Tropicana Entertainment Inc. - FORM 10-Q

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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 31, 2011
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to .
Commission file number 000-53831

TROPICANA ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)


Delaware		27-0540158
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
3930 Howard Hughes Parkway, 4th Floor, Las Vegas, Nevada 89169 (Address of principal executive offices, Zip Code)
Registrant's telephone number, including area code: 702-589-3900

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý No o

As of April 1, 2011, there were 26,312,500 shares outstanding of the registrant's common stock.

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TABLE OF CONTENTS


PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	2
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44
ITEM 4.	CONTROLS AND PROCEDURES	45
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	46
ITEM 1A.	RISK FACTORS	46
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	46
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	46
ITEM 4.	RESERVED	46
ITEM 5.	OTHER INFORMATION	46
ITEM 6.	EXHIBITS	47
	SIGNATURES	48

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TROPICANA ENTERTAINMENT INC.

BALANCE SHEETS

(amounts in thousands)

			Successor

			March 31, 2011			December 31, 2010
			(unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	156,568		$	154,442
	Restricted cash			18,486			18,494
	Receivables, net			37,689			38,855
	Inventories			4,275			4,360
	Prepaid expenses and other assets			14,474			11,675
	Assets held for sale			—			4,653

		Total current assets		231,492			232,479
Property and equipment, net				440,597			448,046
Goodwill				24,928			24,928
Intangible assets, net				79,116			79,739
Investments				33,184			33,271
Other assets, net				28,326			30,429

		Total assets	$	837,643		$	848,892

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current portion of long-term debt		$	1,340		$	1,339
	Liabilities related to assets held for sale			—			1,671
	Accounts payable			38,359			42,086
	Accrued expenses and other current liabilities			76,743			82,050

		Total current liabilities		116,442			127,146
Long-term debt, net—related party				109,178			108,138
Other long-term liabilities				8,582			8,711
Deferred tax liabilities				19,500			19,500

		Total liabilities		253,702			263,495

Commitments and contingencies
Shareholders' equity:
	Tropicana Entertainment Inc. preferred stock at $0.01 par value; 10,000,000 shares authorized, no shares issued			—			—
	Tropicana Entertainment Inc. common stock at $0.01 par value; 100,000,000 shares authorized, 26,312,500 shares issued and outstanding at March 31, 2011 and December 31, 2010			263			263
	Additional paid-in capital			605,999			605,999
	Accumulated deficit			(22,321	)		(20,865	)

		Total shareholders' equity		583,941			585,397

		Total liabilities and shareholders' equity	$	837,643		$	848,892

The accompanying notes are an integral part of these financial statements.

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TROPICANA ENTERTAINMENT INC.

STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

			Successor						Predecessors

												Discontinued Operations
			Tropicana Entertainment Inc.						Tropicana Entertainment Holdings, LLC			Columbia Properties Vicksburg, LLC			JMBS Casino, LLC
			Three months ended March 31, 2011			Period from March 8, 2010 through March 31, 2010			Period from January 1, 2010 through March 7, 2010
Revenues:
	Casino		$	142,550		$	39,728		$	55,416		$	1,189		$	3,498
	Room			25,397			6,988			7,101			86			45
	Food and beverage			22,381			6,213			9,306			75			78
	Other			5,735			1,764			1,559			16			30

		Gross revenues		196,063			54,693			73,382			1,366			3,651
	Less promotional allowances			(38,834	)		(10,271	)		(8,863	)		(95	)		(99	)

		Net revenues		157,229			44,422			64,519			1,271			3,552

Operating costs and expenses:
	Casino			60,225			18,136			22,559			622			1,087
	Room			6,785			1,799			2,819			62			24
	Food and beverage			9,827			2,597			5,373			81			13
	Other			2,149			639			1,081			7			—
	Marketing, advertising and promotions			14,237			4,243			2,199			78			72
	General and administrative			33,479			6,834			14,327			673			764
	Maintenance and utilities			15,594			5,376			5,628			248			227
	Depreciation and amortization			9,782			3,005			6,112			374			432

