 | 108,000 | 20,818 | 87,182 | |||||||||||||||||||||||||||||||||||||||||||
Grand Union Co. | VA | 1 | 13,828 | (3) | 1,805 | (3) | 12,023 | ||||||||||||||||||||||||||||||||||||||||||||||
Whalen | NY | 1 | 7,934,020 | 7,934,020 | (2) | 226,925 | 12,050 | 813,152 | (801,102 | ) | |||||||||||||||||||||||||||||||||||||||||||
Gunite | IN | 1 | 0 | (3) | 66,930 | (3) | (66,930 | ) | |||||||||||||||||||||||||||||||||||||||||||||
G.D. Searle & Co. | MN | 1 | 339,358 | 339,358 | 172,501 | (3,083 | ) | 37,000 | 2,562 | 34,438 | |||||||||||||||||||||||||||||||||||||||||||
G.D. Searle & Co. | IL | 1 | 37,168 | (3) | 8,550 | (3) | 28,618 | ||||||||||||||||||||||||||||||||||||||||||||||
Integra A Hotel and Restaurant Co. | AL | 2 | 127,984 | (3) | 2,646 | (3) | 125,338 | ||||||||||||||||||||||||||||||||||||||||||||||
Integra A Hotel and Restaurant Co. | IN | 1 | 45,272 | (3) | 204 | (3) | 45,068 | ||||||||||||||||||||||||||||||||||||||||||||||
Integra A Hotel and Restaurant Co. | OH | 1 | 39,770 | (3) | 0 | (3) | 39,770 | ||||||||||||||||||||||||||||||||||||||||||||||
Integra A Hotel and Restaurant Co. | MO | 1 | 414,887 | 414,887 | 17,105 | 91,818 | 10,376 | 81,442 | |||||||||||||||||||||||||||||||||||||||||||||
Integra A Hotel and Restaurant Co. | TX | 1 | 438,097 | (2,616 | ) | 435,481 | (2) | 16,744 | 103,960 | 0 | 103,960 | ||||||||||||||||||||||||||||||||||||||||||
Integra A Hotel and Restaurant Co. | MI | 1 | 62,475 | (3) | 204 | (3) | 62,271 | ||||||||||||||||||||||||||||||||||||||||||||||
Intermountain Color | KY | 1 | 560,444 | 560,444 | 523,715 | 97,802 | 5,453 | 92,349 | |||||||||||||||||||||||||||||||||||||||||||||
J.C. Penney Company, Inc. | MA | 1 | 2,484,262 | 2,484,262 | 1,987,410 | (41,707 | ) | 250,244 | 3,850 | 246,394 | |||||||||||||||||||||||||||||||||||||||||||
Kings Buffet | FL | 1 | 910,425 | 910,425 | 42,803 | (279 | ) | 117,000 | 39,061 | 77,939 | |||||||||||||||||||||||||||||||||||||||||||
K-Mart Corporation | LA | 1 | 0 | 31,394 | (31,394 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
K-Mart Corporation | WI | 1 | 0 | (3) | 65,866 | (3) | (65,866 | ) | |||||||||||||||||||||||||||||||||||||||||||||
K-Mart Corporation | MN | 1 | 0 | (3) | 85,348 | (3) | (85,348 | ) | |||||||||||||||||||||||||||||||||||||||||||||
K-Mart Corporation | IA | 1 | 973,484 | 93,963 | 26,423 | 67,540 | |||||||||||||||||||||||||||||||||||||||||||||||
K-Mart Corporation | FL | 1 | 2,636,000 | 2,636,000 | (2) | 1,899,765 | 251,420 | 6,815 | 244,605 | ||||||||||||||||||||||||||||||||||||||||||||
K-Mart Corporation | FL | 0 | 735 | (735 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
K-Mart Corporation | IL | 1 | 600,000 | 600,000 | 31,732 | 62,322 | 58,800 | 3,522 | |||||||||||||||||||||||||||||||||||||||||||||
Kobacker Stores, Inc. | MI | 2 | 112,225 | 112,225 | 1,068 | 106,341 | $ | 2,412 | 24,142 | 461 | 23,681 | ||||||||||||||||||||||||||||||||||||||||||
Kobacker Stores, Inc. | KY | 1 | 88,364 | 88,364 | 769 | 64,103 | 1,115 | 15,853 | 231 | 15,622 | |||||||||||||||||||||||||||||||||||||||||||
Kobacker Stores, Inc. | OH | 4 | 198,031 | 198,031 | 1,851 | 187,753 | 4,117 | 48,933 | 461 | 48,472 | |||||||||||||||||||||||||||||||||||||||||||
Landmark Bancshares Corporation | MO | 1 | 3,303,464 | 482,092 | 0 | 482,092 | |||||||||||||||||||||||||||||||||||||||||||||||
Louisiana Power and Light Company | LA | 6 | 5,636,053 | 5,636,053 | 637,447 | 1,240,853 | 154,203 | 1,086,650 | |||||||||||||||||||||||||||||||||||||||||||||
Louisiana Power and Light Company | LA | 7 | 7,015,989 | 7,015,989 | 727,786 | 1,299,275 | 174,669 | 1,124,606 | |||||||||||||||||||||||||||||||||||||||||||||
Marsh Supermarkets, Inc. | IN | 1 | 5,001,933 | 5,001,933 | 3,229,039 | 506,300 | 131,479 | 374,821 | |||||||||||||||||||||||||||||||||||||||||||||
Mid-South | TN | 1 | 771,125 | (3) | 535,186 | (3) | 235,939 | ||||||||||||||||||||||||||||||||||||||||||||||
Montgomery Ward, Inc. | PA | 1 | 156,267 | (3) | (12,221 | )(3) | 168,488 |
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Part 2 — Revenues earned for the Year Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Part 1 — Real Estate Owned at December 31, 2004 — Accounted for Under the: | December 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Method | Financing Method | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Rent Due | |||||||||||||||||||||||||||||||||||||||||||||||||||||
and Accrued | Expended for | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | or Received | Minimum Lease | Total | Interest, | |||||||||||||||||||||||||||||||||||||||||||||||||
Carried at | in Advance at | Payments Due | Revenue | Depreciation, | Net Income | ||||||||||||||||||||||||||||||||||||||||||||||||
No. of | Amount of | Initial Cost | Cost of | Close of | Reserve for | End of | Net | and Accrued at | Applicable | Taxes, and | Applicable | ||||||||||||||||||||||||||||||||||||||||||
State | Locations | Encumbrances | to Company | Improvements | Period | Depreciation | Period | Investment | End of Period | to Period | Other Expenses | to Period | |||||||||||||||||||||||||||||||||||||||||
COMMERCIAL PROPERTY LAND AND BUILDING | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Montgomery Ward, Inc. | NJ | 1 | 113,765 | (3) | 3,227 | (3) | 110,538 | ||||||||||||||||||||||||||||||||||||||||||||||
Morrison, Inc. | AL | 1 | 0 | (3) | 44,213 | (3) | (44,213 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Morrison, Inc. | GA | 1 | 91,680 | 29,053 | 62,627 | ||||||||||||||||||||||||||||||||||||||||||||||||
Morrison, Inc. | VA | 1 | 904,766 | 904,766 | (2) | 32,502 | 0 | 39,460 | (39,460 | ) | |||||||||||||||||||||||||||||||||||||||||||
Morrison, Inc. | VA | 1 | 861,134 | 861,134 | 46,236 | 0 | 21,793 | (21,793 | ) | ||||||||||||||||||||||||||||||||||||||||||||
North Carolina National Bank | SC | 2 | 1,450,047 | 1,450,047 | 671,374 | 56,238 | 80,407 | (24,169 | ) | ||||||||||||||||||||||||||||||||||||||||||||
North Carolina National Bank | SC | 1 | 153,365 | 153,365 | (2) | 103,365 | 0 | 3,851 | (3,851 | ) | |||||||||||||||||||||||||||||||||||||||||||
Occidental Petroleum Corp. | CA | 1 | 0 | 38 | (38 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Ohio Power Co. Inc. | OH | 1 | 3,053,550 | 290,655 | 0 | 290,655 | |||||||||||||||||||||||||||||||||||||||||||||||
Park West | KY | 1 | 641,691 | (3) | 428,744 | (3) | 212,947 | ||||||||||||||||||||||||||||||||||||||||||||||
Park West UPS | KY | 1 | 932,538 | (3) | 596,187 | (3) | 336,351 | ||||||||||||||||||||||||||||||||||||||||||||||
Penske Corp. | OH | 1 | 0 | (3) | 65,756 | (3) | (65,756 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Pneumo Corp. | OH | 1 | 1,629,713 | 1,629,713 | 123,285 | 243,750 | 54,793 | 188,957 | |||||||||||||||||||||||||||||||||||||||||||||
Portland General Electric Company | OR | 1 | 31,096,664 | 45,903,530 | 3,984,278 | 2,526,316 | 1,457,962 | ||||||||||||||||||||||||||||||||||||||||||||||
Rayovac | WI | 1 | 14,855,137 | 22,065,852 | 22,065,852 | (2) | 2,243,143 | 2,788,657 | 1,224,533 | 1,564,124 | |||||||||||||||||||||||||||||||||||||||||||
Safeway Stores, Inc. | LA | 1 | 48,984 | (3) | 1,545 | (3) | 47,439 | ||||||||||||||||||||||||||||||||||||||||||||||
Sams | MI | 1 | 8,844,225 | 8,844,225 | (2) | 2,380,429 | 1,245,569 | 4,241 | 1,241,328 | ||||||||||||||||||||||||||||||||||||||||||||
Smith’s Management Corp. | NV | 1 | 0 | 810 | (810 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Southland Corporation | FL | 4 | 862,367 | 862,367 | 516,348 | 100,359 | 3,313 | 97,046 | |||||||||||||||||||||||||||||||||||||||||||||
Staples | NY | 1 | 136,332 | (3) | 21,304 | (3) | 115,028 | ||||||||||||||||||||||||||||||||||||||||||||||
Stone Container | WI | 1 | 5,696,064 | 9,028,574 | 9,028,574 | (2) | 1,526,831 | (75,748 | ) | 903,041 | 670,448 | 232,593 | |||||||||||||||||||||||||||||||||||||||||
Stop & Shop | NY | 1 | 137,100 | (3) | 0 | (3) | 137,100 | ||||||||||||||||||||||||||||||||||||||||||||||
Stop & Shop | NJ | 1 | 55,565 | (3) | 45 | (3) | 55,520 | ||||||||||||||||||||||||||||||||||||||||||||||
Stop “N Shop Co., Inc. | VA | 1 | 2,158,099 | 2,158,099 | 115,294 | 109,255 | 207,934 | (98,679 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Super Foods Services, Inc. | MI | 1 | 3,819,320 | 8,303,219 | 895,025 | 356,606 | 538,419 | ||||||||||||||||||||||||||||||||||||||||||||||
Telecom Properties, Inc. | OK | 1 | 0 | 506 | (506 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Telecom Properties, Inc. | KY | 1 | 340,321 | 340,321 | 3,544 | 36,000 | 3,686 | 32,314 | |||||||||||||||||||||||||||||||||||||||||||||
The A&P Company | MI | 1 | 0 | (3) | 72,842 | (3) | (72,842 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Tire Distribution Systems Inc. | TN | 1 | 4,583 | (3) | 150 | (3) | 4,433 | ||||||||||||||||||||||||||||||||||||||||||||||
Tops Market | NY | 1 | 262,357 | 262,357 | 30,311 | (15,727 | ) | 31,453 | 6,062 | 25,391 | |||||||||||||||||||||||||||||||||||||||||||
Toys “R” Us, Inc. | TX | 1 | 0 | 5,077 | (5,077 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Waban | NY | 1 | 261,122 | (3) | 22,972 | (3) | 238,150 | ||||||||||||||||||||||||||||||||||||||||||||||
Wetterau, Inc. | PA | 1 | 400,000 | 400,000 | (2) | 0 | 44,785 | (44,785 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Wetterau, Inc. | NJ | 1 | 747,116 | 747,116 | 57,759 | 150,800 | 25,671 | 125,129 | |||||||||||||||||||||||||||||||||||||||||||||
Wickes Companies, Inc. | CA | 1 | 66,565 | (3) | (12,192 | )(3) | 78,757 | ||||||||||||||||||||||||||||||||||||||||||||||
RESIDENTIAL PROPERTY LAND AND BUILDING | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Crown Cliffs | AL | 1 | 6,926,225 | 11,550,899 | 112,579 | 11,663,478 | (1)(2) | 4,107,054 | 2,078,098 | 1,650,167 | 427,931 | ||||||||||||||||||||||||||||||||||||||||||
COMMERCIAL PROPERTY — LAND | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Foodarama Supermarkets, Inc. | NY | 1 | 13,232 | (3) | 4,002 | (3) | 9,230 | ||||||||||||||||||||||||||||||||||||||||||||||
Foodarama Supermarkets, Inc. | PA | 1 | 12,000 | (3) | 4,002 | (3) | 7,998 | ||||||||||||||||||||||||||||||||||||||||||||||
Gino’s, Inc. | PA | 1 | 6,751 | (3) | 4,002 | (3) | 2,749 | ||||||||||||||||||||||||||||||||||||||||||||||
Gino’s, Inc. | MA | 1 | 6,751 | (3) | 4,002 | (3) | 2,749 | ||||||||||||||||||||||||||||||||||||||||||||||
Gino’s, Inc. | NJ | 1 | 6,751 | (3) | 4,002 | (3) | 2,749 | ||||||||||||||||||||||||||||||||||||||||||||||
J.C. Penney Company, Inc. | NY | 1 | 917 | (3) | 0 | (3) | 917 |
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Part 2 — Revenues Earned for the Year Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Part 1 — Real Estate Owned at December 31, 2004 — Accounted for Under the: | December 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Method | Financing Method | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Rent Due | |||||||||||||||||||||||||||||||||||||||||||||||||||||
and Accrued | Expended for | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | or Received | Minimum Lease | Interest, | ||||||||||||||||||||||||||||||||||||||||||||||||||
Carried at | in Advance at | Payments Due | Total Revenue | Depreciation, | Net Income | ||||||||||||||||||||||||||||||||||||||||||||||||
No. of | Amount of | Initial Cost to | Cost of | Close of | Reserve for | End of | Net | and Accrued at | Applicable to | Taxes, and | Applicable to | ||||||||||||||||||||||||||||||||||||||||||
State | Locations | Encumbrances | Company | Improvements | Period | Depreciation | Period | Investment | End of Period | Period | Other Expenses | Period | |||||||||||||||||||||||||||||||||||||||||
COMMERCIAL PROPERTY LAND AND BUILDING | |||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMERCIAL PROPERTY — BUILDING | |||||||||||||||||||||||||||||||||||||||||||||||||||||
AT&T | CA | 1 | 2,569,705 | 2,830 | 2,572,535 | (2) | 82,237 | 462,931 | 153,631 | 309,300 | |||||||||||||||||||||||||||||||||||||||||||
Bank of America | GA | 1 | 2,581,575 | 265,158 | 23,000 | 242,158 | |||||||||||||||||||||||||||||||||||||||||||||||
Baptist Hospital 1 | TN | 1 | 614,762 | 506,345 | 108,417 | ||||||||||||||||||||||||||||||||||||||||||||||||
Baptist Hospital 2 | TN | 1 | 228,172 | 184,120 | 44,052 | ||||||||||||||||||||||||||||||||||||||||||||||||
Harwood Square | IL | 1 | 6,952,206 | 257,158 | 7,209,364 | (2) | 4,186,890 | 795,016 | 57,952 | 737,064 | |||||||||||||||||||||||||||||||||||||||||||
Safeway Stores, Inc. | CA | 1 | 13,885 | (3) | 0 | (3) | 13,885 | ||||||||||||||||||||||||||||||||||||||||||||||
Toys “R” Us, Inc. | RI | 1 | 745,050 | 10,430 | 72,394 | 0 | 72,394 | ||||||||||||||||||||||||||||||||||||||||||||||
United Life & Accident Ins. Co. | NH | 1 | 2,894,284 | (43,667 | ) | 252,370 | 5,207 | 247,163 | |||||||||||||||||||||||||||||||||||||||||||||
Wickes Companies, Inc. | PA | 1 | 2,138,678 | 527,221 | 902 | 526,319 | |||||||||||||||||||||||||||||||||||||||||||||||
North Moore | NY | 1 | 9,925,579 | 14,583,060 | 14,583,060 | 416,659 | (49,172 | ) | 1,122,237 | 1,110,043 | 12,194 | ||||||||||||||||||||||||||||||||||||||||||
91,895,527 | 119,890,855 | 14,640,582 | 134,531,437 | 27,392,745 | (181,983 | ) | 89,192,686 | (25,593 | ) | 33,514,240 | 16,644,625 | 16,869,615 | |||||||||||||||||||||||||||||||||||||||||
LESS HELD FOR SALE-OPERATING REAL ESTATE | (27,477,426 | ) | (74,523,721 | ) | (369,951 | ) | (74,893,672 | ) | (16,872,519 | ) | (15,657,963 | ) | (8,085,219 | ) | (7,572,744 | ) | |||||||||||||||||||||||||||||||||||||
64,418,101 | 45,367,134 | 14,270,631 | 59,637,765 | 10,520,226 | (181,983 | ) | 89,192,686 | (25,593 | ) | 17,856,277 | 8,559,406 | 9,296,871 | |||||||||||||||||||||||||||||||||||||||||
LESS CURRENT PORTION | (3,700,000 | ) | (3,912,000 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
HOTEL AND RESORT OPERATING PROPERTIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||
New Seabury | MA | 37,087,739 | 954,952 | 38,042,691 | 9,148,267 | 9,848,167 | 10,056,181 | (208,014 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Holiday Inn | FL | 1,602,255 | (3) | 1,297,717 | (3) | 304,538 | |||||||||||||||||||||||||||||||||||||||||||||||
Bayswater | FL | 5,310,365 | 79,105 | 5,389,470 | 719,824 | 3,002,000 | 2,618,000 | 384,000 | |||||||||||||||||||||||||||||||||||||||||||||
Grand Harbor | FL | 16,893,964 | 16,893,964 | 326,262 | 5,626,869 | 7,169,226 | (1,542,357 | ) | |||||||||||||||||||||||||||||||||||||||||||||
0 | 42,398,104 | 17,928,021 | 60,326,125 | 10,194,353 | 0 | 0 | 0 | 20,079,291 | 21,141,124 | (1,061,833 | ) | ||||||||||||||||||||||||||||||||||||||||||
LESS HELD FOR SALE-HOTEL AND RESORT | (3,868,700 | ) | (3,942,003 | ) | 73,303 | ||||||||||||||||||||||||||||||||||||||||||||||||
$ | 60,718,101 | $ | 87,765,238 | $ | 32,198,652 | $ | 119,963,890 | $ | 20,714,579 | $ | (181,983 | ) | $ | 85,280,686 | $ | (25,593 | ) | $ | 34,066,868 | $ | 25,758,527 | $ | 8,308,341 | ||||||||||||||||||||||||||||||
(1) | The Company owns a 70% interest in the joint venture which owns this property. |
(2) | Such properties are being classified as held for sale at 12/31/04. |
(3) | Sold in 2004 and included in discontinued operations. |
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Balance — January 1, 2004 | $ | 161,158 | ||
Additions during period | 32,866 | |||
Reclassifications during period from financing leases | 1,919 | |||
Write downs | (350 | ) | ||
Reclassifications during period to assets held for sale | (74,720 | ) | ||
Disposals during period | (909 | ) | ||
Balance — December 31, 2004 | $ | 119,964 | ||
Balance — January 1, 2004 | $ | 43,189 | ||
Depreciation during period | 5,274 | |||
Disposals during period | (42 | ) | ||
Reclassifications during period to assets held for sale | (27,706 | ) | ||
Balance — December 31, 2004 | $ | 20,715 | ||
Balance — January 1, 2004 | $ | 137,356 | ||
Reclassifications during period to operating properties | (1,919 | ) | ||
Disposals during period | (42,044 | ) | ||
Amortization of unearned income | 9,880 | |||
Minimum lease rentals received | (14,080 | ) | ||
Balance — December 31, 2004 | $ | 89,193 | ||
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4. | Net income applicable to the period in Schedule III is reconciled with net earnings as follows: |
Net income applicable to financing and operating leases and hotel and resort operating properties | $ | 8,308 | |||
Net income applicable to hotel and casino operations | 36,649 | (1) | |||
Net income applicable to land, house and condominium sales | 6,355 | ||||
Net income applicable to oil and gas operations | 28,186 | (2) | |||
Add: | |||||
Interest income on U.S. Government and Agency Obligations and other investments | 44,418 | ||||
Dividend and unallocated other income | 3,133 | ||||
127,049 | |||||
Deduct expenses not allocated: | |||||
General and administrative expenses | 9,806 | ||||
Non-mortgage interest expense | 37,195 | ||||
Other | 7,974 | ||||
54,975 | |||||
Operating income after income taxes | 72,074 | ||||
Gain on sale of marketable equity and debt securities | 40,159 | ||||
Gain on sale of real estate | 5,262 | ||||
Impairment loss on equity interest in GB Holdings, Inc. | (15,600 | ) | |||
Unrealized losses in securities sold sort | (23,619 | ) | |||
Income from continuing operations | 78,276 | ||||
Discontinued Operations: | |||||
Total Income from discontinued operations | 82,697 | ||||
Net Earnings | $ | 160,973 | |||
(1) | Includes depreciation expense of $23,516 and $10,100 of income tax expense. |
(2) | Includes income tax expense of $6,663. |
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Balance — January 1, 2003 | $ | 303,460 | ||
Additions during period | 1,675 | |||
Reclassifications during period from financing leases | 5,065 | |||
Reclassifications during period to held for sale | (146,416 | ) | ||
Disposals during period | (2,626 | ) | ||
Balance December 31, 2003 | $ | 161,158 | ||
Balance — January 1, 2003 | $ | 54,978 | ||
Depreciation during period | 8,605 | |||
Reclassifications during period to held for sale | (20,153 | ) | ||
Disposals during period | (241 | ) | ||
Balance — December 31, 2003 | $ | 43,189 | ||
Balance — January 1, 2003 | $ | 155,458 | ||
Reclassifications during period to operating properties | (5,065 | ) | ||
Disposals during period | (7,708 | ) | ||
Amortization of unearned income | 13,115 | |||
Minimum lease rentals received | (18,444 | ) | ||
Balance — December 31, 2003 | $ | 137,356 | ||
Net income applicable to financing and operating leases and hotel and resort operating properties | $ | 12,397 | ||
Net income applicable to hotel and casino operations | 24,064 | (1) | ||
Net income applicable to land, house and condominium sales | 4,136 | |||
Net income applicable to NEG, Inc. | 19,522 | (2) |
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Add: | |||||
Interest income on U.S. Government and Agency Obligations and other investments | 22,583 | ||||
Dividend and unallocated other income | 3,061 | ||||
85,763 | |||||
Deduct expenses not allocated: | |||||
General and administrative expenses | 6,850 | ||||
Nonmortgage interest expense | 2,449 | ||||
Other | 5,912 | ||||
15,211 | |||||
Operating income after income taxes | 70,552 | ||||
Gain on sale of real estate | 7,121 | ||||
Write down of marketable equity and debt securities and other investments | (19,759 | ) | |||
Loss on sale of other assets | (1,503 | ) | |||
Gain on sale of marketable equity and debt securities | 2,607 | ||||
Income from continuing operations | 59,018 | ||||
Total income from discontinued operations | 11,006 | ||||
Net earnings | $ | 70,024 | |||
(1) | Includes depreciation expense of $20,222 and income tax benefit of $1,798. |
(2) | Includes income tax expense of $225 and interest expense of $11,165. |
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Balance — January 1, 2002 | $ | 273,887 | ||
Additions during period | 20,886 | |||
Reclassifications during period from financing leases | 13,503 | |||
Write downs | (1,992 | ) | ||
Disposals during period | (2,824 | ) | ||
Balance — December 31, 2002 | $ | 303,460 | ||
Balance — January 1, 2002 | $ | 48,057 | ||
Depreciation during period | 7,105 | |||
Disposals during period | (184 | ) | ||
Balance — December 31, 2002 | $ | 54,978 | ||
Balance — January 1, 2002 | $ | 176,757 | ||
Reclassifications during period | (13,503 | ) | ||
Write downs | (257 | ) | ||
Disposals during period | (1,560 | ) | ||
Amortization of unearned income | 14,722 | |||
Minimum lease rentals received | (20,663 | ) | ||
Other | (38 | ) | ||
Balance — December 31, 2002 | $ | 155,458 | ||
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Net income applicable to financing and operating leases and hotel and resort operating properties | $ | 13,198 | |||
Net income applicable to hotel and casino operations | 6,845 | (1) | |||
Net income applicable to land, house and condominium sales | 20,384 | ||||
Net income applicable to NEG Inc. | 9,415 | (2) | |||
Add: | |||||
Interest income on U.S. Government and Agency Obligations and other investments | 30,569 | ||||
Dividend and unallocated other income | 2,720 | ||||
83,131 | |||||
Deduct expenses not allocated: | |||||
General and administrative expenses | 7,029 | ||||
Non-mortgage interest expense | 5,306 | ||||
Other | 1,505 | ||||
13,840 | |||||
Operating income after income taxes | 69,291 | ||||
Gain on sale of real estate | 8,990 | ||||
Write down of equity securities | (8,476 | ) | |||
Loss on sale of other assets | (353 | ) | |||
Loss on limited partnership interests | (3,750 | ) | |||
Minority interest in net earnings of Stratosphere Corporation | (1,943 | ) | |||
Income from continuing operations | 63,759 | ||||
Total income from discontinued operations | 6,937 | ||||
Net earnings | $ | 70,696 | |||
(1) | Includes depreciation expense of $20,209 and income tax expense of $4,970. |
(2) | Includes income tax expense of $5,068 and interest expense of $18,964. |
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Amount at Which | ||||||||
Carried at Close | Reserve for | |||||||
State | of Year | Depreciation | ||||||
Florida | $ | 24,057 | $ | 1,606 | ||||
Illinois | 600 | 32 | ||||||
Indiana | 5,002 | 3,229 | ||||||
Kentucky | 989 | 527 | ||||||
Louisiana | 12,621 | 1,365 | ||||||
Massachusetts | 44,310 | 11,444 | ||||||
Michigan | 112 | 0 | ||||||
Minnesota | 339 | 173 | ||||||
Missouri | 415 | 17 | ||||||
New Jersey | 747 | 58 | ||||||
New York | 15,751 | 551 | ||||||
North Carolina | 3,464 | 459 | ||||||
Ohio | 2,142 | 151 | ||||||
South Carolina | 1,450 | 671 | ||||||
Virginia | 6,046 | 419 | ||||||
West Virginia | 1,919 | 13 | ||||||
$ | 119,964 | $ | 20,715 | |||||
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Net | ||||
State | Investment | |||
Connecticut | $ | 18,938 | ||
Georgia | 2,583 | |||
Iowa | 973 | |||
Kentucky | 64 | |||
Michigan | 8,410 | |||
Missouri | 3,303 | |||
New Hampshire | 2,894 | |||
Ohio | 3,241 | |||
Oregon | 45,903 | |||
Pennsylvania | 2,139 | |||
Rhode Island | 745 | |||
$ | 89,193 | |||
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/s/ GRANT THORNTON LLP |
F-63
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/s/KPMG LLP |
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December 31, | ||||||||||||||
March 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
(In $000’s except per unit amounts) | ||||||||||||||
(Unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents (Note 2) | $ | 1,250,074 | $ | 768,918 | $ | 504,369 | ||||||||
Investment in U.S. government and agency obligations (Note 4) | 68,894 | 96,840 | 52,583 | |||||||||||
Marketable equity and debt securities (Note 5) | 68,497 | 2,248 | 55,826 | |||||||||||
Due from brokers (Note 6) | 147,223 | 123,001 | — | |||||||||||
Restricted cash | 28,537 | 19,856 | 15,058 | |||||||||||
Receivables and other current assets | 52,567 | 59,274 | 51,780 | |||||||||||
Real estate leased to others: | ||||||||||||||
Current portion of lease amortization for leases accounted for under the financing method (Note 8) | 3,740 | 3,912 | 5,738 | |||||||||||
Properties held for sale (Notes 9 and 15) | 33,995 | 58,021 | 128,813 | |||||||||||
Current portion of investment in debt securities of affiliates (Note 12) | 5,429 | 5,429 | — | |||||||||||
Current portion of deferred tax asset (Note 23) | 2,685 | 2,685 | 2,982 | |||||||||||
Total current assets | 1,661,641 | 1,140,184 | 817,149 | |||||||||||
Investment in U.S. government and agency obligations (Note 4) | 5,533 | 5,491 | 8,990 | |||||||||||
Other investments (Note 7) | 244,602 | 245,948 | 50,328 | |||||||||||
Land and construction-in-progress (Note 15) | 106,000 | 106,537 | 43,459 | |||||||||||
Real estate leased to others: | ||||||||||||||
Accounted for under the financing method (Notes 8, 15 and 16) | 75,949 | 85,281 | 131,618 | |||||||||||
Accounted for under the operating method, net of accumulated depreciation (Notes 9, 15 and 16) | 51,127 | 49,118 | 76,443 | |||||||||||
Oil and gas properties, net (Notes 2 and 14) | 180,241 | 168,136 | 168,921 | |||||||||||
Hotel, casino and resort operating properties, net of accumulated depreciation: | ||||||||||||||
American Casino & Entertainment Properties LLC (Notes 10 and 17) | 288,890 | 289,360 | 298,703 | |||||||||||
Hotel and resorts (Notes 9 and 11) | 46,041 | 50,132 | 41,526 | |||||||||||
Deferred finance costs and other assets, net | 24,831 | 21,200 | 4,095 | |||||||||||
Long-term portion of investment in debt securities of affiliates (Note 12) | 91,864 | 92,575 | 24,696 | |||||||||||
Investment in NEG Holding LLC (Note 14) | 97,693 | 87,800 | 69,346 | |||||||||||
Equity interest in GB Holdings, Inc. (The Sands Hotel and Casino)(Note 13) | 9,138 | 10,603 | 30,854 | |||||||||||
Deferred tax asset (Note 23) | 52,147 | 55,824 | 65,445 | |||||||||||
Total | $ | 2,935,697 | $ | 2,408,189 | $ | 1,831,573 | ||||||||
LIABILITIES AND PARTNERS’ EQUITY | ||||||||||||||
Current Liabilities: | ||||||||||||||
Current portion of mortgages payable (Notes 8, 9 and 16) | $ | 4,205 | $ | 3,700 | $ | 4,892 | ||||||||
Mortgages on properties held for sale (Notes 9 and 16) | 20,372 | 27,477 | 82,861 | |||||||||||
Accounts payable, accrued expenses and other current liabilities (Note 20) | 96,814 | 95,877 | 55,880 | |||||||||||
Securities sold not yet purchased (Note 6) | 83,750 | 90,674 | — | |||||||||||
Other debt due to affiliates (Notes 14 and 17) | 10,000 | — | 30,000 | |||||||||||
Total current liabilities | 215,141 | 217,728 | 173,633 | |||||||||||
Other liabilities | 28,133 | 26,048 | 29,127 | |||||||||||
Long-term portion of mortgages payable (Notes 8, 9 and 16) | 55,614 | 60,719 | 93,236 | |||||||||||
Senior secured notes payable (Note 18) | 215,000 | 215,000 | — | |||||||||||
Senior unsecured notes payable 81/8% due 2012 — net of unamortized discount of $2,321 and $2,402 at March 31, 2005 and December 31, 2004 (Note 19) | 350,679 | 350,598 | — | |||||||||||
Senior unsecured notes payable — 71/8% due 2013 (Note 19) | 480,000 | — | — | |||||||||||
Asset retirement obligation (Note 2) | 3,999 | 3,930 | 3,477 | |||||||||||
Due to affiliates (Notes 14 and 17) | — | — | 27,500 | |||||||||||
Preferred limited partnership units: | ||||||||||||||
$10 liquidation preference, 5% cumulative pay-in-kind; 10,400,000 authorized; 10,800,397, 10,286,264 and 9,796,607 issued and outstanding as of March 31, 2005, December 31, 2004 and 2003 (Note 22) | 108,006 | 106,731 | 101,649 | |||||||||||
Total long-term liabilities | 1,241,431 | 763,026 | 254,989 | |||||||||||
Minority interest (Note 14) | — | — | 9,604 | |||||||||||
Commitments and contingencies (Notes 3 and 24): | ||||||||||||||
Partners’ Equity: | ||||||||||||||
Limited partners: | ||||||||||||||
Depositary units; 47,850,000 authorized; 47,235,484 outstanding | 1,383,913 | 1,328,031 | 1,184,870 | |||||||||||
General partner | 107,133 | 111,325 | 220,398 | |||||||||||
Treasury units at cost: | ||||||||||||||
1,137,200 depositary units (Note 28) | (11,921 | ) | (11,921 | ) | (11,921 | ) | ||||||||
Partners’ equity (Notes 2 and 3) | 1,479,125 | 1,427,435 | 1,393,347 | |||||||||||
Total | $ | 2,935,697 | $ | 2,408,189 | $ | 1,831,573 | ||||||||
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Three Months Ended | |||||||||||||||||||||
March 31, | Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(In $000’s except unit and per unit amounts) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Revenues: | |||||||||||||||||||||
Hotel and casino operating income (Note 10) | $ | 82,838 | $ | 75,009 | $ | 299,981 | $ | 262,811 | $ | 250,023 | |||||||||||
Land, house and condominium sales | 8,279 | 5,014 | 26,591 | 13,265 | 76,024 | ||||||||||||||||
Interest income on financing leases | 1,966 | 2,936 | 9,880 | 13,115 | 14,722 | ||||||||||||||||
Interest income on U.S. Government and Agency obligations and other investments (Notes 2 and 7) | 12,902 | 4,944 | 44,376 | 22,592 | 30,569 | ||||||||||||||||
Rental income | 2,035 | 2,027 | 7,916 | 7,092 | 6,852 | ||||||||||||||||
Hotel and resort operating income (Note 11) | 5,563 | 1,335 | 16,211 | 12,376 | 12,921 | ||||||||||||||||
Oil and gas operating income (Notes 2 and 14) | 15,422 | 15,333 | 58,419 | 20,899 | — | ||||||||||||||||
Accretion of investment in NEG Holding LLC (Note 14) | 9,893 | 7,904 | 34,432 | 30,142 | 32,879 | ||||||||||||||||
NEG management fee | 2,108 | 1,464 | 6,887 | 6,629 | 7,637 | ||||||||||||||||
Dividend and other income (Notes 5 and 7) | 4,206 | 834 | 3,616 | 3,211 | 2,720 | ||||||||||||||||
Equity in (loss) earnings of GB Holdings, Inc. (Note 13) | (986 | ) | (348 | ) | (2,113 | ) | (3,466 | ) | 305 | ||||||||||||
144,226 | 116,452 | 506,196 | 388,666 | 434,652 | |||||||||||||||||
Expenses: | |||||||||||||||||||||
Hotel and casino operating expenses (Note 10) | 57,624 | 54,243 | 227,603 | 216,857 | 217,938 | ||||||||||||||||
Cost of land, house and condominium sales | 7,047 | 3,358 | 18,486 | 9,129 | 54,640 | ||||||||||||||||
Oil and gas operating expense (Notes 2 and 14) | 2,866 | 3,858 | 13,816 | 5,028 | — | ||||||||||||||||
Hotel and resort operating expenses (Note 11) | 5,405 | 1,424 | 12,730 | 8,773 | 10,536 | ||||||||||||||||
Interest expense (Notes 15, 16, 17, 18, 19 and 22) | 19,265 | 7,191 | 49,669 | 27,057 | 27,297 | ||||||||||||||||
Depreciation, depletion and amortization | 16,167 | 18,396 | 68,291 | 40,571 | 23,646 | ||||||||||||||||
General and administrative expenses (Note 3) | 7,610 | 4,364 | 20,952 | 14,081 | 14,134 | ||||||||||||||||
Property expenses | 952 | 1,085 | 4,340 | 4,472 | 3,862 | ||||||||||||||||
Provision for losses on real estate | — | — | 3,150 | 750 | 3,212 | ||||||||||||||||
116,936 | 93,919 | 419,037 | 326,718 | 355,265 | |||||||||||||||||
Operating income | 27,290 | 22,533 | 87,159 | 61,948 | 79,387 | ||||||||||||||||
Other gains and (losses): | |||||||||||||||||||||
Gain (loss) on sale of other assets | (180 | ) | (4 | ) | 1,680 | (1,503 | ) | (353 | ) | ||||||||||||
Gain on sale of marketable equity and debt securities | — | 28,857 | 40,159 | 2,607 | — | ||||||||||||||||
Unrealized gains (losses) on securities sold short (Note 6) | 21,704 | — | (23,619 | ) | — | — | |||||||||||||||
Change in fair market value of derivative contract | (9,813 | ) | — | — | — | — | |||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. (Note 13) | — | — | (15,600 | ) | — | — |
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Three Months Ended | ||||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(In $000’s except unit and per unit amounts) | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Write-down of marketable equity and debt securities and other investments (Note 5) | — | — | — | (19,759 | ) | (8,476 | ) | |||||||||||||||
Gain on sales and disposition of real estate (Note 15) | 186 | 6,047 | 5,262 | 7,121 | 8,990 | |||||||||||||||||
Loss on limited partnership interests | — | — | — | — | (3,750 | ) | ||||||||||||||||
Severance tax refund | — | — | 4,468 | — | — | |||||||||||||||||
Minority interest (Notes 10 and 14) | — | (39 | ) | (812 | ) | (1,266 | ) | (1,943 | ) | |||||||||||||
Income from continuing operations before income taxes | 39,187 | 57,394 | 98,697 | 49,148 | 73,855 | |||||||||||||||||
Income tax (expense) benefit (Note 23) | (4,782 | ) | (5,966 | ) | (17,326 | ) | 16,750 | (10,096 | ) | |||||||||||||
Income from continuing operations | 34,405 | 51,428 | 81,371 | 65,898 | 63,759 | |||||||||||||||||
Discontinued operations: | ||||||||||||||||||||||
Income from discontinued operations | 957 | 3,218 | 7,500 | 7,653 | 6,937 | |||||||||||||||||
Gain on sales and disposition of real estate | 18,723 | 6,929 | 75,197 | 3,353 | — | |||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | |||||||||||||||||
Net earnings | $ | 54,085 | $ | 61,575 | $ | 164,068 | $ | 76,904 | $ | 70,696 | ||||||||||||
Net earnings attributable to (Note 1): | ||||||||||||||||||||||
Limited partners | $ | 58,228 | $ | 57,608 | $ | 152,507 | $ | 59,360 | $ | 63,168 | ||||||||||||
General partner | (4,143 | ) | 3,967 | 11,561 | 17,544 | 7,528 | ||||||||||||||||
$ | 54,085 | $ | 61,575 | $ | 164,068 | $ | 76,904 | $ | 70,696 | |||||||||||||
Net earnings per limited partnership unit (Notes 2 and 21): | ||||||||||||||||||||||
Basic earnings: | ||||||||||||||||||||||
Income from continuing operations | $ | 0.84 | $ | 1.03 | $ | 1.55 | $ | 1.00 | $ | 1.12 | ||||||||||||
Income from discontinued operations | 0.42 | 0.22 | 1.76 | 0.24 | 0.15 | |||||||||||||||||
Basic earnings per LP unit | $ | 1.26 | $ | 1.25 | $ | 3.31 | $ | 1.24 | $ | 1.27 | ||||||||||||
Weighted average limited partnership units outstanding | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | |||||||||||||||||
Diluted earnings: | ||||||||||||||||||||||
Income from continuing operations | $ | 0.81 | $ | 0.93 | $ | 1.48 | $ | 0.94 | $ | 1.00 | ||||||||||||
Income from discontinued operations | $ | 0.39 | 0.19 | 1.57 | 0.19 | 0.12 | ||||||||||||||||
Diluted earnings per LP unit | $ | 1.20 | $ | 1.12 | $ | 3.05 | $ | 1.13 | $ | 1.12 | ||||||||||||
Weighted average limited partnership units and equivalent partnership units outstanding | 49,857,622 | 52,499,303 | 51,542,312 | 54,489,943 | 56,466,698 | |||||||||||||||||
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Limited Partners’ Equity | |||||||||||||||||||||||||
General | |||||||||||||||||||||||||
Partner’s | Held in Treasury | Total | |||||||||||||||||||||||
Equity | Depositary | Preferred | Partners’ | ||||||||||||||||||||||
(Deficit) | Units | Units | Amounts | Units | Equity | ||||||||||||||||||||
(In $000’s) | |||||||||||||||||||||||||
Balance, December 31, 2001 | $ | 58,846 | $ | 996,701 | $ | 92,198 | $ | (11,921 | ) | $ | 1,137 | $ | 1,135,824 | ||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net earnings | 7,528 | 63,168 | — | — | — | 70,696 | |||||||||||||||||||
Reclassification of unrealized loss on sale of debt securities | 211 | 10,384 | — | — | — | 10,595 | |||||||||||||||||||
Adjustment to reverse unrealized loss on investment securities reclassified to notes receivable | 131 | 6,451 | — | — | — | 6,582 | |||||||||||||||||||
Net unrealized losses on securities available for sale | (5 | ) | (237 | ) | — | — | — | (242 | ) | ||||||||||||||||
Comprehensive income | 7,865 | 79,766 | — | — | — | 87,631 | |||||||||||||||||||
Net adjustment for acquisition of minority interest (Note 10) | 21,151 | — | — | — | — | 21,151 | |||||||||||||||||||
Pay-in-kind distribution (Note 22) | — | (4,610 | ) | 4,610 | — | — | — | ||||||||||||||||||
Capital contribution to American Casino (Note 10) | 831 | — | — | — | — | 831 | |||||||||||||||||||
Balance, December 31, 2002 | 88,693 | 1,071,857 | 96,808 | (11,921 | ) | 1,137 | 1,245,437 | ||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net earnings | 17,544 | 59,360 | — | — | — | 76,904 | |||||||||||||||||||
Reclassification of unrealized loss on sale of debt securities | 15 | 746 | — | — | — | 761 | |||||||||||||||||||
Net unrealized gains on securities available for sale | 183 | 8,991 | — | — | — | 9,174 | |||||||||||||||||||
Sale of marketable equity securities available for sale | (6 | ) | (274 | ) | — | — | — | (280 | ) | ||||||||||||||||
Comprehensive income | 17,736 | 68,823 | — | — | — | 86,559 | |||||||||||||||||||
Pay-in-kind distribution (Note 22) | — | (2,391 | ) | 2,391 | — | — | — | ||||||||||||||||||
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy (Note 23) | 524 | 46,581 | — | — | — | 47,105 | |||||||||||||||||||
Capital distribution (Note 10) | (2,808 | ) | — | — | — | — | (2,808 | ) | |||||||||||||||||
Reclassification of Preferred LP units to liabilities (Note 22) | — | — | (99,199 | ) | — | — | (99,199 | ) | |||||||||||||||||
Net adjustment for TransTexas acquisition (Note 14) | 116,253 | — | — | — | — | 116,253 | |||||||||||||||||||
Balance, December 31, 2003 | 220,398 | 1,184,870 | — | (11,921 | ) | 1,137 | 1,393,347 |
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Limited Partners’ Equity | |||||||||||||||||||||||||
General | |||||||||||||||||||||||||
Partner’s | Held in Treasury | Total | |||||||||||||||||||||||
Equity | Depositary | Preferred | Partners’ | ||||||||||||||||||||||
(Deficit) | Units | Units | Amounts | Units | Equity | ||||||||||||||||||||
(In $000’s) | |||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net earnings | 11,561 | 152,507 | — | — | — | 164,068 | |||||||||||||||||||
Reclassification of unrealized gains on marketable securities sold | (190 | ) | (9,378 | ) | — | — | — | (9,568 | ) | ||||||||||||||||
