Log in
Login
Password
Remember
Lost password
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  Shares  >  OTC Bulletin Board - Other OTC  >  Tropicana Entertainment Inc    TPCA

SummaryQuotesChartsNewsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 
The feature you requested does not exist. However, we suggest the following feature:

TROPICANA ENTERTAINMENT : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

08/06/2015 | 02:33pm US/Eastern
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 (Exchange Act). These statements involve known
and unknown risks, uncertainties and other factors, which may cause our or our
industry's actual results, performance, or achievements to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. In some situations, you may be able
to identify such statements by words such as "may," "will," "might," "expect,"
"believe," "anticipate," "intend," "could," "would," "estimate," "project,"
"continue," "pursue," or the negative thereof or comparable terminology, and may
include (without limitation) information regarding our expectations, hopes or
intentions regarding the future, including, but not limited to, statements
regarding our operating or other strategic plans, including our acquisition of
Lumière Place and our disposition of River Palms, our competition (including
online gaming), financing, revenues, or tax benefits; our beliefs regarding the
sufficiency of our existing cash and credit sources, including our New Credit
Facilities (as defined herein) and cash flows from operating activities to meet
our projected expenditures (including operating and maintenance capital
expenditures) and costs associated with certain of our projects, our required
capital expenditures pursuant to agreements we are party to and our anticipated
capital expenditures, including our use of our CRDA project funds, estimated
asset and liability values, risk of counterparty nonperformance and our legal
strategies and the potential effect of pending legal claims on our business and
financial condition, and any financial or other information included herein
based upon or otherwise incorporating judgments or estimates based upon future
performance or events. Forward-looking statements involve certain risks and
uncertainties, and actual results may differ materially from those discussed in
each such statement. In light of these risks, uncertainties and assumptions, the
events described in the forward-looking statements might not occur or might
occur to a different manner or extent or at a different time than we have
described. All forward-looking statements are qualified in their entirety by
reference to the areas of risk and uncertainty described elsewhere in this
Quarterly Report on Form 10-Q as well as those discussed under "Item 1A-Risk
Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014.
Forward-looking statements represent our estimates and assumptions only as of
the date of this report. We operate in a continually changing business
environment and new risks emerge from time to time. Except as may be required by
applicable law, we undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Overview
We are an owner and operator of regional casino and entertainment properties
located in the United States and one casino resort development located on the
island of Aruba. Our United States properties include two casinos in Nevada and
one casino in each of Indiana, Louisiana, Mississippi, Missouri and New Jersey.
We primarily cater to local and regional guests to provide a fun and exciting
gaming environment with high quality and high value lodging, dining, retail and
entertainment amenities. Our properties offer a broad array of gaming options
specifically tailored for our patrons in each market. As of June 30, 2015, our
properties collectively included approximately 391,000 square feet of gaming
space with 8,000 slot machines, 300 table games and 5,500 hotel rooms.
We view each property as an operating segment which we aggregate by region in
order to present our reportable segments: (i) East, (ii) Central, (iii) West and
(iv) South and other. As of June 30, 2015, our operations by region include the
following:
•      East-Tropicana Casino and Resort, Atlantic City ("Tropicana AC") located
       in Atlantic City, New Jersey;


•      Central- Tropicana Evansville ("Tropicana Evansville") located in
       Evansville, Indiana; and Lumière Place Casino, HoteLumière, the Four
       Seasons Hotel St. Louis (collectively, "Lumière Place") located in Saint
       Louis, Missouri acquired April 1, 2014;


•      West-Tropicana Laughlin Hotel and Casino ("Tropicana Laughlin") located in
       Laughlin, Nevada; and MontBleu Casino Resort & Spa ("MontBleu") located in
       South Lake Tahoe, Nevada;


•      South and other-Belle of Baton Rouge Casino and Hotel ("Belle of Baton
       Rouge") located in Baton Rouge, Louisiana; Trop Casino Greenville
       ("Tropicana Greenville") located in Greenville, Mississippi; and Tropicana
       Aruba Resort and Casino ("Tropicana Aruba") located in Noord, Aruba.

In addition, through June 30, 2014, the Company owned River Palms Hotel and Casino ("River Palms") located in Laughlin, Nevada, which is presented as discontinued operations in the accompanying condensed consolidated statements of income for the three and six months ended June 30, 2014. On July 1, 2014, the Company sold River Palms to Nevada Restaurant Services, Inc. and its affiliate, Laughlin Hotel, LLC.