		Total operating costs and expenses		152,078			42,629			60,098			2,145			2,619

Operating income (loss)				5,151			1,793			4,421			(874	)		933
Other income (expense):
	Interest expense			(8,050	)		(2,150	)		(2,005	)		—			(2	)
	Interest income			222			46			11			40			103

		Total other income (expense)		(7,828	)		(2,104	)		(1,994	)		40			101

Income (loss) from continuing operations before reorganization items and income taxes.				(2,677	)		(311	)		2,427			(834	)		1,034
	Reorganization items, net			—			—			2,093,098			2,288,185			2,266,609

Income (loss) from continuing operations before income taxes				(2,677	)		(311	)		2,095,525			2,287,351			2,267,643
	Income tax benefit			1,063			103			26,654			—			—

Income (loss) from continuing operations, including noncontrolling interest				(1,614	)		(208	)		2,122,179			2,287,351			2,267,643
	Gain (loss) from discontinued operations, net			158			(97	)		—			—			—

Net income (loss), including noncontrolling interest				(1,456	)		(305	)		2,122,179			2,287,351			2,267,643
	Less net (income) loss attributable to noncontrolling interests			—			(3	)		845			—			—

Net income (loss)			$	(1,456	)	$	(308	)	$	2,123,024		$	2,287,351		$	2,267,643

Net loss attributable to Tropicana Entertainment Inc.:
Loss from continuing operations			$	(1,614	)	$	(211	)
Gain/(loss) from discontinued operations, net				158			(97	)

	Net loss		$	(1,456	)	$	(308	)

Basic and diluted loss per common share attributable to Tropicana Entertainment Inc.:
Loss from continuing operations			$	(0.06	)	$	(0.01	)
Gain/(loss) from discontinued operations, net				—			—

	Net loss		$	(0.06	)	$	(0.01	)

Weighted-average common shares outstanding:
	Basic and diluted			26,313			26,313

The accompanying notes are an integral part of these financial statements.

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TROPICANA ENTERTAINMENT INC.

STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

			Successor						Predecessors

												Discontinued Operations
									Tropicana Entertainment Holdings, LLC			Discontinued Operations
			Tropicana Entertainment Inc.						Tropicana Entertainment Holdings, LLC			Columbia Properties Vicksburg, LLC			JMBS Casino, LLC
			Three months ended March 31, 2011			Period from March 8, 2010 through March 31, 2010			Period from January 1, 2010 through March 7, 2010
Cash flows from operating activities:
Net income (loss), including noncontrolling interest			$	(1,456	)	$	(305	)	$	2,122,179		$	2,287,351		$	2,267,643
Adjustments to reconcile net income (loss), including noncontrolling interest, to net cash provided by operating activities
	Non-cash reorganization items and fresh-start reporting adjustments			—			—			(2,098,064	)		(2,288,191	)		(2,266,614	)
	Gain from disposal of discontinued operations, net			(1,007	)		—			—			—			—
	Depreciation and amortization (including discontinued operations)			9,782			3,057			6,112			374			432
	Amortization of debt discount and debt issuance costs			3,148			837			137			—			—
	Gain on disposition of asset (including discontinued operations)			(40	)		—			—			—			—
	Deferred income tax			—			—			(30,838	)		—			—
Changes in current assets and current liabilities:
	Receivables, net			1,188			(2,304	)		2,942			8			(79	)
	Inventories, prepaids and other assets			(2,645	)		(1,320	)		1,698			34			47
	Accrued interest			—			(1	)		(239	)		—			—
	Accounts payable, accrued expenses and other liabilities			(9,518	)		3,391			(1,994	)		(479	)		(432	)
	Due from affiliates			—			—			(672	)		934			3
	Other			1,705			(308	)		662			(25	)		—