Net unrealized gains on securities available for sale | 1 | 32 | — | — | — | 33 | |||||||||||||||||||
Comprehensive income | 11,372 | 143,161 | — | — | — | 154,533 | |||||||||||||||||||
Capital distribution from American Casino (Note 10) | (17,916 | ) | — | — | — | — | (17,916 | ) | |||||||||||||||||
Capital contribution to American Casino (Note 10) | 22,800 | — | — | — | — | 22,800 | |||||||||||||||||||
Arizona Charlie’s acquisition (Note 10) | (125,900 | ) | — | — | — | — | (125,900 | ) | |||||||||||||||||
Distribution Change in deferred tax asset related to acquisition of Arizona Charlie’s | 2,490 | — | — | — | — | 2,490 | |||||||||||||||||||
Distribution to General Partner relating to TransTexas’ purchase of minority interest and treasury shares (Note 14) | (1,919 | ) | — | — | — | — | (1,919 | ) | |||||||||||||||||
Balance, December 31, 2004 | 111,325 | 1,328,031 | — | (11,921 | ) | 1,137 | 1,427,435 | ||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net earnings | (4,143 | ) | 58,228 | — | — | — | 54,085 | ||||||||||||||||||
Net unrealized losses on securities available for sale | (49 | ) | (2,346 | ) | (2,395 | ) | |||||||||||||||||||
Comprehensive income | (4,192 | ) | 55,882 | 51,690 | |||||||||||||||||||||
Balance, March 31, 2005 (unaudited) | $ | 107,133 | $ | 1,383,913 | $ | — | $ | (11,921 | ) | $ | 1,137 | $ | 1,479,125 | ||||||||||||
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Three Months Ended | |||||||||||||||||||||
March 31, | Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||
Income from continuing operations | $ | 34,405 | $ | 51,428 | $ | 81,371 | $ | 65,898 | $ | 63,759 | |||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||||||||
Depreciation, depletion and amortization | 16,099 | 18,316 | 67,959 | 41,173 | 23,646 | ||||||||||||||||
Change in fair market value of derivative contracts | 9,813 | 2,050 | 1,659 | (373 | ) | — | |||||||||||||||
Note discount amortization | 26 | 71 | 281 | 95 | — | ||||||||||||||||
Accretion of discount on asset retirement obligation | 69 | 80 | 332 | 96 | — | ||||||||||||||||
Preferred LP interest expense | 1,286 | 1,225 | 5,082 | 2,450 | — | ||||||||||||||||
Gain on sale of marketable equity securities | — | (28,857 | ) | (40,159 | ) | (2,607 | ) | — | |||||||||||||
Unrealized (gains) losses on securities sold short | (21,704 | ) | — | 23,619 | — | — | |||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | 15,600 | — | — | ||||||||||||||||
Gain on sales and disposition of real estate | (186 | ) | (6,047 | ) | (5,262 | ) | (7,121 | ) | (8,990 | ) | |||||||||||
Loss on limited partnership interests | — | — | — | — | 3,750 | ||||||||||||||||
Loss (gain) on sale of assets | 180 | 4 | (1,584 | ) | 1,511 | 353 | |||||||||||||||
Provision for loss on real estate | — | — | 3,150 | 750 | 3,212 | ||||||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | 19,759 | 8,476 | ||||||||||||||||
Minority interest | — | 39 | 812 | 1,266 | 1,943 | ||||||||||||||||
Equity in losses (earnings) of GB Holdings, Inc. | 986 | 348 | 2,113 | 3,466 | (305 | ) | |||||||||||||||
Deferred gain amortization | (510 | ) | (510 | ) | (2,038 | ) | (2,038 | ) | (2,038 | ) | |||||||||||
Accretion of investment in NEG Holding LLC | (9,893 | ) | (7,904 | ) | (34,432 | ) | (30,142 | ) | (32,879 | ) | |||||||||||
Deferred income tax expense (benefit) | 3,678 | 1,412 | 14,296 | (22,256 | ) | 9,785 | |||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||||
Decrease (increase) in receivables and other assets | 5,639 | (8,414 | ) | (10,442 | ) | 3,762 | 2,944 | ||||||||||||||
Increase in due from brokers | (2,518 | ) | (123,001 | ) | — | — | |||||||||||||||
Decrease (increase) in land and construction-in-progress | 5,950 | (455 | ) | (1,626 | ) | (4,106 | ) | 24,215 | |||||||||||||
Increase in restricted cash | (8,682 | ) | — | (4,798 | ) | (13,095 | ) | — |
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Three Months Ended | |||||||||||||||||||||
March 31, | Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | 1,404 | 13,046 | 96,280 | (38,346 | ) | 271 | |||||||||||||||
Net cash provided by continuing operations | 36,042 | 35,832 | 89,212 | 20,142 | 98,142 | ||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | ||||||||||||||||
Depreciation and amortization | 31 | 210 | 1,244 | 5,129 | 4,464 | ||||||||||||||||
Net gain from property transactions | (18,723 | ) | (6,929 | ) | (75,197 | ) | (3,353 | ) | — | ||||||||||||
Net cash provided by discontinued operations | 988 | 3,428 | 8,744 | 12,782 | 11,401 | ||||||||||||||||
Net cash provided by operating activities | 37,030 | 39,260 | 97,956 | 32,924 | 109,543 | ||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||
Cash related to combination of TransTexas accounted for as a pooling of interest | — | — | — | 15,312 | — | ||||||||||||||||
Increase (decrease) in other investments | — | — | 2,942 | (28,491 | ) | (23,200 | ) | ||||||||||||||
Repayments of mezzanine loans included in other investments | — | — | 49,130 | 12,200 | 23,000 | ||||||||||||||||
Decrease in mortgages and notes receivable | — | 351 | — | — | — | ||||||||||||||||
Net proceeds from the sales and disposition of real estate | 4,650 | 11,346 | 16,790 | 15,290 | 20,513 | ||||||||||||||||
Proceeds from sale of other assets | 19 | 64 | 3,779 | — | — | ||||||||||||||||
Principal payments received on leases accounted for under the financing method | 908 | 1,112 | 4,219 | 5,310 | 5,941 | ||||||||||||||||
Principal payments received on investments in debt securities of affiliates | 2,700 | — | — | — | — | ||||||||||||||||
Purchase of debt securities included in other investments | — | — | (245,166 | ) | — | — | |||||||||||||||
Purchase of debt securities of affiliates | — | — | (65,500 | ) | — | — | |||||||||||||||
Purchase of Atlantic Holdings debt included in debt securities due from affiliates | — | — | (36,000 | ) | — | — | |||||||||||||||
Acquisition of Arizona Charlies’ | — | — | (125,900 | ) | — | — |
F-71
Table of Contents
Three Months Ended | |||||||||||||||||||||
March 31, | Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Additions to hotel, casino and resort operating property | (4,781 | ) | — | (16,203 | ) | (32,911 | ) | (21,715 | ) | ||||||||||||
Acquisition of hotel and resort operating property | — | (1,492 | ) | (16,463 | ) | — | — | ||||||||||||||
Acquisitions of rental real estate | — | (14,583 | ) | (14,583 | ) | — | (18,226 | ) | |||||||||||||
Acquisition of land and construction in progress | — | — | (61,845 | ) | — | — | |||||||||||||||
Additions to rental real estate | — | (166 | ) | (18 | ) | (413 | ) | (181 | ) | ||||||||||||
Additions to oil and gas operating property | (21,071 | ) | (6,106 | ) | (47,528 | ) | (633 | ) | — | ||||||||||||
Decrease (increase) in investment in U.S. Government and Agency Obligations (Note 2) | 27,903 | (61,077 | ) | (40,757 | ) | 274,478 | (22,410 | ) | |||||||||||||
Increase in marketable equity and debt securities | (66,250 | ) | — | — | (45,140 | ) | (4,415 | ) | |||||||||||||
Proceeds from sale of marketable equity and debt securities | — | 64,471 | 90,614 | 3,843 | — | ||||||||||||||||
Decrease in note receivable from affiliate | — | — | — | 250,000 | — | ||||||||||||||||
Acquisition of minority interest in TransTexas | — | — | (4,136 | ) | — | — | |||||||||||||||
Decrease in minority interest in Stratosphere Corp. | — | — | — | — | (44,744 | ) | |||||||||||||||
Decrease in investment in Stratosphere Corp. | — | — | — | 788 | — | ||||||||||||||||
Investment in NEG, Inc. | — | — | — | (148,101 | ) | — | |||||||||||||||
Guaranteed payment from NEG Holding LLC | — | — | 15,979 | 18,229 | 21,653 | ||||||||||||||||
Priority distribution from NEG Holding LLC | — | — | — | 40,506 | — | ||||||||||||||||
Decrease in due to affiliate | — | — | — | — | (68,491 | ) | |||||||||||||||
Increase in restricted cash | — | (219,313 | ) | — | — | — | |||||||||||||||
Other | — | (50 | ) | (194 | ) | 560 | 197 | ||||||||||||||
Net cash (used in) provided by investing activities from continuing operations | (55,922 | ) | (225,443 | ) | (490,840 | ) | 380,827 | (132,078 | ) | ||||||||||||
Cash flows from investing activities from discontinued operations: | |||||||||||||||||||||
Net proceeds from the sales and disposition of real estate | 36,582 | 7,392 | 134,789 | 5,336 | — | ||||||||||||||||
Net cash (used in) provided by investing activities | (19,340 | ) | (218,051 | ) | (356,051 | ) | 386,163 | (132,078 | ) | ||||||||||||
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Three Months Ended | ||||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||
Partners’ Equity: | ||||||||||||||||||||||
Distributions to members | — | — | (17,916 | ) | — | — | ||||||||||||||||
Member’s contribution | — | — | 22,800 | — | — | |||||||||||||||||
Contributions to American Casino | — | — | — | — | 598 | |||||||||||||||||
Debt: | ||||||||||||||||||||||
Repayment of credit facilities | — | — | — | (2,904 | ) | (5,000 | ) | |||||||||||||||
Proceeds from credit facility | — | — | — | 7,780 | 17,220 | |||||||||||||||||
Proceeds from Senior Notes Payable | 480,000 | 215,000 | 565,409 | — | — | |||||||||||||||||
Decrease in due to affiliates | (6,602 | ) | — | (24,925 | ) | — | — | |||||||||||||||
Proceeds from mortgages payable | — | — | 10,000 | 20,000 | 12,700 | |||||||||||||||||
Payments on mortgages payable | — | — | — | (3,837 | ) | (462 | ) | |||||||||||||||
Periodic principal payments | (1,598 | ) | (3,721 | ) | (14,613 | ) | (15,297 | ) | (7,198 | ) | ||||||||||||
Debt issuance costs | (8,334 | ) | (7,515 | ) | (18,111 | ) | — | — | ||||||||||||||
Other | — | — | — | — | 242 | |||||||||||||||||
Net cash provided by financing activities | 463,466 | 203,764 | 522,644 | 5,742 | 18,100 | |||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 481,156 | 24,973 | 264,549 | 424,829 | (4,435 | ) | ||||||||||||||||
Cash and cash equivalents, beginning of period | 768,918 | 517,464 | 504,369 | 79,540 | 83,975 | |||||||||||||||||
Cash and cash equivalents at end of period | $ | 1,250,074 | $ | 542,437 | $ | 768,918 | $ | 504,369 | $ | 79,540 | ||||||||||||
Supplemental information: | ||||||||||||||||||||||
Cash payments for interest, net of amounts capitalized | $ | 9,612 | $ | 5,667 | $ | 48,015 | $ | 65,253 | $ | 37,176 | ||||||||||||
Supplemental schedule of noncash investing and financing activities: | ||||||||||||||||||||||
Reclassification of real estate to operating lease | $ | 3,068 | $ | — | $ | — | $ | 5,065 | $ | 13,403 | ||||||||||||
Reclassification from hotel and resort operating properties | — | (6,395 | ) | (6,428 | ) | — | — | |||||||||||||||
Reclassification of real estate from financing lease | (358 | ) | — | (1,920 | ) | (5,065 | ) | (13,503 | ) | |||||||||||||
Reclassification of real estate from operating lease | (411 | ) | (14,353 | ) | (38,452 | ) | (126,263 | ) | — | |||||||||||||
Reclassification of real estate to property held for sale | 716 | 20,748 | 46,800 | 126,263 | 100 |
F-73
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Three Months Ended | ||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Reclassification of real estate from properties held for sale | (3,015 | ) | — | — | — | — | ||||||||||||||
Decrease in other investments | — | — | — | (3,453 | ) | — | ||||||||||||||
Decrease in deferred income | — | — | — | 2,565 | — | |||||||||||||||
Increase in real estate accounted for under the operating method | — | — | — | 888 | — | |||||||||||||||
Reclassification from marketable equity and debt securities | — | — | — | — | (20,494 | ) | ||||||||||||||
Reclassification from receivable and other assets | — | — | — | (1,631 | ) | |||||||||||||||
Reclassification to other investments | — | — | — | 1,631 | 20,494 | |||||||||||||||
$ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Net unrealized (losses) gains on securities available for sale | $ | (2,394 | ) | $ | 2,378 | $ | 33 | $ | 9,174 | $ | (242 | ) | ||||||||
Increase in equity and debt securities | $ | 805 | $ | 300 | $ | 1,740 | $ | 1,200 | $ | 2,890 | ||||||||||
Contribution of note from NEG Holding LLC | $ | — | $ | — | $ | — | $ | 10,940 | $ | — | ||||||||||
Change in tax asset related to acquisition | $ | — | $ | — | $ | 2,490 | $ | — | $ | — | ||||||||||
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1. | Description of Business and Basis of Presentation |
F-75
Table of Contents
2. | Summary of Significant Accounting Policies |
F-76
Table of Contents
Oil and Natural Gas Properties |
F-77
Table of Contents
Other Investments |
F-78
Table of Contents
Revenue and Expense Recognition |
F-79
Table of Contents
Natural Gas Production Imbalances |
Hedging Agreements |
Fixed | ||||||||||||||||||||
Type Contract | Production Month | Volume per Month | Price | Floor | Ceiling | |||||||||||||||
Fixed price | April-June 2004 | 300,000 MMBTU | $ | 5.44 | — | — | ||||||||||||||
Fixed price | July-Sept 2004 | 300,000 MMUTU | $ | 5.34 | — | — | ||||||||||||||
No cost collars | Oct-Dec 2004 | 300,000 MMBTU | — | $ | 5.25 | $ | 5.90 | |||||||||||||
No cost collars | Jan-Dec 2004 | 25,000 Bbls | — | $ | 28.72 | $ | 31.90 | |||||||||||||
No cost collars | Jan-Dec 2005 | 15,000 Bbls | — | $ | 42.50 | $ | 46.00 | |||||||||||||
No cost collars | Jan-Dec 2005 | 400,000 MMBTU | — | $ | 6.00 | $ | 8.35 | |||||||||||||
No cost collars | March-Dec 2005 | 9,000 Bbls | — | $ | 44.50 | $ | 48.00 | |||||||||||||
No cost collars | March-Dec 2005 | 210,000 MMBTU | — | $ | 6.05 | $ | 7.30 | |||||||||||||
No cost collars | Jan-Dec 2006 | 14,000 Bbls | — | $ | 41.65 | $ | 45.25 | |||||||||||||
No cost collars | Jan-Dec 2006 | 430,000 MMBTU | — | $ | 6.00 | $ | 7.25 |
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March 31, | December 31, | |||||||
2005 | 2004 | |||||||
Realized (cash payments) | $ | 232,695 | $ | 3,906,325 | ||||
Valuation loss | 9,812,799 | 1,658,809 | ||||||
$ | 10,045,494 | $ | 5,565,134 | |||||
Accounting for Asset Retirement Obligations |
2005 | 2004 | 2003 | ||||||||||
Balance, beginning of period | $ | 3,930 | $ | 3,477 | $ | 3,375 | ||||||
Accretion expense | 69 | 332 | 96 | |||||||||
Additions | — | 121 | 6 | |||||||||
Balance, end of period | $ | 3,999 | $ | 3,930 | $ | 3,477 | ||||||
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Table of Contents
Recently Issued Pronouncements |
3. | Related Party Transactions |
F-82
Table of Contents
December 31, | |||||||||||||||||||||||||
March 31, 2005 | 2004 | 2003 | |||||||||||||||||||||||
Cost | Carrying | Cost | Carrying | Cost | Carrying | ||||||||||||||||||||
Basis | Value | Basis | Value | Basis | Value | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||||
Matures in: | |||||||||||||||||||||||||
less than 1 year | $ | 68.9 | $ | 68.9 | $ | 96.8 | $ | 96.8 | $ | 52.8 | $ | 52.6 | |||||||||||||
2-5 years | 5.6 | 5.5 | 5.6 | 5.5 | 9.0 | 9.0 | |||||||||||||||||||
$ | 74.5 | $ | 74.4 | $ | 102.4 | $ | 102.3 | $ | 61.8 | $ | 61.6 | ||||||||||||||
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Table of Contents
5. | Marketable Equity and Debt Securities (in $Millions) |
December 31, | |||||||||||||||||||||||||
March 31, 2005 | 2004 | 2003 | |||||||||||||||||||||||
Cost | Carrying | Cost | Carrying | Cost | Carrying | ||||||||||||||||||||
Basis | Value | Basis | Value | Basis | Value | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||||
Philip Service Corporation(a): | |||||||||||||||||||||||||
Equity | $ | — | $ | — | $ | — | $ | — | $ | $ | — | ||||||||||||||
Corporate bonds(b) | — | — | — | — | 45.1 | 51.6 | |||||||||||||||||||
Other(c) | 72.4 | 68.5 | 2.2 | 2.2 | 1.3 | 4.2 | |||||||||||||||||||
Total | $ | 72.4 | $ | 68.5 | $ | 2.2 | $ | 2.2 | $ | 46.4 | $ | 55.8 | |||||||||||||
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Table of Contents
6. | Due from Brokers |
7. | Other Investments (in $000’s) |
Balance at | ||||||||||||
Balance at | December 31, | |||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Peninsula/ Hampton & Alex Hotel(a) and (b) | $ | — | $ | — | $ | 42,030 | ||||||
WestPoint Stevens(c) | 205,850 | 205,850 | — | |||||||||
Union Power Partners L.P. and Panda Gila River L.P.(d) | 37,973 | 39,316 | — | |||||||||
Other | 779 | 782 | 8,298 | |||||||||
$ | 244,602 | $ | 245,948 | $ | 50,328 | |||||||
F-85
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F-86
Table of Contents
8. | Real Estate Leased to Others Accounted for Under the Financing Method |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Minimum lease payments receivable | $ | 87,846 | $ | 97,725 | $ | 161,785 | ||||||
Unguaranteed residual value | 43,422 | 48,980 | 74,651 | |||||||||
131,268 | 146,705 | 236,436 | ||||||||||
Less unearned income | 51,579 | 57,512 | 99,080 | |||||||||
79,689 | 89,193 | 137,356 | ||||||||||
Less current portion of lease amortization | 3,740 | 3,912 | 5,738 | |||||||||
$ | 75,949 | $ | 85,281 | $ | 131,618 | |||||||
Year Ending December 31, | Amount | |||
2005 | $ | 11,941 | ||
2006 | 11,746 | |||
2007 | 10,832 | |||
2008 | 9,476 | |||
2009 | 9,255 | |||
Thereafter | 44,475 | |||
$ | 97,725 | |||
9. | Real Estate Leased to Others Accounted for Under the Operating Method |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Land | $ | 13,286 | $ | 13,666 | $ | 24,040 | ||||||
Commercial Buildings | 52,672 | 45,972 | 83,252 | |||||||||
65,958 | 59,638 | 107,292 | ||||||||||
Less accumulated depreciation | 14,831 | 10,520 | 30,849 | |||||||||
$ | 51,127 | $ | 49,118 | $ | 76,443 | |||||||
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Year Ending December 31, | Amount | |||
2005 | $ | 7,186 | ||
2006 | 6,232 | |||
2007 | 5,649 | |||
2008 | 5,383 | |||
2009 | 5,001 | |||
Thereafter | 19,753 | |||
$ | 49,204 | |||
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Leased to others | $ | 40,035 | $ | 74,444 | $ | 146,416 | ||||||
Vacant | 450 | 450 | 2,550 | |||||||||
40,485 | 74,894 | 148,966 | ||||||||||
Less accumulated depreciation | 6,490 | 16,873 | 20,153 | |||||||||
$ | 33,995 | $ | 58,021 | $ | 128,813 | |||||||
Three Months | ||||||||||||||||||||
Ended March 31, | Years Ended December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Rental income | $ | 1,462 | $ | 5,871 | $ | 15,658 | $ | 23,093 | $ | 21,073 | ||||||||||
Hotel and resort operating income | 709 | 1,064 | 3,868 | 6,128 | 5,676 | |||||||||||||||
2,171 | 6,935 | 19,526 | 29,221 | 26,749 | ||||||||||||||||
Mortgage interest expense | 399 | 1,726 | 3,858 | 7,208 | 6,737 | |||||||||||||||
Depreciation and amortization | 31 | 210 | 1,244 | 5,130 | 4,464 | |||||||||||||||
Property expenses | 147 | 1,107 | 3,123 | 3,549 | 3,409 | |||||||||||||||
Hotel and resort operating expenses | 637 | 674 | 3,801 | 5,681 | 5,202 | |||||||||||||||
1,214 | 3,717 | 12,026 | 21,568 | 19,812 | ||||||||||||||||
Income from discontinued operations | $ | 957 | $ | 3,218 | $ | 7,500 | $ | 7,653 | $ | 6,937 | ||||||||||
F-88
Table of Contents
10. | Hotel and Casino Operating Properties |
F-89
Table of Contents
Three Months Ended | ||||||||||||||||||||||
March 31, | Year Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Unaudited) | (In $000’s) | |||||||||||||||||||||
Hotel and casino operating income: | ||||||||||||||||||||||
Casino | $ | 47,729 | $ | 42,592 | $ | 167,972 | $ | 147,888 | $ | 143,057 | ||||||||||||
Hotel | 15,793 | 13,888 | 54,653 | 47,259 | 44,263 | |||||||||||||||||
Food and beverage | 17,076 | 16,701 | 66,953 | 59,583 | 56,349 | |||||||||||||||||
Tower, retail, and other income | 8,206 | 7,976 | 33,778 | 30,336 | 28,247 | |||||||||||||||||
Gross revenues | 88,804 | 81,157 | 323,356 | 285,066 | 271,916 | |||||||||||||||||
Less promotional allowances | (5,966 | ) | (6,148 | ) | (23,375 | ) | (22,255 | ) | (21,893 | ) | ||||||||||||
Net revenues | $ | 82,838 | $ | 75,009 | $ | 299,981 | $ | 262,811 | $ | 250,023 | ||||||||||||
Hotel and casino operating expenses: | ||||||||||||||||||||||
Casino | $ | 15,900 | $ | 15,696 | $ | 61,985 | $ | 61,284 | $ | 59,879 | ||||||||||||
Hotel | 6,023 | 5,596 | 24,272 | 22,074 | 20,142 | |||||||||||||||||
Food and beverage | 12,376 | 11,620 | 48,495 | 44,990 | 43,393 | |||||||||||||||||
Other operating expenses | 3,619 | 3,151 | 14,131 | 13,524 | 14,505 | |||||||||||||||||
Selling, general, and administrative | 19,706 | 18,180 | 78,720 | 74,985 | 80,019 | |||||||||||||||||
Total expenses | $ | 57,624 | $ | 54,243 | $ | 227,603 | $ | 216,857 | $ | 217,938 | ||||||||||||
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Land and improvements, including land held for development | $ | 47,274 | $ | 47,210 | $ | 47,041 | ||||||
Building and improvements | 221,847 | 221,314 | 220,280 | |||||||||
Furniture, fixtures and equipment | 112,379 | 108,595 | 98,586 | |||||||||
Construction in progress | 7,577 | 7,348 | 7,224 | |||||||||
389,077 | 384,467 | 373,131 | ||||||||||
Less accumulated depreciation and amortization | 100,187 | 95,107 | 74,428 | |||||||||
$ | 288,890 | $ | 289,360 | $ | 298,703 | |||||||
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Table of Contents
(In $000s) | ||||
Years ending December 31, | ||||
2005 | $ | 5,877 | ||
2006 | 4,778 | |||
2007 | 3,615 | |||
2008 | 2,177 | |||
2009 | 1,224 | |||
Thereafter | 959 | |||
Total Payments | $ | 18,630 | ||
11. | Hotel and Resort Operating Properties |
F-91
Table of Contents
12. | Investment in Debt Securities of Affiliates (in $000’s): |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Atlantic Holdings/ GB Holdings(a) | $ | 60,650 | $ | 60,004 | $ | 24,696 | ||||||
Panaco(b) | 36,643 | 38,000 | — | |||||||||
97,293 | 98,004 | 24,696 | ||||||||||
Less current portion | (5,429 | ) | (5,429 | ) | — | |||||||
$ | 91,864 | $ | 92,575 | $ | 24,696 | |||||||
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Table of Contents
• | $26,914,500 principal amount of the Atlantic Holdings Notes; | |
• | $3,620,753 in cash representing accrued interest on the GB Notes and $100 per $1,000 in principal amount of the GB Notes; and | |
• | 3,627,711 warrants, which under certain conditions will allow the Company to purchase approximately 998,000 shares of common stock at $.01 per share of Atlantic Holdings, representing approximately 10% of the outstanding common stock of Atlantic Holdings, on a fully diluted basis. |
F-93
Table of Contents
14. | Oil and Gas Operating Properties |
a. National Energy Group, Inc. |
b. NEG Investment in NEG Holding LLC |
F-94
Table of Contents
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Current assets | $ | 30,991 | $ | 23,146 | $ | 33,415 | ||||||
Noncurrent assets(1) | 251,438 | 237,127 | 190,389 | |||||||||
Total assets | $ | 282,429 | $ | 260,273 | $ | 223,804 | ||||||
Current liabilities | $ | 35,699 | $ | 22,456 | $ | 14,253 | ||||||
Noncurrent liabilities | 83,732 | 63,636 | 48,514 | |||||||||
Total liabilities | 119,431 | 86,092 | 62,767 | |||||||||
Members’ equity | 162,998 | 174,181 | 161,037 | |||||||||
Total liabilities and members’ equity | $ | 282,429 | $ | 260,273 | $ | 223,804 | ||||||
(1) | Primarily oil and gas properties |
Three Months Ended | ||||||||||||||||||||
March 31, | Year Ended December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Total revenues | $ | 2,870 | $ | 25,569 | $ | 78,727 | $ | 77,606 | $ | 35,900 | ||||||||||
Costs and expenses | (13,137 | ) | (11,044 | ) | (47,313 | ) | (46,766 | ) | (32,064 | ) | ||||||||||
Operating income | (10,267 | ) | 14,525 | 31,414 | 30,840 | 3,836 | ||||||||||||||
Other income (expense) | (916 | ) | (358 | ) | (2,292 | ) | 30 | 10,090 | ||||||||||||
Net (loss) income | $ | (11,183 | ) | $ | 14,167 | $ | 29,122 | $ | 30,870 | $ | 13,926 | |||||||||
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Table of Contents
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Investment in Holding LLC at beginning of period | $ | 87,800 | $ | 69,346 | $ | 108,880 | ||||||
Priority distribution from Holding LLC | — | — | (51,446 | ) | ||||||||
Guaranteed payment from Holding LLC | — | (15,978 | ) | (18,230 | ) | |||||||
Accretion of investment in Holding LLC | 9,893 | 34,432 | 30,142 | |||||||||
Investment in Holding LLC at end of period | $ | 97,693 | $ | 87,800 | $ | 69,346 | ||||||
1. Guaranteed payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding priority distribution amount. The priority distribution amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of NEG’s 10.75% Senior Notes. As of March 31, 2005 (unaudited) and December 31, 2004, the priority distribution amount was $148.6 million which equals the amount of NEG’s 10.75% Senior Notes due the Company. The guaranteed payments will be made on a semi-annual basis. | |
2. The priority distribution amount is to be paid to NEG. Such payment is to occur by November 6, 2006. | |
3. An amount equal to the priority distribution amount and all guaranteed payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by NEG to Gascon, is to be paid to Gascon. | |
4. An amount equal to the aggregate annual interest (calculated at prime plus1/2% on the sum of the guaranteed payments), plus any unpaid interest for prior years (calculated at prime plus1/2% on the sum of the guaranteed payments), less any distributions previously made by NEG to Gascon, is to be paid to Gascon. |
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5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts. |
c. TransTexas Gas Corporation |
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December 31, | |||||||||
2004 | 2003 | ||||||||
Proved Properties | $ | 221,351 | $ | 182,193 | |||||
Unproved Properties | — | — | |||||||
Other property and equipment | 540 | 2,369 | |||||||
Total | 221,891 | 184,562 | |||||||
Less: Accumulated depreciation, depletion and amortization | (53,755 | ) | (15,641 | ) | |||||
$ | 168,136 | $ | 168,921 | ||||||
2004 | 2003 | ||||||||
Development costs | $ | 14,284 | $ | 556 | |||||
Exploration costs | 33,202 | — | |||||||
Total | $ | 47,486 | $ | 556 | |||||
Depletion rate per MCFe | $ | 4.70 | $ | 4.39 | |||||
d. Supplemental Reserve Information (Unaudited) |
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December 31, | |||||||||||||||||
2004 | 2003 | ||||||||||||||||
Oil and | Oil and | ||||||||||||||||
Condensate | Condensate | ||||||||||||||||
(barrels) | Gas (MCF) | (barrels) | Gas (MCF) | ||||||||||||||
Proved Reserves: | |||||||||||||||||
Beginning of period | 3,124,112 | 38,655,526 | 1,120,400 | 41,440,700 | |||||||||||||
Increase (decrease) during the period attributable to: | |||||||||||||||||
Revisions of previous estimates | 234,521 | (5,630,633 | ) | 2,351,163 | (308,688 | ) | |||||||||||
Extensions and discoveries | 78,453 | 16,875,613 | — | — | |||||||||||||
Sales of reserves | — | — | — | — | |||||||||||||
Production | (918,905 | ) | (5,788,974 | ) | (347,451 | ) | (2,476,486 | ) | |||||||||
End of period | 2,518,181 | 44,111,532 | 3,124,112 | 38,655,526 | |||||||||||||
Proved developed reserves: | |||||||||||||||||
Beginning of period | 2,755,522 | 21,557,712 | 431,400 | 15,802,000 | |||||||||||||
End of period(1) | 2,410,912 | 26,179,029 | 2,755,522 | 21,557,712 |
(1) | includes proved developed non-producing reserves for 2004 and 2003 of 788,042 and 57,441 barrels of oil and 10,479,632 and 4,586,423 mcf of gas, respectively. |
Standardized Measure Information |
Future cash inflows | $ | 354,725,200 | $ | 313,032,000 | ||||
Future production costs | 78,680,400 | 59,113,600 | ||||||
Future development costs | 54,721,925 | 35,690,500 | ||||||
Future income taxes | — | — | ||||||
Future net cash flows | 221,322,875 | 218,227,900 | ||||||
Annual discount (10%) for estimated timing of cash flows | 60,105,800 | 53,790,300 | ||||||
Standardized measure of discounted future net cash flows | $ | 161,217,075 | $ | 164,437,600 | ||||
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2004 | 2003 | |||||||
Beginning of period | $ | 164,437,600 | $ | 101,803,900 | ||||
Sales, net of production costs | (47,635,549 | ) | (16,761,000 | ) | ||||
Net change in prices, net of production costs | (14,353,925 | ) | 31,943,125 | |||||
Revisions of quantity estimates | (17,464,167 | ) | 44,507,391 | |||||
Extensions and discoveries | 74,451,060 | — | ||||||
Development costs incurred | 14,056,670 | 556,000 | ||||||
Change in estimated future development costs | (28,921,504 | ) | 4,930,232 | |||||
Accretion of discount | 16,443,760 | 3,393,463 | ||||||
Changes in production rates and other | 203,130 | (5,935,511 | ) | |||||
End of period | $ | 161,217,075 | $ | 164,437,600 | ||||
e. See Note 29 pertaining to additional oil and gas acquisitions |
15. | Significant Property Transactions |
a. In September 2002, the Company purchased an industrial building located in Nashville, Tennessee for approximately $18.2 million. The building was constructed in 2001 and is fully leased to two tenants, Alliance Healthcare and Jet Equipment & Tools Inc., with leases expiring in 2011. The annual net operating income was anticipated to be approximately $1.6 million increasing to approximately $1.9 million by 2011. In October 2002, the Company closed a $12.7 million non-recourse mortgage loan on the Nashville, Tennessee property. The loan bore interest at 6.4% per annum and was due to mature in ten years. Required payments were interest only for the first three years and then principal amortization would commence based on a thirty-year amortization schedule. In June 2004, the Company sold the property for a selling price of $19.2 million. A gain of approximately $1.4 million was recognized in the year ended December 31, 2004 and is included in discontinued operations in the Consolidated Statements of Earnings. | |
At December 31, 2003, the property had a carrying value of approximately $18,066,000 and was encumbered by a non-recourse mortgage in the amount of $12,700,000. | |
b. In October 2002, the Company sold a property located in North Palm Beach, Florida for a selling price of $3.5 million. A gain of approximately $2.4 million was recognized in the year ended December 31, 2002. | |
c. In October 2003, the Company sold a property located in Columbia, Maryland to its tenant for a selling price of $11 million. A gain of approximately $5.8 million was recognized in the year ended December 31, 2003. |
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d. In the year ended December 31, 2004, of the 57 properties, the Company sold nine financing lease properties for approximately $43.6 million. The properties were encumbered by mortgage debt of approximately $26.8 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $38.3 million; therefore, the Company recognized a gain on sale of approximately $5.3 million in the year ended December 31, 2004, which is included in income from continuing operations in the Supplemental Consolidated Statements of Earnings. |
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16. | Mortgages Payable |
Balance At | Balance At December 31, | |||||||||||||||||||
Annual Principal | March 31, | |||||||||||||||||||
Range of Interest Rates | Range of Maturities | and Interest Payment | 2005 | 2004 | 2003 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
5.630%-8.25% | 10/15/07-10/01/14 | $ | 9,373 | $ | 80,191 | $ | 91,896 | $ | 180,989 | |||||||||||
Less current portion and mortgages on properties held for sale | (24,577 | ) | (31,177 | ) | (87,753 | ) | ||||||||||||||
$ | 55,614 | $ | 60,719 | $ | 93,236 | |||||||||||||||
Year Ending December 31, | Amount | |||
2005 | $ | 4,759 | ||
2006 | 5,116 | |||
2007 | 11,428 | |||
2008 | 24,385 | |||
2009 | 7,211 | |||
2010-2014 | 38,997 | |||
$ | 91,896 | |||
17. | Due to Affiliates |
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18. | Senior Secured Notes Payable and Credit Facility |
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19. | Senior Unsecured Notes Payable |
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20. | Accounts Payable, Accrued Expenses and Other Current Liabilities |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Accrued liabilities | $ | 11,617 | $ | 11,463 | $ | 11,951 | ||||||
Accrued payroll | 10,984 | 11,113 | 12,507 | |||||||||
Due to Panaco, Inc. | — | 16,242 | — | |||||||||
Other | 74,213 | 57,059 | 31,422 | |||||||||
$ | 96,814 | $ | 95,877 | $ | 55,880 | |||||||
21. | Earnings Per Limited Partnership Unit |
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Net Income Per Unit |
Three Months Ended | |||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(In $000’s except per unit data) | |||||||||||||||||||||
Attributable to Limited Partners: | |||||||||||||||||||||
Basic income from continuing operations | $ | 38,940 | $ | 47,663 | $ | 71,476 | $ | 48,588 | $ | 56,380 | |||||||||||
Add Preferred LP Unit distribution | 1,259 | 1,201 | 4,981 | 4,792 | 4,518 | ||||||||||||||||
Income before discontinued operations | 40,199 | 48,864 | 76,457 | 53,380 | 60,898 | ||||||||||||||||
Income from discontinued operations | 19,288 | 9,945 | 81,031 | 10,772 | 6,788 | ||||||||||||||||
Diluted earnings | 59,487 | 58,809 | $ | 157,488 | $ | 64,152 | $ | 67,686 | |||||||||||||
Weighted average limited partnership units outstanding | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | 46,098,284 | ||||||||||||||||
Dilutive effect of redemption of Preferred LP Units | 3,759,338 | 6,401,019 | 5,444,028 | 8,391,659 | 10,368,414 | ||||||||||||||||
Weighed average limited partnership units and equivalent partnership units outstanding | 49,857,622 | 52,499,303 | 51,542,312 | 54,489,943 | 56,466,698 | ||||||||||||||||
Basic earnings: | |||||||||||||||||||||
Income from continuing operations | $ | 0.84 | $ | 1.03 | $ | 1.55 | $ | 1.00 | $ | 1.12 | |||||||||||
Income from discontinued operations | 0.42 | 0.22 | 1.76 | 0.24 | 0.15 | ||||||||||||||||
Basic earnings per LP unit | $ | 1.26 | $ | 1.25 | $ | 3.31 | $ | 1.24 | $ | 1.27 | |||||||||||
Diluted earnings: | |||||||||||||||||||||
Income from continuing operations | $ | 0.81 | $ | 0.93 | $ | 1.48 | $ | 0.94 | $ | 1.00 | |||||||||||
Income from discontinued operations | 0.39 | 0.19 | 1.57 | 0.19 | 0.12 | ||||||||||||||||
Diluted earnings per LP unit | $ | 1.20 | $ | 1.12 | $ | 3.05 | $ | 1.13 | $ | 1.12 | |||||||||||
22. | Preferred Units |
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23. | Income Taxes (in $000’s) |
December 31, | ||||||||
2004 | 2003 | |||||||
Book basis of AREH net assets excluding American Casino, TransTexas and NEG | $ | 1,319,566 | $ | 1,149,418 | ||||
Excess of tax over book | 120,820 | 79,238 | ||||||
Tax basis of net assets | $ | 1,440,386 | $ | 1,228,656 | ||||
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March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
�� | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Current | $ | (1,105 | ) | $ | (4,655 | ) | $ | (3,030 | ) | $ | (5,506 | ) | $ | (311 | ) | |||||
Deferred | (3,677 | ) | (1,311 | ) | (14,296 | ) | 22,256 | (9,785 | ) | |||||||||||
$ | (4,782 | ) | $ | (5,966 | ) | $ | (17,326 | ) | $ | 16,750 | $ | (10,096 | ) | |||||||
December 31, | |||||||||||||
March 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Unaudited) | |||||||||||||
Deferred tax assets: | |||||||||||||
Depreciation, depletion and amortization | $ | 49,607 | $ | 54,489 | $ | 54,439 | |||||||
Net operating loss carryforwards | 55,724 | 53,610 | 51,997 | ||||||||||
Investment in Holding LLC | 1,927 | 5,333 | 18,845 | ||||||||||
Other | 11,955 | 9,458 | 8,841 | ||||||||||
119,213 | 122,890 | 134,122 | |||||||||||
Valuation allowance | (64,381 | ) | (64,381 | ) | (65,695 | ) | |||||||
Net deferred tax assets | 54,832 | 58,509 | 68,427 | ||||||||||
Less current portion | (2,685 | ) | (2,685 | ) | (2,982 | ) | |||||||
Non-current net deferred tax assets | $ | 52,147 | $ | 55,824 | $ | 65,445 | |||||||
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
Tax deduction not given book benefit | 1.0 | 5.6 | 0.0 | |||||||||
Income not subject to taxation | (24.2 | ) | (15.2 | ) | (22.3 | ) | ||||||
Valuation allowance | (2.3 | ) | (51.8 | ) | (0.5 | ) | ||||||
Other | 0.0 | (1.4 | ) | 0.3 | ||||||||
9.5 | % | (27.8 | )% | 12.5 | % | |||||||
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24. | Commitments and Contingencies |
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25. | Employee Benefit Plans |
26. | Fair Value of Financial Instruments |
Other Investments |
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At March 31, 2005 | At December 31, 2004 | At December 31, 2003 | ||||||||||||||||||||||
Net | Estimated | Net | Estimated | Net | Estimated | |||||||||||||||||||
Investment | Fair Value | Investment | Fair Value | Investment | Fair Value | |||||||||||||||||||
Total | $ | 244,602 | $ | 247,600 | $ | 245,948 | $ | 248,900 | $ | 50,328 | $ | 55,000 | ||||||||||||
Mortgages Payable |
At March 31, 2005 | At December 31, 2004 | At December 31, 2003 | ||||||||||||||||||||||
Carrying | Estimated | Carrying | Estimated | Carrying | Estimated | |||||||||||||||||||
Value | Fair Value | Value | Fair Value | Value | Fair Value | |||||||||||||||||||
Total | $ | 80,191 | $ | 81,955 | $ | 91,896 | $ | 93,900 | $ | 180,989 | $ | 185,000 | ||||||||||||
Limitations |
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March 31, | December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Hotel & casino operating properties | $ | 81,852 | $ | 74,661 | $ | 297,868 | $ | 259,345 | $ | 250,328 | ||||||||||||
Land, house and condominium sales | 8,279 | 5,014 | 26,591 | 13,265 | 76,024 | |||||||||||||||||
Rental real estate | 4,001 | 4,963 | 17,796 | 20,207 | 21,714 | |||||||||||||||||