                                       22

--------------------------------------------------------------------------------

Table of Contents



We are a Delaware corporation formed on May 11, 2009 to acquire certain assets
of Tropicana Entertainment Holdings, LLC ("TEH"), and certain of its
subsidiaries, pursuant to their plan of reorganization (the "Plan") under
Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). We
also acquired Columbia Properties Vicksburg (which we sold in March 2011), JMBS
Casino, LLC ("JMBS Casino") and CP Laughlin Realty, LLC (which we sold in July
2014), all of which (collectively, the "Predecessors") were part of the Plan.
In addition, we acquired certain assets of Adamar of New Jersey, Inc.
("Adamar"), an unconsolidated subsidiary of TEH, pursuant to an amended and
restated asset purchase agreement, including Tropicana AC. The reorganization of
the Predecessors and the acquisition of Tropicana AC (together, the
"Restructuring Transactions") were consummated and became effective on March 8,
2010 (the "Effective Date"), at which time we acquired Adamar and several of the
Predecessors' gaming properties and related assets. Adamar was not a party to
the Predecessors' bankruptcy. Prior to the Effective Date, we conducted no
business, other than in connection with the reorganization of the Predecessors
and the acquisition of Tropicana AC, and had no material assets or liabilities.
Except where the context suggests otherwise, the terms "we," "us," "our," and
"the Company" refer to Tropicana Entertainment Inc. and its subsidiaries.
Results of Operations
Our financial results are highly dependent upon the number of customers that we
attract to our facilities and the amounts those customers spend per visit.
Additionally, our operating results may be affected by, among other things,
overall economic conditions affecting the discretionary spending of our
customers, competitive factors, gaming tax increases and other regulatory
changes, the opening or acquisition of new gaming operations, our ability to
reinvest in our properties, potential future exposure for liabilities of the
Predecessors that we assumed, and general public sentiment regarding travel. We
may experience significant fluctuations in our quarterly operating results due
to seasonality and other factors. Historically, our operating results are the
strongest in the third quarter and the weakest in the fourth quarter. In
addition, weather and long-weekend holidays affect our operating results.
Casino revenues are one of our main performance indicators and account for a
significant portion of our net revenues. Casino revenues represent the
difference between wins and losses from gaming activities such as slot machines
and table games. Key volume indicators include table games volumes and slot
volumes, which refer to amounts wagered by our customers. Win or hold percentage
represents the percentage of the amounts wagered by the customer that is won by
the casino, which is not fully controllable by us, and recorded as casino
revenue. Most of our revenues are cash-based, through customers wagering with
cash or chips or paying for non-gaming services with cash or credit cards, and
therefore are not subject to any significant or complex estimation. As a result,
fluctuations in net revenues have a direct impact on cash flows from operating
activities. Other performance indicators include hotel occupancy, which is a
volume indicator for hotels, and the average daily rate, which is a price
indicator for the amount customers paid for hotel rooms.
The following significant factors and trends should be considered in analyzing
our operating performance:
•      Lumière Place. On April 1, 2014 we acquired Lumière Place for a cash
       purchase price of $261.3 million, which included an adjustment for working
       capital as of the acquisition date.


•      Tropicana AC. Casino revenues can vary because of table games hold
       percentage and differences in the odds for different table games. High end
       play may lead to greater fluctuations in our table games hold percentage
       and, as a result, we may experience greater revenue fluctuation between
       reporting periods. For the three months ended June 30, 2015, the table
       game hold percentage decreased 0.5 percentage points compared to the same
       period of the prior year. For the six months ended June 30, 2015, the
       table game hold percentage increased 0.5 percentage points compared to the
       same period in the prior year. This hold percentage is not necessarily
       indicative of results that can be expected for future periods.


•      Atlantic City Market. Competitive pressure in Atlantic City and the
       regional market continue to adversely affect the Atlantic City market.
       Based on market data, the Atlantic City market experienced period over
       period declines in gross casino win of 10.9% and 10.1% for the three and
       six months ended June 30, 2015, respectively. In January 2014, the
       Atlantic Club Casino, one of our competitors, ceased operations and
       Tropicana AC purchased various gaming equipment and the casino's patron
       database for $9.1 million. In the third quarter of 2014, three additional
       competitors ceased operations in Atlantic City. A comparison of year over
       year revenues for the remaining eight operating casinos in Atlantic City
       reflects period over period increases in gross casino win of 2.6% and 4.2%
       for the three and six months ended June 30, 2015, respectively.



                                       23

--------------------------------------------------------------------------------

Table of Contents


•      Impairment losses. In the six months ended June 30, 2014, we determined
       there was an indication of impairment related to goodwill tested at the
       Tropicana AC reporting unit and recognized a $9.1 million goodwill
       impairment due to Tropicana AC's carrying value exceeding its fair value.


•      Insurance Recoveries. In January 2014, we settled claims related to the
       Jubilee barge loss for $5.9 million and received the remaining $5.2
       million in insurance proceeds related to this claim. As a result of the
       settlement, a gain of $4.6 million was included in the accompanying
       condensed consolidated statement of income for the six months ended
       June 30, 2014.


We received a cash settlement of $1.2 million during the second quarter of 2014
related to the business interruption claim that we had filed as a result of
Superstorm Sandy in 2012.
•      Predecessor related gain settlement. In January 2014, we received a $31.7
       million cash payment to satisfy a property tax settlement in Atlantic
       City. This gain is recorded in Property tax settlement in the accompanying
       condensed consolidated statement of income for the six months ended
       June 30, 2014.


•      Debt and Interest Expense. In November 2013, we entered into the credit
       facilities (the "New Credit Facilities"), which consist of (i) a senior
       secured first lien term loan facility in an aggregate principal amount of
       $300 million issued at a discount of 0.5% (the "New Term Loan Facility")
       and (ii) a senior secured first lien revolving credit facility in an
       aggregate principal amount of $15 million (the "Revolving Facility").
       Commencing on December 31, 2013, the New Term Loan Facility requires
       quarterly principal payments of $750,000 through September 2020 with the
       remaining outstanding amounts due on November 27, 2020, the maturity date.
       The obligations under the New Term Loan Facility accrue interest at a
       floating rate which was 4.00% as of June 30, 2015. A portion of the net
       proceeds from the New Term Loan Facility was used to repay in full the
       amounts outstanding under the existing Term Loan Facility which totaled
       approximately $172.4 million in repaid principal, accrued and unpaid
       interest.