		Net cash provided by operating activities		1,157			3,047			1,923			6			1,000

Cash flows from investing activities:
	Additions of property and equipment			(2,845	)		(349	)		(1,057	)		—			(11	)
	Proceeds from sale of discontinued operations			2,731			—			—			—			—
	Other			896			155			—			3			—

		Net cash provided by (used in) investing activities		782			(194	)		(1,057	)		3			(11	)

Cash flows from financing activities:
	Proceeds from issuance of debt			—			—			120,900			—			—
	Repayments of debt			(1,309	)		(46	)		(65,311	)		—			—
	Restricted cash			8			—			(16,075	)		—			—
	Payment of financing costs			—			—			(1,500	)		—			—
	Proceeds from exercise of Penny Warrants			—			9			—			—			—

		Net cash (used in) provided by financing activities		(1,301	)		(37	)		38,014			—			—

Net increase in cash and cash equivalents				638			2,816			38,880			9			989
	Increase in cash and cash equivalents related to Tropicana AC acquisition			—			58,014			—			—			—
	Decrease in cash and cash equivalents related to assets held for sale			1,488			48			—			—			—
Cash and cash equivalents, beginning of period				154,442			94,617			50,904			2,372			3,844

Cash and cash equivalents, end of period			$	156,568		$	155,495		$	89,784		$	2,381		$	4,833

Supplemental cash flow disclosure (including discontinued operations):
	Cash paid for interest		$	4,902		$	1,313		$	1,964		$	—		$	5
	Cash paid for reorganization items			—			—			3,916			6			7
	Cash received related to reorganization items			—			—			1			—			—
	Cash paid for income taxes			1,114			—			—			—			—
Supplemental disclosure of non-cash items:
	Common stock and Ordinary Warrants issued in exchange for discharge of liabilities subject to compromise			—			—			307,292			—			—
	Common stock issued in connection with acquisition of Tropicana AC			—			282,128			—			—			—

The accompanying notes are an integral part of these financial statements.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)

NOTE 1—ORGANIZATION AND BACKGROUND

Organization

Tropicana Entertainment Inc. (the "Company," "TEI," "we," "us," or "our"), a Delaware corporation, is 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 three casinos in Nevada, two casinos in Mississippi, and one casino in each of Indiana, Louisiana and New Jersey. The Company views 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. The current operations of the Company, by region, include the following:

•: East—Tropicana Casino and Resort, Atlantic City ("Tropicana AC") located in Atlantic City, New Jersey;
•: Central—Casino Aztar Evansville ("Casino Aztar") located in Evansville, Indiana;
•: West—Tropicana Laughlin Hotel and Casino ("Tropicana Laughlin") located in Laughlin, Nevada; River Palms Hotel and Casino ("River Palms") located in Laughlin, Nevada; and MontBleu Casino Resort & Spa ("MontBleu") located in Lake Tahoe, Nevada; and
•: South and other—Belle of Baton Rouge ("Belle of Baton Rouge") located in Baton Rouge, Louisiana; Bayou Caddy's Jubilee Casino ("Jubilee") located in Greenville, Mississippi; Lighthouse Point Casino ("Lighthouse Point") located in Greenville, Mississippi and Tropicana Aruba Resort & Casino ("Tropicana Aruba") located in Noord, Aruba.

In addition, Columbia Properties Vicksburg, LLC ("CP Vicksburg"), a wholly owned subsidiary of the Company, sold substantially all the assets and certain liabilities associated with the operation of Horizon Vicksburg Casino ("Horizon Vicksburg") in Vicksburg, Mississippi, in March 2011.

Background

The Company was 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 under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). The Company also acquired CP Vicksburg, JMBS Casino, LLC ("JMBS Casino") and CP Laughlin Realty, LLC ("Realty", collectively with CP Vicksburg and JMBS Casino, the "Affiliate Guarantors"), all of whom were part of the same plan of reorganization (the "Plan") as TEH (collectively, the "Predecessors"). In addition, the Company 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.