Hotel & resort operating properties | 5,563 | 1,335 | 16,211 | 12,376 | 12,921 | |||||||||||||||||
Oil & gas operating properties | 27,423 | 24,701 | 99,738 | 57,670 | 40,516 | |||||||||||||||||
Other investments | 10,440 | 4,818 | 34,724 | 14,024 | 15,283 | |||||||||||||||||
Subtotal | 137,558 | 115,492 | 492,928 | 376,887 | 416,646 | |||||||||||||||||
Reconciling items | 6,668 | (1) | 960 | (1) | 13,268 | (1) | 11,779 | (1) | 18,006 | (1) | ||||||||||||
Total revenues | $ | 144,226 | $ | 116,452 | $ | 506,196 | $ | 388,666 | $ | 434,652 | ||||||||||||
Net earnings: | ||||||||||||||||||||||
Segment earnings: | ||||||||||||||||||||||
Hotel & casino operating properties | $ | 24,228 | $ | 20,418 | $ | 70,265 | $ | 42,488 | $ | 32,390 | ||||||||||||
Land, house and condominium sales | 1,232 | 1,656 | 6,355 | 4,136 | 21,384 | |||||||||||||||||
Oil & gas operating properties | 21,502 | 18,412 | 74,776 | 45,412 | 33,411 | |||||||||||||||||
Rental real estate | 3,049 | 3,878 | 12,863 | 14,368 | 14,206 | |||||||||||||||||
Hotel and resort operating properties | 158 | (89 | ) | 2,674 | 4,220 | 2,679 | ||||||||||||||||
Other investments | 10,440 | 4,818 | 34,724 | 14,024 | 15,283 | |||||||||||||||||
Total segment earnings | 60,609 | 49,093 | 201,657 | 124,648 | 119,353 | |||||||||||||||||
Interest income | 6,668 | 960 | 13,268 | 11,779 | 18,006 | |||||||||||||||||
Interest expense | (19,265 | ) | (7,191 | ) | (49,669 | ) | (27,057 | ) | (27,297 | ) | ||||||||||||
General and administrative expenses | (4,555 | ) | (1,933 | ) | (9,806 | ) | (6,851 | ) | (7,029 | ) | ||||||||||||
Depreciation, depletion, and amortization | (16,167 | ) | (18,396 | ) | (68,291 | ) | (40,571 | ) | (23,646 | ) | ||||||||||||
Operating income | 27,290 | 22,533 | 87,159 | 61,948 | 79,387 | |||||||||||||||||
Gain on sales and disposition of real estate from continuing operations | 186 | 6,047 | 6,942 | 7,121 | 8,990 | |||||||||||||||||
(Loss) gain on sale of assets | (180 | ) | (4 | ) | — | (1,503 | ) | (353 | ) | |||||||||||||
Loss on sale of limited partnership interests | — | — | — | — | (3,750 | ) | ||||||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | (19,759 | ) | (8,476 | ) | |||||||||||||||
Gain on sale of marketable equity securities | — | 28,857 | 40,159 | 2,607 | — | |||||||||||||||||
Unrealized losses on securities sold short | 21,704 | — | (23,619 | ) | — | — | ||||||||||||||||
Change in fair value of derivative contract | (9,813 | ) | — | — | — | — | ||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | (15,600 | ) | — | — | ||||||||||||||||
Severance tax refund | — | — | 4,468 | — | — | |||||||||||||||||
Minority interest | — | (39 | ) | (812 | ) | (1,266 | ) | (1,943 | ) |
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March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
Income tax (expense) benefit | (4,782 | ) | (5,966 | ) | (17,326 | ) | 16,750 | (10,096 | ) | |||||||||||
Income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | |||||||||||||||
General partner’s share of net (income) loss | 4,143 | (3,967 | ) | (11,561 | ) | (17,544 | ) | (7,528 | ) | |||||||||||
Net earnings — limited partners’ unitholders | $ | 58,228 | $ | 57,608 | $ | 152,507 | $ | 59,360 | $ | 63,168 | ||||||||||
(1) | Primarily interest income on U.S. Government and Agency obligations and other short-term investments and Icahn note receivable. |
27. | Segment Reporting |
December 31, | ||||||||||||||||||
March 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002 | |||||||||||||||
Assets: | ||||||||||||||||||
Rental real estate | $ | 164,811 | $ | 196,332 | $ | 340,062 | $ | 359,700 | ||||||||||
Oil and gas properties | 180,241 | 168,136 | 168,921 | — | ||||||||||||||
Hotel and casino operating properties | 288,890 | 289,360 | 298,703 | 290,775 | ||||||||||||||
Land and construction-in-progress | 106,000 | 106,537 | 43,459 | 40,415 | ||||||||||||||
Hotel and resort operating properties | 46,041 | 50,132 | 41,526 | 44,346 | ||||||||||||||
Other investments | 466,252 | 444,603 | 231,050 | 479,104 | ||||||||||||||
1,252,235 | 1,255,100 | 1,123,721 | 1,214,340 | |||||||||||||||
Reconciling items | 1,683,462 | 1,153,089 | 707,852 | 491,691 | ||||||||||||||
Total | $ | 2,935,697 | $ | 2,408,189 | $ | 1,831,573 | $ | 1,706,031 | ||||||||||
Real estate investment capital expenditures: | ||||||||||||||||||
Acquisitions: | ||||||||||||||||||
Rental real estate | $ | — | $ | 14,583 | $ | — | $ | 18,226 | ||||||||||
Land and construction-in-progress | — | 61,845 | — | — | ||||||||||||||
Hotel and casino operating properties | — | 125,900 | — | — | ||||||||||||||
Hotel and resort operating properties | — | 16,463 | — | — | ||||||||||||||
$ | — | $ | 218,791 | $ | — | $ | 18,226 | |||||||||||
Developments: | ||||||||||||||||||
Rental real estate | $ | — | $ | 18 | $ | 413 | $ | 181 | ||||||||||
Oil and gas operating properties | 21,071 | 47,529 | 633 | — | ||||||||||||||
Land and construction-in-progress | — | 17,947 | — | 1,138 | ||||||||||||||
Hotel and casino operating properties | 4,711 | 13,589 | 31,844 | 19,133 | ||||||||||||||
Hotel and resort operating properties | 70 | 2,614 | 1,067 | 2,582 | ||||||||||||||
$ | 25,852 | $ | 81,697 | $ | 33,957 | $ | 23,034 | |||||||||||
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28. | Repurchase of Depositary Units |
29. | Subsequent Events |
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30. | Quarterly Financial Data (Unaudited) (in $000’s, Except Per Unit Data) |
Three Months Ended(1) | |||||||||||||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||||||||||
Revenues | $ | 116,403 | $ | 92,416 | $ | 131,185 | $ | 89,531 | $ | 131,748 | $ | 98,154 | $ | 126,860 | $ | 108,565 | |||||||||||||||||
Operating Income | $ | 22,532 | $ | 16,110 | $ | 26,979 | $ | 15,635 | $ | 24,211 | $ | 11,988 | $ | 13,437 | $ | 18,215 | |||||||||||||||||
Gains (losses) on property transactions | 6,047 | 1,138 | (226 | ) | (272 | ) | 1,354 | 501 | (233 | ) | 5,754 | ||||||||||||||||||||||
Loss on sale of assets | — | — | — | — | — | (311 | ) | — | (1,192 | ) | |||||||||||||||||||||||
Gain on sale of marketable equity and debt securities | 28,857 | — | 8,310 | — | — | 2,168 | 2,992 | 439 | |||||||||||||||||||||||||
Unrealized losses on securities sold short | — | — | — | — | — | — | (23,619 | ) | — | ||||||||||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | — | — | — | — | (15,600 | ) | — | ||||||||||||||||||||||||
Write-down of marketable equity and debt securities | — | (961 | ) | — | (18,798 | ) | — | — | — | — | |||||||||||||||||||||||
Severance tax refund | — | — | 4,468 | — | — | — | — | — | |||||||||||||||||||||||||
Minority interest | (39 | ) | — | (487 | ) | — | (123 | ) | 459 | (163 | ) | (1,725 | ) | ||||||||||||||||||||
Income (loss) from continuing operations before income tax | 57,397 | 16,287 | 39,044 | (3,435 | ) | 25,442 | 14,805 | (23,186 | ) | 21,491 | |||||||||||||||||||||||
Income tax (expense) benefit | (5,966 | ) | (3,892 | ) | (3,695 | ) | (3,167 | ) | (3,839 | ) | (3,577 | ) | (3,826 | ) | 27,386 | ||||||||||||||||||
Income (loss) from continuing operations | 51,431 | 12,395 | 35,349 | (6,602 | ) | 21,603 | 11,228 | (27,012 | ) | 48,877 | |||||||||||||||||||||||
Income from discontinued operations | 10,143 | 1,997 | 50,161 | 3,815 | 10,702 | 3,210 | 11,691 | 1,984 | |||||||||||||||||||||||||
Net earnings (loss) | $ | 61,574 | $ | 14,392 | $ | 85,510 | $ | (2,787 | ) | $ | 32,305 | $ | 14,438 | $ | (15,321 | ) | $ | 50,861 | |||||||||||||||
Net Earnings (loss) per limited Partnership unit(2): | |||||||||||||||||||||||||||||||||
Basic earnings: | |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 1.03 | $ | .15 | $ | .65 | $ | (.21 | ) | $ | .43 | $ | .25 | $ | (.56 | ) | $ | .81 | |||||||||||||||
Income from discontinued operations | .22 | .05 | 1.06 | .08 | .23 | .07 | .24 | .04 | |||||||||||||||||||||||||
Basic earnings (loss) per LP unit | $ | 1.25 | $ | .20 | $ | 1.71 | $ | (.13 | ) | $ | .66 | $ | .32 | $ | (.32 | ) | $ | .85 | |||||||||||||||
Diluted earnings: | |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | .93 | $ | .15 | $ | .60 | $ | (.21 | ) | $ | .41 | $ | .23 | $ | (.56 | ) | $ | .71 | |||||||||||||||
Income from discontinued operations | .19 | .03 | .94 | .08 | .20 | .06 | .24 | .04 | |||||||||||||||||||||||||
Diluted earnings (loss) per LP unit | $ | 1.12 | $ | .18 | $ | 1.54 | $ | (.13 | ) | $ | .61 | $ | .29 | $ | (.32 | ) | $ | .75 | |||||||||||||||
(1) | All quarterly amounts have been reclassified for the effects of reporting discontinued operations. |
(2) | Net earnings (loss) per unit is computed separately for each period and, therefore, the sum of such quarterly per unit amounts may differ from the total for the year. |
F-117
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/s/ GRANT THORNTON LLP |
F-118
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/s/ KPMG LLP |
F-119
Table of Contents
March 31, | December 31, | ||||||||||||||
2005 | 2004 | 2003 | |||||||||||||
(Unaudited) | |||||||||||||||
ASSETS | |||||||||||||||
Current Assets: | |||||||||||||||
Cash and cash equivalents (Note 2) | $ | 1,245,635 | $ | 762,581 | $ | 487,374 | |||||||||
Investment in U.S. government and agency obligations (Note 4) | 68,894 | 96,840 | 52,583 | ||||||||||||
Marketable equity and debt securities (Note 5) | 68,497 | 2,248 | 55,826 | ||||||||||||
Due from brokers (Note 6) | 147,223 | 123,001 | — | ||||||||||||
Restricted cash | 28,537 | 19,856 | 15,058 | ||||||||||||
Receivables and other current assets | 40,817 | 53,186 | 41,169 | ||||||||||||
Real estate leased to others: | |||||||||||||||
Current portion of lease amortization for leases accounted for under the financing method | 3,740 | 3,912 | 5,738 | ||||||||||||
Properties held for sale (Notes 9 and 15) | 33,995 | 58,021 | 128,813 | ||||||||||||
Current portion of investment in debt securities of affiliates (Note 12) | 10,429 | 10,429 | — | ||||||||||||
Current portion of deferred tax asset (Note 21) | 2,685 | 2,685 | 2,982 | ||||||||||||
Total current assets | 1,650,452 | 1,132,759 | 789,543 | ||||||||||||
Investment in U.S. government and agency obligations (Note 4) | 5,533 | 5,491 | 8,990 | ||||||||||||
Other investments (Note 7) | 244,602 | 245,948 | 50,328 | ||||||||||||
Land and construction-in-progress (Note 15) | 106,000 | 106,537 | 43,459 | ||||||||||||
Real estate leased to others: | |||||||||||||||
Accounted for under the financing method (Notes 8, 15 and 16) | 75,949 | 85,281 | 131,618 | ||||||||||||
Accounted for under the operating method, net of accumulated depreciation (Notes 9, 15 and 16) | 51,127 | 49,118 | 76,443 | ||||||||||||
Hotel, casino and resort operating properties, net of accumulated depreciation: | |||||||||||||||
American Casino & Entertainment Properties LLC (Notes 10 and 17) | 288,890 | 289,360 | 298,703 | ||||||||||||
Hotel and resorts (Notes 9 and 11) | 46,041 | 50,132 | 41,526 | ||||||||||||
Deferred finance costs and other assets, net | 8,230 | 7,973 | 3,833 | ||||||||||||
Long-term portion of investment in debt securities of affiliates (Note 12) | 114,364 | 115,075 | 24,696 | ||||||||||||
Investment in NEG Holding LLC (Note 14) | 97,693 | 87,800 | 69,346 | ||||||||||||
Equity interest in GB Holdings, Inc. (The Sands Hotel and Casino)(Note 13) | 9,138 | 10,603 | 30,854 | ||||||||||||
Due from American Real Estate Partners, L.P. | 21,804 | 20,107 | 18,044 | ||||||||||||
Deferred tax asset (Note 21) | 58,851 | 65,399 | 74,892 | ||||||||||||
Total | $ | 2,778,674 | $ | 2,271,583 | $ | 1,662,275 | |||||||||
LIABILITIES AND PARTNERS’ EQUITY | |||||||||||||||
Current Liabilities: | |||||||||||||||
Current portion of mortgages payable (Notes 8, 9 and 16) | $ | 4,205 | $ | 3,700 | $ | 4,892 | |||||||||
Mortgages on properties held for sale (Notes 9 and 16) | 20,372 | 27,477 | 82,861 | ||||||||||||
Accounts payable, accrued expenses and other current liabilities (Note 20) | 76,100 | 81,793 | 45,773 | ||||||||||||
Securities sold not yet purchased (Note 6) | 83,750 | 90,674 | — | ||||||||||||
Credit facility due affiliates (Notes 14 and 17) | — | — | 25,000 | ||||||||||||
Total current liabilities | 184,427 | 203,644 | 158,526 | ||||||||||||
Other liabilities | 21,806 | 23,239 | 22,980 | ||||||||||||
Long-term portion of mortgages payable (Notes 8, 9 and 16) | 55,614 | 60,719 | 93,236 | ||||||||||||
Senior secured notes payable (Note 18) | 215,000 | 215,000 | — | ||||||||||||
Senior unsecured notes payable — American Real Estate Partners, L.P. — net of unamortized discount of $15,062 and $9,575 (Note 19) | 817,938 | 343,425 | — | ||||||||||||
Total long-term liabilities | 1,110,358 | 642,383 | 116,216 | ||||||||||||
Commitments and contingencies (Notes 3 and 22): | |||||||||||||||
Partners’ Equity: | |||||||||||||||
Limited partner | 1,469,050 | 1,411,300 | 1,373,657 | ||||||||||||
General partner | 14,839 | 14,256 | 13,876 | ||||||||||||
Partners’ equity (Notes 2 and 3) | 1,483,889 | 1,425,556 | 1,387,533 | ||||||||||||
Total | $ | 2,778,674 | $ | 2,271,583 | $ | 1,662,275 | |||||||||
F-120
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Three Months | |||||||||||||||||||||
Ended March 31, | Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Revenues: | |||||||||||||||||||||
Hotel and casino operating income (Note 10) | $ | 82,838 | $ | 75,009 | $ | 299,981 | $ | 262,811 | $ | 250,023 | |||||||||||
Land, house and condominium sales | 8,279 | 5,014 | 26,591 | 13,265 | 76,024 | ||||||||||||||||
Interest income on financing leases | 1,966 | 2,936 | 9,880 | 13,115 | 14,722 | ||||||||||||||||
Interest income on U.S. Government and Agency obligations and other investments (Notes 2 and 7) | 13,554 | 4,889 | 44,418 | 22,583 | 30,569 | ||||||||||||||||
Rental income | 2,035 | 2,027 | 7,916 | 7,092 | 6,852 | ||||||||||||||||
Hotel and resort operating income (Note 11) | 5,563 | 1,335 | 16,211 | 12,376 | 12,921 | ||||||||||||||||
Accretion of investment in NEG Holding LLC (Note 14) | 9,893 | 7,904 | 34,432 | 30,142 | 32,879 | ||||||||||||||||
NEG management fee | 3,275 | 2,619 | 11,563 | 7,967 | 7,637 | ||||||||||||||||
Dividend and other income (Notes 5 and 7) | 4,206 | 834 | 3,133 | 3,061 | 2,720 | ||||||||||||||||
Equity in (loss) earnings of GB Holdings, Inc. (Note 13) | (986 | ) | (348 | ) | (2,113 | ) | (3,466 | ) | 305 | ||||||||||||
130,623 | 102,219 | 452,012 | 368,946 | 434,652 | |||||||||||||||||
Expenses: | |||||||||||||||||||||
Hotel and casino operating expenses (Note 10) | 57,624 | 54,243 | 227,603 | 216,857 | 217,938 | ||||||||||||||||
Cost of land, house and condominium sales | 7,047 | 3,358 | 18,486 | 9,129 | 54,640 | ||||||||||||||||
Hotel and resort operating expenses (Note 11) | 5,405 | 1,424 | 12,730 | 8,773 | 10,536 | ||||||||||||||||
Interest expense (Notes 15, 16, 17, 18 and 19) | 18,307 | 4,956 | 41,659 | 18,654 | 27,297 | ||||||||||||||||
Depreciation and amortization | 6,691 | 7,422 | 29,144 | 24,801 | 23,646 | ||||||||||||||||
General and administrative expenses (Note 3) | 7,610 | 4,364 | 20,952 | 14,081 | 14,134 | ||||||||||||||||
Property expenses | 952 | 1,085 | 4,340 | 4,472 | 3,862 | ||||||||||||||||
Provision for losses on real estate | — | — | 3,150 | 750 | 3,212 | ||||||||||||||||
103,636 | 76,852 | 358,064 | 297,517 | 355,265 | |||||||||||||||||
Operating income | 26,987 | 25,367 | 93,948 | 71,428 | 79,387 | ||||||||||||||||
Other gains and (losses): | |||||||||||||||||||||
Loss on sale of other assets | (180 | ) | (4 | ) | — | (1,503 | ) | (353 | ) | ||||||||||||
Gain on sale of marketable equity and debt securities | — | 28,857 | 40,159 | 2,607 | — | ||||||||||||||||
Unrealized gains (losses) on securities sold short (Note 6) | 21,704 | — | (23,619 | ) | — | — | |||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. (Note 13) | — | — | (15,600 | ) | — | — | |||||||||||||||
Write-down of marketable equity and debt securities and other investments (Note 5) | — | — | — | (19,759 | ) | (8,476 | ) | ||||||||||||||
Gain on sales and disposition of real estate (Note 15) | 186 | 6,047 | 5,262 | 7,121 | 8,990 | ||||||||||||||||
Minority interest in net earnings of Stratosphere Corporation (Note 10) | — | — | — | — | (1,943 | ) | |||||||||||||||
Income from continuing operations before income taxes | 48,697 | 60,267 | 100,150 | 59,894 | 77,605 | ||||||||||||||||
Income tax (expense) benefit (Note 21) | (7,650 | ) | (6,169 | ) | (16,763 | ) | 1,573 | (10,096 | ) | ||||||||||||
Income from continuing operations | 41,047 | 54,098 | 83,387 | 61,467 | 67,509 | ||||||||||||||||
Discontinued operations: | |||||||||||||||||||||
Income from discontinued operations | 957 | 3,218 | 7,500 | 7,653 | 6,937 | ||||||||||||||||
Gain on sales and disposition of real estate | 18,723 | 6,929 | 75,197 | 3,353 | — | ||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | ||||||||||||||||
Net earnings | $ | 60,727 | $ | 64,245 | $ | 166,084 | $ | 72,473 | $ | 74,446 | |||||||||||
Net earnings attributable to (Note 1): | |||||||||||||||||||||
Limited partners | $ | 60,120 | $ | 63,603 | $ | 164,423 | $ | 71,748 | $ | 73,702 | |||||||||||
General partner | 607 | 642 | 1,661 | 725 | 744 | ||||||||||||||||
$ | 60,727 | $ | 64,245 | $ | 166,084 | $ | 72,473 | $ | 74,446 | ||||||||||||
F-121
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General | Limited | Total | |||||||||||
Partner’s | Partner’s | Partners’ | |||||||||||
Equity | Equity | Equity | |||||||||||
Balance, December 31, 2001 | $ | 11,477 | $ | 1,136,268 | $ | 1,147,745 | |||||||
Comprehensive income: | |||||||||||||
Net earnings | 744 | 73,702 | 74,446 | ||||||||||
Reclassification of unrealized loss on sale of debt securities | 106 | 10,489 | 10,595 | ||||||||||
Adjustment to reverse unrealized loss on investment securities reclassified to notes receivable | 66 | 6,516 | 6,582 | ||||||||||
Net unrealized losses on securities available for sale | (2 | ) | (240 | ) | (242 | ) | |||||||
Comprehensive income | 914 | 90,467 | 91,381 | ||||||||||
Net adjustment for acquisition of minority interest (Note 10) | 212 | 20,939 | 21,151 | ||||||||||
Capital contribution to American Casino (Note 10) | 8 | 823 | 831 | ||||||||||
Balance, December 31, 2002 | 12,611 | 1,248,497 | 1,261,108 | ||||||||||
Comprehensive income: | |||||||||||||
Net earnings | 725 | 71,748 | 72,473 | ||||||||||
Reclassification of unrealized loss on sale of debt securities | 8 | 753 | 761 | ||||||||||
Net unrealized gains on securities available for sale | 92 | 9,082 | 9,174 | ||||||||||
Sale of marketable equity securities available for sale | (3 | ) | (277 | ) | (280 | ) | |||||||
Comprehensive income | 822 | 81,306 | 82,128 | ||||||||||
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy (Note 21) | 471 | 46,634 | 47,105 | ||||||||||
Capital distribution (Note 10) | (28 | ) | (2,780 | ) | (2,808 | ) | |||||||
Balance, December 31, 2003 | 13,876 | 1,373,657 | 1,387,533 | ||||||||||
Comprehensive income: | |||||||||||||
Net earnings | 1,661 | 164,423 | 166,084 | ||||||||||
Reclassification of unrealized gains on marketable securities sold | (96 | ) | (9,472 | ) | (9,568 | ) | |||||||
Net unrealized losses on securities available for sale | — | 33 | 33 | ||||||||||
Comprehensive income | 1,565 | 154,984 | 156,549 | ||||||||||
Capital distribution from American Casino (Note 10) | (179 | ) | (17,737 | ) | (17,916 | ) | |||||||
Capital contribution to American Casino (Note 10) | 228 | 22,572 | 22,800 | ||||||||||
Arizona Charlie’s acquisition (Note 10) | (1,259 | ) | (124,641 | ) | (125,900 | ) | |||||||
Change in deferred tax asset related to acquisition of Arizona Charlie’s | 25 | 2,465 | 2,490 | ||||||||||
Balance, December 31, 2004 | 14,256 | 1,411,300 | 1,425,556 | ||||||||||
Comprehensive income: | |||||||||||||
Net earnings | 607 | 60,120 | 60,727 | ||||||||||
Net unrealized losses on securities available for sale | (24 | ) | (2,370 | ) | (2,394 | ) | |||||||
Comprehensive income | 583 | 57,750 | 58,333 | ||||||||||
Balance, March 31, 2005 | $ | 14,839 | $ | 1,469,050 | $ | 1,483,889 | |||||||
F-122
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Three Months Ended | ||||||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Income from continuing operations | $ | 41,047 | $ | 54,098 | $ | 83,387 | $ | 61,467 | $ | 67,509 | ||||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 6,691 | 7,422 | 29,144 | 24,801 | 23,646 | |||||||||||||||||||
Gain on sale of marketable equity securities | — | (28,857 | ) | (40,159 | ) | (2,607 | ) | — | ||||||||||||||||
Unrealized losses on securities sold short | (21,704 | ) | — | 23,619 | — | — | ||||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | 15,600 | — | — | |||||||||||||||||||
Gain on sales and disposition of real estate | (186 | ) | (6,047 | ) | (5,262 | ) | (7,121 | ) | (8,990 | ) | ||||||||||||||
Loss on sale of other assets | 180 | 4 | 96 | 1,503 | 353 | |||||||||||||||||||
Provision for loss on real estate | — | — | 3,150 | 750 | 3,212 | |||||||||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | 19,759 | 8,476 | |||||||||||||||||||
Minority interest in net earnings of Stratosphere Corporation | — | — | — | — | 1,943 | |||||||||||||||||||
Equity in losses (earnings) of GB Holdings, Inc. | 986 | 348 | 2,113 | 3,466 | (305 | ) | ||||||||||||||||||
Deferred gain amortization | (510 | ) | (510 | ) | (2,038 | ) | (2,038 | ) | (2,038 | ) | ||||||||||||||
Accretion of investment in NEG Holding LLC | (9,893 | ) | (7,904 | ) | (34,432 | ) | (30,142 | ) | (32,879 | ) | ||||||||||||||
Deferred income tax expense (benefit) | 6,548 | 1,615 | 13,946 | (5,875 | ) | 9,785 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
(Increase) decrease in receivables and other assets | 8,457 | (6,755 | ) | (9,825 | ) | (299 | ) | 2,943 | ||||||||||||||||
Increase in due from brokers | (2,518 | ) | — | (123,001 | ) | — | — | |||||||||||||||||
(Increase) decrease in land and construction-in-progress | 5,950 | (455 | ) | (1,626 | ) | (4,105 | ) | 24,215 | ||||||||||||||||
(Increase) decrease in restricted cash | (8,682 | ) | 13,095 | (4,350 | ) | (13,095 | ) | — | ||||||||||||||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | 8 | 12,841 | 92,476 | (37,328 | ) | 271 | ||||||||||||||||||
Net cash provided by continuing operations | 26,374 | 38,895 | 42,838 | 9,136 | 98,141 | |||||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | |||||||||||||||||||
Depreciation and amortization | 31 | 210 | 1,244 | 5,130 | 4,464 | |||||||||||||||||||
Net gain from property transactions | (18,723 | ) | (6,929 | ) | (75,197 | ) | (3,353 | ) | — | |||||||||||||||
Net cash provided by discontinued operations | 988 | 3,428 | 8,744 | 12,783 | 11,401 | |||||||||||||||||||
Net cash provided by operating activities | 27,362 | 42,323 | 51,582 | 21,919 | 109,542 | |||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
(Increase) decrease in other investments | — | 351 | 2,942 | (28,491 | ) | (23,200 | ) | |||||||||||||||||
Repayments of mezzanine loans included in other investments | — | — | 49,130 | 12,200 | 23,000 | |||||||||||||||||||
Net proceeds from the sales and disposition of real estate | 4,650 | 11,346 | 16,790 | 15,290 | 20,513 | |||||||||||||||||||
Principal payments received on leases accounted for under the financing method | 908 | 1,112 | 4,219 | 5,310 | 5,941 | |||||||||||||||||||
Principal payments received on investment in debt securities of affiliates | 2,700 | — | — | — | — | |||||||||||||||||||
Purchase of debt securities included in other investments | — | — | (245,166 | ) | — | — | ||||||||||||||||||
Purchase of debt securities of affiliates | — | — | (65,500 | ) | — | — | ||||||||||||||||||
Purchase of Atlantic Holdings debt included in debt securities due from affiliates | — | — | (36,000 | ) | — | — | ||||||||||||||||||
Acquisition of Arizona Charlies’ | — | — | (125,900 | ) | — | — | ||||||||||||||||||
Additions to hotel, casino and resort operating property | (4,781 | ) | (1,492 | ) | (16,203 | ) | (32,911 | ) | (21,715 | ) | ||||||||||||||
Acquisition of hotel and resort operating property | — | — | (16,463 | ) | — | — | ||||||||||||||||||
Acquisitions of rental real estate | — | (14,583 | ) | (14,583 | ) | �� | (18,226 | ) | ||||||||||||||||
Acquisition of land and construction in progress | — | — | (61,845 | ) | — | — | ||||||||||||||||||
Additions to rental real estate | — | (166 | ) | (18 | ) | (413 | ) | (181 | ) | |||||||||||||||
(Increase) decrease in investment in U.S. Government and Agency Obligations (Note 2) | 27,903 | (61,077 | ) | (40,757 | ) | 274,478 | (22,410 | ) | ||||||||||||||||
Increase in marketable equity and debt securities | (66,250 | ) | — | — | (45,140 | ) | (4,415 | ) | ||||||||||||||||
Proceeds from sale of marketable equity and debt securities | — | 64,471 | 90,614 | 3,843 | — | |||||||||||||||||||
Increase in restricted cash | — | (219,313 | ) | — | — | — | ||||||||||||||||||
Decrease in note receivable from affiliate | — | — | — | 250,000 | — | |||||||||||||||||||
Decrease in minority interest in Stratosphere Corp. | — | — | — | — | (44,744 | ) | ||||||||||||||||||
Decrease in investment in Stratosphere Corp. | — | — | — | 788 | — | |||||||||||||||||||
Guaranteed payment from NEG Holding LLC | — | — | 15,979 | 18,229 | 21,653 | |||||||||||||||||||
Priority distribution from NEG Holding LLC | — | — | — | 40,506 | — | |||||||||||||||||||
Increase (decrease) in due to affiliate | — | — | 7,597 | — | (68,491 | ) | ||||||||||||||||||
Investment in NEG, Inc. | — | — | — | (148,101 | ) | — | ||||||||||||||||||
Other | — | (50 | ) | (194 | ) | 560 | 197 | |||||||||||||||||
Net cash (used in) provided by investing activities from continuing operations | (34,870 | ) | (219,401 | ) | (435,358 | ) | 366,148 | (132,078 | ) |
F-123
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Three Months Ended | |||||||||||||||||||||||
March 31, | Years Ended December 31, | ||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||||
Cash flows from investing activities from discontinued operations: | |||||||||||||||||||||||
Net proceeds from the sales and disposition of real estate | 36,582 | 7,392 | 134,789 | 5,336 | — | ||||||||||||||||||
Net cash provided by (used in) investing activities | 1,712 | (212,009 | ) | (300,569 | ) | 371,484 | (132,078 | ) | |||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Partners’ Equity: | |||||||||||||||||||||||
Distributions to members | — | — | (17,916 | ) | — | — | |||||||||||||||||
Member’s contribution | — | — | 22,800 | — | — | ||||||||||||||||||
Contributions to American Casino | — | — | — | — | 598 | ||||||||||||||||||
Debt: | |||||||||||||||||||||||
Repayment of credit facilities | — | — | — | (2,904 | ) | (5,000 | ) | ||||||||||||||||
Proceeds from credit facility | — | — | — | 7,780 | 17,220 | ||||||||||||||||||
Proceeds from Senior Notes Payable | 474,000 | 215,000 | 557,594 | — | — | ||||||||||||||||||
Decrease in due to affiliates | (10,683 | ) | — | (24,925 | ) | — | — | ||||||||||||||||
Proceeds from mortgages payable | — | — | 10,000 | 20,000 | 12,700 | ||||||||||||||||||
Payments on mortgages payable | — | — | — | (3,837 | ) | (462 | ) | ||||||||||||||||
Periodic principal payments | (1,003 | ) | (1,738 | ) | (5,248 | ) | (6,484 | ) | (7,198 | ) | |||||||||||||
Debt issuance costs | (8,334 | ) | (7,515 | ) | (18,111 | ) | — | — | |||||||||||||||
Other | — | — | — | — | 242 | ||||||||||||||||||
Net cash provided by financing activities | 453,980 | 205,747 | 524,194 | 14,555 | 18,100 | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 483,054 | 36,061 | 275,207 | 407,958 | (4,436 | ) | |||||||||||||||||
Cash and cash equivalents, beginning of period | 762,581 | 487,374 | 487,374 | 79,416 | 83,852 | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | 1,245,635 | $ | 523,435 | $ | 762,581 | $ | 487,374 | $ | 79,416 | |||||||||||||
Supplemental information: | |||||||||||||||||||||||
Cash payments for interest, net of amounts capitalized | $ | 8,663 | $ | 4,442 | $ | 44,258 | $ | 65,110 | $ | 37,176 | |||||||||||||
Supplemental schedule of noncash investing and financing activities: | |||||||||||||||||||||||
Reclassification of real estate to operating lease | $ | 3,068 | $ | — | $ | — | $ | 5,065 | $ | 13,403 | |||||||||||||
Reclassification from hotel and resort operating properties | — | (6,395 | ) | (6,428 | ) | — | — | ||||||||||||||||
Reclassification of real estate from financing lease | (358 | ) | — | (1,920 | ) | (5,065 | ) | (13,503 | ) | ||||||||||||||
Reclassification of real estate from operating lease | (411 | ) | (14,353 | ) | (38,452 | ) | (126,263 | ) | — | ||||||||||||||
Reclassification of real estate to property held for sale | 716 | 20,748 | 46,800 | 126,263 | 100 | ||||||||||||||||||
Reclassification of real estate from property held for sale | (3,015 | ) | — | — | — | — | |||||||||||||||||
Decrease in other investments | — | — | — | (3,453 | ) | — | |||||||||||||||||
Decrease in deferred income | — | — | — | 2,565 | — | ||||||||||||||||||
Increase in real estate accounted for under the operating method | — | — | — | 888 | — | ||||||||||||||||||
Reclassification from marketable equity and debt securities | — | — | — | — | (20,494 | ) | |||||||||||||||||
Reclassification from receivable and other assets | — | — | — | (1,631 | ) | ||||||||||||||||||
Reclassification to other investments | — | — | — | 1,631 | 20,494 | ||||||||||||||||||
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Net unrealized (losses) gains on securities available for sale | $ | (2,394 | ) | $ | 2,378 | $ | 33 | $ | 9,174 | $ | (242 | ) | |||||||||||
Increase in equity and debt securities | $ | 805 | $ | 300 | $ | 1,740 | $ | 1,200 | $ | 2,890 | |||||||||||||
Contribution of note from NEG Holding LLC | $ | — | $ | — | $ | — | $ | 10,940 | $ | — | |||||||||||||
Change in tax asset related to acquisition | $ | — | $ | — | $ | 2,490 | $ | — | $ | — | |||||||||||||
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy | $ | — | $ | — | $ | — | $ | 47,105 | $ | — | |||||||||||||
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1. | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Other investments. |
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Revenue and Expense Recognition- |
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3. | RELATED PARTY TRANSACTIONS |
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4. | INVESTMENT IN U.S. GOVERNMENT AND AGENCY OBLIGATIONS |
December 31, | |||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Cost | Carrying | Cost | Carrying | Cost | Carrying | ||||||||||||||||||||
Basis | Value | Basis | Value | Basis | Value | ||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||||
Matures in: | |||||||||||||||||||||||||
less than 1 year | $ | 68.9 | $ | 68.9 | $ | 96.8 | $ | 96.8 | $ | 52.8 | $ | 52.6 | |||||||||||||
2-5 years | 5.6 | 5.5 | 5.6 | 5.5 | 9.0 | 9.0 | |||||||||||||||||||
$ | 74.5 | $ | 74.4 | $ | 102.4 | $ | 102.3 | $ | 61.8 | $ | 61.6 | ||||||||||||||
5. | MARKETABLE EQUITY AND DEBT SECURITIES (IN $ MILLIONS) |
December 31, | ||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Cost | Carrying | Cost | Carrying | Cost | Carrying | |||||||||||||||||||||
Basis | Value | Basis | Value | Basis | Value | |||||||||||||||||||||
Available for Sale: | ||||||||||||||||||||||||||
Philip Service Corporation(a): | ||||||||||||||||||||||||||
Equity | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Corporate bonds(b) | — | — | — | — | 45.1 | 51.6 | ||||||||||||||||||||
Other | 72.4 | 68.5 | 2.2 | 2.2 | 1.3 | 4.2 | ||||||||||||||||||||
Total | $ | 72.4 | $ | 68.5 | $ | 2.2 | $ | 2.2 | $ | 46.4 | $ | 55.8 | ||||||||||||||
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6. | DUE FROM BROKERS |
a. $147,223 at March 31, 2005 (unaudited) and $123,001 at December 31, 2004 — Due From Brokers — Net proceeds from short sales of equity securities and cash collateral held by brokerage institutions against our short sales. | |
b. $83,750 at March 31, 2005 (unaudited) and $90,674 at December 31, 2004 — Securities Sold Not Yet Purchased — Our obligation to cover the short sales of equity securities described above. The Company recorded unrealized losses on securities sold short of $23.6 million in the year ended December 31, 2004 reflecting an increase in price in the securities sold short. This amount has been recorded in the consolidated statements of earnings for the year then ended in the respective caption. The Company recorded unrealized gains on securities sold short of $21.7 million in the three months ended March 31, 2005 (unaudited) reflecting a decrease in price of the securities sold short. This amount has |
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been recorded in the consolidated statements of earnings for the three months ended March 31, 2005 in the respective caption. |
7. | OTHER INVESTMENTS (in $000’s) |
Balance at | ||||||||||||
March 31, | December 31, | |||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Peninsula/ Hampton & Alex Hotel (a) and (b) | $ | — | $ | — | $ | 42,030 | ||||||
WestPoint Stevens (c) | 205,850 | 205,850 | — | |||||||||
Union Power Partners L.P. and Panda Gila River L.P. (d) | 37,973 | 39,316 | — | |||||||||
Other | 779 | 782 | 8,298 | |||||||||
$ | 244,602 | $ | 245,948 | $ | 50,328 | |||||||
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8. | REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(unaudited) | ||||||||||||
Minimum lease payments receivable | $ | 87,846 | $ | 97,725 | $ | 161,785 | ||||||
Unguaranteed residual value | 43,422 | 48,980 | 74,651 | |||||||||
131,268 | 146,705 | 236,436 | ||||||||||
Less unearned income | 51,579 | 57,512 | 99,080 | |||||||||
79,689 | 89,193 | 137,356 | ||||||||||
Less current portion of lease amortization | 3,740 | 3,912 | 5,738 | |||||||||
$ | 75,949 | $ | 85,281 | $ | 131,618 | |||||||
Year Ending December 31, | Amount | |||
2005 | $ | 11,941 | ||
2006 | 11,746 | |||
2007 | 10,832 | |||
2008 | 9,476 | |||
2009 | 9,255 | |||
Thereafter | 44,475 | |||
$ | 97,725 | |||
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9. | REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE OPERATING METHOD |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Land | $ | 13,286 | $ | 13,666 | $ | 24,040 | ||||||
Commercial Buildings | 52,672 | 45,972 | 83,252 | |||||||||
65,958 | 59,638 | 107,292 | ||||||||||
Less accumulated depreciation | 14,831 | 10,520 | 30,849 | |||||||||
$ | 51,127 | $ | 49,118 | $ | 76,443 | |||||||
Year Ending December 31, | Amount | |||
2005 | $ | 7,186 | ||
2006 | 6,232 | |||
2007 | 5,649 | |||
2008 | 5,383 | |||
2009 | 5,001 | |||
Thereafter | 19,753 | |||
$ | 49,204 | |||
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Leased to others | $ | 40,035 | $ | 74,444 | $ | 146,416 | ||||||
Vacant | 450 | 450 | 2,550 | |||||||||
40,485 | 74,894 | 148,966 | ||||||||||
Less accumulated depreciation | 6,490 | 16,873 | 20,153 | |||||||||
$ | 33,995 | $ | 58,021 | $ | 128,813 | |||||||
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Three Months End | ||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Rental income | $ | 1,462 | $ | 5,871 | $ | 15,658 | $ | 23,093 | $ | 21,073 | ||||||||||
Hotel and resort operating income | 709 | 1,064 | 3,868 | 6,128 | 5,676 | |||||||||||||||
2,171 | 6,935 | 19,526 | 29,221 | 26,749 | ||||||||||||||||
Mortgage interest expense | 399 | 1,726 | 3,858 | 7,208 | 6,737 | |||||||||||||||
Depreciation and amortization | 31 | 210 | 1,244 | 5,130 | 4,464 | |||||||||||||||
Property expenses | 147 | 1,107 | 3,123 | 3,549 | 3,409 | |||||||||||||||
Hotel and resort operating expenses | 637 | 674 | 3,801 | 5,681 | 5,202 | |||||||||||||||
1,214 | 3,717 | 12,026 | 21,568 | 19,812 | ||||||||||||||||
Income from discontinued operations | $ | 957 | $ | 3,218 | $ | 7,500 | $ | 7,653 | $ | 6,937 | ||||||||||
10. | HOTEL AND CASINO OPERATING PROPERTIES |
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Three Months Ended | |||||||||||||||||||||
March 31, | Year Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Unaudited) | (in $000’s) | ||||||||||||||||||||
Hotel and casino operating income: | |||||||||||||||||||||
Casino | $ | 47,729 | $ | 42,592 | $ | 167,972 | $ | 147,888 | $ | 143,057 | |||||||||||
Hotel | 15,793 | 13,888 | 54,653 | 47,259 | 44,263 | ||||||||||||||||
Food and beverage | 17,076 | 16,701 | 66,953 | 59,583 | 56,349 | ||||||||||||||||
Tower, retail, and other income | 8,206 | 7,976 | 33,778 | 30,336 | 28,247 | ||||||||||||||||
Gross revenues | 88,804 | 81,157 | 323,356 | 285,066 | 271,916 | ||||||||||||||||
Less promotional allowances | (5,966 | ) | (6,148 | ) | (23,375 | ) | (22,255 | ) | (21,893 | ) | |||||||||||
Net revenues | $ | 82,838 | $ | 75,009 | $ | 299,981 | $ | 262,811 | $ | 250,023 | |||||||||||
Hotel and casino operating expenses: | |||||||||||||||||||||
Casino | $ | 15,900 | $ | 15,696 | $ | 61,985 | $ | 61,284 | $ | 59,879 | |||||||||||
Hotel | 6,023 | 5,596 | 24,272 | 22,074 | 20,142 | ||||||||||||||||
Food and beverage | 12,376 | 11,620 | 48,495 | 44,990 | 43,393 | ||||||||||||||||
Other operating expenses | 3,619 | 3,151 | 14,131 | 13,524 | 14,505 | ||||||||||||||||
Selling, general, and administrative | 19,706 | 18,180 | 78,720 | 74,985 | 80,019 | ||||||||||||||||
Total expenses | $ | 57,624 | $ | 54,243 | $ | 227,603 | $ | 216,857 | $ | 217,938 | |||||||||||
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Land and improvements, including land held for development | $ | 47,274 | $ | 47,210 | $ | 47,041 | ||||||
