Greektown Superholdings 8-K Results of Operations and Financial Condition

Greektown Superholdings, Inc. 8-K

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

March 30, 2012

Greektown Superholdings, Inc. Reports Fourth Quarter and Full Year 2011 Financial Results

DETROIT, March 30, 2012 – Greektown Superholdings, Inc. (“Greektown” or the “company”) today reported financial results for its fourth quarter and full year ended December 31, 2011.

Net revenues for the quarter ended December 31, 2011 were $83.9 million, compared to $80.1 million for the same quarter of 2010, an increase of 4.7%. Net loss for the fourth quarter improved to $5.9 million compared to $9.6 million a year ago. EBITDA(1) decreased to $18.8 million for the fourth quarter of 2011 from $19.9 million in the same quarter of 2010. Fourth quarter 2010 EBITDA and net loss included $3.4 million of pre-tax income related to a property tax settlement agreement which retroactively reduced the company’s property tax basis.

Net revenues for the year ended December 31, 2011 were $333.4 million, and net loss was $24.9 million. EBITDA for the year ended December 31, 2011 was $74.2 million.

“We are encouraged that our renovation efforts, as well as other initiatives, are growing our business,” said Michael Puggi, president and chief executive officer of Greektown. “Despite a significant portion of the casino being affected by construction through the first half of December, we were able to increase fourth quarter revenues over the prior year and improve our operating performance. In addition, we are pleased with our guests’ enthusiastic response to the changes we’ve made. Of these changes, one of the most significant has been the opening of Asteria, a bar/lounge and entertainment facility that was completed on December 19th.”

“The projects completed in 2011 were important first steps in revitalizing Greektown, and provide our guests with an enhanced gaming experience,” said Puggi. “In 2012, we are focused on expanding our appeal through higher levels of service, a broader range of amenities, and improved access to our property.”

 Cash and cash equivalents increased to $50.8 million at December 31, 2011, compared to $30.2 million a year ago. The increase was primarily due to proceeds received from the previously announced sale of land to Wayne County, Michigan, during the third quarter of 2011, as well as operating results for the year. The company did not borrow against its $30.0 million revolving loan agreement during the fourth quarter.

 

The company’s capital expenditures for the year ended December 31, 2011 were $15.7 million, including spending related to the completion of numerous renovations, such as the Super Pit table games area, The Fringe video poker and sports bar, the new first floor promotions area, cage, and club booth, the new Asteria bar/lounge, and the new valet parking facility. 

For the year ending December 31, 2012, capital expenditures are projected to be approximately $44.0 million, including $26.0 million related to our new valet parking facility. The amount and nature of our projected 2012 capital expenditures are subject to obtaining the required financing and regulatory approvals.

(1) EBITDA (earnings before interest, taxes, depreciation and amortization) is a measurement not in accordance with Generally Accepted Accounting Principles (GAAP) but is commonly used in the gaming industry as a measure of performance and as a basis for valuation of gaming companies. Reconciliation of net (loss) income to EBITDA is attached to this release. EBITDA is a supplemental financial measure used by management, as well as industry analysts, to evaluate our operations. However, EBITDA should not be construed as an alternative to income from operations (as an indicator of our operating performance) or to cash flows from operating activities (as a measure of liquidity) as determined in accordance with GAAP. All companies do not calculate EBITDA in the same manner. As a result, the Company’s EBITDA may not be comparable to similarly titled measures presented by other companies.

###

About Greektown Superholdings, Inc.

Greektown Superholdings, Inc. operates, through its subsidiaries, the Greektown Casino-Hotel. Located in the heart of Detroit’s Greektown Dining and Entertainment District, Greektown Casino-Hotel opened on November 10, 2000. Greektown Casino-Hotel offers such amenities as the International Buffet, Eclipz Lounge, Shotz Sports Bar & Grill, Bistro 555 and a VIP lounge for players. Greektown Casino-Hotel opened its 400-room hotel tower in February 2009 and recently became the first Michigan casino to debut a smartphone application. For more information, visit greektowncasinohotel.com.