Our interest expense was $5.9 million and $6.4 million for the six months ended
June 30, 2015 and 2014, respectively, which includes amortization of the related
debt discounts and debt issuance costs of $0.5 million for each of the six
months ended June 30, 2015 and 2014, respectively.
•      River Palms. On July 1, 2014, we sold substantially all of the assets
       constituting River Palms to Nevada Restaurant Services, Inc. and its
       affiliate, Laughlin Hotel, LLC, for approximately $6.8 million in cash and
       the assumption of certain liabilities. Concurrently with the sale, we
       leased back River Palms. We terminated the lease and discontinued
       operations at River Palms in September 2014. Due to the sale of River
       Palms and the termination of its operations in September 2014, the results
       of operations for River Palms are presented as discontinued operations. In
       addition, River Palms is not included in management's discussion and
       analysis of financial condition and results of operations.


•      General Economic Conditions. Current economic conditions, resulting in
       decreased discretionary spending by our customers, continue to adversely
       impact us and the gaming industry as a whole. While general economic
       conditions have modestly improved, we cannot assure that they will
       continue to improve or will not worsen in the future.


•      Cost Efficiencies. As a result of economic conditions, we continue to
       focus on efficiency initiatives. These cost saving initiatives include
       decreased payroll and benefits expense related to our company-sponsored
       health insurance plans.




                                       24

--------------------------------------------------------------------------------

Table of Contents

Three months ended June 30, 2015 compared to three months ended June 30, 2014 The following table sets forth certain information concerning our results of operations (dollars in thousands):

                                    Three months ended June 30,
                                      2015               2014
Net revenues:
East                            $      82,340       $      77,818
Central                                71,873              72,229
West                                   25,095              24,923
South and other                        23,684              22,538
Corporate                                   -                   -
Total net revenues              $     202,992       $     197,508
Operating income (loss):
East                            $       8,200       $       6,901
Central                                11,444               5,465
West                                    2,012               2,793
South and other                         1,657               1,245
Corporate                              (4,197 )            (4,947 )
Total operating income          $      19,116       $      11,457
Operating income margin(a):
East                                     10.0 %               8.9 %
Central                                  15.9 %               7.6 %
West                                      8.0 %              11.2 %
South and other                           7.0 %               5.5 %
Total operating income margin             9.4 %               5.8 %


(a)Operating income margin is operating income as a percentage of net revenues. The following table presents detail of our net revenues (in thousands):

                                  Three months ended June 30,
                                    2015               2014
Revenues:
Casino                        $     159,825       $     157,864
Room                                 30,705              30,412
Food and beverage                    26,822              28,030
Other                                 7,377               6,840
Gross revenues                      224,729             223,146
Less promotional allowances         (21,737 )           (25,638 )
Net revenues                  $     202,992       $     197,508


Net Revenues In the East region, net revenues were $82.3 million for the three months ended June 30, 2015, an increase of $4.5 million, or 5.8%, when compared to the three months ended June 30, 2014. Tropicana AC's net revenues comprise approximately 41% and 39% of the Company's total net revenues for the three months ended June 30, 2015 and 2014, respectively. Based on market data, the Atlantic City market experienced year-over-year declines in gross casino win of 10.9% for the three months ended June 30, 2015, due primarily to the closure of four casino properties in Atlantic City during 2014. A comparison of year-over year results for the remaining eight properties reflects a 2.6% increase in gross casino win in the Atlantic City market for the three months ended June 30, 2015. Tropicana AC's gross casino win increased 1.8% in the three months ended June 30, 2015, as compared to the corresponding prior year period primarily as a result of increased customer volumes. In addition, promotional gaming credits redeemed at Tropicana AC were reduced by 16.0% during that time period; as a result, total net casino revenue (after deducting promotional gaming credits) at Tropicana AC increased 4.4% in the three months ended June 30, 2015 as compared to the same period of 2014. Internet gaming revenues also increased by approximately $2.0 million during the three months ended June 30, 2015 as compared to the comparable prior year period. Several renovation and construction projects at Tropicana AC were completed during the quarter ended June 30, 2015, including hotel room and casino floor renovations, boardwalk facade renovations and the opening of a new fitness center. Revenue from rooms increased for