Building and improvements | 221,847 | 221,314 | 220,280 | |||||||||
Furniture, fixtures and equipment | 112,379 | 108,595 | 98,586 | |||||||||
Construction in progress | 7,577 | 7,348 | 7,224 | |||||||||
389,077 | 384,467 | 373,131 | ||||||||||
Less accumulated depreciation and amortization | 100,187 | 95,107 | 74,428 | |||||||||
$ | 288,890 | $ | 289,360 | $ | 298,703 | |||||||
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(in $000’s) | ||||
Years ending December 31, | ||||
2005 | $ | 5,877 | ||
2006 | 4,778 | |||
2007 | 3,615 | |||
2008 | 2,177 | |||
2009 | 1,224 | |||
Thereafter | 959 | |||
Total payments | $ | 18,630 | ||
11. | HOTEL AND RESORT OPERATING PROPERTIES |
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12. | INVESTMENT IN DEBT SECURITIES OF AFFILIATES (in $000’s): |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Atlantic Holdings/GB Holdings(a) | $ | 60,650 | $ | 60,004 | $ | 24,696 | ||||||
TransTexas(b) | 27,500 | 27,500 | — | |||||||||
Panaco(c) | 36,643 | 38,000 | — | |||||||||
124,793 | 125,504 | 24,696 | ||||||||||
Less current portion | (10,429 | ) | (10,429 | ) | — | |||||||
$ | 114,364 | $ | 115,075 | $ | 24,696 | |||||||
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13. | EQUITY INTEREST IN GB HOLDINGS, INC. |
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• | $26,914,500 principal amount of the Atlantic Holdings Notes; | |
• | $3,620,753 in cash representing accrued interest on the GB Notes and $100 per $1,000 in principal amount of the GB Notes; and | |
• | 3,627,711 warrants, which under certain conditions will allow the Company to purchase approximately 998,000 shares of common stock at $.01 per share of Atlantic Holdings representing approximately 10% of the outstanding common stock of Atlantic Holdings, on a fully diluted basis. |
14. | NATIONAL ENERGY GROUP |
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December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Current assets | $ | 30,991 | $ | 23,146 | $ | 33,415 | ||||||
Noncurrent assets(1) | 251,438 | 237,127 | 190,389 | |||||||||
Total assets | $ | 282,429 | $ | 260,273 | $ | 223,804 | ||||||
Current liabilities | $ | 35,699 | $ | 22,456 | $ | 14,253 | ||||||
Noncurrent liabilities | 83,732 | 63,636 | 48,514 | |||||||||
Total liabilities | 119,431 | 86,092 | 62,767 | |||||||||
Members’ equity | 162,998 | 174,181 | 161,037 | |||||||||
Total liabilities and members’ equity | $ | 282,429 | $ | 260,273 | $ | 223,804 | ||||||
(1) | Primarily oil and gas properties |
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | (In $000’s) | |||||||||||||||||||
Total revenues | $ | 2,870 | $ | 25,569 | $ | 78,727 | $ | 77,606 | $ | 35,900 | ||||||||||
Costs and expenses | (13,137 | ) | (11,044 | ) | (47,313 | ) | (46,766 | ) | (32,064 | ) | ||||||||||
Operating income | (10,267 | ) | 14,525 | 31,414 | 30,840 | 3,836 | ||||||||||||||
Other income (expense) | (916 | ) | (358 | ) | (2,292 | ) | 30 | 10,090 | ||||||||||||
Net income | $ | (11,183 | ) | $ | 14,167 | $ | 29,122 | $ | 30,870 | $ | 13,926 | |||||||||
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December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Investment in Holding LLC at beginning of period | $ | 87,800 | $ | 69,346 | $ | 108,880 | ||||||
Priority distribution from Holding LLC | — | — | (51,446 | ) | ||||||||
Guaranteed payment from Holding LLC | — | (15,978 | ) | (18,230 | ) | |||||||
Accretion of investment in Holding LLC | 9,893 | 34,432 | 30,142 | |||||||||
Investment in Holding LLC at end of period | $ | 97,693 | $ | 87,800 | $ | 69,346 | ||||||
1. Guaranteed payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding priority distribution amount. The priority distribution amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of NEG’s 10.75% Senior Notes. As of March 31, 2005 (unaudited) and December 31, 2004, the priority |
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distribution amount was $148.6 million which equals the amount of NEG’s 10.75% Senior Notes due the Company. The guaranteed payments will be made on a semi-annual basis. | |
2. The priority distribution amount is to be paid to NEG. Such payment is to occur by November 6, 2006. | |
3. An amount equal to the priority distribution amount and all guaranteed payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by NEG to Gascon, is to be paid to Gascon. | |
4. An amount equal to the aggregate annual interest (calculated at prime plus1/2% on the sum of the guaranteed payments), plus any unpaid interest for prior years (calculated at prime plus1/2% on the sum of the guaranteed payments), less any distributions previously made by NEG to Gascon, is to be paid to Gascon. | |
5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts. |
15. | SIGNIFICANT PROPERTY TRANSACTIONS |
a. In September 2002, the Company purchased an industrial building located in Nashville, Tennessee for approximately $18.2 million. The building was constructed in 2001 and is fully leased to two tenants, Alliance Healthcare and Jet Equipment & Tools Inc., with leases expiring in 2011. The annual net operating income was anticipated to be approximately $1.6 million increasing to approximately $1.9 million by 2011. In October 2002, the Company closed a $12.7 million non-recourse mortgage loan on the Nashville, Tennessee property. The loan bore interest at 6.4% per annum and was due to mature in ten years. Required payments were interest only for the first three years and then principal amortization would commence based on a thirty-year amortization schedule. In June 2004, the Company sold the property for a selling price of $19.2 million. A gain of approximately $1.4 million was recognized in the year ended December 31, 2004 and is included in discontinued operations in the Consolidated Statements of Earnings. | |
At December 31, 2003, the property had a carrying value of approximately $18,066,000 and was encumbered by a non-recourse mortgage in the amount of $12,700,000. | |
b. In October 2002, the Company sold a property located in North Palm Beach, Florida for a selling price of $3.5 million. A gain of approximately $2.4 million was recognized in the year ended December 31, 2002. | |
c. In October 2003, the Company sold a property located in Columbia, Maryland to its tenant for a selling price of $11 million. A gain of approximately $5.8 million was recognized in the year ended December 31, 2003. |
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d. In the year ended December 31, 2004, the Company sold 57 rental real estate properties for approximately $245 million which were encumbered by mortgage debt of approximately $94 million which was repaid from the sale proceeds. | |
In the year ended December 31, 2004, of the 57 properties, the Company sold nine financing lease properties for approximately $43.6 million. The properties were encumbered by mortgage debt of approximately $26.8 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $38.3 million; therefore, the Company recognized a gain on sale of approximately $5.3 million in the year ended December 31, 2004, which is included in income from continuing operations in the Consolidated Statements of Earnings. | |
In the year ended December 31, 2004, of the 57 properties, the Company sold 48 operating and held for sale properties for approximately $201.8 million. The properties were encumbered by mortgage debt of approximately $67 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $126.6 million. The Company recognized a gain on sale of approximately $75.2 million in year ended December 31, 2004, which is included in income from discontinued operations in the Consolidated Statements of Earnings. | |
In the three months ended March 31, 2005 (unaudited), the Company sold four rental real estate properties and a golf resort for approximately $51.9 million which were encumbered by mortgage debt of approximately $10.7 million repaid from the sale proceeds. | |
Of the five properties, the Company sold one financing lease property for approximately $8.4 million encumbered by mortgage debt of approximately $3.8 million. The carrying value of this property was approximately $8.2 million; therefore, the Company recognized a gain on sale of approximately $0.2 million in the three months ended March 31, 2005 (unaudited), which is included in income from continuing operations. The Company sold four operating properties for approximately $43.5 million encumbered by mortgage debt of approximately $6.9 million. The carrying value of these properties was approximately $24.8 million. The Company recognized a gain on sale of approximately $18.7 million in the three months ended March 31, 2005 (unaudited), which is included in income from discontinued operations. | |
At March 31, 2005, the Company had 11 properties under contract or as to which letters of intent had been executed by potential purchasers, all of which contracts or letters of intent are subject to purchaser’s due diligence and other closing conditions. Selling prices for the properties covered by the contracts or letters of intent would total approximately $45.5 million. These properties are encumbered by mortgage debt of approximately $25.3 million. At March 31, 2005, the carrying value of these properties is approximately $29.1 million. In accordance with generally accepted accounting principles, only the real estate operating properties under contract or letter of intent, but not the financing lease properties, were reclassified to “Properties Held for Sale” and the related income and expense reclassified to “Income from Discontinued Operations.” | |
e. In January 2004, in conjunction with its reinvestment program, the Company purchased a 34,422 square foot commercial condominium unit (“North Moore Condos”) located in New York City for approximately $14.5 million. The unit contains a Citibank branch, a furniture store and a restaurant. Current annual rent income from the three tenants is approximately $1,289,000. The Company obtained mortgage financing of $10 million for this property in April 2004. The mortgage bears interest at the rate of 5.73% per annum, and matures in March 2014. Annual debt service is $698,760. | |
f. In July 2004, the Company purchased two Vero Beach, Florida waterfront communities, Grand Harbor and Oak Harbor (“Grand Harbor”), including their respective golf courses, tennis complex, fitness center, beach club and clubhouses. The acquisition also included properties in various stages of development, including land for future residential development, improved lots and finished residential |
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units ready for sale. The purchase price was approximately $75 million, which included approximately $62 million of land and construction in progress. The Company plans to invest in the further development of these properties and the enhancement of the existing infrastructure. |
16. | MORTGAGES PAYABLE |
Balance at | Balance at December 31, | |||||||||||||||||||
Annual Principal and | March 31, | |||||||||||||||||||
Range of Interest Rates | Range of Maturities | Interest Payment | 2005 | 2004 | 2003 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
5.630% — 8.250% | 10/15/07–10/01/14 | $ | 9,373 | $ | 80,191 | $ | 91,896 | $ | 180,989 | |||||||||||
Less current portion and mortgages on properties held for sale | (24,577 | ) | (31,177 | ) | (87,753 | ) | ||||||||||||||
$ | 55,614 | $ | 60,719 | $ | 93,236 | |||||||||||||||
Year Ending December 31, | Amount | |||
2005 | $ | 4,759 | ||
2006 | 5,116 | |||
2007 | 11,428 | |||
2008 | 24,385 | |||
2009 | 7,211 | |||
2010 — 2014 | 38,997 | |||
$ | 91,896 | |||
a. See Note 15a. for Mid-South Logistics financing in October 2002. | |
b. On May 16, 2003, the Company executed a mortgage note secured by a distribution facility located in Windsor Locks, Connecticut and obtained funding in the principal amount of $20 million. The loan bears interest at 5.63% per annum and matures on June 1, 2013. Annual debt service is approximately $1,382,000 based on a 30 year amortization schedule. | |
c. See Note 15e. for North Moore Condo financing in April 2004. |
17. | SENIOR NOTES AND CREDIT FACILITIES DUE AFFILIATES |
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18. | SENIOR SECURED NOTES PAYABLE AND CREDIT FACILITY |
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20. | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
March 31, | December 31, | |||||||||||
2005 | 2004 | 2003 | ||||||||||
Accrued liabilities | $ | 11,617 | $ | 11,463 | $ | 11,951 | ||||||
Accrued payroll | 10,984 | 11,113 | 12,507 | |||||||||
Due to Panaco, Inc. | — | 16,242 | — | |||||||||
Other | 53,499 | 42,975 | 21,315 | |||||||||
$ | 76,100 | $ | 81,793 | $ | 45,773 | |||||||
21. | INCOME TAXES (in $000’s) |
December 31, | |||||||||
2004 | 2003 | ||||||||
The difference between the book basis and the tax basis of the net assets of the Company, not directly subject to income taxes, is as follows: | |||||||||
Book basis of AREH net assets excluding American Casino and NEG | $ | 1,319,566 | $ | 1,149,418 | |||||
Excess of tax over book | 120,820 | 79,238 | |||||||
Tax basis of net assets | $ | 1,440,386 | $ | 1,228,656 | |||||
(i) The Company’s corporate subsidiaries recorded the following income tax (expense) benefit attributable to continuing operations for American Casino and NEG for the three months ended |
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March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002 (in $000’s): |
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Current | $ | (1,102 | ) | $ | (4,554 | ) | $ | (2,626 | ) | $ | (4,302 | ) | $ | (311 | ) | |||||
Deferred | (6,548 | ) | (1,615 | ) | (14,137 | ) | 5,875 | (9,785 | ) | |||||||||||
$ | (7,650 | ) | $ | (6,169 | ) | $ | (16,763 | ) | $ | 1,573 | $ | (10,096 | ) | |||||||
(ii) The tax effect of significant differences representing net deferred tax assets (the difference between financial statement carrying values and the tax basis of assets and liabilities) for the Company is as follows at March 31, 2005 (unaudited), December 31, 2004 and 2003 (in $000’s): |
March 31, | December 31, | ||||||||||||
2005 | 2004 | 2003 | |||||||||||
Deferred tax assets: | |||||||||||||
Depreciation | $ | 38,424 | $ | 39,209 | $ | 39,858 | |||||||
Net operating loss carryforwards | 30,741 | 32,176 | 30,942 | ||||||||||
Investment in Holding LLC | 1,927 | 5,333 | 18,845 | ||||||||||
Other | 5,032 | 5,954 | 5,962 | ||||||||||
76,124 | 82,672 | 95,607 | |||||||||||
Valuation allowance | (14,588 | ) | (14,588 | ) | (17,733 | ) | |||||||
Subtotal | 61,536 | 68,084 | 77,874 | ||||||||||
Less current portion | (2,685 | ) | (2,685 | ) | (2,982 | ) | |||||||
Net deferred tax assets — non current | $ | 58,851 | $ | 65,399 | $ | 74,892 | |||||||
(iii) The provision (benefit) for income taxes differs from the amount computed at the federal statutory rate as a result of the following: |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
Tax deduction not given book benefit | 0.0 | % | 5.0 | % | 0.0 | % | ||||||
Income not subject to taxation | (25.3 | )% | (15.0 | )% | (22.9 | )% | ||||||
Valuation allowance | (1.7 | )% | (27.3 | )% | (0.5 | )% | ||||||
Other | 1.2 | % | 0.1 | % | 0.3 | % | ||||||
9.2 | % | (2.2 | )% | 11.9 | % | |||||||
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22. | COMMITMENTS AND CONTINGENCIES |
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23. | EMPLOYEE BENEFIT PLANS |
24. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
Other Investments |
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At March 31, 2005 | At December 31, 2004 | At December 31, 2003 | ||||||||||||||||||||||
Net | Estimated | Net | Estimated | Net | Estimated | |||||||||||||||||||
Investment | Fair Value | Investment | Fair Value | Investment | Fair Value | |||||||||||||||||||
Total | $ | 244,602 | $ | 247,600 | $ | 245,948 | $ | 248,900 | $ | 50,328 | $ | 55,000 | ||||||||||||
Mortgages Payable |
At March 31, 2005 | At December 31, 2004 | At December 31, 2003 | ||||||||||||||||||||||
Carrying | Estimated | Carrying | Estimated | Carrying | Estimated | |||||||||||||||||||
Value | Fair Value | Value | Fair Value | Value | Fair Value | |||||||||||||||||||
Total | $ | 80,191 | $ | 81,955 | $ | 91,896 | $ | 93,900 | $ | 180,989 | $ | 185,000 | ||||||||||||
Limitations |
25. | SEGMENT REPORTING |
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March 31, | December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Hotel & casino operating properties | $ | 81,852 | $ | 74,661 | $ | 297,868 | $ | 259,345 | $ | 250,328 | ||||||||||||
Land, house and condominium sales | 8,279 | 5,014 | 26,591 | 13,265 | 76,024 | |||||||||||||||||
Rental real estate | 4,001 | 4,963 | 17,796 | 20,207 | 21,574 | |||||||||||||||||
Hotel & resort operating properties | 5,563 | 1,335 | 16,211 | 12,376 | 12,921 | |||||||||||||||||
Oil & gas operating properties | 13,168 | 10,523 | 45,995 | 38,109 | 40,516 | |||||||||||||||||
Other investments | 11,092 | 4,763 | 34,241 | 13,874 | 15,283 | |||||||||||||||||
Subtotal | 123,955 | 101,259 | 438,702 | 357,176 | 416,646 | |||||||||||||||||
Reconciling items(1) | 6,668 | (1) | 960 | (1) | 13,310 | (1) | 11,770 | (1) | 18,006 | (1) | ||||||||||||
Total revenues | $ | 130,623 | $ | 102,219 | $ | 452,012 | $ | 368,946 | $ | 434,652 | ||||||||||||
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March 31, | December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
Net earnings: | ||||||||||||||||||||||
Segment earnings: | ||||||||||||||||||||||
Hotel & casino operating properties | $ | 24,228 | $ | 20,418 | $ | 70,265 | $ | 42,488 | $ | 32,390 | ||||||||||||
Land, house and condominium sales | 1,232 | 1,656 | 6,355 | 4,136 | 21,384 | |||||||||||||||||
Oil & gas operating properties | 10,113 | 8,092 | 34,849 | 30,879 | 33,411 | |||||||||||||||||
Rental real estate | 3,049 | 3,878 | 12,863 | 14,368 | 14,206 | |||||||||||||||||
Hotel and resort operating properties | 158 | (89 | ) | 2,674 | 4,219 | 2,679 | ||||||||||||||||
Other investments | 11,092 | 4,763 | 34,241 | 13,874 | 15,283 | |||||||||||||||||
Total segment earnings | 49,872 | 38,718 | 161,247 | 109,964 | 119,353 | |||||||||||||||||
Interest income | 6,668 | 960 | 13,310 | 11,770 | 18,006 | |||||||||||||||||
Interest expense | (18,307 | ) | (4,956 | ) | (41,659 | ) | (18,654 | ) | (27,297 | ) | ||||||||||||
General and administrative expenses | (4,555 | ) | (1,933 | ) | (9,806 | ) | (6,851 | ) | (7,029 | ) | ||||||||||||
Depreciation and amortization | (6,691 | ) | (7,422 | ) | (29,144 | ) | (24,801 | ) | (23,646 | ) | ||||||||||||
Operating Income | 26,987 | 25,367 | 93,948 | 71,428 | 79,387 | |||||||||||||||||
Gain on sales and disposition of real estate from continuing operations | 186 | 6,047 | 5,262 | 7,121 | 8,990 | |||||||||||||||||
(Loss) on sale of other assets | (180 | ) | (4 | ) | — | (1,503 | ) | (353 | ) | |||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | (19,759 | ) | (8,476 | ) | |||||||||||||||
Gain on sale of marketable equity securities | — | 28,857 | 40,159 | 2,607 | — | |||||||||||||||||
Unrealized losses on securities sold short | 21,704 | — | (23,619 | ) | — | — | ||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | (15,600 | ) | — | — | ||||||||||||||||
Minority interest in net earnings of Stratosphere Corp | — | — | — | — | (1,943 | ) | ||||||||||||||||
Income tax (expense) benefit | (7,650 | ) | (6,169 | ) | (16,763 | ) | 1,573 | (10,096 | ) | |||||||||||||
Income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | |||||||||||||||||
General partner’s share of net income | (607 | ) | (642 | ) | (1,661 | ) | (725 | ) | (744 | ) | ||||||||||||
Net earnings-limited partners | $ | 60,120 | $ | 63,603 | $ | 164,423 | $ | 71,748 | $ | 73,702 | ||||||||||||
(1) | Primarily interest income on U.S. Government and Agency obligations and other short-term investments and Icahn note receivable. |
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March 31, | December 31, | |||||||||||||||||
2005 | 2004 | 2003 | 2002 | |||||||||||||||
(Unaudited) | ||||||||||||||||||
Assets: | ||||||||||||||||||
Rental real estate | $ | 164,811 | $ | 196,332 | $ | 340,062 | $ | 359,700 | ||||||||||
Hotel and casino operating properties | 288,890 | 289,360 | 298,703 | 290,775 | ||||||||||||||
Land and construction-in-progress | 106,000 | 106,537 | 43,459 | 40,415 | ||||||||||||||
Hotel and resort operating properties | 46,041 | 50,132 | 41,526 | 44,346 | ||||||||||||||
Other investments | 466,252 | 472,103 | 231,050 | 479,104 | ||||||||||||||
1,071,994 | 1,114,464 | 954,800 | 1,214,340 | |||||||||||||||
Reconciling items | 1,706,680 | 1,157,119 | 707,475 | 510,945 | ||||||||||||||
Total | $ | 2,778,674 | $ | 2,271,583 | $ | 1,662,275 | $ | 1,725,285 | ||||||||||
Real estate investment capital expenditures: | ||||||||||||||||||
Acquisitions: | ||||||||||||||||||
Rental real estate | $ | — | $ | 14,583 | $ | — | $ | 18,226 | ||||||||||
Land and construction-in-progress | — | 61,845 | — | — | ||||||||||||||
Hotel and casino operating properties | — | 125,900 | — | — | ||||||||||||||
Hotel and resort operating properties | — | 16,463 | — | — | ||||||||||||||
$ | — | $ | 218,791 | $ | — | $ | 18,226 | |||||||||||
Developments: | ||||||||||||||||||
Rental real estate | $ | — | $ | 18 | $ | 413 | $ | 181 | ||||||||||
Land and construction-in-progress | — | 17,947 | — | 1,138 | ||||||||||||||
Hotel and casino operating properties | 4,711 | 13,589 | 31,844 | 19,133 | ||||||||||||||
Hotel and resort operating properties | 70 | 2,614 | 1,067 | 2,582 | ||||||||||||||
$ | 4,781 | $ | 34,168 | $ | 33,324 | $ | 23,034 | |||||||||||
26. | SUBSEQUENT EVENTS |
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/s/ GRANT THORNTON LLP |
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/s/KPMG LLP |
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March 31, | December 31, | ||||||||||||||
2005 | 2004 | 2003 | |||||||||||||
(Unaudited) | |||||||||||||||
ASSETS | |||||||||||||||
Current Assets: | |||||||||||||||
Cash and cash equivalents (Note 2) | 1,249,947 | $ | 768,791 | $ | 504,245 | ||||||||||
Investment in U.S. government and agency obligations (Note 4) | 68,894 | 96,840 | 52,583 | ||||||||||||
Marketable equity and debt securities (Note 5) | 68,497 | 2,248 | 55,826 | ||||||||||||
Due from brokers (Note 6) | 147,223 | 123,001 | — | ||||||||||||
Restricted cash | 28,537 | 19,856 | 15,058 | ||||||||||||
Receivables and other current assets | 50,318 | 60,885 | 49,529 | ||||||||||||
Real estate leased to others: | |||||||||||||||
Current portion of lease amortization for leases accounted for under the financing method | 3,740 | 3,912 | 5,738 | ||||||||||||
Properties held for sale (Notes 9 and 15) | 33,995 | 58,021 | 128,813 | ||||||||||||
Current portion of investment in debt securities of affiliates (Note 12) | 5,429 | 5,429 | — | ||||||||||||
Current portion of deferred tax asset (Note 21) | 2,685 | 2,685 | 2,982 | ||||||||||||
Total current assets | 1,659,265 | 1,141,668 | 814,774 | ||||||||||||
Investment in U.S. government and agency obligations (Note 4) | 5,533 | 5,491 | 8,990 | ||||||||||||
Other investments (Note 7) | 244,602 | 245,948 | 50,328 | ||||||||||||
Land and construction-in-progress (Note 15) | 106,000 | 106,537 | 43,459 | ||||||||||||
Real estate leased to others: | |||||||||||||||
Accounted for under the financing method (Notes 8, 15 and 16) | 75,949 | 85,281 | 131,618 | ||||||||||||
Accounted for under the operating method, net of accumulated depreciation (Notes 9, 15 and 16) | 51,127 | 49,118 | 76,443 | ||||||||||||
Oil and gas properties, net | 180,241 | 168,136 | 168,921 | ||||||||||||
Hotel, casino and resort operating properties, net of accumulated depreciation: | |||||||||||||||
American Casino & Entertainment Properties LLC (Notes 10 and 17) | 288,890 | 289,360 | 298,703 | ||||||||||||
Hotel and resorts (Notes 9 and 11) | 46,041 | 50,132 | 41,526 | ||||||||||||
Deferred finance costs and other assets, net | 8,392 | 8,135 | 4,095 | ||||||||||||
Long-term portion of investment in debt securities of affiliates (Note 12) | 91,864 | 92,575 | 24,696 | ||||||||||||
Investment in NEG Holding LLC (Note 14) | 97,693 | 87,800 | 69,346 | ||||||||||||
Equity interest in GB Holdings, Inc. (The Sands Hotel and Casino)(Note 13) | 9,138 | 10,603 | 30,854 | ||||||||||||
Due from American Real Estate Partners, L.P. | 21,804 | 20,107 | 18,044 | ||||||||||||
Deferred tax asset (Note 21) | 52,147 | 55,824 | 65,445 | ||||||||||||
Total | $ | 2,938,686 | $ | 2,416,715 | $ | 1,847,242 | |||||||||
LIABILITIES AND PARTNERS’ EQUITY | |||||||||||||||
Current Liabilities: | |||||||||||||||
Current portion of mortgages payable (Notes 8, 9 and 16) | $ | 4,205 | $ | 3,700 | $ | 4,892 | |||||||||
Mortgages on properties held for sale (Notes 9 and 16) | 20,372 | 27,477 | 82,861 | ||||||||||||
Due to affiliates | 10,000 | — | — | ||||||||||||
Accounts payable, accrued expenses and other current liabilities (Note 20) | 96,813 | 95,877 | 55,879 | ||||||||||||
Securities sold not yet purchased (Note 6) | 83,750 | 90,674 | — | ||||||||||||
Credit facility due affiliates (Notes 14 and 17) | — | — | 30,000 | ||||||||||||
Total current liabilities | 215,140 | 217,728 | 173,632 | ||||||||||||
Other liabilities | 28,122 | 26,048 | 29,127 | ||||||||||||
Long-term portion of mortgages payable (Notes 8, 9 and 16) | 55,614 | 60,719 | 93,236 | ||||||||||||
Senior secured notes payable (Note 18) | 215,000 | 215,000 | — | ||||||||||||
Senior unsecured notes payable — American Real Estate Partners, L.P. — net of unamortized discount of $9,575 (Note 19) | 817,938 | 343,425 | — | ||||||||||||
Asset retirement obligation | 3,999 | 3,930 | 3,477 | ||||||||||||
Due to affiliate | — | — | 27,500 | ||||||||||||
Total long-term liabilities | 1,120,673 | 649,122 | 153,340 | ||||||||||||
Commitments and contingencies (Notes 3 and 22): | |||||||||||||||
Minority Interest | — | — | 9,604 | ||||||||||||
Partners’ Equity: | |||||||||||||||
Limited partner | 1,463,778 | 1,411,300 | 1,373,657 | ||||||||||||
General partner | 139,095 | 138,565 | 137,009 | ||||||||||||
Partners’ equity (Notes 2 and 3) | 1,602,873 | 1,549,865 | 1,510,666 | ||||||||||||
Total | 2,938,686 | $ | 2,416,715 | $ | 1,847,242 | ||||||||||
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Three Months | |||||||||||||||||||||
Ended March 31, | Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Unaudited) (In $000’s) | |||||||||||||||||||||
Revenues: | |||||||||||||||||||||
Hotel and casino operating income (Note 10) | $ | 82,838 | $ | 75,009 | $ | 299,981 | $ | 262,811 | $ | 250,023 | |||||||||||
Land, house and condominium sales | 8,279 | 5,014 | 26,591 | 13,265 | 76,024 | ||||||||||||||||
Interest income on financing leases | 1,966 | 2,936 | 9,880 | 13,115 | 14,722 | ||||||||||||||||
Interest income on U.S. Government and Agency obligations and other investments (Notes 2 and 7) | 12,902 | 4,944 | 44,376 | 22,592 | 30,569 | ||||||||||||||||
Rental income | 2,035 | 2,027 | 7,916 | 7,091 | 6,852 | ||||||||||||||||
Hotel and resort operating income (Note 11) | 5,563 | 1,335 | 16,211 | 12,376 | 12,921 | ||||||||||||||||
Oil and gas operating income | 15,422 | 15,333 | 58,419 | 20,899 | — | ||||||||||||||||
Accretion of investment in NEG Holding LLC (Note 14) | 9,893 | 7,904 | 34,432 | 30,142 | 32,879 | ||||||||||||||||
NEG management fee | 2,108 | 1,464 | 6,887 | 6,629 | 7,637 | ||||||||||||||||
Dividend and other income (Notes 5 and 7) | 4,206 | 834 | 3,616 | 3,211 | 2,720 | ||||||||||||||||
Equity in (loss) earnings of GB Holdings, Inc. (Note 13) | (986 | ) | (348 | ) | (2,113 | ) | (3,466 | ) | 305 | ||||||||||||
144,226 | 116,452 | 506,196 | 388,665 | 434,652 | |||||||||||||||||
Expenses: | |||||||||||||||||||||
Hotel and casino operating expenses (Note 10) | 57,624 | 54,243 | 227,603 | 216,857 | 217,938 | ||||||||||||||||
Cost of land, house and condominium sales | 7,047 | 3,358 | 18,486 | 9,129 | 54,640 | ||||||||||||||||
Hotel and resort operating expenses (Note 11) | 5,405 | 1,424 | 12,730 | 8,773 | 10,536 | ||||||||||||||||
Oil and gas operating expenses | 2,866 | 3,858 | 13,816 | 5,028 | — | ||||||||||||||||
Interest expense (Notes 15, 16, 17, 18 and 19) | 18,411 | 5,966 | 45,229 | 24,608 | 27,297 | ||||||||||||||||
Depreciation and amortization | 15,704 | 18,396 | 67,620 | 40,570 | 23,646 | ||||||||||||||||
General and administrative expenses (Note 3) | 7,610 | 4,364 | 20,952 | 14,081 | 14,134 | ||||||||||||||||
Property expenses | 952 | 1,085 | 4,340 | 4,472 | 3,862 | ||||||||||||||||
Provision for losses on real estate | — | 3,150 | 750 | 3,212 | |||||||||||||||||
115,619 | 92,694 | 413,926 | 324,268 | 355,265 | |||||||||||||||||
Operating income | 28,607 | 23,758 | 92,270 | 64,397 | 79,387 | ||||||||||||||||
Other gains and (losses): | |||||||||||||||||||||
Gain (loss) on sale of other assets | (180 | ) | (4 | ) | 1,680 | (1,503 | ) | (353 | ) | ||||||||||||
Gain on sale of marketable equity and debt securities | — | — | 40,159 | 2,607 | — | ||||||||||||||||
Unrealized losses on securities sold short (Note 6) | 21,704 | — | (23,619 | ) | — | — | |||||||||||||||
Change in fair market value of derivative contract | (9,813 | ) | — | — | — | — | |||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. (Note 13) | — | — | (15,600 | ) | — | — | |||||||||||||||
Write-down of marketable equity and debt securities and other investments (Note 5) | — | 28,857 | — | (19,759 | ) | (8,476 | ) | ||||||||||||||
Gain on sales and disposition of real estate (Note 15) | 186 | 6,047 | 5,262 | 7,121 | 8,990 | ||||||||||||||||
Severance tax refund | — | — | 4,468 | — | — | ||||||||||||||||
Minority interest in net earnings of Stratosphere Corporation (Note 10) | — | (39 | ) | (812 | ) | (1,266 | ) | (1,943 | ) | ||||||||||||
Income from continuing operations before income taxes | 40,504 | 58,619 | 103,808 | 51,597 | 77,605 | ||||||||||||||||
Income tax (expense) benefit (Note 21) | (4,782 | (5,966 | ) | (17,326 | ) | 16,750 | (10,096 | ) | |||||||||||||
Income from continuing operations | 35,722 | 52,653 | 86,482 | 68,347 | 67,509 | ||||||||||||||||
Discontinued operations: | |||||||||||||||||||||
Income from discontinued operations | 957 | 3,218 | 7,500 | 7,653 | 6,937 | ||||||||||||||||
Gain on sales and disposition of real estate | 18,723 | 6,929 | 75,197 | 3,353 | — | ||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | ||||||||||||||||
Net earnings | $ | 55,402 | $ | 62,800 | $ | 169,179 | $ | 79,353 | $ | 74,446 | |||||||||||
Net earnings attributable to (Note 1): | |||||||||||||||||||||
Limited partners | $ | 54,848 | $ | 62,172 | $ | 167,487 | $ | 78,559 | $ | 73,702 | |||||||||||
General partner | $ | 554 | $ | 628 | 1,692 | 794 | 744 | ||||||||||||||
$ | 55,402 | $ | 62,800 | $ | 169,179 | $ | 79,353 | $ | 74,446 | ||||||||||||
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General | Limited | Total | |||||||||||
Partner’s | Partner’s | Partners’ | |||||||||||
Equity | Equity | Equity | |||||||||||
Balance, December 31, 2001 | $ | 11,477 | $ | 1,136,268 | $ | 1,147,745 | |||||||
Comprehensive income: | |||||||||||||
Net earnings | 744 | 73,702 | 74,446 | ||||||||||
Reclassification of unrealized loss on sale of debt securities | 106 | 10,489 | 10,595 | ||||||||||
Adjustment to reverse unrealized loss on investment securities reclassified to notes receivable | 66 | 6,516 | 6,582 | ||||||||||
Net unrealized losses on securities available for sale | (2 | ) | (240 | ) | (242 | ) | |||||||
Comprehensive income | 914 | 90,467 | 91,381 | ||||||||||
Net adjustment for acquisition of minority interest (Note 10) | 212 | 20,939 | 21,151 | ||||||||||
Capital contribution to American Casino (Note 10) | 8 | 823 | 831 | ||||||||||
Balance, December 31, 2002 | 12,611 | 1,248,497 | 1,261,108 | ||||||||||
Comprehensive income: | |||||||||||||
Net earnings | 794 | 78,559 | 79,353 | ||||||||||
Reclassification of unrealized loss on sale of debt securities | 8 | 753 | 761 | ||||||||||
Net unrealized gains on securities available for sale | 92 | 9,082 | 9,174 | ||||||||||
Sale of marketable equity securities available for sale | (3 | ) | (277 | ) | (280 | ) | |||||||
Comprehensive income | 891 | 88,117 | 89,008 | ||||||||||
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy (Note 21) | 471 | 46,634 | 47,105 | ||||||||||
Capital contribution to TransTexas | 123,064 | (6,811 | ) | 116,253 | |||||||||
Capital distribution (Note 10) | (28 | ) | (2,780 | ) | (2,808 | ) | |||||||
Balance, December 31, 2003 | 137,009 | 1,373,657 | 1,510,666 | ||||||||||
Comprehensive income: | |||||||||||||
Net earnings | 1,692 | 167,487 | 169,179 | ||||||||||
Reclassification of unrealized gains on marketable securities sold | (96 | ) | (9,472 | ) | (9,568 | ) | |||||||
Net unrealized losses on securities available for sale | — | 33 | 33 | ||||||||||
Comprehensive income | 1,596 | 158,048 | 159,644 | ||||||||||
Capital distribution from American Casino (Note 10) | (179 | ) | (17,737 | ) | (17,916 | ) | |||||||
Capital contribution to American Casino (Note 10) | 228 | 22,572 | 22,800 | ||||||||||
Capital contribution to TransTexas | 1,145 | (3,064 | ) | (1,919 | ) | ||||||||
Arizona Charlie’s acquisition (Note 10) | (1,259 | ) | (124,641 | ) | (125,900 | ) | |||||||
Change in deferred tax asset related to acquisition of Arizona Charlie’s | 25 | 2,465 | 2,490 | ||||||||||
Balance, December 31, 2004 | 138,565 | 1,411,300 | 1,549,865 | ||||||||||
Comprehensive income: | |||||||||||||
Net earnings | 554 | 54,848 | 55,402 | ||||||||||
Net unrealized loss on securities available for sale | (24 | ) | (2,370 | ) | (2,394 | ) | |||||||
Comprehensive income | 530 | 52,478 | 53,008 | ||||||||||
Balance, March 31, 2005 | $ | 139,095 | $ | 1,463,778 | $ | 1,602,873 | |||||||
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Three Months Ended | ||||||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||||
(Unaudited) | (In $000’s) | |||||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Income from continuing operations | $ | 35,722 | $ | 52,653 | $ | 86,482 | $ | 68,347 | $ | 67,509 | ||||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 15,636 | 18,316 | 67,288 | 41,172 | 23,646 | |||||||||||||||||||
Change in fair market value of restrictive contracts | 9,813 | 2,050 | 1,659 | (373 | ) | — | ||||||||||||||||||
Note discount amortization | 26 | 71 | 281 | 95 | — | |||||||||||||||||||
Accretion of discount in asset retirement obligation | 69 | 80 | 332 | 96 | — | |||||||||||||||||||
Gain on sale of marketable equity securities | — | (28,857 | ) | (40,159 | ) | (2,607 | ) | — | ||||||||||||||||
Unrealized losses on securities sold short | (21,704 | ) | — | 23,619 | — | — | ||||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | 15,600 | — | — | ||||||||||||||||||||
Gain on sales and disposition of real estate | (186 | ) | (6,047 | ) | (5,262 | ) | (7,121 | ) | (8,990 | ) | ||||||||||||||
Loss on sale of other assets | 180 | 4 | (1,584 | ) | 1,511 | 353 | ||||||||||||||||||
Provision for loss on real estate | — | — | 3,150 | 750 | 3,212 | |||||||||||||||||||
Minority interest | — | 39 | 812 | 1,266 | — | |||||||||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | 19,759 | 8,476 | |||||||||||||||||||
Minority interest in net earnings of Stratosphere Corporation | — | — | — | — | 1,943 | |||||||||||||||||||
Equity in losses (earnings) of GB Holdings, Inc. | 986 | 348 | 2,113 | 3,466 | (305 | ) | ||||||||||||||||||
Deferred gain amortization | (510 | ) | (510 | ) | (2,038 | ) | (2,038 | ) | (2,038 | ) | ||||||||||||||
Accretion of investment in NEG Holding LLC | (9,893 | ) | (7,904 | ) | (34,432 | ) | (30,142 | ) | (32,879 | ) | ||||||||||||||
Deferred income tax expense (benefit) | 3,678 | 1,412 | 14,509 | (21,052 | ) | 9,785 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
(Increase) decrease in receivables and other assets | 5,639 | (8,414 | ) | (10,033 | ) | 3,762 | 2,943 | |||||||||||||||||
Increase in due from brokers | (2,518 | ) | — | (123,001 | ) | — | — | |||||||||||||||||
Increase (decrease) in land and construction-in-progress | 5,950 | (455 | ) | (1,626 | ) | (4,105 | ) | 24,215 | ||||||||||||||||
Increase in restricted cash | (8,682 | ) | 13,095 | (4,350 | ) | (13,095 | ) | — | ||||||||||||||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | 1,917 | 13,170 | 96,067 | (39,550 | ) | 271 | ||||||||||||||||||
Net cash provided by continuing operations | 36,123 | 49,051 | 89,427 | 20,141 | 98,141 | |||||||||||||||||||
Total income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | |||||||||||||||||||
Depreciation and amortization | 31 | 210 | 1,244 | 5,130 | 4,464 | |||||||||||||||||||
Net gain from property transactions | (18,723 | ) | (6,929 | ) | (75,197 | ) | (3,353 | ) | — | |||||||||||||||
Net cash provided by discontinued operations | 988 | 3,428 | 8,744 | 12,783 | 11,401 | |||||||||||||||||||
Net cash provided by operating activities | 37,111 | 52,479 | 98,171 | 32,924 | 109,542 | |||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Cash associated with acquisition | — | — | — | 15,312 | — | |||||||||||||||||||
Purchase of minority interest | — | — | (4,136 | ) | — | — | ||||||||||||||||||
Increase (decrease) in other investments | — | — | 2,942 | (28,491 | ) | (23,200 | ) | |||||||||||||||||