 

Safe Harbor Statement

Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about capitalization and performance of Greektown. All forward-looking statements involve risks and uncertainties. All statements contained herein that are not clearly historical in nature are forward-looking, and words such as “anticipate,” “expect,” “will,” “continue,” or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in other press releases, written statements or documents filed with the Securities and Exchange Commission are subject to known and unknown risks, uncertainties and contingencies. Many of these risks, uncertainties and contingencies are beyond Greektown’s control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Any forward-looking statements in this release speak only as of the date of this release, and Greektown undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

Media Contact:

Greektown Superholdings, Inc.

Lloryn Love

313-223-2999, ext. 5455

llove@greektowncasino.com

Investor Contact:

Greektown Superholdings, Inc.

Glen Tomaszewski

Senior Vice President and Chief Financial Officer

313-223-2999, ext. 5458

gtomaszewski@greektowncasino.com

 

Greektown Superholdings, Inc.
Consolidated Statements of Operations (unaudited)
(In thousands, except share and per share data)
	Successor (1)												Predecessor (1)
	Year Ended December 31,			Three Months Ended December 31,			Three Months Ended December 31,			Six Months Ended December 31,			Six Months Ended June 30,
	2011			2011			2010			2010			2010
Revenues
Casino	$	347,396		$	87,293		$	80,968		$	168,061		$	177,429
Food and beverage		23,158			5,923			5,264			11,164			11,924
Hotel		11,004			2,764			2,106			4,675			4,628
Other		4,763			1,209			1,302			2,593			2,482
Gross revenues		386,321			97,189			89,640			186,493			196,463
Less promotional allowances		52,949			13,250			9,522			21,757			23,591
Net revenues		333,372			83,939			80,118			164,736			172,872
Operating expenses
Casino		80,496			20,611			20,528			42,890			44,291
Gaming taxes		74,961			18,903			17,233			36,065			38,469
Food and beverage		18,530			4,210			4,992			8,907			7,817
Hotel		9,156			2,238			2,192			4,380			4,397
Marketing, advertising, and entertainment		8,287			2,857			1,653			3,149			4,146
Facilities		20,215			4,970			5,248			9,984			9,689
Depreciation and amortization		37,303			8,415			10,225			20,257			10,488
General and administrative expenses		46,072			11,377			8,292			19,310			21,437
Other		282			14			61			120			105
Operating expenses		295,302			73,595			70,424			145,062			140,839
Income from operations		38,070			10,344			9,694			19,674			32,033
Other expenses
Interest expense		(50,167	)		(12,330	)		(12,355	)		(25,425	)		(37,489	)
Amortization of finance fees		(6,938	)		(1,769	)		(1,660	)		(3,292	)		(2,079	)
Other expense		(23	)		1			8			(21	)		(298	)
Net (loss) gain on Chapter 11 related reorganization items from fresh start adjustments		(1,149	)		-			(61	)		317			301,352
Total other (expense) income, net		(58,277	)		(14,098	)		(14,068	)		(28,421	)		261,486
(Loss) income before provisions for state income taxes		(20,207	)		(3,754	)		(4,374	)		(8,747	)		293,519
Income tax expense  – current		(1,859	)		(439	)		(935	)		(1,585	)		(1,248	)
Income tax benefit (expense) – deferred		(2,812	)		(1,682	)		(4,289	)		(3,562	)		(1,350	)
Net (loss) income	$	(24,878	)	$	(5,875	)	$	(9,598	)	$	(13,894	)	$	290,921
Loss per share:
Basic	$	(295.21	)	$	(70.50	)	$	(99.01	)	$	(160.38	)		N/A
Diluted	$	(295.21	)	$	(70.50	)	$	(99.01	)	$	(160.38	)		N/A
Weighted average common shares outstanding		142,423			144,211			140,291			140,146			N/A
Weighted average common and common equivalent shares outstanding		142,423			144,211			140,291			140,146			N/A
(1) Successor and Predecessor periods represent the Company adopting fresh-start accounting reporting at June 30, 2010.