                                       25

--------------------------------------------------------------------------------

Table of Contents



the three months ended June 30, 2015 as compared to the corresponding prior year
period, due to increases in both occupied rooms and the average daily room rate.
The average daily room rate was $87 for the three months ended June 30, 2015,
compared to $84 for the three months ended June 30, 2014. The occupancy rate for
the three months ended June 30, 2015 at Tropicana AC was 81%, up from 78% for
the three months ended June 30, 2014.
In the Central region, net revenues were $71.9 million for the three months
ended June 30, 2015, a decrease of $0.4 million from the three months ended
June 30, 2014. In April 2014, the Company completed its acquisition of Lumière
Place which contributed $41.0 million in net revenues for the three months ended
June 30, 2015. Casino revenues at Lumiere decreased $3.4 million compared to the
prior year period primarily due to a 16.5% decrease in slot volumes and a 4.8%
decrease in table games volumes. This was partially offset by reductions in
promotional gaming credits and promotional allowances as compared to the prior
year, when promotional spending was inflated as the Company was trying to
establish itself in the St. Louis market. In addition, net revenues at Tropicana
Evansville increased 4.9% during the three months ended June 30, 2015 as
compared to the prior year period. The occupancy rate for the three months ended
June 30, 2015 in the Central Region was 82%, an increase from 78% in the three
months ended June 30, 2014. The average daily room rate in the Central Region
decreased to $140 for the three months ended June 30, 2015, compared to $145 for
the three months ended June 30, 2014.
In the West region, net revenues were $25.1 million for the three months ended
June 30, 2015, an increase of $0.2 million, or 0.7%, compared to the three
months ended June 30, 2014. At Tropicana Laughlin, net revenues increased $1.9
million for the three months ended June 30, 2015 primarily due to increased
marketing incentives, including promotional gaming credits given to our casino
patrons. At MontBleu, net revenues decreased $1.7 million due to lower gaming,
hotel and food and beverage revenue resulting from disruption from a major room
renovation project that has significantly impacted business. In addition, at the
end of March 2014 a competitor across the street from MontBleu closed. The
property was substantially renovated and reopened as a "Hard Rock" branded
casino hotel in 2015, thereby increasing competition to MontBleu. The average
daily room rate for the West region was $48 for the three months ended June 30,
2015, in line with the room rate for the comparable prior year period. The
occupancy rate in the West region was 60% for the three months ended June 30,
2015 an increase from 58% for the three months ended June 30, 2014.
In the South and other region, net revenues were $23.7 million for the three
months ended June 30, 2015, an increase of $1.1 million, or 5.1%, compared to
the three months ended June 30, 2014. Casino revenues, net of promotional gaming
credits for the South and other region increased $1.2 million. Net revenues at
the Belle of Baton Rouge were relatively flat for the three months ended
June 30, 2015, compared to the three months ended June 30, 2014, primarily due
to an increase in promotional slot play which is recorded as a reduction in
revenues combined with a 1.1% decrease in slot volumes, and offset by a 14.7%
increase in table games volumes. Tropicana Greenville's net revenues increased
$1.1 million for the three months ended June 30, 2015 compared to the three
months ended June 30, 2014, primarily due to 16.8% higher slot volumes and a
72.2% increase in table game volumes; the increase in gaming revenue was
partially due to the completion of Greenville's casino renovation project in the
fourth quarter of 2014. Tropicana Aruba's net revenue was relatively flat during
the three months ended June 30, 2015 compared to the three months ended June 30,
2014. The occupancy rate at our properties in the South and other region was 67%
and 68% for the three months ended June 30, 2015 and 2014, respectively. The
average daily room rate for the South and other region was $71 and $76 for the
three months ended June 30, 2015 and 2014, respectively.
Operating Income
In the East region, the operating income for the three months ended June 30,
2015 was $8.2 million, a $1.3 million increase compared to the three months
ended June 30, 2014. The operating income in the East region was higher than the
prior year primarily due to the net revenue increase discussed above, partially
offset by increased costs related to Internet gaming, gaming taxes, and other
operating expenses.
In the Central region, the operating income for the three months ended June 30,
2015 was $11.4 million, a $6.0 million increase compared to the three months
ended June 30, 2014. The improvement was primarily driven by expense reductions
at Lumière Place, combined with the increased net revenues at Evansville, as
discussed previously.
In the West region, the operating income for the three months ended June 30,
2015 was $2.0 million, a $0.8 million decrease compared to the three months
ended June 30, 2014. The decrease is mainly attributable to the decreased
revenues at MontBleu resulting from the ongoing room renovation project,
partially offset by improvement in operating income at Tropicana Laughlin,
resulting from the increase in net revenues, as discussed above.
In the South and other region operating income for the three months ended
June 30, 2015 was $1.7 million, a $0.4 million increase compared to the three
months ended June 30, 2014. This increase is primarily due to the increased
revenue, as previously discussed, partially offset by increased taxes and
depreciation expense during the three months ended June 30, 2015.