Repayments of mezzanine loans included in other investments | — | — | 49,130 | 12,200 | 23,000 | |||||||||||||||||||
Net proceeds from the sales and disposition of real estate | 4,650 | 11,346 | 16,790 | 15,290 | 20,513 | |||||||||||||||||||
Proceeds from sale of other assets | 19 | 64 | 3,779 | — | — | |||||||||||||||||||
Principal payments received on investments in debt securities of affiliates | 2,700 | — | — | — | — | |||||||||||||||||||
Principal payments received on leases accounted for under the financing method | 908 | 1,112 | 4,219 | 5,310 | 5,941 | |||||||||||||||||||
Purchase of debt securities included in other investments | — | — | (245,166 | ) | — | — | ||||||||||||||||||
Purchase of debt securities of affiliates | — | — | (65,500 | ) | — | — | ||||||||||||||||||
Purchase of Atlantic Holdings debt included in debt securities due from affiliates | — | — | (36,000 | ) | — | — | ||||||||||||||||||
Acquisition of Arizona Charlies’ | — | — | (125,900 | ) | — | — | ||||||||||||||||||
Additions to hotel, casino and resort operating property | (4,781 | ) | (1,492 | ) | (16,203 | ) | (32,911 | ) | (21,715 | ) | ||||||||||||||
Acquisition of hotel and resort operating property | — | — | (16,463 | ) | — | — | ||||||||||||||||||
Acquisitions of rental real estate | — | (14,583 | ) | (14,583 | ) | — | (18,226 | ) | ||||||||||||||||
Acquisition of land and construction in progress | — | — | (61,845 | ) | — | — | ||||||||||||||||||
Additions to rental real estate | — | (166 | ) | (18 | ) | (413 | ) | (181 | ) | |||||||||||||||
Additions to oil gas operating property | (21,071 | ) | (6,106 | ) | (47,528 | ) | (633 | ) | — | |||||||||||||||
Decrease (increase) in investment in U.S. Government and Agency Obligations (Note 2) | 27,903 | (61,077 | ) | (40,757 | ) | 274,478 | (22,410 | ) | ||||||||||||||||
Increase in marketable equity and debt securities | (66,250 | ) | — | — | (45,140 | ) | (4,415 | ) | ||||||||||||||||
Proceeds from sale of marketable equity and debt securities | — | 64,471 | 90,614 | 3,843 | — | |||||||||||||||||||
Decrease in note receivable from affiliate | — | — | — | 250,000 | — | |||||||||||||||||||
Decrease in mortgages and note receivable | — | 351 | — | — | — | |||||||||||||||||||
Decrease in minority interest in Stratosphere Corp. — | — | — | — | — | (44,744 | ) | ||||||||||||||||||
Decrease in investment in Stratosphere Corp. — | — | — | — | 788 | — | |||||||||||||||||||
Guaranteed payment from NEG Holding LLC | — | — | 15,979 | 18,229 | 21,653 | |||||||||||||||||||
Priority distribution from NEG Holding LLC | — | — | — | 40,506 | — | |||||||||||||||||||
Increase (decrease) in due to affiliate | — | — | 7,597 | — | (68,491 | ) | ||||||||||||||||||
Increase in restricted cash | — | (219,313 | ) | — | — | — | ||||||||||||||||||
Investment in NEG, Inc. | — | — | — | (148,101 | ) | — | ||||||||||||||||||
Other | — | (50 | ) | (194 | ) | 560 | 197 | |||||||||||||||||
Net cash (used in) provided by investing activities from continuing operations | (55,922 | ) | (225,443 | ) | (483,243 | ) | 380,827 | (132,078 | ) |
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Three Months Ended | |||||||||||||||||||||||
March 31, | Years Ended December 31, | ||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Cash flows from investing activities from discontinued operations: | |||||||||||||||||||||||
Net proceeds from the sales and disposition of real estate | $ | 36,582 | $ | 7,392 | 134,789 | 5,336 | — | ||||||||||||||||
Net cash (used in) provided by investing activities | (19,340 | ) | (218,051 | ) | (348,454 | ) | 386,163 | (132,078 | ) | ||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Partners’ Equity: | |||||||||||||||||||||||
Distributions to members | — | — | (17,916 | ) | — | — | |||||||||||||||||
Member’s contribution | — | — | 22,800 | — | — | ||||||||||||||||||
Contributions to American Casino | — | — | — | — | 598 | ||||||||||||||||||
Debt: | |||||||||||||||||||||||
Repayment of credit facilities | — | — | — | (2,904 | ) | (5,000 | ) | ||||||||||||||||
Proceeds from credit facility | — | — | — | 7,780 | 17,220 | ||||||||||||||||||
Proceeds from Senior Notes Payable | 474,000 | 215,000 | 557,594 | — | — | ||||||||||||||||||
Decrease in due to affiliates | (683 | ) | — | (24,925 | ) | — | — | ||||||||||||||||
Proceeds from mortgages payable | — | — | 10,000 | 20,000 | 12,700 | ||||||||||||||||||
Payments on mortgages payable | — | — | — | (3,837 | ) | (462 | ) | ||||||||||||||||
Periodic principal payments | (1,598 | ) | (3,721 | ) | (14,613 | ) | (15,297 | ) | (7,198 | ) | |||||||||||||
Debt issuance costs | (8,334 | ) | (7,515 | ) | (18,111 | ) | — | — | |||||||||||||||
Other | — | — | — | — | 242 | ||||||||||||||||||
Net cash provided by financing activities | 463,385 | 203,764 | 514,829 | 5,742 | 18,100 | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 481,156 | 38,192 | 264,546 | 424,829 | (4,436 | ) | |||||||||||||||||
Cash and cash equivalents, beginning of year | 768,791 | 504,245 | 504,245 | 79,416 | 83,852 | ||||||||||||||||||
Cash and cash equivalents at end of year | $ | 1,249,947 | $ | 542,437 | $ | 768,791 | $ | 504,245 | $ | 79,416 | |||||||||||||
Supplemental information: | |||||||||||||||||||||||
Cash payments for interest, net of amounts capitalized | $ | 8,758 | $ | 4,442 | $ | 48,015 | $ | 65,253 | $ | 37,176 | |||||||||||||
Supplemental schedule of noncash investing and financing activities: | |||||||||||||||||||||||
Reclassification of real estate to operating lease | $ | 3,068 | $ | — | $ | — | $ | 5,065 | $ | 13,403 | |||||||||||||
Reclassification from hotel and resort operating properties | — | (6,395 | ) | (6,428 | ) | — | — | ||||||||||||||||
Reclassification of real estate from financing lease | (358 | ) | — | (1,920 | ) | (5,065 | ) | (13,503 | ) | ||||||||||||||
Reclassification of real estate from operating lease | (411 | ) | (14,353 | ) | (38,452 | ) | (126,263 | ) | — | ||||||||||||||
Reclassification of real estate to property held for sale | 716 | 20,748 | 46,800 | 126,263 | 100 | ||||||||||||||||||
Decrease in other investments | — | — | — | (3,453 | ) | — | |||||||||||||||||
Decrease in deferred income | — | — | — | 2,565 | — | ||||||||||||||||||
Increase in real estate accounted for under the operating method | — | — | — | 888 | — | ||||||||||||||||||
Reclassification from properties held for sale | (3,015 | ) | — | — | — | — | |||||||||||||||||
Reclassification from marketable equity and debt securities | — | — | — | — | (20,494 | ) | |||||||||||||||||
Reclassification from receivable and other assets | — | — | — | (1,631 | ) | ||||||||||||||||||
Reclassification to other investments | — | — | — | 1,631 | 20,494 | ||||||||||||||||||
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Net unrealized (losses) gains on securities available for sale | $ | (2,394 | ) | $ | 2,378 | $ | 33 | $ | 9,174 | $ | (242 | ) | |||||||||||
Increase in equity and debt securities | $ | 805 | $ | 300 | $ | 1,740 | $ | 1,200 | $ | 2,890 | |||||||||||||
Contribution of note from NEG Holding LLC | — | — | $ | — | $ | 10,940 | $ | — | |||||||||||||||
Change in tax asset related to acquisition | — | — | $ | 2,490 | $ | — | $ | — | |||||||||||||||
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy | — | — | $ | — | $ | 47,105 | $ | — | |||||||||||||||
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1. | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Oil and Natural Gas Properties |
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Other investments. |
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Revenue and Expense Recognition- |
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Fixed | ||||||||||||||||
Type contract | Production Month | Volume per month | price | Floor | Ceiling | |||||||||||
Fixed price | April-June 2004 | 300,000 MMBTU | $ | 5.44 | — | — | ||||||||||
Fixed price | July-Sept 2004 | 300,000 MMUTU | $ | 5.34 | — | — | ||||||||||
No cost collars | Oct-Dec 2004 | 300,000 MMBTU | — | $ | 5.25 | $ | 5.50 | |||||||||
No cost collars | Jan-Dec 2004 | 25,000 Bbls | — | $ | 28.72 | $ | 31.90 | |||||||||
No cost collars | Jan-Dec 2005 | 15,000 Bbls | — | $ | 42.50 | $ | 46.50 | |||||||||
No cost collars | Jan-Dec 2005 | 400,000 MMBTU | — | $ | 6.00 | $ | 8.35 | |||||||||
No cost collars | March-Dec 2005 | 9,000 Bbls | — | $ | 44.50 | $ | 48.00 | |||||||||
No cost collars | March-Dec 2005 | 210,000 MMBTU | — | $ | 6.05 | $ | 7.30 | |||||||||
No cost collars | Jan-Dec 2006 | 14,000 Bbls | — | $ | 41.65 | $ | 45.25 | |||||||||
No cost collars | Jan-Dec 2006 | 430,000 MMBTU | — | $ | 6.00 | $ | 7.25 |
March 31, | December 31, | |||||||
2005 | 2004 | |||||||
Realized (cash payments) | $ | 232,695 | $ | 3,906,325 | ||||
Valuation loss | 9,812,799 | 1,658,809 | ||||||
$ | 10,045,494 | $ | 5,565,134 | |||||
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2005 | 2004 | 2003 | ||||||||||
Balance, beginning of period | $ | 3,930 | $ | 3,477 | $ | 3,375 | ||||||
Accretion expense | 69 | 332 | 96 | |||||||||
Additions | — | 121 | 6 | |||||||||
Balance, end of period | $ | 3,999 | $ | 3,930 | $ | 3,477 | ||||||
Recently Issued Pronouncements |
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3. | RELATED PARTY TRANSACTIONS |
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4. | INVESTMENT IN U.S. GOVERNMENT AND AGENCY OBLIGATIONS |
December 31, | |||||||||||||||||||||||||
March 31, 2005 | 2004 | 2003 | |||||||||||||||||||||||
Cost | Carrying | Cost | Carrying | Cost | Carrying | ||||||||||||||||||||
Basis | Value | Basis | Value | Basis | Value | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||||
Matures in: | |||||||||||||||||||||||||
less than 1 year | $ | 68.9 | $ | 68.9 | $ | 96.8 | $ | 96.8 | $ | 52.8 | $ | 52.6 | |||||||||||||
2-5 years | 5.6 | 5.5 | 5.6 | 5.5 | 9.0 | 9.0 | |||||||||||||||||||
$ | 74.5 | $ | 74.4 | $ | 102.4 | $ | 102.3 | $ | 61.8 | $ | 61.6 | ||||||||||||||
5. | MARKETABLE EQUITY AND DEBT SECURITIES (IN $ MILLIONS) |
December 31, | ||||||||||||||||||||||||||
March 31, 2005 | 2004 | 2003 | ||||||||||||||||||||||||
Cost | Carrying | Cost | Carrying | Cost | Carrying | |||||||||||||||||||||
Basis | Value | Basis | Value | Basis | Value | |||||||||||||||||||||
Available for Sale: | ||||||||||||||||||||||||||
Philip Service Corporation(a): | ||||||||||||||||||||||||||
Equity | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Corporate bonds(b) | — | — | — | — | 45.1 | 51.6 | ||||||||||||||||||||
Other | 72.4 | 68.5 | 2.2 | 2.2 | 1.3 | 4.2 | ||||||||||||||||||||
Total | $ | 72.4 | $ | 68.5 | $ | 2.2 | $ | 2.2 | $ | 46.4 | $ | 55.8 | ||||||||||||||
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6. | DUE FROM BROKERS |
a. $147,223 at March 31, 2005 (unaudited) and $123,001 at December 31, 2004 — Due From Brokers — Net proceeds from short sales of equity securities and cash collateral held by brokerage institutions against our short sales. | |
b. $83,750 at March 31, 2005 (unaudited) and $90,674 at December 31, 2004 — Securities Sold Not Yet Purchased — Our obligation to cover the short sales of equity securities described above. The Company recorded unrealized losses on securities sold short of $23.6 million in the year ended December 31, 2004 reflecting an increase in price in the securities sold short. This amount has been |
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recorded in the consolidated statements of earnings for the year then ended in the respective caption. The Company recorded unrealized gains on securities sold short of $21.7 million in the three months ended March 31, 2005 (unaudited) reflecting a decrease in price of the securities sold short. This amount has been recorded in the consolidated statements of earnings for the three months ended March 31, 2005 in the respective caption. |
7. | OTHER INVESTMENTS (in $000’s) |
Balance at | ||||||||||||
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Peninsula/ Hampton & Alex Hotel (a) and (b) | $ | — | $ | — | $ | 42,030 | ||||||
WestPoint Stevens (c) | 205,850 | 205,850 | — | |||||||||
Union Power Partners L.P. and Panda Gila River L.P. (d) | 37,973 | 39,316 | — | |||||||||
Other | 779 | 782 | 8,298 | |||||||||
$ | 244,602 | $ | 245,948 | $ | 50,328 | |||||||
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8. | REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Minimum lease payments receivable | $ | 87,846 | $ | 97,725 | $ | 161,785 | ||||||
Unguaranteed residual value | 43,422 | 48,980 | 74,651 | |||||||||
131,268 | 146,705 | 236,436 | ||||||||||
Less unearned income | 51,579 | 57,512 | 99,080 | |||||||||
79,689 | 89,193 | 137,356 | ||||||||||
Less current portion of lease amortization | 3,740 | 3,912 | 5,738 | |||||||||
$ | 75,949 | $ | 85,281 | $ | 131,618 | |||||||
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Year Ending December 31, | Amount | |||
2005 | $ | 11,941 | ||
2006 | 11,746 | |||
2007 | 10,832 | |||
2008 | 9,476 | |||
2009 | 9,255 | |||
Thereafter | 44,475 | |||
$ | 97,725 | |||
9. | REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE OPERATING METHOD |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Land | $ | 13,286 | $ | 13,666 | $ | 24,040 | ||||||
Commercial Buildings | 52,672 | 45,972 | 83,252 | |||||||||
65,958 | 59,638 | 107,292 | ||||||||||
Less accumulated depreciation | 14,831 | 10,520 | 30,849 | |||||||||
$ | 51,127 | $ | 49,118 | $ | 76,443 | |||||||
Year Ending December 31, | Amount | |||
2005 | $ | 7,186 | ||
2006 | 6,232 | |||
2007 | 5,649 | |||
2008 | 5,383 | |||
2009 | 5,001 | |||
Thereafter | 19,753 | |||
$ | 49,204 | |||
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December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Leased to others | $ | 40,035 | $ | 74,444 | $ | 146,416 | ||||||
Vacant | 450 | 450 | 2,550 | |||||||||
40,485 | 74,894 | 148,966 | ||||||||||
Less accumulated depreciation | 6,490 | 16,873 | 20,153 | |||||||||
$ | 33,995 | $ | 58,021 | $ | 128,813 | |||||||
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Rental income | $ | 1,462 | $ | 5,871 | $ | 15,658 | $ | 23,093 | $ | 21,073 | ||||||||||
Hotel and resort operating income | 709 | 1,064 | 3,868 | 6,128 | 5,676 | |||||||||||||||
2,171 | 6,935 | 19,526 | 29,221 | 26,749 | ||||||||||||||||
Mortgage interest expense | 399 | 1,726 | 3,858 | 7,208 | 6,737 | |||||||||||||||
Depreciation and amortization | 31 | 210 | 1,244 | 5,130 | 4,464 | |||||||||||||||
Property expenses | 147 | 1,107 | 3,123 | 3,549 | 3,409 | |||||||||||||||
Hotel and resort operating expenses | 637 | 674 | 3,801 | 5,681 | 5,202 | |||||||||||||||
1,214 | 3,717 | 12,026 | 21,568 | 19,812 | ||||||||||||||||
Income from discontinued operations | $ | 957 | $ | 3,218 | $ | 7,500 | $ | 7,653 | $ | 6,937 | ||||||||||
10. | HOTEL AND CASINO OPERATING PROPERTIES |
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Three Months Ended | |||||||||||||||||||||
March 31, | Year Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Unaudited) | (In $000’s) | ||||||||||||||||||||
Hotel and casino operating income: | |||||||||||||||||||||
Casino | $ | 47,729 | $ | 42,592 | $ | 167,972 | $ | 147,888 | $ | 143,057 | |||||||||||
Hotel | 15,793 | 13,888 | 54,653 | 47,259 | 44,263 | ||||||||||||||||
Food and beverage | 17,076 | 16,701 | 66,953 | 59,583 | 56,349 | ||||||||||||||||
Tower, retail, and other income | 8,206 | 7,976 | 33,778 | 30,336 | 28,247 | ||||||||||||||||
Gross revenues | 88,804 | 81,157 | 323,356 | 285,066 | 271,916 | ||||||||||||||||
Less promotional allowances | (5,966 | ) | (6,148 | ) | (23,375 | ) | (22,255 | ) | (21,893 | ) | |||||||||||
Net revenues | $ | 82,838 | $ | 75,009 | $ | 299,981 | $ | 262,811 | $ | 250,023 | |||||||||||
Hotel and casino operating expenses: | |||||||||||||||||||||
Casino | $ | 15,900 | $ | 15,696 | $ | 61,985 | $ | 61,284 | $ | 59,879 | |||||||||||
Hotel | 6,023 | 5,596 | 24,272 | 22,074 | 20,142 | ||||||||||||||||
Food and beverage | 12,376 | 11,620 | 48,495 | 44,990 | 43,393 | ||||||||||||||||
Other operating expenses | 3,619 | 3,151 | 14,131 | 13,524 | 14,505 | ||||||||||||||||
Selling, general, and administrative | 19,706 | 18,180 | 78,720 | 74,985 | 80,019 | ||||||||||||||||
Total expenses | $ | 57,624 | $ | 54,243 | $ | 227,603 | $ | 216,857 | $ | 217,938 | |||||||||||
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Land and improvements, including land held for development | $ | 47,274 | $ | 47,210 | $ | 47,041 | ||||||
Building and improvements | 221,847 | 221,314 | 220,280 | |||||||||
Furniture, fixtures and equipment | 112,379 | 108,595 | 98,586 | |||||||||
Construction in progress | 7,577 | 7,348 | 7,224 | |||||||||
389,077 | 384,467 | 373,131 | ||||||||||
Less accumulated depreciation and amortization | 100,187 | 95,107 | 74,428 | |||||||||
$ | 288,890 | $ | 289,360 | $ | 298,703 | |||||||
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(In $000’s) | ||||
Years ending December 31, | ||||
2005 | $ | 5,877 | ||
2006 | 4,778 | |||
2007 | 3,615 | |||
2008 | 2,177 | |||
2009 | 1,224 | |||
Thereafter | 959 | |||
Total payments | $ | 18,630 | ||
11. | HOTEL AND RESORT OPERATING PROPERTIES |
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12. | INVESTMENT IN DEBT SECURITIES OF AFFILIATES (in $000’s): |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Atlantic Holdings/GB Holdings(a) | $ | 60,650 | $ | 60,004 | $ | 24,696 | ||||||
Panaco(c) | 36,643 | 38,000 | — | |||||||||
97,293 | 98,004 | 24,696 | ||||||||||
Less current portion | (5,429 | ) | (5,429 | ) | — | |||||||
$ | 91,864 | $ | 92,575 | $ | 24,696 | |||||||
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13. | EQUITY INTEREST IN GB HOLDINGS, INC. |
• | $26,914,500 principal amount of the Atlantic Holdings Notes; | |
• | $3,620,753 in cash representing accrued interest on the GB Notes and $100 per $1,000 in principal amount of the GB Notes; and | |
• | 3,627,711 warrants, which under certain conditions will allow the Company to purchase approximately 998,000 shares of common stock at $.01 per share of Atlantic Holdings representing approximately 10% of the outstanding common stock of Atlantic Holdings, on a fully diluted basis. |
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14. | NATIONAL ENERGY GROUP |
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December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Current assets | $ | 30,991 | $ | 23,146 | $ | 33,415 | ||||||
Noncurrent assets(1) | 251,438 | 237,127 | 190,389 | |||||||||
Total assets | $ | 282,429 | $ | 260,273 | $ | 223,804 | ||||||
Current liabilities | $ | 35,699 | $ | 22,456 | $ | 14,253 | ||||||
Noncurrent liabilities | 83,732 | 63,636 | 48,514 | |||||||||
Total liabilities | 119,431 | 86,092 | 62,767 | |||||||||
Members’ equity | 162,998 | 174,181 | 161,037 | |||||||||
Total liabilities and members’ equity | $ | 282,429 | $ | 260,273 | $ | 223,804 | ||||||
(1) | Primarily oil and gas properties |
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | (In $000’s) | |||||||||||||||||||
Total revenues | $ | 2,870 | $ | 25,569 | $ | 78,727 | $ | 77,606 | $ | 35,900 | ||||||||||
Costs and expenses | (13,137 | ) | (11,044 | ) | (47,313 | ) | (46,766 | ) | (32,064 | ) | ||||||||||
Operating income | (10,267 | ) | 14,525 | 31,414 | 30,840 | 3,836 | ||||||||||||||
Other income (expense) | (916 | ) | (358 | ) | (2,292 | ) | 30 | 10,090 | ||||||||||||
Net income | $ | (11,183 | ) | $ | 14,167 | $ | 29,122 | $ | 30,870 | $ | 13,926 | |||||||||
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December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Investment in Holding LLC at beginning of period | $ | 87,800 | $ | 69,346 | $ | 108,880 | ||||||
Priority distribution from Holding LLC | — | — | (51,446 | ) | ||||||||
Guaranteed payment from Holding LLC | — | (15,978 | ) | (18,230 | ) | |||||||
Accretion of investment in Holding LLC | 9,893 | 34,432 | 30,142 | |||||||||
Investment in Holding LLC at end of period | $ | 97,693 | $ | 87,800 | $ | 69,346 | ||||||
1. Guaranteed payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding priority distribution amount. The priority distribution amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of NEG’s 10.75% Senior Notes. As of March 31, 2005 (unaudited) and December 31, 2004, the priority distribution amount was $148.6 million which equals the amount of NEG’s 10.75% Senior Notes due the Company. The guaranteed payments will be made on a semi-annual basis. | |
2. The priority distribution amount is to be paid to NEG. Such payment is to occur by November 6, 2006. | |
3. An amount equal to the priority distribution amount and all guaranteed payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by NEG to Gascon, is to be paid to Gascon. | |
4. An amount equal to the aggregate annual interest (calculated at prime plus1/2% on the sum of the guaranteed payments), plus any unpaid interest for prior years (calculated at prime plus1/2% on the sum of the guaranteed payments), less any distributions previously made by NEG to Gascon, is to be paid to Gascon. | |
5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts. |
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December 31, | |||||||||
2004 | 2003 | ||||||||
Proved Properties | $ | 221,351 | $ | 182,193 | |||||
Unproved Properties | — | — | |||||||
Other property and equipment | 540 | 2,369 | |||||||
Total | 221,891 | 184,562 | |||||||
Less: Accumulated depreciation, depletion and amortization | (53,755 | ) | (15,641 | ) | |||||
$ | 168,136 | $ | 168,921 | ||||||
2004 | 2003 | ||||||||
Development costs | $ | 14,284 | $ | 556 | |||||
Exploration costs | 33,202 | — | |||||||
Total | $ | 47,486 | $ | 556 | |||||
Depletion rate per MCFe | $ | 4.70 | $ | 4.39 | |||||
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December 31, | |||||||||||||||||
2004 | 2003 | ||||||||||||||||
Oil and | Oil and | ||||||||||||||||
Condensate | Condensate | ||||||||||||||||
(barrels) | Gas (MCF) | (barrels) | Gas (MCF) | ||||||||||||||
Proved Reserves: | |||||||||||||||||
Beginning of period | 3,124,112 | 38,655,526 | 1,120,400 | 41,440,700 | |||||||||||||
Increase (decrease) during the period attributable to: | |||||||||||||||||
Revisions of previous estimates | 234,521 | (5,630,633 | ) | 2,351,163 | (308,688 | ) | |||||||||||
Extensions and discoveries | 78,453 | 16,875,613 | — | — | |||||||||||||
Sales of reserves | — | — | — | — | |||||||||||||
Production | (918,905 | ) | (5,788,974 | ) | (347,451 | ) | (2,476,486 | ) | |||||||||
End of period | 2,518,181 | 44,111,532 | 3,124,112 | 38,655,526 | |||||||||||||
Proved developed reserves: | |||||||||||||||||
Beginning of period | 2,755,522 | 21,557,712 | 431,400 | 15,802,000 | |||||||||||||
End of period(1) | 2,410,912 | 26,179,029 | 2,755,522 | 21,557,712 |
(1) | includes proved developed non-producing reserves for 2004 and 2003 of 788,042 and 57,441 barrels of oil and 10,479,632 and 4,586,423 mcf of gas, respectively. |
2004 | 2003 | |||||||
Future cash inflows | $ | 354,725,200 | $ | 313,032,000 | ||||
Future production costs | 78,680,400 | 59,113,600 | ||||||
Future development costs | 54,721,925 | 35,690,500 | ||||||
Future income taxes | — | — | ||||||
Future net cash flows | 221,322,875 | 218,227,900 | ||||||
Annual discount (10%) for estimated timing of cash flows | 60,105,800 | 53,790,300 | ||||||
Standardized measure of discounted future net cash flows | $ | 161,217,075 | $ | 164,437,600 | ||||
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2004 | 2003 | |||||||
Beginning of period | $ | 164,437,600 | $ | 101,803,900 | ||||
Sales, net of production costs | (47,635,549 | ) | (16,761,000 | ) | ||||
Net change in prices, net of production costs | (14,353,925 | ) | 31,943,125 | |||||
Revisions of quantity estimates | (17,464,167 | ) | 44,507,391 | |||||
Extensions and discoveries | 74,451,060 | — | ||||||
Development costs incurred | 14,056,670 | 556,000 | ||||||
Change in estimated future development costs | (28,921,504 | ) | 4,930,232 | |||||
Accretion of discount | 16,443,760 | 3,393,463 | ||||||
Changes in production rates and other | 203,130 | (5,935,511 | ) | |||||
End of period | $ | 161,217,075 | $ | 164,437,600 | ||||
15. | SIGNIFICANT PROPERTY TRANSACTIONS |
a. In September 2002, the Company purchased an industrial building located in Nashville, Tennessee for approximately $18.2 million. The building was constructed in 2001 and is fully leased to two tenants, Alliance Healthcare and Jet Equipment & Tools Inc., with leases expiring in 2011. The annual net operating income was anticipated to be approximately $1.6 million increasing to approximately $1.9 million by 2011. In October 2002, the Company closed a $12.7 million non-recourse mortgage loan on the Nashville, Tennessee property. The loan bore interest at 6.4% per annum and was due to mature in ten years. Required payments were interest only for the first three years and then principal amortization would commence based on a thirty-year amortization schedule. In June 2004, the Company sold the property for a selling price of $19.2 million. A gain of approximately $1.4 million was recognized in the year ended December 31, 2004 and is included in discontinued operations in the Consolidated Statements of Earnings. | |
At December 31, 2003, the property had a carrying value of approximately $18,066,000 and was encumbered by a non-recourse mortgage in the amount of $12,700,000. | |
b. In October 2002, the Company sold a property located in North Palm Beach, Florida for a selling price of $3.5 million. A gain of approximately $2.4 million was recognized in the year ended December 31, 2002. | |
c. In October 2003, the Company sold a property located in Columbia, Maryland to its tenant for a selling price of $11 million. A gain of approximately $5.8 million was recognized in the year ended December 31, 2003. |
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d. In the year ended December 31, 2004, the Company sold 57 rental real estate properties for approximately $245 million which were encumbered by mortgage debt of approximately $94 million which was repaid from the sale proceeds. | |
In the year ended December 31, 2004, of the 57 properties, the Company sold nine financing lease properties for approximately $43.6 million. The properties were encumbered by mortgage debt of approximately $26.8 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $38.3 million; therefore, the Company recognized a gain on sale of approximately $5.3 million in the year ended December 31, 2004, which is included in income from continuing operations in the Consolidated Statements of Earnings. | |
In the year ended December 31, 2004, of the 57 properties, the Company sold 48 operating and held for sale properties for approximately $201.8 million. The properties were encumbered by mortgage debt of approximately $67 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $126.6 million. The Company recognized a gain on sale of approximately $75.2 million in year ended December 31, 2004, which is included in income from discontinued operations in the Consolidated Statements of Earnings. | |
In the three months ended March 31, 2005 (unaudited), the Company sold four rental real estate properties and a golf resort for approximately $51.9 million which were encumbered by mortgage debt of approximately $10.7 million repaid from the sale proceeds. | |
Of the five properties, the Company sold one financing lease property for approximately $8.4 million encumbered by mortgage debt of approximately $3.8 million. The carrying value of this property was approximately $8.2 million; therefore, the Company recognized a gain on sale of approximately $0.2 million in the three months ended March 31, 2005 (unaudited), which is included in income from continuing operations. The Company sold four operating properties for approximately $43.5 million encumbered by mortgage debt of approximately $6.9 million. The carrying value of these properties was approximately $24.8 million. The Company recognized a gain on sale of approximately $18.7 million in the three months ended March 31, 2005 (unaudited), which is included in income from discontinued operations. | |
At March 31, 2005, the Company had 11 properties under contract or as to which letters of intent had been executed by potential purchasers, all of which contracts or letters of intent are subject to purchaser’s due diligence and other closing conditions. Selling prices for the properties covered by the contracts or letters of intent would total approximately $45.5 million. These properties are encumbered by mortgage debt of approximately $25.3 million. At March 31, 2005, the carrying value of these properties is approximately $29.1 million. In accordance with generally accepted accounting principles, only the real estate operating properties under contract or letter of intent, but not the financing lease properties, were reclassified to “Properties Held for Sale” and the related income and expense reclassified to “Income from Discontinued Operations.” | |
e. In January 2004, in conjunction with its reinvestment program, the Company purchased a 34,422 square foot commercial condominium unit (“North Moore Condos”) located in New York City for approximately $14.5 million. The unit contains a Citibank branch, a furniture store and a restaurant. Current annual rent income from the three tenants is approximately $1,289,000. The Company obtained mortgage financing of $10 million for this property in April 2004. The mortgage bears interest at the rate of 5.73% per annum, and matures in March 2014. Annual debt service is $698,760. | |
f. In July 2004, the Company purchased two Vero Beach, Florida waterfront communities, Grand Harbor and Oak Harbor (“Grand Harbor”), including their respective golf courses, tennis complex, fitness center, beach club and clubhouses. The acquisition also included properties in various stages of development, including land for future residential development, improved lots and finished residential |
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units ready for sale. The purchase price was approximately $75 million, which included approximately $62 million of land and construction in progress. The Company plans to invest in the further development of these properties and the enhancement of the existing infrastructure. |
16. | MORTGAGES PAYABLE |
Balance at | Balance at | |||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
Annual Principal and | ||||||||||||||||||||
Range of Interest Rates | Range of Maturities | Interest Payment | 2005 | 2004 | 2003 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
5.630% — 8.250% | 10/15/07–10/01/14 | $ | 9,373 | $ | 80,191 | $ | 91,896 | $ | 180,989 | |||||||||||
Less current portion and mortgages on properties held for sale | (24,577 | ) | (31,177 | ) | (87,753 | ) | ||||||||||||||
$ | 55,614 | $ | 60,719 | $ | 93,236 | |||||||||||||||
Year Ending December 31, | Amount | |||
2005 | $ | 4,759 | ||
2006 | 5,116 | |||
2007 | 11,428 | |||
2008 | 24,385 | |||
2009 | 7,211 | |||
2010 — 2014 | 38,997 | |||
$ | 91,896 | |||
a. See Note 15a. for Mid-South Logistics financing in October 2002. | |
b. On May 16, 2003, the Company executed a mortgage note secured by a distribution facility located in Windsor Locks, Connecticut and obtained funding in the principal amount of $20 million. The loan bears interest at 5.63% per annum and matures on June 1, 2013. Annual debt service is approximately $1,382,000 based on a 30 year amortization schedule. | |
c. See Note 15e. for North Moore Condo financing in April 2004. |
17. | SENIOR NOTES AND CREDIT FACILITIES DUE AFFILIATES |
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18. | SENIOR SECURED NOTES PAYABLE AND CREDIT FACILITY |
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20. | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Unaudited) | ||||||||||||
Accrued liabilities | $ | 11,617 | $ | 25,547 | $ | 22,057 | ||||||
Accrued payroll | 10,984 | 11,113 | 12,507 | |||||||||
Due to Panaco, Inc. | — | 16,242 | — | |||||||||
Other | 74,213 | 42,975 | 21,315 | |||||||||
$ | 96,814 | $ | 95,877 | $ | 55,879 | |||||||
21. | INCOME TAXES (in $000’s) |
December 31, | |||||||||
2004 | 2003 | ||||||||
The difference between the book basis and the tax basis of the net assets of the Company, not directly subject to income taxes, is as follows: | |||||||||
Book basis of AREH net assets excluding American Casino, TransTexas and NEG | $ | 1,319,566 | $ | 1,149,418 | |||||
Excess of tax over book | 120,820 | 79,238 | |||||||
Tax basis of net assets | $ | 1,440,386 | $ | 1,228,656 | |||||
(i) The Company’s corporate subsidiaries recorded the following income tax (expense) benefit attributable to continuing operations for American Casino, TransTexas and NEG for the three months |
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ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002 (in $000’s): |
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Current | $ | (1,105 | ) | $ | (4,655 | ) | $ | (3,030 | ) | $ | (5,506 | ) | $ | (311 | ) | |||||
Deferred | (3,677 | ) | (1,311 | ) | (14,296 | ) | 22,256 | (9,785 | ) | |||||||||||
$ | (4,782 | ) | $ | (5,966 | ) | $ | (17,326 | ) | $ | 16,750 | $ | (10,096 | ) | |||||||
(ii) The tax effect of significant differences representing net deferred tax assets (the difference between financial statement carrying values and the tax basis of assets and liabilities) for the Company is as follows at March 31, 2005 (unaudited), December 31, 2004 and 2003 (in $000’s): |
December 31, | |||||||||||||
March 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Unaudited) | |||||||||||||
Deferred tax assets: | |||||||||||||
Depreciation | $ | 49,607 | $ | 54,489 | $ | 54,439 | |||||||
Net operating loss carryforwards | 55,724 | 53,610 | 51,997 | ||||||||||
Investment in Holding LLC | 1,927 | 5,333 | 18,845 | ||||||||||
Other | 11,955 | 9,458 | 8,841 | ||||||||||
119,213 | 122,890 | 134,122 | |||||||||||
Valuation allowance | (64,381 | ) | (64,381 | ) | (65,695 | ) | |||||||
Subtotal | 54,832 | 58,509 | 68,427 | ||||||||||
Less current portion | (2,685 | ) | (2,685 | ) | (2,982 | ) | |||||||
Net deferred tax assets — non current | $ | 52,147 | $ | 55,824 | $ | 65,445 | |||||||
(iii) The provision (benefit) for income taxes differs from the amount computed at the federal statutory rate as a result of the following: |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
Tax deduction not given book benefit | 1.0 | 5.6 | 0.0 | |||||||||
Income not subject to taxation | (24.2 | ) | (15.2 | ) | (22.3 | ) | ||||||
Valuation allowance | (2.3 | ) | (51.8 | ) | (0.5 | ) | ||||||
Other | 0.0 | (1.4 | ) | 0.3 | ||||||||
9.5 | % | (27.8 | )% | 12.5 | % | |||||||
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22. | COMMITMENTS AND CONTINGENCIES |
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23. | EMPLOYEE BENEFIT PLANS |
24. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
Other Investments |
At March 31, 2005 | At December 31, 2004 | At December 31, 2003 | ||||||||||||||||||||||
Net | Estimated | Net | Estimated | Net | Estimated | |||||||||||||||||||
Investment | Fair Value | Investment | Fair Value | Investment | Fair Value | |||||||||||||||||||
Total | $ | 244,602 | $ | 247,600 | $ | 245,948 | $ | 248,900 | $ | 50,328 | $ | 55,000 | ||||||||||||
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Mortgages Payable |
At March 31, 2005 | At December 31, 2004 | At December 31, 2003 | ||||||||||||||||||||||
Carrying | Estimated | Carrying | Estimated | Carrying | Estimated | |||||||||||||||||||
Value | Fair Value | Value | Fair Value | Value | Fair Value | |||||||||||||||||||
Total | $ | 80,191 | $ | 81,955 | $ | 91,896 | $ | 93,900 | $ | 180,989 | $ | 185,000 | ||||||||||||
Limitations |
25. | SEGMENT REPORTING |
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March 31, | December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Hotel & casino operating properties | $ | 81,852 | $ | 74,661 | $ | 297,868 | $ | 259,345 | $ | 250,328 | ||||||||||||
Land, house and condominium sales | 8,279 | 5,014 | 26,591 | 13,265 | 76,024 | |||||||||||||||||
Rental real estate | 4,001 | 4,963 | 17,796 | 20,206 | 21,574 | |||||||||||||||||
Hotel & resort operating properties | 5,563 | 1,335 | 16,211 | 12,376 | 12,921 | |||||||||||||||||
Oil & gas operating properties | 27,423 | 24,701 | 99,738 | 57,670 | 40,516 | |||||||||||||||||
Other investments | 10,440 | 4,818 | 34,682 | 14,033 | 15,283 | |||||||||||||||||
Subtotal | 137,558 | 115,492 | 492,886 | 376,895 | 416,646 | |||||||||||||||||
Reconciling items(1) | 6,668 | (1) | 960 | (1) | 13,310 | 11,770 | (1) | 18,006 | (1) | |||||||||||||
Total revenues | $ | 144,226 | $ | 116,452 | $ | 506,196 | $ | 388,665 | $ | 434,652 | ||||||||||||
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March 31, | December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Net earnings: | ||||||||||||||||||||||
Segment earnings: | ||||||||||||||||||||||
Hotel & casino operating properties | $ | 24,228 | $ | 20,418 | $ | 70,265 | $ | 42,488 | $ | 32,390 | ||||||||||||
Land, house and condominium sales | 1,232 | 1,656 | 6,355 | 4,136 | 21,384 | |||||||||||||||||
Oil & gas operating properties | 11,689 | 18,412 | 48,665 | 35,907 | 33,411 | |||||||||||||||||
Rental real estate | 3,049 | 3,878 | 12,865 | 14,368 | 14,206 | |||||||||||||||||
Hotel and resort operating properties | 158 | (89 | ) | 2,672 | 4,219 | 2,679 | ||||||||||||||||