 

Greektown Superholdings, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)
	December 31,		December 31,
	2011		2010
Assets
Current assets:
Cash and cash equivalents	$	50,754	$	30,195
Restricted cash		–		5,000
Certificate of deposit		–		534
Accounts receivable – gaming, less allowance for doubtful accounts of $282 and $1,931 in 2011 and 2010, respectively		734		712
Accounts receivable – other, less allowance for doubtful accounts of $101 and $151 in 2011 and 2010, respectively		1,216		1,824
Note receivable		–		2,000
Property tax refund receivable		–		3,451
Inventories		398		383
Prepaid expenses		5,605		2,106
Prepaid Michigan Gaming Control Board annual fee		8,823		8,754
Prepaid municipal service fees		3,346		3,434
Deposits		1,631		3,793
Total current assets		72,507		62,186
Property, building, and equipment, net		317,085		335,608
Other assets:
Financing fees - net of accumulated amortization of $5,086 and $1,680 in 2010 and 2011, respectively		11,571		14,854
Deposits and other assets		30		30
Casino development rights		117,800		117,800
Trade names		26,300		26,300
Rated player relationships - net of accumulated amortization of $20,700 and $6,900 in 2010 and 2011, respectively		48,300		62,100
Goodwill		110,252		110,252
Total assets	$	703,845	$	729,130

 

Greektown Superholdings, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)
	December 31,			December 31,
	2011			2010
Liabilities and shareholders' equity
Current liabilities:
Accounts payable		15,128			12,068
Taxes payable		–			295
Accrued interest		25,063			25,164
Unsecured distribution liability		–			10,000
Accrued expenses and other liabilities		9,631			9,626
Total current liabilities		49,822			57,153
Long-term liabilities:
Other accrued income taxes		8,871			8,887
Senior secured notes - net		367,748			364,218
Obligation under capital lease		2,489			2,510
Deferred income taxes		10,094			7,282
Total long-term liabilities		389,202			382,897
Total liabilities		439,024			440,050
Shareholders' equity (members' deficit):
Series A-1 preferred stock at $0.01 par value;
1,688,268 shares authorized, 1,463,535 shares issued and outstanding at December 31, 2011 and 2010		185,396			185,396
Series A-2 preferred stock at $0.01 par value;
645,065 shares authorized, 162,255 shares issued and outstanding at December 31, 2011 and 2010		20,551			20,551
Series A-1 preferred warrants at $0.01 par value;
202,511 shares issued and outstanding at December 31, 2011 and 2010		25,651			25,651
Series A-2 preferred warrants at $0.01 par value;
460,587 shares issued and outstanding at December 31, 2011 and 2010		58,342			58,342
Series A-1 common stock at $0.01 par value;
4,354,935 shares authorized, 142,423 and 140,291 shares issued and outstanding at December 31, 2011 and 2010, respectively		1			1
Series A-2 common stock at $0.01 par value; 645,065 shares authorized, no shares issued		–			–
Additional paid-in capital		13,652			13,033
Accumulated deficit		(38,772	)		(13,894	)
Total shareholders' equity		264,821			289,080
Total liabilities and shareholders' equity	$	703,845		$	729,130

 