On May 5, 2008 (the "Petition Date"), the Predecessors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). 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 the Company acquired Adamar and several of the Predecessors' gaming properties and related assets. Adamar was not a party to the Predecessors' bankruptcy. The results of operations of Tropicana AC are not presented for the Predecessor Period (as defined below). The results of operations of Tropicana AC are included in the Successor Period (as defined below). Prior to March 8, 2010, the Company conducted no business,

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 1—ORGANIZATION AND BACKGROUND (Continued)

other than in connection with the reorganization of the Predecessors and the acquisition of Tropicana AC, and had no material assets or liabilities.

Pursuant to the Plan, on the Effective Date, a series of restructuring transactions were consummated through which the Company acquired the Predecessors in exchange for (i) the issuance of 12,098,053 shares of the Company's common stock, $0.01 par value per share ("Common Stock"), and warrants to purchase an additional 3,750,000 shares of Common Stock (the "Ordinary Warrants") in accordance with the Plan and (ii) the entering into new debt in accordance with the Plan, which included the issuance to certain lenders of warrants to purchase an additional 1,312,500 shares of our Common Stock at $0.01 per share (the "Penny Warrants"). As a result of the reorganization the Company also applied fresh-start reporting. Additionally, on the Effective Date, certain subsidiaries of the Company acquired Tropicana AC, and the lenders under the TEH Senior Secured Credit Facility ("Credit Facility") each received their pro rata share of 12,901,947 shares of the Company's Common Stock in exchange for their credit bid of $200.0 million (the "Credit Bid"). As a result, on the Effective Date, Carl C. Icahn, Chairman of our Board of Directors, became the beneficial owner of approximately 47.5% of the Company's Common Stock. Subsequent to March 8, 2010, Mr. Icahn increased his ownership and on November 15, 2010, affiliates of Carl C. Icahn became the beneficial owners of approximately 51.5% of the Company's Common Stock.

On August 31, 2010, the Company through a subsidiary, purchased Tropicana Entertainment Cayman Holdings Co. Ltd., formerly known as Icahn Fund Sub 1D Ltd. ("Cayman Company"), for a total purchase price of $12.0 million, of which approximately $10.3 million was allocated to intangible assets relating to a favorable land lease arrangement. Cayman Company was an entity controlled by Carl C. Icahn. The Company indirectly acquired Cayman Company's wholly owned subsidiary Abura Development Corp. VBA, a limited liability company created and existing under the laws of Aruba, Netherlands Antilles, which owns The Aruban Resort & Casino at Eagle Beach, an approximately 360-unit timeshare casino resort in Aruba, including the unsold fractional timeshares attached to such property, a temporary casino currently not in operation and an unfinished permanent casino structure. The Company renamed the property Tropicana Aruba Resort & Casino. In accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805"), the purchase price was allocated to the fair values of the assets acquired and liabilities assumed which were determined by the Company's management after input from an independent third party valuation expert.

On October 28, 2010, immediately following Mississippi Gaming Commission approval, the Company elected to effect a merger in order to purchase the minority interests in Lighthouse Point. The minority owner received $2.5 million in January 2011, and exercised its appraisal rights requesting an additional $3.2 million as payment for its minority interest. The Company intends to contest any additional payment for its minority interest, however there can be no assurance that the Company will not be required to make an additional payment.

On December 1, 2010, the Company, through CP Vicksburg, entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Delta Investments & Development, LLC ("Delta") pursuant to which it agreed to sell substantially all of the assets associated with the operation of Horizon Vicksburg in exchange for $3.25 million in cash and the assumption by Delta of certain liabilities associated with Horizon Vicksburg. The transaction closed in March 2011, resulting in a gain of $1.0 million, which is included in the gain from discontinued operations in the accompanying condensed statements of operations for the three months ended March 31, 2011.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed financial statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain disclosures required by generally accepted accounting principles are omitted or condensed in these condensed financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) that are necessary to present fairly the Company's and the Predecessors' financial position, results of operations and cash flows for the interim periods have been made. The interim results reflected in these financial statements are not necessarily indicative of results to be expected for the full fiscal year. The accompanying condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, from which the accompanying condensed balance sheet information as of that date was derived.