Other investments | 10,440 | 4,818 | 63,790 | 23,538 | 15,283 | |||||||||||||||||
Total segment earnings | 50,796 | 49,093 | 201,615 | 124,656 | 119,353 | |||||||||||||||||
Interest income | 6,668 | 960 | 13,310 | 11,770 | 18,006 | |||||||||||||||||
Interest expense | (18,411 | ) | (5,966 | ) | (45,229 | ) | (24,608 | ) | (27,297 | ) | ||||||||||||
General and administrative expenses | (4,555 | ) | (1,933 | ) | (9,806 | ) | (6,851 | ) | (7,029 | ) | ||||||||||||
Depreciation and amortization | (15,704 | ) | (18,396 | ) | (67,620 | ) | (40,570 | ) | (23,646 | ) | ||||||||||||
Operating Income | 18,794 | 23,758 | 92,270 | 64,397 | 79,387 | |||||||||||||||||
Gain on sales and disposition of real estate from continuing operations | 186 | 6,047 | 5,262 | 7,121 | 8,990 | |||||||||||||||||
(Loss) on sale of other assets | (180 | ) | (4 | ) | 1,680 | (1,503 | ) | (353 | ) | |||||||||||||
Write-down of marketable equity and debt securities and other investments | — | — | — | (19,759 | ) | (8,476 | ) | |||||||||||||||
Gain on sale of marketable equity securities | — | 28,857 | 40,159 | 2,607 | — | |||||||||||||||||
Unrealized losses on securities sold short | 21,704 | — | (23,619 | ) | — | — | ||||||||||||||||
Impairment loss on equity interest in GB Holdings, Inc. | — | — | (15,600 | ) | — | — | ||||||||||||||||
Severance tax refund | — | — | 4,468 | — | — | |||||||||||||||||
Minority interest | — | (39 | ) | (812 | ) | (1,266 | ) | (1,943 | ) | |||||||||||||
Income tax (expense) benefit | (4,782 | ) | (5,966 | ) | (17,326 | ) | 16,750 | (10,096 | ) | |||||||||||||
Income from discontinued operations | 19,680 | 10,147 | 82,697 | 11,006 | 6,937 | |||||||||||||||||
General partner’s share of net income | (554 | ) | (628 | ) | (1,692 | ) | (794 | ) | (744 | ) | ||||||||||||
Net earnings-limited partners | $ | 54,848 | $ | 62,172 | $ | 162,487 | $ | 78,559 | $ | 73,702 | ||||||||||||
(1) | Primarily interest income on U.S. Government and Agency obligations and other short-term investments and Icahn note receivable. |
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December 31, | ||||||||||||||||||
March 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002 | |||||||||||||||
(Unaudited) | ||||||||||||||||||
Assets: | ||||||||||||||||||
Rental real estate | $ | 164,811 | $ | 196,332 | $ | 340,062 | $ | 359,700 | ||||||||||
Oil and gas properties | 180,241 | 168,136 | 168,921 | — | ||||||||||||||
Hotel and casino operating properties | 288,890 | 289,360 | 298,703 | 290,775 | ||||||||||||||
Land and construction-in-progress | 106,000 | 106,537 | 43,459 | 40,415 | ||||||||||||||
Hotel and resort operating properties | 46,041 | 50,132 | 41,526 | 44,346 | ||||||||||||||
Other investments | 466,252 | 444,603 | 231,050 | 479,104 | ||||||||||||||
1,252,235 | 1,255,100 | 1,123,721 | 1,214,340 | |||||||||||||||
Reconciling items | 1,686,451 | 1,161,615 | 723,521 | 510,945 | ||||||||||||||
Total | $ | 2,938,686 | $ | 2,416,715 | $ | 1,847,242 | $ | 1,725,285 | ||||||||||
Real estate investment capital expenditures: | ||||||||||||||||||
Acquisitions: | ||||||||||||||||||
Rental real estate | $ | — | $ | 14,583 | $ | — | $ | 18,226 | ||||||||||
Land and construction-in-progress | — | 61,845 | — | — | ||||||||||||||
Hotel and casino operating properties | — | 125,900 | — | — | ||||||||||||||
Hotel and resort operating properties | — | 16,463 | — | — | ||||||||||||||
$ | — | $ | 218,791 | $ | — | $ | 18,226 | |||||||||||
Developments: | ||||||||||||||||||
Rental real estate | $ | — | $ | 18 | $ | 413 | $ | 181 | ||||||||||
Oil and gas operating properties | 21,071 | 47,529 | 633 | — | ||||||||||||||
Land and construction-in-progress | — | 17,947 | — | 1,138 | ||||||||||||||
Hotel and casino operating properties | 4,711 | 13,589 | 31,844 | 19,133 | ||||||||||||||
Hotel and resort operating properties | 70 | 2,614 | 1,067 | 2,582 | ||||||||||||||
$ | 25,852 | $ | 81,697 | $ | 33,957 | $ | 23,034 | |||||||||||
26. | SUBSEQUENT EVENTS |
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/s/ Grant Thornton LLP |
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December 31, | |||||
2004 | |||||
ASSETS | |||||
Cash and cash equivalents | $ | 149,889 | |||
Investment in partnerships (Note B) | 27,588,000 | ||||
Accrued interest receivable (Note C) | 59,538 | ||||
$ | 27,797,427 | ||||
LIABILITIES AND STOCKHOLDER’S EQUITY | |||||
Accounts payable and accrued expenses | $ | 15,198 | |||
Stockholder’s equity: | |||||
Common stock — $1 par value, 1,216 shares authorized, 216 shares outstanding | 216 | ||||
Additional paid-in capital | 26,228,997 | ||||
Note receivable from affiliate (Note C) | (9,500,000 | ) | |||
Retained earnings | 11,053,016 | ||||
Total stockholder’s equity | 27,782,229 | ||||
Total liabilities and stockholder’s equity | $ | 27,797,427 | |||
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1. Organization |
2. | Cash and Cash Equivalents |
3. | Use of Estimates |
4. | Income Taxes |
5. | Investments in Partnerships |
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Cash and cash equivalents | $ | 762,708 | |||
Investment in U.S. government and agency obligations | 96,840 | ||||
Due from brokers | 123,001 | ||||
Other current assets | 148,726 | ||||
Total current assets | 1,131,275 | ||||
Other investments | 245,948 | ||||
Land and construction-in-progress | 106,537 | ||||
Real estate leased to others | 134,399 | ||||
Hotel casino and resort operating properties | 339,492 | ||||
Investment in debt securities of affiliates | 115,075 | ||||
Investment in NEG Holding LLC | 87,800 | ||||
Other assets | 102,531 | ||||
Total assets | $ | 2,263,057 | |||
Accounts payable, accrued expenses and other current liabilities | $ | 81,793 | |||
Securities sold not yet purchased | 90,674 | ||||
Other current liabilities | 31,177 | ||||
Total current liabilities | 203,644 | ||||
Mortgages payable | 60,719 | ||||
Senior secured notes payable | 215,000 | ||||
Senior unsecured notes payable | 350,598 | ||||
Preferred limited partnership units | 106,731 | ||||
Other liabilities | 23,239 | ||||
Total liabilities | 959,931 | ||||
Partners’ equity | 1,303,126 | ||||
Total liabilities and partners’ equity | $ | 2,263,057 | |||
General partners equity | $ | (12,984 | ) |
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/s/Grant Thornton LLP |
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/s/ KPMG LLP |
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December 31, | ||||||||||
2004 | 2003 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 882,841 | $ | 15,401,433 | ||||||
Accounts receivable — oil and natural gas sales | 18,220,105 | 13,214,537 | ||||||||
Accounts receivable — joint interest and other (net of allowance of $104,000 in 2004 & 2003) | 495,272 | 485,083 | ||||||||
Notes receivable — other (net of allowance of $790,000 in 2004) | 489,389 | 1,220,960 | ||||||||
Derivative broker deposit | — | 1,700,000 | ||||||||
Drilling prepayments | 858,114 | 1,106,871 | ||||||||
Other | 2,200,156 | 286,399 | ||||||||
Total current assets | 23,145,877 | 33,415,283 | ||||||||
Oil and natural gas properties, at cost (full cost method): | ||||||||||
Subject to ceiling limitation | 573,069,515 | 507,250,803 | ||||||||
Accumulated depreciation, depletion, and amortization | (343,485,274 | ) | (322,443,045 | ) | ||||||
Net oil and natural gas properties | 229,584,241 | 184,807,758 | ||||||||
Other property and equipment | 5,055,490 | 4,838,114 | ||||||||
Accumulated depreciation | (4,063,781 | ) | (3,746,317 | ) | ||||||
Net other property and equipment | 991,709 | 1,091,797 | ||||||||
Note receivable | 3,090,000 | 1,827,000 | ||||||||
Equity investment | 2,379,108 | 1,698,000 | ||||||||
Other long term assets | 1,082,504 | 964,500 | ||||||||
Total assets | $ | 260,273,439 | $ | 223,804,338 | ||||||
LIABILITIES AND MEMBERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable — trade | $ | 10,239,384 | $ | 2,879,138 | ||||||
Accounts payable — affiliate | 1,595,235 | 411,731 | ||||||||
Accounts payable — revenue | 4,104,029 | 3,964,530 | ||||||||
Prepayments from partners | 90,186 | 265,871 | ||||||||
Other | 77,593 | 136,707 | ||||||||
Derivative financial instruments | 6,349,714 | 6,595,475 | ||||||||
Total current liabilities | 22,456,141 | 14,253,452 | ||||||||
Long term liabilities: | ||||||||||
Note payable | 83,031 | 592,889 | ||||||||
Gas balancing | 897,852 | 818,621 | ||||||||
Credit facility | 51,833,624 | 43,833,624 | ||||||||
Asset retirement obligation | 3,055,240 | 3,268,381 | ||||||||
Derivative financial instruments | 7,766,144 | — | ||||||||
Members’ equity | 174,181,407 | 161,037,371 | ||||||||
Total liabilities and members’ equity | $ | 260,273,439 | $ | 223,804,338 | ||||||
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Year Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
Revenues: | ||||||||||||||
Oil and natural gas sales | $ | 76,677,224 | $ | 75,740,373 | $ | 35,319,918 | ||||||||
Field operations | 326,960 | 297,069 | 403,933 | |||||||||||
Plant operations | 1,723,305 | 1,568,502 | 177,049 | |||||||||||
Total revenue | 78,727,489 | 77,605,944 | 35,900,900 | |||||||||||
Costs and expenses: | ||||||||||||||
Lease operating | 13,505,366 | 11,501,303 | 8,508,744 | |||||||||||
Field operations | 334,443 | 397,669 | 420,188 | |||||||||||
Plant operations | 680,066 | 577,003 | 68,767 | |||||||||||
Oil and natural gas production taxes | 5,732,265 | 5,770,865 | 1,874,854 | |||||||||||
Depreciation, depletion and amortization | 21,385,529 | 23,442,797 | 15,509,106 | |||||||||||
Accretion of asset retirement obligation | 261,471 | 242,752 | — | |||||||||||
Amortization of loan cost | 494,386 | — | — | |||||||||||
General and administrative | 4,919,525 | 4,833,546 | 5,682,804 | |||||||||||
Total costs and expenses | 47,313,051 | 46,765,935 | 32,064,463 | |||||||||||
Operating income | 31,414,438 | 30,840,009 | 3,836,437 | |||||||||||
Other income (expense): | ||||||||||||||
Interest expense | (2,222,009 | ) | (1,538,048 | ) | (96,491 | ) | ||||||||
Interest income and other, net | 299,327 | 472,337 | 1,245,204 | |||||||||||
Interest income from affiliate | 149,650 | 114,867 | 546,228 | |||||||||||
Commitment fee income | — | 125,000 | 175,000 | |||||||||||
Equity in loss on investment | (518,892 | ) | (102,000 | ) | — | |||||||||
Dividend expense | — | — | (145,200 | ) | ||||||||||
Gain (loss) on sale of securities | — | (953,790 | ) | 8,711,915 | ||||||||||
Unrealized loss on financial instruments/short sale | — | — | (346,992 | ) | ||||||||||
Income before cumulative effect of change in accounting principle | 29,122,514 | 28,958,375 | 13,926,101 | |||||||||||
Cumulative effect of change in accounting principle | — | 1,911,705 | — | |||||||||||
Net income | $ | 29,122,514 | $ | 30,870,080 | $ | 13,926,101 | ||||||||
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Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Operating Activities | |||||||||||||
Net income | $ | 29,122,514 | $ | 30,870,080 | $ | 13,926,101 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation, depletion and amortization | 21,385,529 | 23,442,797 | 15,509,106 | ||||||||||
Change in fair market value of derivative contracts | 7,520,383 | 2,987,013 | 3,608,462 | ||||||||||
Unrealized loss on financial instruments/short sale | — | — | 346,992 | ||||||||||
Gain (loss) on sale of assets | (6,136 | ) | — | 7,058 | |||||||||
Equity in loss on investment | 518,892 | 102,000 | — | ||||||||||
Accretion of asset retirement obligation | 261,471 | 242,752 | — | ||||||||||
Provision for doubtful account | 790,000 | — | — | ||||||||||
Amortization of note costs | 494,386 | — | — | ||||||||||
Cumulative effect of change in accounting principle | — | (1,911,705 | ) | — | |||||||||
Changes in operating assets and liabilities: | |||||||||||||
Accounts receivable | (5,078,989 | ) | (1,296,013 | ) | (2,069,815 | ) | |||||||
Notes receivable | (1,258,198 | ) | (1,831,802 | ) | (2,774,968 | ) | |||||||
Drilling prepayments | 248,758 | (380,288 | ) | (457,565 | ) | ||||||||
Derivative broker deposit | 1,700,000 | 100,000 | (1,800,000 | ) | |||||||||
Other current assets | (2,086,257 | ) | (26,215 | ) | 912,577 | ||||||||
Accounts payable and accrued liabilities | 8,017,822 | 493,730 | (566,450 | ) | |||||||||
Net cash provided by operating activities | 61,630,175 | 52,792,349 | 26,641,498 | ||||||||||
Investing Activities | |||||||||||||
Oil and natural gas exploration and development expenditures | (67,487,412 | ) | (36,034,277 | ) | (18,106,385 | ) | |||||||
Longfellow Ranch acquisition | — | — | (51,037,347 | ) | |||||||||
Purchases of other property and equipment | (245,250 | ) | (149,897 | ) | (222,039 | ) | |||||||
Increase in restricted cash | — | — | (346,992 | ) | |||||||||
Proceeds from sales of oil and natural gas properties | 1,202,263 | 1,436,016 | 1,434,212 | ||||||||||
Equity investment | (1,200,000 | ) | (1,800,000 | ) | — | ||||||||
Net cash used in investing activities | (67,730,399 | ) | (36,548,158 | ) | (68,278,551 | ) | |||||||
Financing Activities | |||||||||||||
Proceeds from Arnos credit facility | — | 46,756,377 | — | ||||||||||
Repayment of Arnos credit facility | — | (46,756,377 | ) | — | |||||||||
Proceeds from Mizuho credit facility | 8,000,000 | 43,833,624 | — | ||||||||||
Loan issuance costs | (439,890 | ) | (951,697 | ) | — | ||||||||
Guaranteed Payment to member | (15,978,478 | ) | (18,228,781 | ) | (21,652,819 | ) | |||||||
Priority Amount distribution to member | — | (40,506,072 | ) | — | |||||||||
Net cash used in financing activities | (8,418,368 | ) | (15,852,926 | ) | (21,652,819 | ) | |||||||
Increase (decrease) in cash and cash equivalents | (14,518,592 | ) | 391,265 | (63,289,872 | ) | ||||||||
Cash and cash equivalents at beginning of period | 15,401,433 | 15,010,168 | 78,300,040 | ||||||||||
Cash and cash equivalents at end of period | $ | 882,841 | $ | 15,401,433 | $ | 15,010,168 | |||||||
Supplemental Cash Flow Information | |||||||||||||
Interest paid in cash | $ | 1,713,136 | $ | 1,537,127 | $ | 96,491 | |||||||
Distribution of member note payable | $ | — | $ | 10,939,750 | $ | — | |||||||
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Members’ | |||||
Equity | |||||
Balance at December 31, 2001 | $ | 207,568,612 | |||
Guaranteed Payment to member | (21,652,819 | ) | |||
Net income | 13,926,101 | ||||
Balance at December 31, 2002 | $ | 199,841,894 | |||
Guaranteed Payment to member | (18,228,781 | ) | |||
Priority Amount distribution to member | (51,445,822 | ) | |||
Net income | 30,870,080 | ||||
Balance at December 31, 2003 | $ | 161,037,371 | |||
Guaranteed Payment to member | (15,978,478 | ) | |||
Net income | 29,122,514 | ||||
Balance at December 31, 2004 | $ | 174,181,407 | |||
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1. | Background |
National Energy | ||||||||||||
Group, Inc. | Gascon | Total | ||||||||||
Current assets | $ | 11,535,745 | $ | 97,183,477 | $ | 108,719,222 | ||||||
Net oil and natural gas properties | 84,983,139 | 30,573,625 | 115,556,764 | |||||||||
Hedge assets | 4,807,689 | — | 4,807,689 | |||||||||
Intercompany receivable | — | 4,783,737 | 4,783,737 | |||||||||
Total assets | $ | 101,326,573 | $ | 132,540,839 | $ | 233,867,412 | ||||||
Current liabilities | $ | 4,157,430 | $ | 2,657,190 | $ | 6,814,620 | ||||||
Long-term liabilities | 940,033 | 1,377,782 | 2,317,815 | |||||||||
Intercompany payable | 4,783,737 | — | 4,783,737 | |||||||||
Members’ equity | 91,445,373 | 128,505,867 | 219,951,240 | |||||||||
Total liabilities and members’ equity | $ | 101,326,573 | $ | 132,540,839 | $ | 233,867,412 | ||||||
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2. | Significant Accounting Policies |
Consolidation |
Accounting Estimates |
Cash and Cash Equivalents |
Oil and Natural Gas Properties |
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Other Property and Equipment |
Income Taxes |
Financial Instruments |
Accounts Receivable |
F-220
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Revenue Recognition |
Natural Gas Production Imbalances |
Comprehensive Income |
Derivatives |
2004 | 2003 | 2002 | ||||||||||
Gross cash receipts | $ | 1,327,200 | $ | 14,924 | $ | 1,246,080 | ||||||
Gross cash payments | $ | 13,694,010 | $ | 8,681,198 | $ | 2,430 | ||||||
Valuation loss | $ | 7,520,383 | $ | 2,987,013 | $ | 3,608,462 |
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Production | ||||||||||||||||
Date of Contract | Volume/Month | Month | Floor | Ceiling | ||||||||||||
August 2002 | 30,000 Bbls | 2003 | $ | 23.55 | $ | 26.60 | ||||||||||
August 2002 | 300,000 MMBTU | 2003 | $ | 3.25 | $ | 4.62 | ||||||||||
November 2002 | 300,000 MMBTU | 2003 | $ | 3.50 | $ | 4.74 | ||||||||||
November 2002 | 300,000 MMBTU | 2004 | $ | 3.35 | $ | 4.65 | ||||||||||
November 2002 | 300,000 MMBTU | 2005 | $ | 3.25 | $ | 4.60 | ||||||||||
November 2003 | 45,000 Bbls | 2004 | $ | 26.63 | $ | 29.85 | ||||||||||
February 2005 | 16,000 Bbls | 2006 | $ | 41.75 | $ | 45.40 | ||||||||||
February 2005 | 120,000 MMBTU | 2006 | $ | 6.00 | $ | 7.28 |
Fixed | ||||||||||||||||||||
Type Contract | Production Month | Volume per | Price | Floor | Ceiling | |||||||||||||||
Fixed price | February - March 2004 | 400,000 MMBTU | $ | 6.915 | $ | — | $ | — | ||||||||||||
Fixed price | April - June 2004 | 400,000 MMBTU | $ | 5.48 | $ | — | $ | — | ||||||||||||
Fixed price | July - September 2004 | 400,000 MMBTU | $ | 5.38 | $ | — | $ | — | ||||||||||||
No Cost Collars | October - December 2004 | 400,000 MMBTU | $ | — | $ | 5.25 | $ | 5.85 | ||||||||||||
No Cost Collars | 2005 | 300,000 MMBTU | $ | — | $ | 4.75 | $ | 5.45 | ||||||||||||
No Cost Collars | 2006 | 500,000 MMBTU | $ | — | $ | 4.50 | $ | 5.00 | ||||||||||||
No Cost Collars | 2005 | 250,000 MMBTU | $ | — | $ | 6.00 | $ | 8.70 | ||||||||||||
No Cost Collars | 2005 | 25,000 Bbls | $ | — | $ | 43.60 | $ | 45.80 |
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Recent Accounting Pronouncements |
3. | Management Agreement |
F-223
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4. | Acquisitions |
F-224
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Pro Forma | ||||||
Year Ended | ||||||
December 31, | ||||||
2002 | ||||||
(Unaudited) | ||||||
Revenues: | ||||||
Oil and natural gas sales | $ | 47,659 | ||||
Plant operations | 1,515 | |||||
Field operations | 404 | |||||
Total revenue | 49,578 | |||||
Costs and expenses: | ||||||
Oil and natural gas production taxes | (2,414 | ) | ||||
Lease operating | (12,250 | ) | ||||
Depreciation and depletion | (20,206 | ) | ||||
Plant operations expense | (529 | ) | ||||
Field operations | (420 | ) | ||||
General and administrative | (5,683 | ) | ||||
Total expense | (41,502 | ) | ||||
Operating income | $ | 8,076 | ||||
Net income | $ | 14,557 | ||||
5. | Investments/Note Receivable |
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6. | Credit Facilities |
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7. | Commitments and Contingencies |
(a) $20,500 in post bond premiums alleged to be owed for certain plugging and abandonment liabilities associated with the oil and gas properties sold to Osprey, | |
(b) $5,422 in expenses associated with NEG’s bond claim, | |
(c) $53,226 in attorneys fees, |
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(d) $24,617 in administrative expenses paid to the American Arbitration Association, | |
(e) an order requiring Osprey to post and maintain an acceptable replacement bond, | |
(f) a finding that Osprey’s counterclaim in the amount of $15 million was without merit, and | |
(g) a ruling that Osprey is entitled to no recovery of any damages or expenses associated with NEG’s bond claim or Osprey’s counterclaim. |
8. | Asset Retirement Obligation |
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Balance as of January 1, 2003 | $ | 3,034,395 | ||||
Add: | Accretion | 242,752 | ||||
Additions | 89,548 | |||||
Revisions | 9,396 | |||||
Less: | Settlements | (57,008 | ) | |||
Dispositions | (50,702 | ) | ||||
Balance as of December 31, 2003 | $ | 3,268,381 | ||||
Add: | Accretion | 261,471 | ||||
Additions | 93,838 | |||||
Less: | Revisions | (250,650 | ) | |||
Settlements | (24,354 | ) | ||||
Dispositions | (293,446 | ) | ||||
Balance as of December 31, 2004 | $ | 3,055,240 | ||||
9. | Distributions under the Holding LLC Operating Agreement |
1. Guaranteed Payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding Priority Amount. The Priority Amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of the Company’s 10.75% Senior Notes. As of December 31, 2004, the Priority Amount was $148.6 million. The Guaranteed Payments will be made on a semi-annual basis. | |
2. The Priority Amount is to be paid to NEG. Such payment is to occur by November 6, 2006. | |
3. An amount equal to the Priority Amount and all Guaranteed Payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by the Company to Gascon, is to be paid to Gascon. | |
4. An amount equal to the aggregate annual interest (calculated at prime plus 1/2% on the sum of the Guaranteed Payments), plus any unpaid interest for prior years (calculated at prime plus 1/2% on the sum of the Guaranteed Payments), less any distributions previously made by the Company to Gascon, is to be paid to Gascon. | |
5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of the NEG’s and Gascon’s respective capital accounts. (Capital accounts as defined in the Holding LLC Operating Agreement). |
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10. | Crude Oil and Natural Gas Producing Activities |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Acquisition of properties | $ | — | $ | — | $ | 49,049,174 | ||||||
Exploration costs | 29,006,772 | 6,950,706 | 1,072,997 | |||||||||
Development costs | 38,480,640 | 29,083,572 | 16,124,610 | |||||||||
Depletion rate per Mcfe | $ | 1.28 | $ | 1.25 | $ | 1.29 |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Plains Marketing and Transportation | $ | 19,786,979 | $ | 15,666,690 | $ | 12,512,767 | ||||||
Crosstex Energy Services, Inc. | 5,080,974 | 9,225,086 | 4,843,756 | |||||||||
Riata Energy, Inc. | 29,884,850 | 30,420,624 | — | |||||||||
Seminole Energy Services | 19,572,461 | 7,215,735 | — |
11. | Supplementary Crude Oil and Natural Gas Reserve Information (Unaudited) |
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Crude Oil | Natural Gas | ||||||||
(Barrels) | (Thousand | ||||||||
Cubic Feet) | |||||||||
December 31, 2001 | 5,158,883 | 82,431,275 | |||||||
Purchases of reserves in place | 30,436 | 34,196,450 | |||||||
Sales of reserves in place | (223,214 | ) | — | ||||||
Extensions and discoveries | 28,892 | 14,403,643 | |||||||
Revisions of previous estimates | 842,776 | (636,931 | ) | ||||||
Production | (629,100 | ) | (7,827,100 | ) | |||||
December 31, 2002 | 5,208,673 | 122,567,337 | |||||||
Purchase of reserves in place | — | — | |||||||
Sales of reserves in place | (25,399 | ) | (744,036 | ) | |||||
Extensions and discoveries | 494,191 | 61,637,828 | |||||||
Revisions of previous estimates | (7,092 | ) | (2,419,969 | ) | |||||
Production | (628,923 | ) | (13,436,865 | ) | |||||
December 31, 2003 | 5,041,450 | 167,604,295 | |||||||
Purchase of reserves in place | — | — | |||||||
Sales of reserves in place | (15,643 | ) | (344,271 | ) | |||||
Extensions and discoveries | 445,636 | 33,350,666 | |||||||
Revisions of previous estimates | (30,249 | ) | 15,441,298 | ||||||
Production | (565,100 | ) | (13,106,103 | ) | |||||
December 31, 2004 | 4,876,094 | 202,945,885 | |||||||
Proved developed reserves: | |||||||||
December 31, 2002 | 3,539,450 | 92,382,411 | |||||||
December 31, 2003 | 4,096,596 | 104,207,660 | |||||||
December 31, 2004 | 3,798,341 | 111,126,829 |
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December 31, | ||||||||
2004 | 2003 | |||||||
Future cash inflows | $ | 1,466,369,163 | $ | 1,184,869,747 | ||||
Future production and development costs | (489,331,736 | ) | (374,829,047 | ) | ||||
Future net cash flows | 977,037,427 | 810,040,700 | ||||||
10% annual discount for estimated timing of cash flows | (442,213,801 | ) | (353,980,596 | ) | ||||
Standardized measure of discounted future net cash flows | $ | 534,823,626 | $ | 456,060,104 | ||||
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Purchases of reserves | $ | — | $ | — | $ | 102,916,472 | ||||||
Sales of reserves in place | (1,375,463 | ) | (2,475,742 | ) | (2,509,704 | ) | ||||||
Sales and transfers of crude oil and natural gas produced, net of production costs | (83,004,073 | ) | (57,424,780 | ) | (31,115,247 | ) | ||||||
Net changes in prices and production costs | 31,039,998 | 44,711,900 | 112,380,701 | |||||||||
Development costs incurred during the period and changes in estimated future development costs | (81,370,910 | ) | (75,286,532 | ) | (45,230,813 | ) | ||||||
Extensions and discoveries, less related costs | 118,570,850 | 211,324,414 | 43,640,702 | |||||||||
Revisions of previous quantity estimates | 49,194,080 | (6,789,000 | ) | 8,510,824 | ||||||||
Accretion of discount | 45,606,010 | 31,063,232 | 11,312,180 | |||||||||
Changes in production rates (timing) and other | 103,030 | 304,290 | (2,394,593 | ) | ||||||||
Net change | $ | 78,763,522 | $ | 145,427,782 | $ | 197,510,522 | ||||||
F-232
Table of Contents
March 31, 2005 | ||||||
(Unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 10,999,200 | ||||
Accounts receivable — oil and natural gas sales | 17,388,724 | |||||
Accounts receivable — joint interest and other | 216,496 | |||||
Notes receivable — other, (net allowance of $790,000) | 488,415 | |||||
Drilling prepayments | 793,558 | |||||
Other | 1,104,408 | |||||
Total current assets | 30,990,801 | |||||
Oil and natural gas properties, at cost (full cost method): | ||||||
Subject to ceiling limitation | 594,136,210 | |||||
Accumulated depreciation, depletion, and amortization | (349,909,614 | ) | ||||
Net oil and natural gas properties | 244,226,596 | |||||
Other property and equipment | 5,143,947 | |||||
Accumulated depreciation | (4,154,948 | ) | ||||
Net other property and equipment | 988,999 | |||||
Note receivable | 3,090,000 | |||||
Equity investment | 2,169,566 | |||||
Other long term assets | 962,696 | |||||
Total assets | $ | 282,428,658 | ||||
Current liabilities: | ||||||
Accounts payable — trade | $ | 6,423,198 | ||||
Accounts payable — affiliate | 369,722 | |||||
Accounts payable — revenue | 4,158,627 | |||||
Prepayments from partners | 87,754 | |||||
Other current liabilities | 806,885 | |||||
Derivative financial instruments | 23,852,452 | |||||
Total current liabilities | 35,698,638 | |||||
Long term liabilities: | ||||||
Gas balancing | 897,853 | |||||
Credit facility | 66,833,624 | |||||
Asset retirement obligation | 3,116,344 | |||||
Derivative financial instruments | 12,883,768 | |||||
Members’ equity | 162,998,431 | |||||
Total liabilities and members’ equity | $ | 282,428,658 | ||||
F-233
Table of Contents
Three Months Ended March 31, | ||||||||||
2005 | 2004 | |||||||||
(Unaudited) | ||||||||||
Revenues: | ||||||||||
Oil and natural gas sales | $ | 2,346,633 | $ | 25,017,234 | ||||||
Field operations | 80,630 | 79,161 | ||||||||
Plant operations | 442,609 | 472,786 | ||||||||
Total revenue | 2,869,872 | 25,569,181 | ||||||||
Costs and expenses: | ||||||||||
Lease operating | 3,883,238 | 3,126,587 | ||||||||
Field operations | 78,371 | 90,494 | ||||||||
Plant operations | 174,442 | 125,548 | ||||||||
Oil and natural gas production taxes | 1,695,128 | 1,349,374 | ||||||||
Depreciation, depletion and amortization | 6,515,506 | 5,352,006 | ||||||||
Accretion of asset retirement obligation | 61,104 | 63,807 | ||||||||
General and administrative | 556,457 | 824,295 | ||||||||
Total costs and expenses | 12,964,246 | 10,932,111 | ||||||||
Operating income (loss) | (10,094,374 | ) | 14,637,070 | |||||||
Other income (expense): | ||||||||||
Interest expense | (728,809 | ) | (483,166 | ) | ||||||
Amortization of debt issuance costs | (172,890 | ) | (111,809 | ) | ||||||
Interest income and other, net | 22,639 | 89,249 | ||||||||
Interest income from affiliate | — | 35,803 | ||||||||
Interest in loss of equity investee | (209,542 | ) | — | |||||||
Net income (loss) | $ | (11,182,976 | ) | $ | 14,167,147 | |||||
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Table of Contents
Three Months Ended March 31, | |||||||||
2005 | 2004 | ||||||||
(Unaudited) | |||||||||
Operating Activities | |||||||||
Net income (loss) | $ | (11,182,976 | ) | $ | 14,167,147 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||
Depreciation, depletion and amortization | 6,515,506 | 5,352,006 | |||||||
Change in fair market value of derivative contracts | 22,620,363 | (2,688,548 | ) | ||||||
Amortization of debt issuance costs | 172,890 | 111,809 | |||||||
Interest in loss of equity investee | 209,543 | — | |||||||
Accretion of asset retirement obligation | 61,104 | 63,807 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 1,111,132 | (1,064,720 | ) | ||||||
Notes receivable | — | (1,207,198 | ) | ||||||
Drilling prepayments | 64,556 | 254,227 | |||||||
Derivative broker deposit | — | 1,700,000 | |||||||
Other current assets | 1,095,752 | (20,439 | ) | ||||||
Accounts payable and accrued liabilities | (4,343,276 | ) | 1,626,714 | ||||||
Net cash provided by operating activities | 16,324,594 | 18,294,805 | |||||||
Investing Activities | |||||||||
Oil and natural gas exploration and development expenditures | (21,189,663 | ) | (10,869,942 | ) | |||||
Purchases of other property and equipment | (88,457 | ) | (38,467 | ) | |||||
Proceeds from sales of oil and natural gas properties | 122,967 | — | |||||||
Equity investment | — | (1,200,000 | ) | ||||||
Net cash used in investing activities | (21,155,153 | ) | (12,108,409 | ) | |||||
Financing Activities | |||||||||
Proceeds from Mizuho credit facility | 15,000,000 | — | |||||||
Proceeds from advance from affiliate | 5,000,000 | — | |||||||
Repayment of advance from affiliate | (5,000,000 | ) | — | ||||||
Loan issuance costs | (53,082 | ) | (328,599 | ) | |||||
Net cash (used in) provided by financing activities | 14,946,918 | (328,599 | ) | ||||||
Increase in cash and cash equivalents | 10,116,359 | 5,857,797 | |||||||
Cash and cash equivalents at beginning of period | 882,841 | 15,401,433 | |||||||
Cash and cash equivalents at end of period | $ | 10,999,200 | $ | 21,259,230 | |||||
Supplemental Cash Flow Information | |||||||||
Interest paid in cash | $ | 247,022 | $ | 148,979 | |||||
F-235
Table of Contents
Members’ | ||||
Equity | ||||
(Unaudited) | ||||
Balance at December 31, 2004 | $ | 174,181,407 | ||
Net loss for the three months ended March 31, 2005 | (11,182,976 | ) | ||
Balance at March 31, 2005 | $ | 162,998,431 | ||
F-236
Table of Contents
1. | Background |
2. | Basis of Presentation |
3. | Recent Accounting Pronouncements |
F-237
Table of Contents
4. | Derivatives |
F-238
Table of Contents
5. | Management Fees |
6. | Investment in Petrosource |
7. | Credit Facilities |
F-239
Table of Contents
8. | Note Receivable |
9. | Commitments and Contingencies |
F-240
Table of Contents
(a) $20,500 in post bond premiums alleged to be owed for certain plugging and abandonment liabilities associated with the oil and gas properties sold to Osprey, | |
(b) $5,422 in expenses associated with our bond claim, | |
(c) $53,226 in attorneys fees, | |
(d) $24,617 in administrative expenses paid to the American Arbitration Association, | |
(e) an order requiring Osprey to post and maintain an acceptable replacement bond, | |
(f) a finding that Osprey’s counterclaim in the amount of $15 million was without merit, and | |
(g) a ruling that Osprey is entitled to no recovery of any damages or expenses associated with the Company’s bond claim or Osprey’s counterclaim. |
F-241
Table of Contents
/s/Pannell Kerr Forster of Texas P.C. |
F-242
Table of Contents
December 31, | ||||||||||
2004 | 2003 | |||||||||
ASSETS | ||||||||||
Current assets | ||||||||||
Cash | $ | 23,753,000 | $ | 3,152,000 | ||||||
Restricted cash | — | 8,716,000 | ||||||||
Accounts receivable, net of allowance of $5,947,000 and $5,847,000 as of December 31, 2004 and December 31, 2003, respectively | 8,641,000 | 8,233,000 | ||||||||
Accounts receivable — other | 1,841,000 | — | ||||||||
Prepaid expenses and other current assets | 4,652,000 | 1,001,000 | ||||||||
Deferred taxes, net | 1,943,000 | — | ||||||||
Total current assets | 40,830,000 | 21,102,000 | ||||||||
Property, plant and equipment | ||||||||||
Oil and natural gas properties, successful efforts method of accounting | 326,733,000 | 323,001,000 | ||||||||
Less accumulated depreciation, depletion and amortization | (263,140,000 | ) | (246,803,000 | ) | ||||||
Oil and natural gas properties, net | 63,593,000 | 76,198,000 | ||||||||
Pipelines and other property, plant and equipment | 26,114,000 | 26,303,000 | ||||||||
Less accumulated depreciation | (17,789,000 | ) | (16,023,000 | ) | ||||||
Pipelines and other property, plant and equipment, net | 8,325,000 | 10,280,000 | ||||||||
Other assets | ||||||||||
Restricted deposits | 23,519,000 | 18,234,000 | ||||||||
Deferred taxes, net | 21,341,000 | — | ||||||||
Total assets | $ | 157,608,000 | $ | 125,814,000 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||
Liabilities not subject to compromise | ||||||||||
Current liabilities | ||||||||||
Accounts payable and accrued liabilities | $ | 13,517,000 | $ | 6,506,000 | ||||||
Accounts payable — related party | 555,000 | — | ||||||||
Interest payable — related party | 288,000 | — | ||||||||
Interest payable | — | 220,000 | ||||||||
Income tax payable | 157,000 | — | ||||||||
Current maturities of long-term debt — related party | 5,429,000 | — | ||||||||
Revolving credit facility | — | 35,272,000 | ||||||||
Total current liabilities | 19,946,000 | 41,998,000 | ||||||||
Long-term debt — related party, net of current maturities | 32,571,000 | — | ||||||||
Deferred credits | 263,000 | 556,000 | ||||||||
Asset retirement obligation | 49,538,000 | 43,933,000 | ||||||||
Total liabilities not subject to compromise | 102,318,000 | 86,487,000 | ||||||||
Liabilities subject to compromise | ||||||||||
Accounts payable and accrued liabilities | — | 19,838,000 | ||||||||
Interest payable | — | 3,115,000 | ||||||||
Natural gas imbalance payable | — | 1,311,000 | ||||||||
Senior notes due 2004 | — | 100,000,000 | ||||||||
Total liabilities subject to compromise | — | 124,264,000 | ||||||||
Commitments and contingencies | — | — | ||||||||
Stockholders’ equity (deficit) | ||||||||||
Preferred shares, $0.01 par value, 5,000,000 shares authorized at December 31, 2003; no shares issued and outstanding at December 31, 2003 (see Note 1) | — | — | ||||||||
New common shares, $0.01 par value, 1,000,000 shares authorized; 1,000 shares issued and outstanding as of December 31, 2004 | — | — | ||||||||
Old common shares, $0.01 par value, 100,000,000 shares authorized; 24,359,695 shares issued and outstanding as of December 31, 2003 | — | 247,000 | ||||||||
Additional paid-in capital | 121,140,000 | 69,089,000 | ||||||||
Accumulated deficit | (65,850,000 | ) | (154,273,000 | ) | ||||||
Total stockholders’ equity (deficit) | 55,290,000 | (84,937,000 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 157,608,000 | $ | 125,814,000 | ||||||
F-243
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Year Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
Oil and natural gas sales | $ | 51,234,000 | $ | 50,160,000 | $ | 39,065,000 | ||||||||
Costs and expenses: | ||||||||||||||
Lease operating expenses and ad valorem taxes | 14,040,000 | 17,218,000 | 14,508,000 | |||||||||||
Production taxes | 711,000 | 1,021,000 | 720,000 | |||||||||||
Geological and geophysical expenses | 76,000 | 105,000 | 119,000 | |||||||||||
Depletion, depreciation and amortization | 19,008,000 | 12,812,000 | 36,986,000 | |||||||||||
Impairment of oil and natural gas properties | — | — | 23,291,000 | |||||||||||
General and administrative expenses | 2,284,000 | 2,290,000 | 3,550,000 | |||||||||||
Management fees and other — related party | 884,000 | — | — | |||||||||||
Bad debt expense | 100,000 | 1,896,000 | 510,000 | |||||||||||
Accretion of asset retirement obligation | 3,132,000 | 2,843,000 | — | |||||||||||
Gain on expiration of production payment | — | (2,249,000 | ) | — | ||||||||||
Total cost and expenses | 40,235,000 | 35,936,000 | 79,684,000 | |||||||||||
Operating income (loss) | 10,999,000 | 14,224,000 | (40,619,000 | ) | ||||||||||
Other income (expense): | ||||||||||||||
Interest income | 684,000 | 274,000 | 500,000 | |||||||||||
Other income | 48,000 | — | — | |||||||||||
Interest expense | (912,000 | ) | (2,929,000 | ) | (9,298,000 | ) | ||||||||
Interest expense — related party | (1,605,000 | ) | — | — | ||||||||||
Loss on sale of assets | (76,000 | ) | — | — | ||||||||||
Total other expense. net | (1,861,000 | ) | (2,655,000 | ) | (8,798,000 | ) | ||||||||
Income (loss) before reorganization costs, income taxes and cumulative effect of accounting change | 9,138,000 | 11,569,000 | (49,417,000 | ) | ||||||||||
Reorganization costs: | ||||||||||||||
Deferred debt costs | — | — | (962,000 | ) | ||||||||||
Professional fees | (3,794,000 | ) | (2,898,000 | ) | (1,296,000 | ) | ||||||||
Loss on restructuring of debt — related party | (3,561,000 | ) | — | — | ||||||||||
Gain on restructuring of senior notes due 2004 | 51,268,000 | — | — | |||||||||||