                                       26

--------------------------------------------------------------------------------

Table of Contents



Corporate expenses were $4.2 million for the three months ended June 30, 2015, a
$0.8 million decrease from the three months ended June 30, 2014, driven
primarily by lower professional fees.
Interest Expense
Interest expense for the three months ended June 30, 2015 and 2014 was $3.0
million and $3.2 million, respectively. The interest expense for the three
months ended June 30, 2015 decreased compared to the prior year period primarily
due to a reduced principal balance on our New Term Loan Facility which accrues
interest at a floating rate, which was 4.0% per annum as of June 30, 2015. Cash
paid for interest, net of interest capitalized, decreased to $2.8 million from
$3.0 million for the three months ended June 30, 2015 and 2014, respectively,
related to the lower interest rate under the New Term Loan Facility and the
capitalization of interest in 2014.
Income Taxes
Income tax expense from continuing operations was $6.7 million for the three
months ended June 30, 2015 and our effective income tax rate was 41.1%. The
difference between the federal statutory rate of 35% and the effective tax rate
for the three months ended June 30, 2015 was primarily due to the disallowed
foreign losses, state income taxes (net of federal benefit), and other permanent
differences. For the three months ended June 30, 2014, the income tax expense
from continuing operations was $3.5 million and our effective tax rate was
41.2%. The difference between the federal statutory rate of 35% and the
effective tax rate for the three months ended June 30, 2014, was primarily due
to the utilization of the Company's deferred tax assets and employment credits
offset by disallowed foreign losses, state income taxes (net of federal
benefit), and other permanent differences.
Six months ended June 30, 2015 compared to six months ended June 30, 2014
The following table sets forth certain information concerning our results of
operations (dollars in thousands):
                                   Six months ended June 30,
                                      2015             2014
Net revenues:
East                            $     150,791       $ 140,837
Central                               143,812         103,270
West                                   51,643          50,106
South and other                        50,127          47,918
Corporate                                   -               -
Total net revenues              $     396,373       $ 342,131
Operating income (loss):
East                            $       7,921       $  35,207
Central                                21,750          13,332
West                                    5,463           6,699
South and other                         6,095          10,003
Corporate                              (8,167 )       (18,275 )
Total operating income          $      33,062       $  46,966
Operating income margin(a):
East                                      5.3 %          25.0 %
Central                                  15.1 %          12.9 %
West                                     10.6 %          13.4 %
South and other                          12.2 %          20.9 %
Total operating income margin             8.3 %          13.7 %


(a)Operating income margin is operating income as a percentage of net revenues.



                                       27

--------------------------------------------------------------------------------

Table of Contents

The following table presents detail of our net revenues (in thousands):

                                 Six months ended June 30,
                                    2015             2014
Revenues:
Casino                        $     316,442       $ 276,068
Room                                 56,437          50,519
Food and beverage                    51,923          46,739
Other                                14,073          11,804
Gross revenues                      438,875         385,130

Less promotional allowances (42,502 ) (42,999 ) Net revenues

                  $     396,373       $ 342,131


Net Revenues
In the East region, net revenues were $150.8 million for the six months ended
June 30, 2015, an increase of $10.0 million, or 7.1%, when compared to the six
months ended June 30, 2014. Based on market data, the Atlantic City market
experienced year-over-year declines in gross casino win of 10.1% in the six
months ended June 30, 2015; a comparison of year-over-year results for the
remaining eight properties reflects a 4.2% increase in gross casino win in the
Atlantic City market. Tropicana AC gross casino win increased 5.3% in the six
months ended June 30, 2015 as compared to the corresponding prior year period.
Net revenue increases for Tropicana AC are primarily due to a $7.8 million
increase in casino revenues as a result of increased internet gaming revenues,
together with increased customer volumes. The average daily room rate was $84
and $82 for the six months ended June 30, 2015 and 2014, respectively. The
occupancy rate increased to 76% for the six months ended June 30, 2015 compared
to 71% for the six months ended June 30, 2014. Net revenues for our hotel
increased despite fewer rooms available for sale in the six months ended
June 30, 2015 due to room renovations, which were completed in the second
quarter of 2015.
In the Central region, net revenues were $143.8 million for the six months ended
June 30, 2015, an increase of $40.5 million, compared to the six months ended
June 30, 2014. In April 2014, the Company completed its acquisition of Lumière
Place which was the primary reason for the increase in net revenues for the six
months ended June 30, 2015. At Tropicana Evansville, lower table volumes and
hold resulted in lower casino revenues, despite a 1.9% increase in slot volumes
during the six months ended June 30, 2015. In addition, efforts in Evansville to
shift revenues from complimentary to cash resulted in a reduction in promotional
allowances, which contributed to the increase in net revenues. The occupancy
rate for the six months ended June 30, 2015 in the Central region was 79%, an
increase from 76% in the six months ended June 30, 2014. The increased occupancy
rate reflects higher customer visitation at Tropicana Evansville in the current
period compared to the prior year period and the acquisition of Lumière Place.
The average daily room rate in the Central region was $133 for the six months
ended June 30, 2015, compared to $131 for the six months ended June 30, 2014.
In the West region, net revenues were $51.6 million for the six months ended
June 30, 2015, an increase of $1.5 million, or 3.1%, compared to the six months
ended June 30, 2014. The increase was primarily driven by increases in casino
revenues, partially offset by increased promotional allowances. Casino revenues
in the West region increased due to increased slot volumes at Tropicana
Laughlin, partially offset by a 12.3% decrease in table games volumes. Net
revenues at Tropicana Laughlin increased $4.5 million for the six months ended
June 30, 2015 compared to the same period in the prior year primarily due to
increased customer visitation related to marketing incentives given to our
casino patrons and lower gas prices. At MontBleu, net revenues decreased
$3.0 million due to decreased customer visitation related to a major room
renovation at our property and a new competitor opening during the six months
ended June 30, 2015 compared to the prior year period, as previously discussed.
The average daily room rate for the West region was $45 for the six months ended
June 30, 2015 compared to $47 for the six months ended June 30, 2014. The
occupancy rate for the six months ended June 30, 2015 and 2014 at our properties
in the West region was 59% and 55%, respectively.
In the South and other region, net revenues were $50.1 million for the six
months ended June 30, 2015, an increase of $2.2 million, or 4.6%, compared to
the six months ended June 30, 2014. The increase was primarily due to a
$1.7 million increase in casino revenues, as well as increases in food and
beverage revenues for the South and other region for the six months ended
June 30, 2015 compared to the six months ended June 30, 2014. Casino revenues in
the South and other region increased due to a 5.2% increase in slot volumes
combined with a 6.7% increase in table games volumes, partially offset by lower
table games hold. Tropicana Greenville's net revenues increased $2.6 million due
to 19.0% higher slot volumes and 53.0% higher table games volumes. Tropicana
Greenville opened its new gaming operation expansion in October 2014, which
includes new gaming options, a VIP Lounge, a casual dining restaurant, a live
entertainment stage and covered casino parking. Net revenues at the Belle of
Baton Rouge decreased $0.2 million for the six months ended June 30, 2015,
primarily due to decreased table game hold of 3.8 points, although table games
volume increased 2.8%. At Tropicana Aruba decreased slot