As of the Effective Date, the Company adopted the "fresh start" provisions in accordance with accounting guidance on reorganizations, which require that all assets and liabilities be recorded at their reorganization values and fair values, respectively, as of such Effective Date. Certain of these values differed materially from the values recorded on the Predecessors' balance sheets. In addition, the Company's accounting practices and policies may not be the same as that of the Predecessors. For all of these reasons, our condensed financial statements for periods subsequent to the Effective Date are not comparable with the Predecessors' prior periods.

References in this Quarterly Report on Form 10-Q to "Successor" refer to the Company on or after March 8, 2010. References to "Predecessors" refer to the Predecessors prior to March 8, 2010. The accompanying condensed statements of operations and cash flows for the three months ended March 31, 2010 are presented for two periods: January 1, 2010 through March 7, 2010 (the "Predecessor Period") and March 8, 2010 through March 31, 2010 (the "Successor Period"). The Predecessor Period reflects the historical accounting basis in the Predecessors' assets and liabilities, while the Successor Period reflects assets and liabilities at fair value by allocating the Company's enterprise value to its assets and liabilities pursuant to accounting guidance related to business combinations.

As discussed in Note 1, on December 1, 2010, the Company, entered into an agreement to sell substantially all of the assets of Horizon Vicksburg and as a result its operations are presented as discontinued operations in the accompanying condensed statements of operations for the Successor Period while the assets and liabilities are presented as held for sale in the accompanying condensed balance sheet as of December 31, 2010. Additionally, we are required to report the historical results of the Predecessors in our condensed financial statements and have accordingly presented CP Vicksburg, one of our Predecessors and the owner and operator of Horizon Vicksburg, noting it as discontinued operations throughout our condensed financial statements and notes thereto.

For the periods prior to the Effective Date, the accompanying condensed financial statements of the Predecessors have been prepared in accordance with accounting guidance for financial reporting by entities in reorganization under the Bankruptcy Code. Reorganization items include the expenses, realized gains and losses, and provisions for losses resulting from the reorganization under the Bankruptcy Code, and are reported separately as reorganization items in the accompanying condensed statements of operations. Cash received and payments for reorganization items are disclosed separately in the accompanying condensed statements of cash flows.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Principles of Consolidation

The accompanying condensed financial statements include the Company and its majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Noncontrolling interest in the condensed financial statements of the Company represents the noncontrolling equity ownership of Greenville Riverboat, LLC ("Greenville Riverboat") through October 28, 2010, the date the minority owner buyout was consummated. The noncontrolling interest of Greenville Riverboat prior to October 28, 2010 was allocated in accordance with the terms of the Greenville Riverboat operating agreement which was based upon an assumed liquidation of Lighthouse Point.

The accompanying condensed financial statements for TEH include TEH, its majority-owned subsidiaries and Realty. Noncontrolling interest in the condensed financial statements of TEH represents the noncontrolling equity interest ownership of Greenville Riverboat and Realty for the Predecessor Period. The noncontrolling equity ownership of Realty represents 100% of the earnings of Realty prior to the Effective Date. In accordance with accounting guidance related to the consolidation of variable interest entities, the consolidated financial statements of TEH include Realty, a variable interest entity of which TEH was the primary beneficiary and was required to be consolidated. Upon the Effective Date, Realty became a subsidiary of the Company. In addition, Greenville Riverboat was not a debtor in the Predecessors Chapter 11 Cases as it did not guarantee TEH's pre-petition debt.

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates incorporated in our condensed financial statements include the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, the estimated valuation allowance for deferred tax assets, certain tax liabilities, estimated cash flows in assessing the impairment of long-lived assets, intangible assets, CRDA (as defined below) investments, enterprise allocations made in connection with fresh-start reporting, fair values of acquired assets and liabilities, self-insured liability reserves, customer loyalty program reserves, contingencies, litigation, claims, assessments and loss contingencies. Actual results could differ from these estimates.