Gain on restructuring of payables | 12,495,000 | — | — | |||||||||||
Income (loss) before cumulative effect of accounting change | 65,546,000 | 8,671,000 | (51,675,000 | ) | ||||||||||
Income tax benefit, net | 22,877,000 | — | — | |||||||||||
Cumulative effect of accounting change, net of tax | — | (12,149,000 | ) | — | ||||||||||
Net income (loss) | $ | 88,423,000 | $ | (3,478,000 | ) | $ | (51,675,000 | ) | ||||||
Basic and diluted earnings (loss) per share (see Note 2): | ||||||||||||||
Income (loss) before cumulative effect of accounting change | $ | 0.36 | $ | (2.12 | ) | |||||||||
Cumulative effect of accounting change, net of tax | (0.50 | ) | — | |||||||||||
Net loss | $ | (0.14 | ) | $ | (2.12 | ) | ||||||||
Basic and diluted weighted average common shares outstanding | 24,359,695 | 24,359,695 | ||||||||||||
F-244
Table of Contents
Number of | Number of | Common | Total | |||||||||||||||||||||
New Common | Old Common | Share Par | Additional | Accumulated | Stockholders’ | |||||||||||||||||||
Shares | Shares | Value | Paid-In Capital | Deficit | Equity (Deficit) | |||||||||||||||||||
Balance, December 31, 2001 | — | 24,359,695 | $ | 247,000 | $ | 69,089,000 | $ | (99,120,000 | ) | $ | (29,784,000 | ) | ||||||||||||
Net loss | — | — | — | — | (51,675,000 | ) | (51,675,000 | ) | ||||||||||||||||
Balance, December 31, 2002 | — | 24,359,695 | 247,000 | 69,089,000 | (150,795,000 | ) | (81,459,000 | ) | ||||||||||||||||
Net loss | — | — | — | — | (3,478,000 | ) | (3,478,000 | ) | ||||||||||||||||
Balance, December 31, 2003 | — | 24,359,695 | 247,000 | 69,089,000 | (154,273,000 | ) | (84,937,000 | ) | ||||||||||||||||
Cancellation Old Common Stock | — | (24,359,695 | ) | (247,000 | ) | 247,000 | — | — | ||||||||||||||||
Issuance of New Common Stock | 1,000 | — | — | 51,804,000 | — | 51,804,000 | ||||||||||||||||||
Net income | — | — | — | — | 88,423,000 | 88,423,000 | ||||||||||||||||||
Balance, December 31, 2004 | 1,000 | — | $ | — | $ | 121,140,000 | $ | (65,850,000 | ) | $ | 55,290,000 | |||||||||||||
F-245
Table of Contents
Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Cash flows from operating activities | |||||||||||||
Net income (loss) | $ | 88,423,000 | $ | (3,478,000 | ) | $ | (51,675,000 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided from operating activities | |||||||||||||
Depletion, depreciation and amortization | 19,008,000 | 12,812,000 | 36,986,000 | ||||||||||
Impairment of oil and natural gas properties | — | — | 23,291,000 | ||||||||||
Deferred income taxes | (23,284,000 | ) | — | — | |||||||||
Loss on sale of assets | 76,000 | — | — | ||||||||||
Unrealized loss on derivative instruments | 903,000 | — | — | ||||||||||
Loss on restructuring of debt — related party | 3,561,000 | — | — | ||||||||||
Gain on restructuring of senior notes due 2004 | (51,268,000 | ) | — | — | |||||||||
Gain on restructuring of payables | (12,495,000 | ) | — | — | |||||||||
Allowance for doubtful accounts | 100,000 | 1,896,000 | 510,000 | ||||||||||
Accretion of asset retirement obligation | 3,132,000 | 2,843,000 | — | ||||||||||
Deferred debt costs | — | — | 962,000 | ||||||||||
Gain on expiration of production payment | — | (2,249,000 | ) | — | |||||||||
Cumulative effect of accounting change | — | 12,149,000 | — | ||||||||||
Changes in operating assets and liabilities | |||||||||||||
Accounts receivable | (508,000 | ) | (1,353,000 | ) | (924,000 | ) | |||||||
Accounts receivable — other | (1,841,000 | ) | — | — | |||||||||
Prepaid expenses and other current assets | (3,651,000 | ) | 20,000 | (103,000 | ) | ||||||||
Accounts payable and accrued liabilities | (3,278,000 | ) | (5,306,000 | ) | (3,560,000 | ) | |||||||
Accounts payable — related party | 555,000 | — | — | ||||||||||
Natural gas imbalance payable | (1,311,000 | ) | 154,000 | 8,000 | |||||||||
Deferred credits | (293,000 | ) | (397,000 | ) | (552,000 | ) | |||||||
Interest payable | 1,385,000 | (661,000 | ) | 1,132,000 | |||||||||
Income taxes payable | 157,000 | — | — | ||||||||||
Net cash provided by operating activities | 19,371,000 | 16,430,000 | 6,075,000 | ||||||||||
Cash flows from investing activities | |||||||||||||
Capital expenditures | (1,994,000 | ) | (3,875,000 | ) | (6,494,000 | ) | |||||||
Proceeds from property sale | 150,000 | — | — | ||||||||||
Increase in restricted deposits | (5,285,000 | ) | (4,907,000 | ) | (2,316,000 | ) | |||||||
Asset retirement obligation | (207,000 | ) | (1,028,000 | ) | — | ||||||||
Net cash used in investing activities | (7,336,000 | ) | (9,810,000 | ) | (8,810,000 | ) | |||||||
Cash flows from financing activities | |||||||||||||
Proceeds from borrowings of debt | — | — | 8,101,000 | ||||||||||
Repayment of debt | (150,000 | ) | (2,450,000 | ) | (3,250,000 | ) | |||||||
Net cash provided by (used in) financing activities | (150,000 | ) | (2,450,000 | ) | 4,851,000 | ||||||||
Net increase in cash | 11,885,000 | 4,170,000 | 2,116,000 | ||||||||||
Decrease (increase) in restricted cash | 8,716,000 | (8,716,000 | ) | — | |||||||||
Cash at beginning of year | 3,152,000 | 7,698,000 | 5,582,000 | ||||||||||
Cash at end of year | $ | 23,753,000 | $ | 3,152,000 | $ | 7,698,000 | |||||||
Supplemental Disclosure of Cash Flow Information: | |||||||||||||
Interest paid | $ | 1,129,000 | $ | 3,590,000 | $ | 8,166,000 | |||||||
Income taxes paid | $ | 272,000 | $ | — | $ | — | |||||||
Supplemental Non-cash Investing and Financing Activities: | |||||||||||||
Oil and natural gas properties for asset retirement obligation | $ | 2,680,000 | $ | 26,344,000 | $ | — | |||||||
Interest payable — related party converted to debt principal | $ | 1,317,000 | $ | — | $ | — | |||||||
Senior notes due 2004 and accrued interest converted to new common stock and additional paid-in capital | $ | 51,804,000 | $ | — | $ | — | |||||||
Old common stock converted to additional paid-in capital | $ | 247,000 | $ | — | $ | — |
F-246
Table of Contents
Note 1 — | Voluntary Petition for Relief Under Chapter 11 Bankruptcy |
• | Revolving Credit Facility: the holder of the claim received a new note, the principal amount of which will be paid over seven years, | |
• | Senior Notes: 49% of the Senior Notes were settled for a cash payment equal to 2.5% of the face value of the Senior Notes; 51% of the Senior Notes were converted into 100% of the equity of the reorganized Company, | |
• | Unsecured Creditors: received a cash payment equal to 10% of their allowed claim. | |
• | Equity: the pre-confirmation shares of common stock (the “Old Common Stock”) are deemed to be of no value and were cancelled. The equity of the reorganized Company became owned by the 51% Senior Note holders. |
F-247
Table of Contents
Note 2 — | Summary of Significant Accounting Policies |
Nature of business |
Significant Accounting Policies |
Basis of Presentation |
Oil and Natural Gas Properties and Depreciation, Depletion and Amortization |
F-248
Table of Contents
Revenue Recognition |
Earnings Per Share |
Cash and Cash Equivalents |
Stock-Based Compensation |
F-249
Table of Contents
2004 | 2003 | 2002 | ||||||||||
Net income (loss) — as reported | $ | 88,423,000 | $ | (3,478,000 | ) | $ | (51,675,000 | ) | ||||
Plus: stock-based compensation expense determined using the intrinsic value of the option at the measurement date | — | — | — | |||||||||
Less: stock-based employee compensation determined under fair value method for all awards granted to employees | — | (34,000 | ) | (77,000 | ) | |||||||
Net income (loss) — pro forma | $ | 88,423,000 | $ | (3,512,000 | ) | $ | (51,752,000 | ) | ||||
Basic and diluted net income (loss) per share — as reported | $ | (0.14 | ) | $ | (2.12 | ) | ||||||
Basic and diluted net income (loss) per share — pro forma | $ | (0.14 | ) | $ | (2.12 | ) | ||||||
Fair Value |
Asset Retirement Obligations |
Restricted cash |
F-250
Table of Contents
Accounts Receivable |
Pipelines and Other Property, Plant and Equipment |
Amortization of Deferred Debt Costs |
Natural gas Imbalances |
Derivative Instruments and Hedging Activities |
F-251
Table of Contents
Date of Contract | Volume/Month | Beginning | Ending | Floor | Ceiling | |||||||||||||||
November 2004 | 25,000 Bbls | January 2005 | December 2005 | $ | 42.50 | $ | 46.00 | |||||||||||||
November 2004 | 150,000 MMBTU | January 2005 | December 2005 | $ | 6.00 | $ | 8.35 |
Income Taxes |
Environmental Liabilities |
F-252
Table of Contents
Concentration of Credit Risk |
Use of Estimates |
Recently Issued Accounting Pronouncements |
Note 3 — | Asset Retirement Obligations |
F-253
Table of Contents
2004 | 2003 | |||||||
ARO at beginning of period | $ | 43,933,000 | $ | 42,118,000 | ||||
Revision of estimate | 2,680,000 | — | ||||||
Liabilities settled | (207,000 | ) | (1,028,000 | ) | ||||
Accretion expense | 3,132,000 | 2,843,000 | ||||||
ARO at end of period | $ | 49,538,000 | $ | 43,933,000 | ||||
Note 4 — | Restricted Deposits |
F-254
Table of Contents
Year Ended December 31, | ||||
2005 | $ | 3,200,000 | ||
2006 | 3,200,000 | |||
2007 | 3,200,000 | |||
2008 | 3,200,000 | |||
2009 | 3,200,000 | |||
Thereafter | 2,000,000 | |||
$ | 18,000,000 | |||
Note 5 — | Debt |
2004 | 2003 | ||||||||
Subject to compromise: | |||||||||
10.625% Senior Notes due 2004 | $ | — | $ | 100,000,000 | |||||
Not subject to compromise: | |||||||||
Revolving Credit Facility due 2003 | $ | — | $ | 35,272,000 | |||||
Term loan due 2011 — related party | 38,000,000 | — | |||||||
Total long-term debt | 38,000,000 | 35,272,000 | |||||||
Less current maturities | (5,429,000 | ) | (35,272,000 | ) | |||||
Long-term debt, less current maturities | $ | 32,571,000 | $ | — | |||||
Senior Notes |
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Revolving Credit Facility |
Term Loan |
Production Payment |
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Long-Term | ||||
Year Ended December 31, | Debt | |||
2005 | $ | 5,429,000 | ||
2006 | 5,429,000 | |||
2007 | 5,429,000 | |||
2008 | 5,429,000 | |||
2009 | 5,429,000 | |||
Thereafter | 10,855,000 | |||
$ | 38,000,000 | |||
Note 6 — | Major Customers |
Note 7 — | Income Taxes |
2004 | 2003 | 2002 | ||||||||||
Current | $ | (407,000 | ) | $ | — | $ | — | |||||
Deferred | 23,284,000 | — | — | |||||||||
$ | 22,877,000 | $ | — | $ | — | |||||||
2004 | 2003 | 2002 | ||||||||||
Statutory federal income tax rate expense (benefit) | 35 | % | 35 | % | (35 | )% | ||||||
Other | — | % | 11 | % | 1 | % | ||||||
Change in valuation allowance | (70 | )% | (46 | )% | 34 | % | ||||||
(35 | )% | — | % | — | % | |||||||
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Note 7 — | Income Taxes |
2004 | 2003 | |||||||||
Deferred tax assets | ||||||||||
Net operating loss carryforwards | $ | 14,917,000 | $ | 38,393,000 | ||||||
Asset retirement obligation accretion | 6,343,000 | 6,516,000 | ||||||||
Fixed asset basis differences | — | 3,152,000 | ||||||||
Allowance for bad debts | 2,081,000 | 2,046,000 | ||||||||
State taxes | 795,000 | 2,615,000 | ||||||||
AMT tax credits | 610,000 | 290,000 | ||||||||
Total deferred tax assets | 24,746,000 | 53,012,000 | ||||||||
Less valuation allowance | — | (53,012,000 | ) | |||||||
Total net deferred tax assets | 24,746,000 | — | ||||||||
Deferred tax liabilities | ||||||||||
Fixed asset basis differences | (1,324,000 | ) | — | |||||||
Natural gas balancing | (138,000 | ) | — | |||||||
Total deferred tax liabilities | (1,462,000 | ) | — | |||||||
Net deferred tax assets (liabilities) | $ | 23,284,000 | $ | — | ||||||
Note 8 — | Stock Options |
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2004 | 2003 | 2002 | |||||||||||||||||||||||
Weighted | Weighted | Weighted | |||||||||||||||||||||||
Average | Average | Average | |||||||||||||||||||||||
Exercise | Exercise | Exercise | |||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | ||||||||||||||||||||
Outstanding at beginning of year | 100,000 | $ | 1.92 | 225,000 | $ | 1.92 | 425,000 | $ | 1.92 | ||||||||||||||||
Granted | — | — | — | — | — | — | |||||||||||||||||||
Exercised | — | — | — | — | — | — | |||||||||||||||||||
Forfeited | — | — | — | — | (200,000 | ) | 1.92 | ||||||||||||||||||
Cancelled | (100,000 | ) | 1.92 | (125,000 | ) | 1.92 | — | — | |||||||||||||||||
Outstanding at end of year | — | — | 100,000 | 1.92 | 225,000 | 1.92 | |||||||||||||||||||
Exercisable at end of year | — | — | 60,000 | $ | 1.92 | 90,000 | $ | 1.92 | |||||||||||||||||
Unexercisable at end of year | — | — | 40,000 | 1.92 | 135,000 | 1.92 |
Note 9 — | Related Party Transactions |
• | At December 31, 2004, the balance sheet reflects a term loan payable of $38 million, and related interest payable of $0.3 million. During the year ended December 31, 2004, the Company recorded interest expense of $1.6 million and a loss on restructuring of debt of $3.6 million associated with this related party. | |
• | The Company entered into a Management Agreement with an entity pursuant to the Bankruptcy Court’s Order confirming the effective date of the Plan. In exchange for management services provided by that entity, the Company pays a monthly fee equal to the actual direct and indirect administrative overhead costs that the entity incurs in operating and administering the Company’s oil and natural gas properties plus 15% of such costs. The Company recorded $0.7 million in management fee expense under this agreement and $0.2 of general and administrative expense for the year ended December 31, 2004. At December 31, 2004 the balance sheet reflects accounts payable of $0.6 million owed under the agreement. |
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Note 11 — | Subsequent Events |
Note 12 — | Supplemental Information Related to Oil and Natural Gas Producing Activities (Unaudited) |
Capitalized Costs |
2004 | 2003 | |||||||
Developed oil and natural gas properties | $ | 326,733,000 | $ | 323,001,000 | ||||
Unevaluated oil and natural gas properties | — | — | ||||||
Pipelines and other production equipment | 26,114,000 | 25,554,000 | ||||||
Accumulated depletion, depreciation and amortization | (280,929,000 | ) | (262,077,000 | ) | ||||
Net capitalized costs(1) | $ | 71,918,000 | $ | 86,478,000 | ||||
(1) | Included in net capitalized costs is approximately $30 million of net ARO asset recorded in 2003 relating to the cumulative effect of adopting SFAS No. 143 on January 1, 2003 (see Note 3) and $2.7 million of net ARO asset recorded in 2004 as a result of a revision in estimate. |
Costs Incurred |
2004 | 2003 | 2002 | |||||||||||
Property acquisition costs, proved | $ | — | $ | — | $ | — | |||||||
Property acquisition costs, unproved | — | — | — | ||||||||||
Exploration expenses | — | — | — | ||||||||||
Development costs | 1,994,000 | 3,875,000 | 6,494,000 | ||||||||||
Asset retirement cost(1) | 207,000 | 1,028,000 | — | ||||||||||
Total cost incurred | $ | 2,201,000 | $ | 4,903,000 | $ | 6,494,000 | |||||||
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(1) | Excluded from asset retirement cost in 2003 is $26.3 million of asset retirement obligation asset recorded in 2003 related to the cumulative effect of adopting SFAS No. 143 on January 1, 2003 (see Note 3). Excluded from asset retirement cost in 2004 is $2.7 million of asset retirement obligation asset recorded in 2004 related to a revision in estimate. |
Results of Operations |
2004 | 2003 | 2002 | ||||||||||||
Oil and natural gas revenues | $ | 51,234,000 | $ | 50,160,000 | $ | 39,065,000 | ||||||||
Operating expenses: | ||||||||||||||
Lease operating expenses and ad valorem taxes | 14,040,000 | 17,218,000 | 14,508,000 | |||||||||||
Production taxes | 711,000 | 1,021,000 | 720,000 | |||||||||||
Geological and geophysical expenses | 76,000 | 105,000 | 119,000 | |||||||||||
Depletion expense | 16,441,000 | 10,007,000 | 33,589,000 | |||||||||||
Depreciation of pipelines and other production equipment | 2,567,000 | 2,468,000 | 2,468,000 | |||||||||||
Accretion expense | 3,132,000 | 2,843,000 | — | |||||||||||
Impairment of oil and natural gas properties | — | — | 23,291,000 | |||||||||||
Results of operations from oil and natural gas producing activities | $ | 14,267,000 | $ | 16,498,000 | $ | (35,630,000 | ) | |||||||
Quantities of Oil and Natural gas Reserves |
Oil | Natural gas | |||||||
(BBLS) | (MCF) | |||||||
Proved developed and undeveloped reserves: | ||||||||
Estimated reserves as of December 31, 2001 | 7,853,303 | 66,940,028 | ||||||
Production | (916,030 | ) | (5,621,901 | ) | ||||
Extensions and discoveries | 35,901 | 39,000 | ||||||
Sale of minerals in-place | — | — | ||||||
Revisions of previous estimates | (270,378 | ) | (14,058,034 | ) | ||||
Estimated reserves as of December 31, 2002 | 6,702,796 | 47,299,093 |
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Oil | Natural gas | |||||||
(BBLS) | (MCF) | |||||||
Production | (689,318 | ) | (5,043,527 | ) | ||||
Extensions and discoveries | 151,197 | 1,026,000 | ||||||
Sale of minerals in-place | (78,761 | ) | (1,908,300 | ) | ||||
Revisions of previous estimates | (106,515 | ) | (2,594,770 | ) | ||||
Estimated reserves as of December 31, 2003 | 5,979,399 | 38,778,496 | ||||||
Production | (643,404 | ) | (3,938,379 | ) | ||||
Extensions and discoveries | — | — | ||||||
Sale of minerals in-place | (43,663 | ) | (3,695 | ) | ||||
Revisions of previous estimates | (88,733 | ) | (8,854,673 | ) | ||||
Estimated reserves as of December 31, 2004 | 5,203,599 | 25,981,749 | ||||||
Proved developed reserves: | ||||||||
December 31, 2002 | 2,062,680 | 8,057,440 | ||||||
December 31, 2003 | 1,600,376 | 5,115,501 | ||||||
December 31, 2004 | 2,746,047 | 14,145,700 | ||||||
Standardized Measure of Discounted Future Net Cash Flows |
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2004 | 2003 | 2002 | ||||||||||||
Future cash inflows | $ | 382,805,375 | $ | 425,695,797 | $ | 431,912,125 | ||||||||
Future costs: | ||||||||||||||
Production | (109,972,000 | ) | (139,335,808 | ) | (125,247,373 | ) | ||||||||
Development and ARO | (103,386,010 | ) | (89,551,310 | ) | (91,096,741 | ) | ||||||||
Future production and development costs | (213,358,010 | ) | (228,887,118 | ) | (216,344,114 | ) | ||||||||
Net cash flows before tax | 169,447,365 | 196,808,679 | 215,568,011 | |||||||||||
Future income tax expense(1) | (32,979,000 | ) | — | — | ||||||||||
Future net cash flows | 136,468,365 | 196,808,679 | 215,568,011 | |||||||||||
10% discount for estimated timing of future cash flows | (61,229,531 | ) | (60,564,618 | ) | (71,565,128 | ) | ||||||||
Standardized measure of discounted future net cash flows | $ | 75,238,834 | $ | 136,244,061 | $ | 144,002,883 | ||||||||
(1) | Prior to the year ended December 31, 2004, it was determine by management that the likelihood for the Company to have taxable income in the future was uncertain thus no future income tax expense was provided (see Note 7). |
Changes Relating to the Standardized Measure of Discounted Future Net Cash Flows |
2004 | 2003 | 2002 | ||||||||||||
Beginning of year balance | $ | 136,244,061 | $ | 144,002,883 | $ | 89,242,543 | ||||||||
Changes due to current year operations: | ||||||||||||||
Sales, net of production costs | (36,483,000 | ) | (31,921,000 | ) | (23,837,000 | ) | ||||||||
Sales of minerals in place | (5,365,497 | ) | (4,264,894 | ) | — | |||||||||
Development costs incurred | 1,994,000 | 3,875,000 | 6,494,000 | |||||||||||
Extensions and discoveries, net of future production and development costs | — | 1,286,545 | 358,972 | |||||||||||
Changes due to revisions of standardized variables: | ||||||||||||||
Sales prices, net of production costs | 56,915,433 | 15,264,428 | 115,325,081 | |||||||||||
Revisions of previous quantity estimates | (38,312,699 | ) | (8,306,671 | ) | (36,822,411 | ) | ||||||||
Estimated future development costs | (26,166,440 | ) | (2,059,901 | ) | (16,156,317 | ) | ||||||||
Income taxes(1) | (24,097,000 | ) | — | — | ||||||||||
Accretion of discount | 13,624,406 | 14,400,288 | 8,924,254 | |||||||||||
Production rates (timing) and other | (3,114,430 | ) | 3,967,383 | 473,761 | ||||||||||
Net increase (decrease) | (61,005,227 | ) | (7,758,822 | ) | 54,760,340 | |||||||||
End of year balance | $ | 75,238,834 | $ | 136,244,061 | $ | 144,002,883 | ||||||||
(1) | Prior to the year ended December 31, 2004, it was determine by management that the likelihood for the Company to have taxable income in the future was uncertain thus no future income tax expense was provided (see Note 7). |
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ASSETS | ||||||
(unaudited) | ||||||
Current assets | ||||||
Cash | $ | 9,721,125 | ||||
Accounts receivable, net of allowance of $5,947,000 | 7,885,023 | |||||
Hedge deposits | 3,600,000 | |||||
Advances to affiliate | 10,000,000 | |||||
Prepaid expenses and other current assets | 4,552,886 | |||||
Deferred taxes, net | 3,440,605 | |||||
Total current assets | 39,199,639 | |||||
Property, plant and equipment | ||||||
Oil and natural gas properties, successful efforts method of accounting | 266,150,858 | |||||
Less accumulated depreciation, depletion and amortization | (212,470,520) | |||||
Oil and natural gas properties, net | 53,680,338 | |||||
Pipelines and other property, plant and equipment | 22,057,363 | |||||
Less accumulated depreciation | (15,036,406) | |||||
Pipelines and other property, plant and equipment, net | 7,020,957 | |||||
Other assets | ||||||
Restricted deposits | 19,631,786 | |||||
Deferred taxes, net | 21,340,236 | |||||
Total assets | $ | 140,872,956 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | $ | 9,803,917 | ||||
Accounts payable — related party | 277,292 | |||||
Interest payable — related party | 207,177 | |||||
Hedge liability | 4,980,264 | |||||
Income tax payable | 155,953 | |||||
Current maturities of long-term debt — related party | 5,428,572 | |||||
Total current liabilities | 20,853,175 | |||||
Long-term debt — related party, net of current maturities | 31,214,285 | |||||
Deferred credits | 263,250 | |||||
Asset retirement obligation | 33,600,348 | |||||
Hedge Liability | 2,257,960 | |||||
Commitments and contingencies | ||||||
Stockholders’ equity | ||||||
New Common shares, $0.01 par value, 1,000,000 shares authorized; 1,000 shares issued and outstanding as of March 31, 2005 | 10 | |||||
Additional paid-in capital | 121,140,455 | |||||
Accumulated deficit | (68,456,527) | |||||
Total stockholders’ equity | 52,683,938 | |||||
Total liabilities and stockholders’ equity | $ | 140,872,956 | ||||
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Three Months Ended | ||||||||||
March 31, | ||||||||||
2005 | 2004 | |||||||||
(Unaudited) | ||||||||||
Oil and natural gas sales | $ | 6,474,008 | $ | 12,155,652 | ||||||
Costs and expenses: | ||||||||||
Lease operating expenses | 3,132,010 | 3,144,885 | ||||||||
Production taxes | 209,938 | 191,173 | ||||||||
Geological and geophysical expenses | 75,804 | 14,980 | ||||||||
Depletion, depreciation and amortization | 3,662,254 | 3,729,647 | ||||||||
Bad debt expense | — | 120,532 | ||||||||
General and administrative expenses | 529,851 | 421,685 | ||||||||
Management fees and other — related party | 1,017,402 | — | ||||||||
Accretion of asset retirement obligation | 823,734 | 758,711 | ||||||||
Total cost and expenses | 9,450,993 | 8,381,613 | ||||||||
Operating income (loss) | (2,976,985 | ) | 3,774,039 | |||||||
Other income (expense): | ||||||||||
Interest income and other | 131,721 | 62,286 | ||||||||
Bankruptcy (costs) benefit | 60,000 | (1,084,445 | ) | |||||||
Interest expense — related party | (604,444 | ) | (655,541 | ) | ||||||
Loss on sale of assets | (714,764 | ) | — | |||||||
Total other expense. | (1,127,487 | ) | (1,677,700 | ) | ||||||
Net Income (loss) before income taxes | (4,104,472 | ) | 2,096,339 | |||||||
Income tax benefit (expense), net | 1,497,722 | — | ||||||||
Net income (loss) | $ | (2,606,750 | ) | $ | 2,096,339 | |||||
Basic and diluted earnings (loss) per share (see Note 4): | ||||||||||
Net income (loss) per share | $ | (2,606.75 | ) | $ | .09 | |||||
Basic and diluted weighted average New common shares outstanding | 1,000 | |||||||||
Basic and diluted weighted average Old common shares outstanding | 24,359,695 | |||||||||
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New Common | ||||||||||||||||||||
Shares | Total | |||||||||||||||||||
Additional | Accumulated | Stockholders’ | ||||||||||||||||||
Shares | Amount | Paid-In Capital | Deficit | Equity | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Balance, December 31, 2004 | 1,000 | $ | 10 | $ | 121,140,455 | $ | (65,849,777 | ) | $ | 55,290,688 | ||||||||||
Net loss for the three month period ended March 31, 2005 | — | — | — | (2,606,750 | ) | (2,606,750 | ) | |||||||||||||
Balance, March 31, 2005 | 1,000 | $ | 10 | $ | 121,140,455 | $ | (68,456,527 | ) | $ | 52,683,938 | ||||||||||
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Three Months Ended | |||||||||
March 31, | |||||||||
2005 | 2004 | ||||||||
(Unaudited) | |||||||||
Cash flows from operating activities | |||||||||
Net income (loss) | $ | (2,606,750 | ) | $ | 2,096,339 | ||||
Adjustments to reconcile net income (loss) to net cash provided from operating activities | |||||||||
Depletion, depreciation and amortization | 3,662,254 | 3,729,647 | |||||||
Deferred income taxes | (1,497,722 | ) | — | ||||||
Loss on sale of assets | 714,764 | — | |||||||
Unrealized loss on derivative instruments | 6,335,507 | — | |||||||
Allowance for doubtful accounts | — | 120,532 | |||||||
Accretion of asset retirement obligation | 823,734 | 758,711 | |||||||
Changes in operating assets and liabilities | |||||||||
Accounts receivable | 2,201,089 | 274,787 | |||||||
Hedge deposit | (3,600,000 | ) | — | ||||||
Prepaid expenses and other current assets | 494,831 | 676,251 | |||||||
Accounts payable and accrued liabilities | (3,167,943 | ) | (1,503,185 | ) | |||||
Accounts receivable — related party | (10,000,000 | ) | — | ||||||
Natural gas imbalance payable | — | (809,872 | ) | ||||||
Other | (832,578 | ) | (87,750 | ) | |||||
Net cash provided by (used in) operating activities | (7,472,814 | ) | 5,255,460 | ||||||
Cash flows from investing activities | |||||||||
Capital expenditures | (4,683,666 | ) | (131,013 | ) | |||||
Proceeds from property sale, net | (518,480 | ) | 150,000 | ||||||
Increase in restricted deposits | — | (875,437 | ) | ||||||
Net cash used in investing activities | (5,202,146 | ) | (856,450 | ) | |||||
Cash flows from financing activities Repayment of debt | (1,357,143 | ) | (150,000 | ) | |||||
Net cash used in financing activities | (1,357,143 | ) | (150,000 | ) | |||||
Net increase (decrease) in cash | (14,032,103 | ) | 4,249,010 | ||||||
Decrease (increase) in restricted cash | — | (5,272,641 | ) | ||||||
Cash at beginning of period | 23,753,229 | 3,152,122 | |||||||
Cash at end of period | $ | 9,721,126 | $ | 2,128,491 | |||||
Supplemental Disclosure of Cash Flow Information: | |||||||||
Interest paid | $ | 682,812 | $ | 641,530 | |||||
Income taxes paid | $ | — | $ | 52,000 |
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Note 1 — | Basis of Presentation |
Note 2 — | Voluntary Petition for Relief Under Chapter 11 Bankruptcy |
• | Revolving Credit Facility: the holder of the claim received a new note, the principal amount of which will be paid over seven years, |
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• | Senior Notes: 49% of the Senior Notes were settled for a cash payment equal to 2.5% of the face value of the Senior Notes; 51% of the Senior Notes were converted into 100% of the equity of the reorganized Company, | |
• | Unsecured Creditors: received a cash payment equal to 10% of their allowed claim. | |
• | Equity: the pre-confirmation shares of common stock (the “Old Common Stock”) are deemed to be of no value and were cancelled. The equity of the reorganized Company became owned by the 51% Senior Note holders. |
Note 3 — | Sale of West Delta Property |
Book Value at | |||||
March 10, 2005 | |||||
Assets transferred to purchaser: | |||||
Net book value of West Delta properties | $ | (12,238,020 | ) | ||
Escrow account — West Delta | (4,720,060 | ) | |||
Cash payment — purchase price adjustment | (518,480 | ) | |||
Liabilities assumed by purchaser: | |||||
West Delta asset retirement obligation | 16,761,796 | ||||
Loss on sale of West Delta | $ | (714,764 | ) | ||
Note 4 — | Earnings per Share |
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Note 5 — | Derivative Instruments and Hedging Activities |
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Date of Contract | Volume/Month | Beginning | Ending | Floor | Ceiling | |||||||||||||||
November 2004 | 25,000 Bbls | January 2005 | December 2005 | $ | 42.50 | $ | 46.00 | |||||||||||||
November 2004 | 150,000 MMBTU | January 2005 | December 2005 | $ | 6.00 | $ | 8.35 | |||||||||||||
February 2005 | 5,000 Bbls | March 2005 | December 2005 | $ | 44.50 | $ | 48.00 | |||||||||||||
February 2005 | 40,000 MMBTU | March 2005 | December 2005 | $ | 6.05 | $ | 7.30 | |||||||||||||
February 2005 | 17,000 Bbls | January 2006 | December 2006 | $ | 41.65 | $ | 45.25 | |||||||||||||
February 2005 | 140,000 MMBTU | January 2006 | December 2006 | $ | 6.00 | $ | 7.25 |
Note 6 — | Asset Retirement Obligations |
Three Month Period Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
ARO at the beginning of the period | $ | 49,538,410 | $ | 43,932,452 | ||||
Sales (see note 3) | (16,761,796 | ) | — | |||||
Accretion expense | 823,734 | 758,711 | ||||||
ARO at the end of the period | $ | 33,600,348 | $ | 44,691,163 | ||||
Note 7 — | Income Taxes |
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Note 8 — | Commitments and Contingencies |
Restricted Deposits |
Year Ended | ||||
December 31, | ||||
2005 (remaining) | $ | 2,400,000 | ||
2006 | 3,200,000 | |||
2007 | 3,200,000 | |||
2008 | 3,200,000 | |||
2009 | 3,200,000 | |||
Thereafter | 2,000,000 | |||
$ | 17,200,000 | |||
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Note 9 — | Related Party Transactions |
• | At March 31, 2005, the balance sheet reflects a term loan payable of $38.6 million, and related interest payable of $0.2 million. During the three month period ended March 31, 2005, the Company recorded interest expense of $0.6 million associated with this related party. | |
• | The Company entered into a Management Agreement with an entity pursuant to the Bankruptcy Court’s Order confirming the effective date of the Plan. In exchange for management services provided by that entity, the Company pays a monthly fee equal to the actual direct and indirect administrative overhead costs that the entity incurs in operating and administering the Company’s oil and natural gas properties plus 15% of such costs. The Company recorded $1.0 million in management fee expense under this agreement for the three month period ended March 31, 2005. At March 31, 2005, the balance sheet reflects accounts payable of $0.3 million owed under the agreement. | |
• | As of March 31, 2005, the Company had $10 million in outstanding advances to TransTexas, Inc., an entity owned or controlled by Mr. Icahn. The advances are non-interest bearing. |
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/s/KPMG LLP |
F-274
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As of December 31, | ||||||||||
2004 | 2003 | |||||||||
ASSETS | ||||||||||
Current Assets: | ||||||||||
Cash and cash equivalents | $ | 12,756,000 | $ | 33,454,000 | ||||||
Accounts receivable, net of allowances of $3,862,000 and $5,918,000, respectively | 5,223,000 | 5,247,000 | ||||||||
Inventories | 2,499,000 | 2,222,000 | ||||||||
Deferred financing costs | 2,260,000 | 762,000 | ||||||||
Insurance deposits | 3,017,000 | — | ||||||||
Prepaid expenses and other current assets | 1,689,000 | 3,946,000 | ||||||||
Total current assets | 27,444,000 | 45,631,000 | ||||||||
Property and Equipment: | ||||||||||
Land | 54,344,000 | 54,344,000 | ||||||||
Buildings and improvements | 88,147,000 | 88,249,000 | ||||||||
Equipment | 73,675,000 | 64,722,000 | ||||||||
Construction in progress | 2,040,000 | 2,111,000 | ||||||||
218,206,000 | 209,426,000 | |||||||||
Less — accumulated depreciation and amortization | (46,566,000 | ) | (40,013,000 | ) | ||||||
Property and equipment, net | 171,640,000 | 169,413,000 | ||||||||
Other Assets: | ||||||||||
Obligatory investments, net of allowances of $12,500,000 and $11,340,000, respectively | 11,647,000 | 10,705,000 | ||||||||
Other assets | 6,227,000 | 1,814,000 | ||||||||
Total other assets | 17,874,000 | 12,519,000 | ||||||||
$ | 216,958,000 | $ | 227,563,000 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current Liabilities: | ||||||||||
Current portion debt | $ | 43,741,000 | $ | — | ||||||
Current portion capital leases | 248,000 | — | ||||||||
Accounts payable | 7,082,000 | 6,815,000 | ||||||||
Accrued liabilities — | ||||||||||
Payroll and related expenses | 4,379,000 | 4,241,000 | ||||||||
Interest | 1,216,000 | 3,092,000 | ||||||||
Gaming obligations | 3,363,000 | 2,725,000 | ||||||||
Insurance | 4,330,000 | 2,505,000 | ||||||||
Other | 2,175,000 | 2,821,000 | ||||||||
Total current liabilities | 66,534,000 | 22,199,000 | ||||||||
Long-Term Debt, net of current maturities | 66,259,000 | 110,000,000 | ||||||||
Non-current capital leases | 432,000 | — | ||||||||
Other Noncurrent Liabilities | 4,920,000 | 3,729,000 | ||||||||
Commitments and Contingencies | — | — | ||||||||
Warrants in Atlantic Coast Entertainment Holdings, Inc. | 43,587,000 | — | ||||||||
Shareholders’ Equity: | ||||||||||
Preferred stock, $.01 par value per share; 5,000,000 shares authorized; 0 shares outstanding | — | — | ||||||||
Common Stock, $.01 par value per share; 20,000,000 shares authorized; 10,000,000 shares issued and outstanding | 100,000 | 100,000 | ||||||||
Additional paid-in capital | 81,313,000 | 124,900,000 | ||||||||
Accumulated deficit | (46,187,000 | ) | (33,365,000 | ) | ||||||
Total shareholders’ equity | 35,226,000 | 91,635,000 | ||||||||
$ | 216,958,000 | $ | 227,563,000 | |||||||
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Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Revenues: | |||||||||||||
Casino | $ | 157,643,000 | $ | 154,813,000 | $ | 175,065,000 | |||||||
Rooms | 10,908,000 | 10,994,000 | 11,143,000 | ||||||||||
Food and beverage | 21,898,000 | 21,962,000 | 23,330,000 | ||||||||||
Other | 3,940,000 | 3,914,000 | 3,735,000 | ||||||||||
194,389,000 | 191,683,000 | 213,273,000 | |||||||||||
Less — promotional allowances | (23,146,000 | ) | (23,934,000 | ) | (23,356,000 | ) | |||||||
Net revenues | 171,243,000 | 167,749,000 | 189,917,000 | ||||||||||
Expenses: | |||||||||||||
Casino | 50,467,000 | 52,657,000 | 59,971,000 | ||||||||||
Rooms | 3,397,000 | 2,677,000 | 3,639,000 | ||||||||||
Food and beverage | 7,930,000 | 8,481,000 | 10,343,000 | ||||||||||
Other | 870,000 | 1,297,000 | 1,222,000 | ||||||||||
Selling, general and administrative | 90,423,000 | 90,010,000 | 93,871,000 | ||||||||||
Depreciation and amortization | 14,898,000 | 14,123,000 | 13,292,000 | ||||||||||
Provision for obligatory investments | 1,165,000 | 1,434,000 | 1,521,000 | ||||||||||
Loss on impairment of fixed assets | — | — | 1,282,000 | ||||||||||
Loss on disposal of assets | 152,000 | 28,000 | 185,000 | ||||||||||
Total expenses | 169,302,000 | 170,707,000 | 185,326,000 | ||||||||||
Income (loss) from operations | 1,941,000 | (2,958,000 | ) | 4,591,000 | |||||||||
Non-operating income (expense): | |||||||||||||
Interest income | 422,000 | 627,000 | 1,067,000 | ||||||||||
Interest expense | (11,115,000 | ) | (12,581,000 | ) | (12,195,000 | ||||||||
Debt restructuring costs | (3,084,000 | ) | (1,843,000 | ) | — | ||||||||
Total non-operating expense, net | (13,777,000 | ) | (13,797,000 | ) | (11,128,000 | ) | |||||||
Loss before income taxes | (11,836,000 | ) | (16,755,000 | ) | (6,537,000 | ) | |||||||
Income tax provision | (986,000 | ) | (958,000 | ) | (784,000 | ) | |||||||
Net loss | $ | (12,822,000 | ) | $ | (17,713,000 | ) | $ | (7,321,000 | ) | ||||
Basic/diluted loss per common share | $ | (1.28 | ) | $ | (1.77 | ) | $ | (0.73 | ) | ||||
Basic/diluted weighted average common shares outstanding | 10,000,000 | 10,000,000 | 10,000,000 | ||||||||||
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Common Stock | ||||||||||||||||||||
Additional | Accumulated | |||||||||||||||||||
Shares | Amount | Paid-In Capital | Deficit | Total | ||||||||||||||||
BALANCE, December 31, 2001 | 10,000,000 | $ | 100,000 | $ | 124,900,000 | $ | (8,331,000 | ) | $ | 116,669,000 | ||||||||||
Net Loss | — | — | — | (7,321,000 | ) | (7,321,000 | ) | |||||||||||||
BALANCE, December 31, 2002 | 10,000,000 | $ | 100,000 | $ | 124,900,000 | $ | (15,652,000 | ) | $ | 109,348,000 | ||||||||||
Net Loss | — | — | — | (17,713,000 | ) | (17,713,000 | ) | |||||||||||||
BALANCE, December 31, 2003 | 10,000,000 | $ | 100,000 | $ | 124,900,000 | $ | (33,365,000 | ) | $ | 91,635,000 | ||||||||||
Net Loss | — | — | — | (12,822,000 | ) | (12,822,000 | ) | |||||||||||||
Dividend to common shareholders in the form of warrants, exercisable for 2,750,000 common shares of Atlantic Coast Entertainment Holdings, Inc. | — | — | (43,587,000 | ) | — | (43,587,000 | ) | |||||||||||||
BALANCE, December 31, 2004 | 10,000,000 | $ | 100,000 | $ | 81,313,000 | $ | (46,187,000 | ) | $ | 35,226,000 | ||||||||||
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Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
OPERATING ACTIVITIES: | |||||||||||||