                                       28

--------------------------------------------------------------------------------

Table of Contents



volumes and table games volumes due to the closure of the casino for renovations
contributed to a decrease of $0.1 million in net revenues during the six months
ended June 30, 2015. The casino floor at Tropicana Aruba reopened mid-February
2015. The occupancy rate at our properties in the South and other region was 71%
and 69% for the six months ended June 30, 2015 and 2014, respectively. The
average daily room rate for the South and other region was $81 and $82 for the
six months ended June 30, 2015 and 2014, respectively.
Operating Income
In the East region, the operating income for the six months ended June 30, 2015
was $7.9 million, compared to an operating income of $35.2 million for the six
months ended June 30, 2014. The operating income in the East region for the six
months ended June 30, 2015 was unfavorable compared to the prior year primarily
due to a real estate tax settlement which resulted in a $31.7 million one-time
cash payment received at Tropicana AC during the six months ended June 30, 2014.
In the current year period, Tropicana AC recorded an increase in expenses due to
an increase in the real estate tax assessed in the current period.
In the Central region, the operating income for the six months ended June 30,
2015 was $21.8 million, an $8.4 million increase compared to the six months
ended June 30, 2014. In April 2014, we completed the acquisition of Lumière
Place which contributed $6.4 million of the increase in operating income for the
six months ended June 30, 2015. The additional increase in operating income is
related to the increase in net revenues in Evansville discussed above, combined
with decreased operating expenses during the six months ended June 30, 2015.
In the West region, the operating income for the six months ended June 30, 2015
was $5.5 million, a $1.2 million decrease compared to the six months ended
June 30, 2014. The decrease in operating income is mainly attributable to the
MontBleu, where although management focused on controlling operating costs and
expenses during the disruption caused by the ongoing room renovation project,
the reduction in expenses only partially offset the decreased revenues during
the six months ended June 30, 2015 at the property. Additionally, the West
region properties realized a $0.4 million increase in depreciation and
amortization expense related to new capital projects placed in service after the
comparable period in the prior year.
In the South and other region operating income for the six months ended June 30,
2015 was $6.1 million, a $3.9 million decrease compared to the six months ended
June 30, 2014. This decrease is primarily due to a gain on insurance recoveries
of $4.6 million, net of expenses and write-downs recorded in the six months
ended June 30, 2014. The decrease from the prior year also resulted from
increased payroll costs and operating expenses associated with higher customer
volumes at Tropicana Greenville, as well as higher depreciation and amortization
costs in the region during the six months ended June 30, 2015.
Corporate expenses were $8.2 million for the six months ended June 30, 2015, a
$10.1 million decrease from the six months ended June 30, 2014, driven primarily
by a $9.1 million goodwill impairment recognized during the six months ended
June 30, 2014 due to Tropicana AC's carrying value exceeding its fair value. In
addition, we recorded a decrease in professional fees during the six months
ended June 30, 2015.
Interest Expense
Interest expense for the six months ended June 30, 2015 and 2014 was $5.9
million and $6.4 million, respectively. The interest expense for the six months
ended June 30, 2015 decreased compared to the prior year period primarily due to
reduced principal balance on our New Term Loan Facility which accrues interest
at a floating rate, which was 4.0% per annum as of June 30, 2015. Cash paid for
interest, net of interest capitalized, decreased to $5.5 million from $6.0
million for the six months ended June 30, 2015 and 2014, respectively, related
to the lower principal balance under the New Term Loan Facility and the
capitalization of interest in 2015. Interest expense also includes approximately
$0.5 million of amortization of debt issuance costs and discounts for each of
the six months ended June 30, 2015 and 2014, respectively.
Income Taxes
Income tax expense from continuing operations was $11.3 million for the six
months ended June 30, 2015 and our effective income tax rate was 41.0%. The
difference between the federal statutory rate of 35% and the effective tax rate
for the six months ended June 30, 2015 was primarily due to the disallowed
foreign losses, state income taxes (net of federal benefit), and other permanent
differences. For the six months ended June 30, 2014, the income tax expense from
continuing operations was $13.3 million and our effective tax rate was 31.5%.
The difference between the federal statutory rate of 35% and the effective tax
rate for the six months ended June 30, 2014, was primarily due to the
utilization of our deferred tax assets offset by disallowed foreign losses, the
goodwill impairment, state income taxes (net of federal benefit), and other
permanent differences.