Business Combinations

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

acquired; (4) recognize at the acquisition date any contingent consideration using acquisition-date fair values (i.e., fair value earn-outs in the initial accounting for the acquisition); and (5) eliminate the recognition of liabilities for restructuring costs expected to be incurred as a result of the business combination. In addition, if the buyer determines that some or all of its previously booked deferred tax valuation allowance is no longer needed as a result of the business combination, the guidance requires that the reduction or elimination of the valuation allowance be accounted as a reduction of income tax expense.

Fresh-Start Reporting

The adoption of fresh-start reporting results in a new reporting entity. Under fresh-start reporting, all assets and liabilities are recorded at their estimated fair values and the predecessor's accumulated deficit is eliminated. In adopting fresh-start reporting, the Company is required to determine its enterprise value, which represents the fair value of the entity before considering its interest bearing debt.

Cash and Cash Equivalents

Cash and cash equivalents include cash, cash on hand in the casino cages, certificates of deposit, money market funds and other highly liquid investments with original maturities of three months or less.

Restricted Cash

Restricted cash consists primarily of funds invested in approved money market funds. These funds were restricted by the Bankruptcy Court in connection with the reorganization of the Predecessors for the purpose of satisfying liabilities related to professional services incurred as part of the Chapter 11 Cases.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalent accounts maintained in financial institutions and accounts receivable. Bank accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 or with the Securities Investor Protection Corporation up to $500,000. Concentration of credit risk, with respect to casino receivables, is limited through the Company's credit evaluation process. The Company issues markers to approved casino customers following credit checks and investigations of credit worthiness.

Receivables

Receivables consist primarily of casino, hotel and other receivables, net of an allowance for doubtful accounts. Receivables are typically non-interest bearing and are initially recorded at cost. Accounts are written off when management deems the account to be uncollectible. An estimated allowance for doubtful accounts is maintained to reduce the Company's receivables to their expected realization, which approximates fair value. The allowance is estimated based on specific reviews of customer accounts as well as historical collection experience and current economic and business conditions. Recoveries of accounts previously written off are recorded when received.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventories

Inventories consist primarily of food and beverage, retail merchandise and operating supplies and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method.

Property and Equipment

Property and equipment under fresh-start reporting and business combination guidance is stated at fair value as of the Effective Date and acquisition date, respectively. Property and equipment acquired subsequent to the Effective Date and the acquisition date are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets or, for capital leases and leasehold improvements, over the shorter of the asset's useful life or the term of the lease. Gains or losses on disposals of assets are recognized as incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred.

We must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered a maintenance expense or a capital asset is a matter of judgment. In contrast to normal repair and maintenance costs that are expensed when incurred, items we classify as maintenance capital are 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. Our depreciation expense is highly dependent on the assumptions we make about our assets' estimated useful lives. We determine the estimated useful lives based on our experience with similar assets, engineering studies and our estimate of the usage of the asset. Whenever events or circumstances occur that change the estimated useful life of an asset, we account for the change prospectively.

Long-Lived Assets

We evaluate our property and equipment and other long-lived assets for impairment in accordance with accounting guidance related to impairment or disposal of long-lived assets. For assets to be held for sale, we recognize the asset to be sold at the lower of carrying value or fair value less costs to sell. Fair value for assets held for sale is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model. For long-lived assets to be held and used, we review for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we compare the estimated undiscounted future cash flows of the asset to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows are less than the carrying value, then impairment is measured based on estimated fair value compared to carrying value, with fair value typically based on a discounted cash flow model.

Goodwill and Intangible Assets

Goodwill represents the excess of purchase price over fair value of assets acquired and liabilities assumed in business combinations. In accordance with accounting guidance related to goodwill and other intangible assets, we test for impairment of goodwill and indefinite-lived intangible assets annually in the fourth quarter of each year and in certain situations between those annual dates.