Net loss | $ | (12,822,000 | ) | $ | (17,713,000 | ) | $ | (7,321,000 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||
Depreciation and amortization | 14,898,000 | 14,123,000 | 13,292,000 | ||||||||||
Provision for obligatory investments | 1,165,000 | 1,434,000 | 1,521,000 | ||||||||||
Loss on impairment of fixed assets | — | — | 1,282,000 | ||||||||||
Loss on disposal of assets | 152,000 | 28,000 | 185,000 | ||||||||||
Provision for doubtful accounts | 416,000 | 1,040,000 | 1,586,000 | ||||||||||
Decrease in deferred financing costs | 1,229,000 | — | — | ||||||||||
Increase in insurance deposits | (3,017,000 | ) | — | — | |||||||||
(Increase) decrease in accounts receivable | (392,000 | ) | (1,312,000 | ) | 2,349,000 | ||||||||
Increase (decrease) in accounts payable and accrued liabilities | 360,000 | (130,000 | ) | (3,080,000 | ) | ||||||||
Decrease (increase) in prepaid expenses and other current assets | 2,187,000 | (98,000 | ) | (426,000 | ) | ||||||||
Increase in other noncurrent assets | (929,000 | ) | (11,000 | ) | — | ||||||||
Increase in other noncurrent liabilities | 1,178,000 | 369,000 | 285,000 | ||||||||||
Net cash provided by (used in) operating activities | 4,425,000 | (2,270,000 | ) | 9,673,000 | |||||||||
INVESTING ACTIVITIES: | |||||||||||||
Purchase of property and equipment | (17,378,000 | ) | (12,825,000 | ) | (14,058,000 | ) | |||||||
Proceeds from disposition of assets | 308,000 | 110,000 | 320,000 | ||||||||||
Proceeds from sale of obligatory investments | 202,000 | 130,000 | 208,000 | ||||||||||
Purchase of obligatory investments | (2,308,000 | ) | (2,336,000 | ) | (2,496,000 | ) | |||||||
Net cash used in investing activities | (19,176,000 | ) | (14,921,000 | ) | (16,026,000 | ) | |||||||
FINANCING ACTIVITIES: | |||||||||||||
Proceeds from long-term debt | 758,000 | — | — | ||||||||||
Repayments of long-term debt | (79,000 | ) | — | (371,000 | ) | ||||||||
Cost of issuing long-term debt | (6,626,000 | ) | — | — | |||||||||
Net cash used in financing activities | (5,947,000 | ) | — | (371,000 | ) | ||||||||
Net decrease in cash and cash equivalents | (20,698,000 | ) | (17,191,000 | ) | (6,724,000 | ) | |||||||
Cash and cash equivalents at beginning of period | 33,454,000 | 50,645,000 | 57,369,000 | ||||||||||
Cash and cash equivalents at end of period | $ | 12,756,000 | $ | 33,454,000 | $ | 50,645,000 | |||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||||
Interest paid | $ | 10,744,000 | $ | 12,100,000 | $ | 12,128,000 | |||||||
Interest Capitalized | $ | 86,000 | $ | 300,000 | $ | 766,000 | |||||||
Income Taxes paid | $ | 1,051,000 | $ | 899,000 | $ | 1,764,000 | |||||||
Dividends to Common Shareholders in the form of Warrants in Atlantic Coast Entertainment Holdings, Inc. | $ | 43,587,000 | $ | — | $ | — | |||||||
Issuance of 3% Notes in exchange for 11% Notes | $ | 66,259,000 | $ | — | $ | — | |||||||
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(1) | Organization, Business and Basis of Presentation |
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(2) | Liquidity Matters |
(3) | Summary of Significant Accounting Policies |
Casino revenues, promotional allowances and departmental expenses |
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Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Allocation From: | ||||||||||||
Rooms | $ | 6,511,000 | $ | 7,360,000 | $ | 8,274,000 | ||||||
Food and Beverage | 16,116,000 | 16,482,000 | 17,399,000 | |||||||||
Other Operating | 2,294,000 | 2,070,000 | 1,324,000 | |||||||||
$ | 24,921,000 | $ | 25,912,000 | $ | 26,997,000 | |||||||
Allocation To: | ||||||||||||
Casino | $ | 3,846,000 | $ | 3,815,000 | $ | 4,186,000 | ||||||
Selling, General and Administrative | 21,075,000 | 22,097,000 | 22,811,000 | |||||||||
$ | 24,921,000 | $ | 25,912,000 | $ | 26,997,000 | |||||||
Cash and cash equivalents |
Allowance for doubtful accounts |
Inventories |
Property and equipment |
Buildings and improvements | 25 - 40 years | |
Operating equipment | 3 - 7 years |
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Deferred financing costs |
Long-lived assets |
Accrued insurance |
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Income taxes |
Loss per share |
Reclassifications |
(4) | Long-Term Debt |
As of December 31, | ||||||||
2004 | 2003 | |||||||
11% notes, due September 29, 2005(a) | $ | 43,741,000 | $ | 110,000,000 | ||||
3% Notes due July 22, 2008(b) | 66,259,000 | — | ||||||
Total indebtedness | 110,000,000 | 110,000,000 | ||||||
Less — current maturities | (43,741,000 | ) | — | |||||
Total long-term debt | $ | 66,259,000 | $ | 110,000,000 | ||||
(a) | In accordance with its approved plan of reorganization, GB Holdings through its then wholly-owned subsidiaries issued $110 million at 11% interest payable September 29, 2005 (“11% Notes”). Interest on the 11% Notes is payable on March 29 and September 29, beginning March 29, 2001. The outstanding principal is due on September 29, 2005. | |
The original indenture for the 11% Notes contained various provisions, which, among other things, restricted the ability of GB Holdings, and GBHC to incur certain senior secured indebtedness beyond certain limitations, and contained certain other limitations on the ability to merge, consolidate, or sell |
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substantially all of their assets, to make certain restricted payments, to incur certain additional senior liens, and to enter into certain sale-leaseback transactions. | ||
In a Consent Solicitation Statement and Consent Form dated September 14, 2001, Property sought the consent of holders of the 11% Notes to make certain changes to the original indenture (the “Modifications”). The Modifications included, but were not limited to, a deletion of, or changes to, certain provisions the result of which would be (i) to permit GB Holdings and its subsidiaries to incur any additional indebtedness without restriction, to issue preferred stock without restriction, to make distributions in respect of preferred stock and to prepay indebtedness without restriction, to incur liens without restriction and to enter into sale-leaseback transactions without restriction, (ii) to add additional exclusions to the definition of “asset sales” to exclude from the restrictions on “asset sales” sale-leaseback transactions, conveyances or contributions to any entity in which GB Holdings or its subsidiaries has or obtains equity or debt interests, and transactions (including the granting of liens) made in accordance with another provision of the Modifications relating to collateral release and subordination or any documents entered into in connection with an “approved project” (a new definition included as part of the Modifications which includes, if approved by the Board of Directors of GB Holdings, incurrence of indebtedness or the transfer of assets to any person if GB Holdings or any of its subsidiaries has or obtain debt or equity interests in the transferee or any similar, related or associated event, transaction or activity) in which a release or subordination of collateral has occurred including, without limitation, any sale or other disposition resulting from any default or foreclosure, (iii) to exclude from the operation of covenants related to certain losses to collateral, any assets and any proceeds thereof, which have been subject to the release or subordination provisions of the Modifications, (iv) to permit the sale or other conveyances of Casino Reinvestment Development Authority (the “CRDA”) investments in accordance with the terms of a permitted security interest whether or not such sale was made at fair value, (v) to exclude from the operation of covenants related to the deposit into a collateral account of certain proceeds of “asset sales” or losses to collateral any assets and any proceeds thereof, which have been subject to the release or subordination provisions of the Modifications, (vi) to add new provisions authorizing the release or subordination of the collateral securing the 11% Notes in connection with, in anticipation of, as a result of, or in relation to, an “approved project”, and (vii) various provisions conforming the text of the original indenture to the intent of the preceding summary of the Modifications. | ||
(b) | On July 22, 2004, Atlantic Holdings consummated the Consent Solicitation and Offer to Exchange which it commenced and in which Atlantic Holdings offered to exchange its 3% Notes due July 22, 2008 for 11% Notes due September 29, 2005, issued by Property. Pursuant to the Consent Solicitation and Offer to Exchange, an aggregate principal amount of $66,258,970 of 11% Notes, representing 60.2% of the outstanding 11% Notes, were tendered to Atlantic Holdings, on a dollar for dollar basis, in exchange for an aggregate principal amount of $66,258,970 of 3% Notes. At the election of the holders of a majority in principal amount of the outstanding 3% Notes, each $1,000 principal amount of 3% Notes is payable in or convertible into 65.909 shares of Atlantic Holdings Common Stock, subject to adjustments for stock dividends, stock splits, recapitalizations and the like. As a result of the Transaction, the $43.7 million in 11% Notes are no longer secured by any property or equipment of the Company. Holders of the 11% Notes that tendered in the Consent Solicitation and Offer to Exchange also received their pro rata share of the aggregate consent fees ($6.6 million) at the rate of $100 per $1000 principal amount of the 11% Notes tendered, plus accrued interest ($2.3 million) on the 11% Notes tendered, which amounts were paid at the consummation of the Transaction. The exchange is being accounted for as a modification of debt. The consent fees paid are being amortized over the term of the 3% Notes using the effective yield method. All external costs associated with the issuance of the 3% Notes have been expensed. As indicated in the Consent Solicitation and Offer to Exchange, an aggregate of 10,000,000 warrants, issued by Atlantic Holdings, were distributed on a pro rata basis to the shareholders of GB Holdings upon the consummation of the Transaction. Such Warrants allow the holders to purchase, from Atlantic Holdings, at an exercise price of $.01 per share, an aggregate of 2,750,000 shares of Atlantic Holdings Common |
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Stock and are only exercisable following the earlier of (a) either the 3% Notes being paid in cash or upon conversion, in whole or in part, into Atlantic Holdings Common Stock, (b) payment in full of the outstanding principal of the 11% Notes which have not been exchanged, or (c) a determination by a majority of the board of directors of Atlantic Holdings (including at least one independent director of Atlantic Holdings) that the Warrants may be exercised. The fair value of the warrants as of July 22, 2004 (date of issuance) was $43,587,000 (as determined by a third party valuation). An additional $4.9 million in legal, accounting, professionals and state transfer fees were expended related to the Transaction, of which $3.1 million and $1.8 million were charged to debt restructuring costs during 2004 and 2003, respectively. |
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(5) | Income Taxes |
Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Federal income tax provision | $ | $ | $ | ||||||||||
Current | — | — | — | ||||||||||
Deferred | — | — | — | ||||||||||
State income tax provision | |||||||||||||
Current | (986,000 | ) | (958,000 | ) | (784,000 | ) | |||||||
Deferred | — | — | — | ||||||||||
$ | (986,000 | ) | $ | (958,000 | ) | $ | (784,000 | ) | |||||
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2004 | 2003 | ||||||||||
Deferred tax assets: | |||||||||||
Bad debt reserve | $ | 1,578,000 | $ | 2,418,000 | |||||||
Deferred financing costs | — | 234,000 | |||||||||
Group insurance | 904,000 | 747,000 | |||||||||
Accrued vacation | 603,000 | 613,000 | |||||||||
Action cash awards accrual | 191,000 | 123,000 | |||||||||
Jackpot accrual | 407,000 | 298,000 | |||||||||
Medical reserve | 534,000 | 408,000 | |||||||||
Debt restructuring costs | — | 754,000 | |||||||||
CRDA | 6,293,000 | 5,724,000 | |||||||||
Federal and state net operating loss carryforward | 21,962,000 | 17,004,000 | |||||||||
Workers Compensation | 462,000 | — | |||||||||
Grantors trust income | 3,713,000 | 3,616,000 | |||||||||
Credit carryforwards | 3,345,000 | 3,385,000 | |||||||||
Other | 770,000 | 297,000 | |||||||||
Total deferred tax assets | 40,762,000 | 35,621,000 | |||||||||
Less valuation allowance | (24,209,000 | ) | (17,685,000 | ) | |||||||
Total deferred tax assets after valuation allowance | 16,553,000 | 17,936,000 | |||||||||
Deferred tax liabilities: | |||||||||||
Noncurrent: | |||||||||||
Depreciation of plant and equipment | (16,336,000 | ) | (17,812,000 | ) | |||||||
Deferred financing costs | (81,000 | ) | — | ||||||||
Other | (11,000 | ) | — | ||||||||
Chips and tokens | (125,000 | ) | (124,000 | ) | |||||||
Total deferred tax liabilities | (16,553,000 | ) | (17,936,000 | ) | |||||||
Net deferred tax assets (liabilities) | $ | — | $ | — | |||||||
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Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Expected federal benefit | (35.0 | )% | (35.0 | )% | (35.0 | )% | ||||||
State taxes net of federal benefit | (0.4 | )% | (2.2 | )% | (1.6 | )% | ||||||
State tax rate correction | 0.0 | % | 3.9 | % | 0.0 | % | ||||||
Expired tax credit | 2.7 | % | 0.7 | % | 0.0 | % | ||||||
Permanent differences | 0.4 | % | 0.2 | % | 0.9 | % | ||||||
Tax credits | (6.2 | )% | (5.2 | )% | (13.2 | )% | ||||||
Deferred tax valuation allowance | 55.2 | % | 43.3 | % | 57.8 | % | ||||||
Other | (8.4 | )% | 0.0 | % | 3.1 | % | ||||||
8.3 | % | 5.7 | % | 12.0 | % | |||||||
(6) | Transactions with Related Parties |
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(7) | New Jersey Regulations and Obligatory Investments |
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(8) | Commitments and Contingencies |
Legal Proceedings |
Labor Relations |
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(9) | Employee Retirement Savings Plan |
(10) | Disclosures about Fair Value of Financial Instruments |
December 31, 2004 | December 31, 2003 | ||||||||||||||||
Carrying | Carrying | ||||||||||||||||
Amount | Fair Value | Amount | Fair Value | ||||||||||||||
Financial Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 12,756,000 | $ | 12,756,000 | $ | 33,454,000 | $ | 33,454,000 | |||||||||
Obligatory investments, net | 11,647,000 | 11,647,000 | 10,705,000 | 10,705,000 | |||||||||||||
Financial Liabilities: | |||||||||||||||||
Interest payable | 2,099,000 | 2,099,000 | 3,092,000 | 3,092,000 | |||||||||||||
11% Notes | 43,741,000 | 35,430,000 | 110,000,000 | 91,300,000 | |||||||||||||
3% Notes | 66,259,000 | 64,452,000 | — | — |
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(11) | Leases |
Operating Leases | Capital Leases | |||||||||
2005 | $ | 1,967,000 | $ | 286,000 | ||||||
2006 | 1,998,000 | 286,000 | ||||||||
2007 | 1,998,000 | 188,000 | ||||||||
2008 | 1,998,000 | — | ||||||||
2009 | 1,998,000 | — | ||||||||
Thereafter | 6,434,000 | — | ||||||||
Total Minimum Lease Payments | $ | 16,393,000 | 760,000 | |||||||
Less imputed interest costs | (80,000 | ) | ||||||||
Present value of Net Minimum Capital Lease Payments | $ | 680,000 | ||||||||
(12) | Subsequent Events |
(13) | Selected Quarterly Financial Data (Unaudited) |
Quarter | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Year Ended December 31, 2004 | ||||||||||||||||
Net revenues | $ | 40,990,000 | $ | 44,570,000 | $ | 44,160,000 | $ | 41,523,000 | ||||||||
Income (loss) from operations | $ | 915,000 | $ | 1,911,000 | $ | 719,000 | $ | (1,604,000 | ) | |||||||
Net loss | $ | (3,140,000 | ) | $ | (2,493,000 | ) | $ | (3,124,000 | ) | $ | (4,065,000 | ) | ||||
Net loss per share | $ | (0.31 | ) | $ | (0.25 | ) | $ | (0.31 | ) | $ | (0.41 | ) | ||||
Year Ended December 31, 2003 | ||||||||||||||||
Net revenues | $ | 39,303,000 | $ | 45,464,000 | $ | 45,211,000 | $ | 37,771,000 | ||||||||
Income (loss) from operations | $ | (1,298,000 | ) | $ | 2,607,000 | $ | (144,000 | ) | $ | (4,123,000 | ) | |||||
Net loss | $ | (4,401,000 | ) | $ | (507,000 | ) | $ | (3,456,000 | ) | $ | (9,349,000 | ) | ||||
Net loss per share | $ | (0.44 | ) | $ | (0.05 | ) | $ | (0.35 | ) | $ | (0.93 | ) | ||||
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Additions | ||||||||||||||||
Amounts | ||||||||||||||||
Balance of | Charged to | |||||||||||||||
Beginning of | Costs and | Balance at | ||||||||||||||
Period | Expenses | Deductions | End of Period | |||||||||||||
Year Ended December 31, 2004: | ||||||||||||||||
Allowance for doubtful accounts receivable | $ | 5,918,000 | $ | 416,000 | $ | (2,472,000 | )(1) | $ | 3,862,000 | |||||||
Allowance for obligatory investments | 11,340,000 | 1,165,000 | (5,000 | )(2) | 12,500,000 | |||||||||||
$ | 17,258,000 | $ | 1,581,000 | $ | (2,477,000 | ) | $ | 16,362,000 | ||||||||
Year Ended December 31, 2003: | ||||||||||||||||
Allowance for doubtful accounts receivable | $ | 11,301,000 | $ | 1,040,000 | $ | (6,423,000 | )(1) | $ | 5,918,000 | |||||||
Allowance for obligatory investments | 10,028,000 | 1,434,000 | (122,000 | )(2) | 11,340,000 | |||||||||||
$ | 21,329,000 | $ | 2,474,000 | $ | (6,545,000 | ) | $ | 17,258,000 | ||||||||
Year Ended December 31, 2002: | ||||||||||||||||
Allowance for doubtful accounts receivable | $ | 14,406,000 | $ | 1,586,000 | $ | (4,691,000 | )(1) | $ | 11,301,000 | |||||||
Allowance for obligatory investments | 9,290,000 | 1,521,000 | (783,000 | )(2) | 10,028,000 | |||||||||||
$ | 23,696,000 | $ | 3,107,000 | $ | (5,474,000 | ) | $ | 21,329,000 | ||||||||
(1) | Represents net write offs of uncollectible accounts. |
(2) | Represents write offs of obligatory investments in connection with the contribution of certain obligatory investments to CRDA approved projects. |
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As of | ||||||||||
March 31, | December 31, | |||||||||
2005 | 2004 | |||||||||
(Unaudited) | ||||||||||
(In thousands) | ||||||||||
ASSETS | ||||||||||
Current Assets: | ||||||||||
Cash and cash equivalents | $ | 14,929 | $ | 12,756 | ||||||
Accounts receivable, net | 4,371 | 5,100 | ||||||||
Deferred financing costs | 2,237 | 2,260 | ||||||||
Other current assets | 9,813 | 7,328 | ||||||||
Total Current Assets | 31,350 | 27,444 | ||||||||
Property and equipment, net | 168,237 | 171,640 | ||||||||
Obligatory investments, net | 11,830 | 11,647 | ||||||||
Deferred financing costs | 3,970 | 4,509 | ||||||||
Other assets | 1,667 | 1,718 | ||||||||
Total Other Assets | 17,467 | 17,874 | ||||||||
TOTAL ASSETS | $ | 217,054 | $ | 216,958 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current Liabilities: | ||||||||||
Line of credit | $ | 4,000 | $ | — | ||||||
Current portion of long-term debt | 43,741 | 43,741 | ||||||||
Accounts payable — trade | 3,912 | 3,995 | ||||||||
Accrued expenses | 10,261 | 11,360 | ||||||||
Accrued payroll and related expenses | 7,503 | 6,819 | ||||||||
Related party payables | 588 | 371 | ||||||||
Current portion of capital lease obligation | 236 | 248 | ||||||||
Total Current Liabilities | 70,241 | 66,534 | ||||||||
Long-Term Liabilities: | ||||||||||
Long-term debt, less current portion | 66,259 | 66,259 | ||||||||
Capital lease obligations, less current portion | 385 | 432 | ||||||||
Other | 5,496 | 4,920 | ||||||||
Total Long-Term Liabilities | 72,140 | 71,611 | ||||||||
Commitments and Contingencies | ||||||||||
Warrants in Atlantic Coast Entertainment Holdings, Inc. | 43,587 | 43,587 | ||||||||
Shareholders’ Equity: | ||||||||||
Preferred stock, $.01 par value per share; 5,000,000 shares authorized; 0 shares outstanding | — | — | ||||||||
Common stock, $.01 par value share; 20,000,000 shares authorized; 10,000,000 shares issued and outstanding | 100 | 100 | ||||||||
Additional paid-in capital | 81,313 | 81,313 | ||||||||
Accumulated deficit | (50,327 | ) | (46,187 | ) | ||||||
Total Shareholders’ Equity | 31,086 | 35,226 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 217,054 | $ | 216,958 | ||||||
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Three Months | Three Months | ||||||||
Ended | Ended | ||||||||
March 31, 2005 | March 31, 2004 | ||||||||
(In thousands, except per share data) | |||||||||
(Unaudited) | |||||||||
REVENUES: | |||||||||
Casino | $ | 37,341 | $ | 38,119 | |||||
Hotel | 2,294 | 2,288 | |||||||
Food and beverage | 4,866 | 4,990 | |||||||
Other | 807 | 927 | |||||||
Gross Revenues | 45,308 | 46,324 | |||||||
Less promotional allowances | (5,343 | ) | (5,334 | ) | |||||
Net Revenues | 39,965 | 40,990 | |||||||
COSTS AND EXPENSES: | |||||||||
Casino | 11,827 | 12,214 | |||||||
Hotel | 703 | 655 | |||||||
Food and beverage | 1,566 | 2,027 | |||||||
Other operating expenses | 209 | 203 | |||||||
Selling, general and administrative | 22,925 | 21,041 | |||||||
Depreciation and amortization | 4,026 | 3,567 | |||||||
Provision for obligatory investments | 238 | 368 | |||||||
Gain on sale of assets | (4 | ) | — | ||||||
Total Costs And Expenses | 41,490 | 40,075 | |||||||
(LOSS) INCOME FROM OPERATIONS | (1,525 | ) | 915 | ||||||
OTHER INCOME (EXPENSE): | |||||||||
Interest income | 107 | 111 | |||||||
Interest expense | (2,451 | ) | (3,189 | ) | |||||
Debt restructuring costs | (24 | ) | (710 | ) | |||||
Total other expense, net | (2,368 | ) | (3,788 | ) | |||||
LOSS BEFORE INCOME TAXES | (3,893 | ) | (2,873 | ) | |||||
Provision for income taxes | 247 | 267 | |||||||
NET LOSS | $ | (4,140 | ) | $ | (3,140 | ) | |||
Basic/diluted loss per common share | $ | (0.41 | ) | $ | (0.31 | ) | |||
Weighted average common shares outstanding | 10,000,000 | 10,000,000 | |||||||
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Three Months | Three Months | ||||||||
Ended | Ended | ||||||||
March 31, 2005 | March 31, 2004 | ||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
Net Loss | $ | (4,140 | ) | $ | (3,140 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation and amortization | 4,026 | 3,567 | |||||||
Provision for obligatory investments | 238 | 368 | |||||||
Gain on sale of assets | (4 | ) | — | ||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable, net | 729 | 94 | |||||||
Deferred financing costs | 595 | — | |||||||
Other current assets | (2,486 | ) | 900 | ||||||
Accounts payable and accrued expenses | (281 | ) | (4,612 | ) | |||||
Long-term liabilities | 576 | 56 | |||||||
Net Cash Used in Operating Activities | (747 | ) | (2,767 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
Acquisition of property and equipment | (571 | ) | (2,118 | ) | |||||
Purchase of obligatory investments | (553 | ) | (517 | ) | |||||
Cash proceeds from sale of property and equipment | 4 | 9 | |||||||
Cash proceeds from sale of obligatory investments | 132 | — | |||||||
Net Cash Used in Investing Activities | (988 | ) | (2,626 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
Net proceeds from borrowing on line of credit | 4,000 | — | |||||||
Deferred financing fees | (33 | ) | — | ||||||
Payments on capital lease obligation | (59 | ) | — | ||||||
Net Cash Provided by Financing Activities | 3,908 | — | |||||||
Net increase (decrease) in cash and cash equivalents | 2,173 | (5,393 | ) | ||||||
Cash and cash equivalents — beginning of period | 12,756 | 33,454 | |||||||
Cash and Cash Equivalents — End of Period | $ | 14,929 | $ | 28,061 | |||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||
Cash paid for interest | $ | 2,494 | $ | 6,050 | |||||
Cash paid for income taxes | $ | 88 | $ | 88 | |||||
Interest capitalized | $ | 2 | $ | 28 | |||||
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(1) | Organization, Business and Basis of Presentation |
Reclassifications |
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(2) | Liquidity Matters |
(3) | Related Party Transactions |
(4) | Line of Credit |
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(5) | Commitments and Contingencies |
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Item 20. | Indemnification of Directors and Officers. |
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Item 21. | Exhibits and Financial Statement Schedules |
Exhibit No. | Description | |||
3 | .1 | Certificate of Limited Partnership of American Real Estate Holdings Limited Partnership (“AREH”) dated February 17, 1987, as amended pursuant to First Amendment to Certificate of Limited Partnership, dated March 10, 1987 (incorporated by reference to Exhibit 3.4 to Form 10-Q for the quarter ended March 31, 2004 (SEC File No. 1-9516), filed on May 10, 2004). | ||
3 | .2 | Amended and Restated Agreement of Limited Partnership of AREH, dated as of July 1, 1987 (incorporated by reference to Exhibit 3.5 to Form 10-Q for the quarter ended March 31, 2004 (SEC File No. 1-9516), filed on May 10, 2004). | ||
3 | .3 | Amendment No. 1 to the Amended and Restated Agreement of Limited Partnership of AREH, dated as of August 16, 1996 (incorporated by reference to Exhibit 10.2 to Form 8-K (SEC File No. 1-9516), filed on August 16, 1996). | ||
3 | .4 | Amendment No. 2 to the Amended and Restated Agreement of Limited Partnership of AREH, dated as of June 14, 2002 (incorporated by reference to Exhibit 3.9 to Form 10-K for the year ended December 31, 2002 (SEC File No. 1-9516), filed on March 31, 2003). | ||
3 | .5 | Certificate of Incorporation of American Real Estate Finance Corp. (incorporated by reference to Exhibit 3.6 to Form S-4 (SEC File No. 1-9516), filed on August 6, 2004). | ||
3 | .6 | By-Laws of American Real Estate Finance Corp. (incorporated by reference to Exhibit 3.7 to Form S-4 (SEC File No. 1-9516), filed on August 6, 2004). | ||
4 | .1 | Indenture, dated as of February 7, 2005, among American Real Estate Partners, L.P., American Real Estate Finance Corp., AREH, as guarantor and Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 4.9 to AREP’s Form 8-K (SEC File No. 1-9516), filed on February 10, 2005). | ||
4 | .2 | Form of 71/8% Senior Note due 2013 (incorporated by reference to Exhibit 4.9 to AREP’s Form 8-K (SEC File No. 1-9516), filed on February 10, 2005). | ||
4 | .3 | Registration Rights Agreement, dated as of February 7, 2005, among American Real Estate Partners, L.P., American Real Estate Finance Corp., AREH and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 4.11 to AREP’s Form 8-K (SEC File No. 1-9516), filed on February 10, 2005. | ||
5 | .1 | Opinion of DLA Piper Rudnick Gray Cary US LLP.(1) | ||
10 | .1 | Registration Rights Agreement between AREP and X LP (now known as High Coast Limited Partnership)(incorporated by reference to Exhibit 10.2 to Form 10-K for the year ended December 31, 2004 (SEC File No. 1-9516), filed on March 16, 2005). | ||
10 | .2 | Amended and Restated Agency Agreement (incorporated by reference to Exhibit 10.12 to Form 10-K for the year ended December 31, 1994 (SEC File No. 1-9516), filed on March 31, 1995). | ||
10 | .3 | Service Mark License Agreement, by and between Becker Gaming, Inc. and Arizona Charlie’s, Inc., dated as of August 1, 2000 (incorporated by reference to ACEP’s Form 10-K (SEC File No. 333-118149), filed on March 16, 2005. | ||
10 | .4 | Management Agreement, dated September 12, 2001, by and between National Energy Group, Inc. (“NEG”) and NEG Operating LLC (incorporated by reference to Exhibit 99.4 to NEG’s Form 8-K (SEC File No. 000-19136), filed on September 27, 2001). |
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Exhibit No. | Description | |||
10 | .5 | Pledge Agreement and Irrevocable Proxy, dated December 29, 2003, made by NEG in favor of Bank of Texas, N.A. (incorporated by reference to Exhibit 10.3 of NEG’s Form 8-K (SEC File No. 000-19036), filed on January 14, 2004). | ||
10 | .6 | Credit Agreement, dated as of January 29, 2004, by and among ACEP, certain subsidiaries of ACEP, the several lenders from time to time parties thereto and Bear Stearns Corporate Lending Inc., as Syndication Agent and Administrative Agent (incorporated by reference to Exhibit 10.1 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on August 12, 2004). | ||
10 | .7 | Pledge and Security Agreement, dated as of May 26, 2004, by and among ACEP, ACEP Finance, certain subsidiaries of ACEP and Bear Sterns Corporate Lending Inc. (incorporated by reference to Exhibit 10.2 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on August 12, 2004). | ||
10 | .8 | Employment Agreement, effective as of April 1, 2004, by and between ACEP and Richard P. Brown (incorporated by reference to Exhibit 10.4 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on August 12, 2004). | ||
10 | .9 | First Amendment to Credit Agreement, dated as of January 29, 2004 by and among ACEP, as the Borrower, certain subsidiaries of the Borrower, as Guarantors, The Several Lenders, Bear Stearns Corporate Lending Inc. as Syndication Agent, and Bear Stearns Corporate Lending Inc., as Administrative Agent, dated as of May 26, 2004, Bear, Stearns & Co. Inc., as Sole Lead Arranger and Sole Bookrunner (incorporated by reference to Exhibit 10.6 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on October 12, 2004). | ||
10 | .10 | Management Agreement, dated November 16, 2004, by and between NEG and Panaco, Inc. (“Panaco”) (incorporated by reference to Exhibit 10.13 to NEG’s Form 10-Q (SEC File No. 000-19136), filed on November 15, 2004). | ||
10 | .11 | Management Agreement, dated August 28, 2003, by and between NEG and TransTexas Gas Corporation (“TransTexas”) (incorporated by reference to Exhibit 10.1 to NEG’s Form 8-K (SEC File No. 000-19136), filed on September 10, 2003). | ||
10 | .12 | Purchase Agreement for Notes Issued by TransTexas, dated December 6, 2004, by and between Thornwood Associates LP (“Thornwood”) and AREP Oil & Gas LLC (“AREP Oil & Gas”) (incorporated by reference to Exhibit 99.1 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004. | ||
10 | .13 | Assignment and Assumption Agreement, dated December 6, 2004, by and between Thornwood and AREP Oil & Gas (incorporated by reference to Exhibit 99.2 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004). | ||
10 | .14 | Membership Interest Purchase Agreement, dated as of December 6, 2004, by and among AREP Oil & Gas, Arnos Corp., High River and Hopper Investments LLC (incorporated by reference to Exhibit 99.3 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004). | ||
10 | .15 | Assignment and Assumption Agreement, dated December 6, 2004, by and among AREP Oil & Gas, Arnos Corp., High River and Hopper Investments LLC (incorporated by reference to Exhibit 99.4 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004). | ||
10 | .16 | Amended and Restated Oil & Gas Term Loan Agreement by and among Thornwood and TransTexas, Galveston Bay Pipeline Company and Galveston Bay Processing Corporation and Thornwood, dated August 28, 2003 (incorporated by reference to Exhibit 99.5 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004). | ||
10 | .17 | Amended and Restated Security and Pledge Agreement, dated August 2003, by and among TransTexas, Galveston Bay Pipeline Company, Galveston Bay Processing Corporation and Thornwood (incorporated by reference to Exhibit 99.6 to AREP’s Form 8-K (SEC File No. 1-9516, filed on December 10, 2004). |
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Exhibit No. | Description | |||
10 | .18 | Term Loan and Security Agreement among Panaco, Mid River LLC and Lenders Named Therein, dated as of November 16, 2004 (incorporated by reference to Exhibit 99.7 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004). | ||
10 | .19 | Note Purchase Agreement, dated as of December 27, 2004, by and among AREP Sands Holding LLC, Barberry Corp., and Cyprus, LLC (incorporated by reference to Exhibit 99.1 to AREP’s Form 8-K (SEC File No. 1-9516, filed on December 30, 2004). | ||
10 | .20 | Amendment No. 1 to Purchase Agreement, dated May 23, 2005 (incorporated by reference to Exhibit 99.1 to Form 8-K (SEC File No. 1-9516) filed on May 23, 2005). | ||
10 | .21 | Indenture, dated as of May 12, 2004, among American Real Estate Partners, L.P., American Real Estate Finance Corp., AREH, as guarantor and Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to AREP’s Form S-4 (SEC File No. 333-118021), filed on August 6, 2004). | ||
10 | .22 | Form of 81/8% Senior Note due 2012 (incorporated by reference to Exhibit 4.1 to AREP’s Form S-4 (SEC File No. 333-118021), filed on August 6, 2004). | ||
10 | .23 | Registration Rights Agreement, dated as of May 12, 2004, among AREP, AREP Finance, AREH and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 4.3 to AREP’s Form S-4 (SEC File No. 333-118021), filed on August 6, 2004. | ||
12 | .1 | Ratio of earnings to fixed charges. | ||
17 | .1 | Statement of Eligibility of Trustee.(1) | ||
21 | Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to AREH’s Form 10-K (SEC File No. 333-118021), filed on March 31, 2005). | |||
23 | .1 | Consent of Grant Thornton LLP. | ||
23 | .2 | Consent of KPMG LLP. | ||
23 | .3 | Consent of Grant Thornton LLP. | ||
23 | .4 | Consent of Grant Thornton LLP. | ||
23 | .5 | Consent of Grant Thornton LLP. | ||
23 | .6 | Consent of KPMG LLP. | ||
23 | .7 | Consent of Pannell Kerr Forster of Texas P.C. | ||
23 | .8 | Consent of KPMG LLP. | ||
23 | .9 | Consent of Netherland, Sewell & Associates, Inc. | ||
23 | .10 | Consent of DLA Piper Rudnick Gray Cary US LLP. (to be included in exhibit 5.1)(1) | ||
24 | .1 | Power of Attorney (included on the signature pages to this Form S-4). | ||
99 | .1 | Letter of Transmittal.(1) | ||
99 | .2 | Notice of Guaranteed Delivery.(1) | ||
99 | .3 | Letter to Clients.(1) | ||
99 | .4 | Letter to Brokers.(1) | ||
99 | .5 | Form of Exchange Agent Agreement by and between AREP and Wilmington Trust Company.(1) |
(1) | To be filed by amendment. |
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Item 22. | Undertakings |
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; | |
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
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AMERICAN REAL ESTATE | |
PARTNERS, L.P. |
By: | American Property Investors, Inc., |
its general partner |
By: | /s/ Keith A. Meister |
Keith A. Meister | |
Chief Executive Officer |
KNOW BY ALL MEN BY THESE PRESENTS that each person whose signature appears below hereby constitutes and appoints John P. Saldarelli and Keith A. Meister, and each of them acting singly, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, to act, without the other, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, their substitute may lawfully do or cause to be done by virtue hereof. |
/s/ Keith A. Meister | Chief Executive Officer (Principal Executive Officer) | June 20, 2005 | ||||
/s/ John P. Saldarelli | Treasurer, Chief Financial Officer (Principal Financial Officer) | June 20, 2005 | ||||
/s/ Jack G. Wasserman | Director | June 20, 2005 | ||||
/s/ William A. Leidesdorf | Director | June 20, 2005 | ||||
/s/ James L. Nelson | Director | June 20, 2005 | ||||
/s/ Carl C. Icahn | Director | June 20, 2005 |
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AMERICAN REAL ESTATE FINANCE CORP. |
By: | /s/ Keith A. Meister |
Keith A. Meister | |
Chief Executive Officer |
KNOW BY ALL MEN BY THESE PRESENTS that each person whose signature appears below hereby constitutes and appoints John P. Saldarelli and Keith A. Meister, and each of them acting singly, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, to act, without the other, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do an perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, their substitute may lawfully do or cause to be done by virtue hereof. |
/s/ Keith A. Meister | Chief Executive Officer (Principal Executive Officer) | June 20, 2005 | ||||
/s/ John P. Saldarelli | Treasurer, Chief Financial Officer (Principal Financial and Accounting Officer) | June 20, 2005 | ||||
/s/ Jack G. Wasserman | Director | June 20, 2005 | ||||
/s/ William A. Leidesdorf | Director | June 20, 2005 | ||||
/s/ James L. Nelson | Director | June 20, 2005 | ||||
/s/ Carl C. Icahn | Director | June 20, 2005 |
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AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP |
By: | American Property Investors, Inc., |
its general partner |
By: | /s/ Keith A. Meister |
Keith A. Meister | |
Chief Executive Officer |
KNOW BY ALL MEN BY THESE PRESENTS that each person whose signature appears below hereby constitutes and appoints John P. Saldarelli and Keith A. Meister, and each of them acting singly, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, to act, without the other, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do an perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, their substitute may lawfully do or cause to be done by virtue hereof. |
/s/ Keith A. Meister | Chief Executive Officer (Principal Executive Officer) | June 20, 2005 | ||||
/s/ John P. Saldarelli | Treasurer, Chief Financial Officer (Principal Financial and Accounting Officer) | June 20, 2005 | ||||
/s/ Jack G. Wasserman | Director | June 20, 2005 | ||||
/s/ William A. Leidesdorf | Director | June 20, 2005 | ||||
/s/ James L. Nelson | Director | June 20, 2005 | ||||
/s/ Carl C. Icahn | Director | June 20, 2005 |
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