                                       29

--------------------------------------------------------------------------------

Table of Contents



Discontinued Operations
On July 1, 2014, we entered into and closed an asset purchase agreement with
Laughlin Hotel, LLC and Nevada Restaurant Services, Inc. Pursuant to the terms
of the asset purchase agreement substantially all of the assets associated with
the operation of River Palms were sold for $6.8 million in cash and the
assumption of certain liabilities. Concurrently with the execution and closing
of the asset purchase agreement, we leased back River Palms. We terminated the
lease and discontinued operations at River Palms in September 2014. Accordingly,
the results of operations of River Palms are presented as discontinued
operations in the accompanying condensed consolidated statements of income for
all periods presented.
Liquidity and Capital Resources
Our cash flows are and will continue to be affected by a variety of factors,
many of which are outside of our control, including regulatory restrictions,
competition, financial markets and other general business conditions. We believe
that we will have sufficient liquidity through available cash, credit facilities
and cash flow from our properties to fund our cash requirements and capital
expenditures for our normal operating activities for at least twelve months.
However, we cannot provide assurance that we will generate sufficient income and
liquidity to meet all of our liquidity requirements and other obligations as our
results for future periods are subject to numerous uncertainties that may result
in liquidity problems that could affect our ability to meet our obligations
while attempting to meet competitive pressures or adverse economic conditions.
In addition, we continually evaluate our financing needs and we may refinance
all or a portion of our indebtedness on or before maturity. Liquidity may be
impacted if stock repurchases are made under the stock repurchase program noted
below (the "Stock Repurchase Program").
Part of our overall strategy includes consideration of expansion opportunities
in new gaming jurisdictions, underserved markets and acquisition and other
strategic opportunities that may arise periodically. We may require additional
funds in order to execute on such strategic growth, and we may incur additional
debt or issue additional equity to finance any such transactions. We cannot
assure that we will be able to incur such debt or issue any such additional
equity on acceptable terms or at all. In April 2014, we completed our purchase
of Lumière Place for a cash purchase price of $261.3 million, which includes an
adjustment for working capital as of the acquisition date. We used a portion of
the proceeds from the New Term Loan Facility to fund the purchase of Lumière
Place.
Our material cash requirements for our existing properties for 2015 are expected
to include (i) principal and interest payments related to our New Term Loan
Facility of $3.0 million and $12.0 million, respectively, (ii) maintenance
capital expenditures expected to be between $30 million and $40 million,
(iii) growth capital expenditures expected to be approximately $60 million, a
portion of which will be reimbursed in 2015 through Approved CRDA Project Funds
(defined below), and (iv) minimum lease payments under our operating leases of
approximately $6.8 million. Except for $24 million of capital renovation at
MontBleu required by its lease agreement, the majority of our planned capital
expenditures are discretionary and we may decide to spend more or less than the
amounts described above. We have been approved to use $18.8 million of our CRDA
deposits ("Approved CRDA Project Funds") for certain capital expenditures
relating to Tropicana AC. In addition we have been approved for approximately
$4.8 million in a grant through the New Jersey Economic Development Authority,
ERG Grant Program ("ERG Grant").
The following table summarizes our cash flows, which includes cash flows
generated from discontinued operations within operating and investing activities
(in thousands):
                                                         Six months ended June 30,
                                                           2015              2014
Cash Flow Information:
Net cash provided by operating activities             $     52,573       $   60,214
Net cash used in investing activities                      (63,070 )       (257,729 )
Net cash provided by (used in) financing activities            197           (1,514 )
Net decrease in cash and cash equivalents             $    (10,300 )     $ (199,029 )


During the six months ended June 30, 2015, our operating activities provided $52.6 million in cash. Cash paid for interest, net of interest capitalized, was $5.5 million and $6.0 million for the six months ended June 30, 2015 and 2014, respectively. This decrease primarily relates to the decreased principal balance under our New Term Loan Facility and the capitalization of interest in 2015. Net cash provided by operating activities for the six months ended June 30, 2015 decreased from the prior year period due to the $31.7 million cash gain on a property tax settlement. Operating cash provided by discontinued operations was $0.4 million for the six months ended June 30, 2014. During the six months ended June 30, 2015, our investing activities used $63.1 million in cash. Net cash used in investing activities primarily consisted of $61.5 million for capital expenditures and $1.7 million in sales and luxury tax rebates included


                                       30

--------------------------------------------------------------------------------

Table of Contents



in other investing activities in the six months ended June 30, 2015. Net cash
used in investing activities during the six months ended June 30, 2014 consists
of $237.3 million related to the Lumière Place Acquisition, net of cash
acquired, $29.2 million for capital expenditures, offset by $5.2 million in
insurance proceeds and $1.7 million in sales and luxury tax rebates included in
other investing activities. Capital expenditures relate to expenditures
necessary to keep our existing properties at their current levels and are
typically replacement items due to the normal wear and tear of our properties
and equipment as a result of use and age. Investing cash used in discontinued
operations for capital expenditures was $0.4 million for the six months ended
June 30, 2014.
During the six months ended June 30, 2015, our financing activities provided
$0.2 million in cash. Net cash provided by financing activities for the six
months ended June 30, 2015 primarily consisted of amounts previously classified
as restricted cash offset by payments on the New Term Loan Facility. Net cash
provided by financing activities for the six months ended June 30, 2014
primarily consisted of payments on the New Term Loan Facility.
New Credit Facilities
On November 27, 2013, we entered into (i) a senior secured first lien term loan
facility in an aggregate principal amount of $300 million, issued at a discount
of 0.5% (the "New Term Loan Facility") and (ii) a senior secured first lien
revolving credit facility in an aggregate principal amount of $15 million (the
"Revolving Facility" and, together with the New Term Loan Facility, the "New
Credit Facilities"). Commencing on December 31, 2013, the New Term Loan Facility
will amortize in equal quarterly installments in an amount of $750,000, with any
remaining balance payable on the final maturity date of the New Term Loan
Facility, which is November 27, 2020. Amounts under the Revolving Facility are
available to be borrowed and re-borrowed until its termination on November 27,
2018.