Our annual impairment testing for goodwill is performed at the reporting unit level and each of our casino properties is considered to be a reporting unit. The annual goodwill impairment testing

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NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

utilizes a two step process. In the first step, we compare the fair value of each reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is estimated using the expected present value of future cash flows along with indications provided by the current valuation multiples of comparable publicly traded companies. If the fair value of the reporting unit exceeds its carrying amount, then goodwill of the reporting unit is not considered impaired. If the carrying amount of the reporting unit exceeds it fair value, then the goodwill of the reporting unit is considered impaired and we proceed to the second step of the goodwill impairment test. In the second step, we determine the implied value of the reporting unit's goodwill by allocating the fair value of the reporting unit determined in step one to the assets and liabilities of the reporting unit, as if the reporting unit had been acquired in business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

Our indefinite-lived intangible assets which includes our "Tropicana" trade name and certain gaming licenses are not subject to amortization but are tested for impairment annually. The annual impairment test for our indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The fair value of our trade name is estimated using the relief from royalty method of the income approach which is a function of projected revenue, the royalty rate that would hypothetically be charged by a licensor of an asset to an unrelated licensee, and a discount rate. The fair value of our gaming licenses is estimated using the Greenfield method of the discounted cash flow approach which is the function of the cost to build a new casino operation, the build out period, projected cash flows attributed to the casino once operational, and a discount rate.

Our definite life intangible assets include customer lists and favorable lease arrangements. Intangible assets with a definite life are amortized over their useful life, which is the period over which the asset is expected to contribute directly or indirectly to future cash flows. Management periodically assesses the amortization period of intangible assets with definite lives based upon estimated future cash flows from related operations.

Inherent in the reviews of the carrying amounts of goodwill and intangible assets are various estimates. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. If our ongoing estimates of future cash flows are not met, additional impairment charges may be recorded in future accounting periods. Estimates of cash flows are based on the current regulatory, political and economic climates, recent operating information and budgets of the various properties where we conduct operations. These estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or other events affecting various forms of travel and access to our properties.

CRDA Investment

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NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

agreement with the CRDA for a return of the deposit at full face value. If the CRDA deposits are used to purchase CRDA bonds, the valuation allowance is transferred to the bonds as a discount, which is amortized to interest income using the interest method. If the CRDA deposits are used to make other investments, the valuation allowance is transferred to those investments and remains a valuation allowance. The CRDA bonds are classified as held-to-maturity securities and are carried at amortized cost less a valuation allowance.

Fair Value of Financial Instruments

The carrying values of our cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The carrying values of investments, which include deposits and bonds, approximate fair value as items are presented net of a valuation allowance and in the case of the bonds, net of an unamortized discount.

The fair value of our long-term debt is based on the quoted market prices for similar issues. The estimated fair value of our long-term debt as of March 31, 2011 is approximately $131.3 million.

Revenue Recognition and Promotional Allowances

Casino revenue represents the difference between wins and losses from gaming activities. Room, food and beverage and other operating revenues are recognized at the time the goods or services are provided. The Company collects taxes from customers at the point of sale on transactions subject to sales and other taxes. Revenues are recorded net of any taxes collected. The majority of our casino revenue is counted in the form of cash and chips and, therefore, is not subject to any significant or complex estimation. The retail value of rooms, food and beverage and other services provided to customers on a complimentary basis is included in gross revenues and then deducted as promotional allowances. The estimated departmental costs and expenses of providing these promotional allowances, for continuing operations, are included in casino operating costs and expenses and consist of the following (in thousands, unaudited):

		Successor				Predecessors

								Discontinued Operations
								CP Vicksburg		JMBS Casino
		Three months ended March 31, 2011		Period from March 8, 2010 through March 31, 2010		TEH		CP Vicksburg		JMBS Casino
		Three months ended March 31, 2011		Period from March 8, 2010 through March 31, 2010		Period from January 1, 2010 through March 7, 2010
Room		$	5,797	$	1,566	$	1,340	$	22	$	24
Food and beverage			10,066		2,793		3,004		122		92
Other			298		98		162		5		—