Greektown Superholdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
	Successor (1)												Predecessor (1)
	Year Ended December 31,			Three Months Ended December 31,			Three Months Ended December 31,			Six Months Ended December 31,			Six Months Ended June 30,
	2011			2011			2010			2010			2010
Operating activities
Net (loss) income	$	(24,878	)	$	(5,875	)	$	(9,598	)	$	(13,894	)	$	290,921
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		37,303			8,415			10,225			20,257			10,488
Amortization of finance fees and accretion of discount on senior notes		6,938			1,769			1,660			3,292			2,079
Chapter 11 related reorganization items		1,149			-			61			(317	)		(301,352	)
Deferred income taxes		2,812			1,682			3,580			3,562			1,350
Stock compensation		619			219			96			175			-
Changes in current assets and liabilities:					-			-			-			-
Accounts receivable - gaming		(22	)		(130	)		598			980			1,684
Accounts receivable - other		608			79			(365	)		(528	)		460
Note receivable		2,000			1,900			-			-			-
Property tax refund receivable		3,451			-			(3,451	)		(3,451	)		-
State of Michigan gaming tax refundable		-			-			-			5,743			6,585
Inventories		(15	)		(4	)		(44	)		30			20
Prepaid expenses		(1,318	)		(10,799	)		(7,543	)		(5,363	)		4,748
Accounts payable		3,060			1,541			(1,494	)		5,593			(6,315	)
Accrued PIK interest		-			-			-			-			(27,783	)
City of Detroit settlement agreement accrual		-			-			-			-			(13,547	)
Unsecured distribution liability		(10,000	)		-			-			-			-
Accrued interest		(101	)		12,513			12,196			25,164			-
Accrued expenses and other liabilities		(447	)		(763	)		167			(3,823	)		14,029
Net cash provided by (used in) operating activities before reorganization costs		21,159			10,547			6,088			37,420			(16,633	)
Operating cash flows for reorganization costs		(1,070	)		-			(878	)		(5,094	)		(14,557	)
Net cash provided by (used in) operating activities		20,089			10,547			5,210			32,326			(31,190	)
Investing activities
Decrease/(increase) in restricted cash		5,000			-			(5,000	)		(5,000	)		-
Capital expenditures		(15,661	)		(5,725	)		(4,960	)		(9,410	)		(5,566	)
Disposition of real estate and property		10,681			-			-			-
Redemption of (investment in) certificate of deposit		534			–			(1	)		-2			(2	)
Net cash provided by (used in) investing activities		554			(5,725	)		(9,961	)		(14,412	)		(5,568	)
Financing activities
Proceeds from borrowings on long-term notes payable		-			–			-			-			362,605
Payments on long-term debt		-			–			-			-			(516,328	)
Payments on notes payable		-			–			(507	)		(983	)		(913	)
Financing fees paid		(84	)		–			(147	)		(332	)		(16,702	)
Proceeds from issuance of stockholders' equity					–			–			–			196,000
Net cash (used in) provided by financing activities		(84	)		–			(654	)		(1,315	)		24,662
Net increase (decrease) in cash and cash equivalents		20,559			4,822			(5,405	)		16,599			(12,096	)
Cash and cash equivalents at beginning of year		30,195			45,932			35,600			13,596			25,692
Cash and cash equivalents at end of period	$	50,754		$	50,754		$	30,195		$	30,195		$	13,596
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	50,574		$	38		$	93		$	196		$	13,689
Cash paid during the period for income taxes	$	2,288		$	1,732		$	-		$	760		$	475
(1) Successor and Predecessor periods represent the Company adopting fresh-start accounting reporting at June 30, 2010.

 

Greektown Superholdings, Inc.
Reconciliation of Net (loss) Income to EBITDA
(In thousands, except share and per share data)
	Successor (1)												Predecessor (1)
	Year Ended December 31,			Three Months Ended December 31,			Three Months Ended December 31,			Six Months Ended December 31,			Six Months Ended June 30,
	2011			2011			2010 (2)			2010			2010
Net (loss)/Income (1)	$	(24,878	)	$	(5,875	)	$	(9,598	)	$	(13,894	)	$	290,921
Interest expense		57,128			14,097			14,005			28,738			39,866
Income tax expense		4,671			2,121			5,224			5,147			2,598
Depreciation and amortization		37,303			8,415			10,226			20,257			10,488
EBITDA (3)	$	74,224		$	18,758		$	19,858		$	40,248		$	343,873

(1) Successor and Predecessor periods represent the Company adopting fresh-start accounting reporting at June 30, 2010.

(2) EBITDA for the quarter ended December 31, 2010 included income of $3.4 million related to a property tax settlement agreement which retroactively reduced the company’s property tax basis.

(3) EBITDA (earnings before interest, taxes, depreciation and amortization) is a measurement not in accordance with U.S. Generally Accepted Accounting Principles (GAAP) but is commonly used in the gaming industry as a measure of performance and as a basis for valuation of gaming companies. EBITDA is a supplemental financial measure used by management, as well as industry analysts, to evaluate our operations. However, EBITDA should not be construed as an alternative to income from operations (as an indicator of our operating performance) or to cash flows from operating activities (as a measure of liquidity) as determined in accordance with GAAP. All companies do not calculate EBITDA in the same manner. As a result, the Company’s EBITDA may not be comparable to similarly titled measures presented by other companies.