Approximately $172.4 million of the net proceeds from the New Credit Facilities were used to repay in full the principal amounts outstanding under our then existing Credit Facilities. The Credit Facilities were terminated effective as of November 27, 2013. A portion of the proceeds from the New Credit Facilities was used to finance our acquisition of Lumière Place in April 2014.

The New Term Loan Facility accrues interest, at our option, at a per annum rate equal to either (i) the LIBO Rate (as defined in the Credit Agreement) (subject to a 1.00% floor) plus an applicable margin equal to 3.00%, or (ii) the alternate base rate (as defined in the Credit Agreement) (subject to a 2.00% floor) plus an applicable margin equal to 2.00%; such that in either case, the applicable interest rate shall not be less than 4.0%. The Revolving Facility accrues interest, at our option, at a per annum rate equal to either (i) the LIBO Rate plus an applicable margin ranging from 2.00% (if the total net leverage ratio is less than 2.50:1.00) to 2.50% (if the total net leverage ratio is greater than or equal to 3.00:1.00); or (ii) the alternate base rate plus an applicable margin ranging from 1.00% (if the total net leverage ratio is less than 2.50:1.00) to 1.50% (if the total net leverage ratio is greater than or equal to 3.00:1.00). The interest rate increases by 2.00% following certain defaults. As of June 30, 2015, the interest rate on the New Term Loan Facility was 4.0% and no amounts were outstanding under the Revolving Facility.

At our election and subject to certain conditions, including a maximum senior secured net leverage ratio of 3.25:1.00, the amount available under the New Credit Facilities may be increased, which increased amount may be comprised of additional term loans and revolving loans.

The New Term Loan Facility may be prepaid at our option at any time without penalty (other than customary LIBO Rate breakage fees). We are required to make mandatory payments of the New Credit Facilities with (i) net cash proceeds of certain asset sales (subject to reinvestment rights), (ii) net cash proceeds from certain issuances of debt and equity (with certain exceptions), (iii) up to 50% of annual excess cash flow (as low as 0% if our total leverage ratio is below 2.75:1.00), and (iv) certain casualty proceeds and condemnation awards (subject to reinvestment rights).

Our interest expense for the six months ended June 30, 2015 and 2014 was $5.9 million and $6.4 million, respectively, which includes $0.5 million of amortization of the related debt discounts and debt issuance costs for each of the six months ended June 30, 2015 and 2014.

Stock Repurchase Program

On July 31, 2015 our Board of Directors authorized the repurchase of up to $50 million of our outstanding common stock with no set expiration date. The Stock Repurchase Program will end upon the earlier of the date on which the plan is terminated by the Board of Directors or when all authorized repurchases are completed. The timing and amount of stock repurchases, if any, will be determined based upon our evaluation of market conditions and other factors. The Stock Repurchase Program may be suspended, modified or discontinued at any time and we have no obligation to repurchase any


                                       31

--------------------------------------------------------------------------------

Table of Contents

amount of our common stock under the Stock Repurchase Program. As of the date of this report, we have not yet repurchased any shares of our common stock under the Stock Repurchase program.


Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in
Item 303(a)(4)(ii) of SEC Regulation S-K.
Critical Accounting Policies
There have been no material changes to our critical accounting policies during
the six months ended June 30, 2015 compared to those reported in our Annual
Report on Form 10-K for the year ended December 31, 2014.

© Edgar Online, source Glimpses

React to this article
Latest news on TROPICANA ENTERTAINMENT IN
08/06 TROPICANA ENTERTAINMENT : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL COND..
08/05 TROPICANA ENTERTAINMENT : Debuts New Social Casino App "TropWorld Casino"
08/04 TROPICANA ENTERTAINMENT : Introduces New Social Casino App
08/03 TROPICANA ENTERTAINMENT : Debuts New Social Casino App 'TropWorld Casino'; 'Trop..
07/30 TROPICANA ENTERTAINMENT : Debuts New Social Casino App "TropWorld Casino"
06/09 TROPICANA BHD : Syncrolite Lights Up The Boardwalk
06/05 TROPICANA BHD : Ospreys Find Home atop TropicanaCasino.com Billboard; Nest of th..
05/14 TROPICANA ENTERTAINMENT : Submission of Matters to a Vote of Security Holders (f..
05/07 TROPICANA ENTERTAINMENT : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL COND..
05/01 PENN NATIONAL GAMING : BRIEF: Tropicana Las Vegas getting a new owner; Tropicana..
Advertisement
Chart
Duration : Period :
Tropicana Entertainment In Technical Analysis Chart | TPCA | US89708X1054 | 4-Traders
Income Statement Evolution
More Financials