	Total	$	16,161	$	4,457	$	4,506	$	149	$	116

Gaming Taxes

The Company is subject to taxes based on gross gaming revenues in the jurisdictions in which we operate, subject to applicable jurisdictional adjustments. These gaming taxes are an assessment on our gaming revenues and are included in casino operating costs and expenses on our condensed statements

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NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

of operations. Gaming taxes included in continuing operations totaled $20 million and $4.8 million for the quarter ended March 31, 2011 and the Successor Period, respectively. Gaming taxes included in continuing operations for the Predecessor Period for TEH, CP Vicksburg and JMBS Casino totaled $9.2 million, $0.1 million and $0.6 million, respectively.

Advertising

The Company expenses advertising costs as incurred or the first time the advertising takes place. Advertising expense, included in continuing operations, which is generally included in marketing, advertising and promotions on our condensed statements of operations was $1.9 million and $0.5 million for the quarter ended March 31, 2011 and the Successor Period, respectively. Advertising expense for the Predecessor Period for TEH, CP Vicksburg and JMBS Casino was $0.8 million, $40,000 and $31,000, respectively.

Income Taxes

The Company accounts for income taxes under accounting guidance for income taxes, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the accounting guidance, the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that included the enactment date. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not, and a valuation allowance is established for deferred tax assets which do not meet this threshold.

Recently Issued Accounting Standards

In December 2010, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2010-28, "When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts." Under GAAP, the evaluation of goodwill impairment is a two-step test. In Step 1, an entity must assess whether the carrying amount of a reporting unit exceeds its fair value. If it does, an entity must perform Step 2 of the goodwill impairment test to determine whether goodwill has been impaired and to calculate the amount of that impairment. The provisions of this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. The Company adopted the provisions of this ASU in preparing the Consolidated Financial Statements for the period ended March 31, 2011. As of March 31, 2011, the Company had no reporting units with zero or negative carrying amounts or reporting units where there was a reasonable possibility of failing Step 1 of the goodwill impairment test. As a result, the adoption of this ASU had no impact on the Company's condensed financial statements.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

A variety of proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our condensed financial statements.

Reclassifications

Certain items in the prior period financial statements were reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net income (loss).

NOTE 3—PRO FORMA RESULTS

The following unaudited pro forma results of operations assume that the Restructuring Transactions, including the acquisition of the Predecessors and Tropicana AC, occurred at the beginning of the period (in thousands, except per share data, unaudited):

	Three months ended March 31, 2010

Net revenues	$	165,834
Operating income		9,878
Net income		1,271
Basic and diluted earnings per common share	$	0.05

This unaudited pro forma information should not be relied upon as necessarily being indicative of the results that would have been obtained if the Restructuring Transactions had actually occurred at the beginning of the period, nor of the results that may be reported in the future.

NOTE 4—RECEIVABLES

Receivables consist of the following (in thousands):

		Successor

		March 31, 2011			December 31, 2010
		(unaudited)
Casino		$	20,482		$	21,903
Hotel			5,357			6,009
Predecessors' administrative tax claim			14,314			14,314
Income tax receivable			715			—
Other			6,967			6,448

			47,835			48,674
Allowance for doubtful accounts			(10,146	)		(9,819	)

	Receivables, net	$	37,689		$	38,855

The Predecessors' administrative tax claim amounts represent tax refund claims filed related to our Predecessors. The timing of any collections on these is uncertain and is pending litigation.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 5—PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

		Successor

		Estimated life (years)	March 31, 2011			December 31, 2010
			(unaudited)
Land		—	$	92,860		$	92,860
Buildings and improvements		10 - 40		298,791			298,716
Furniture, fixtures and equipment		3 - 7		68,280			68,099
Riverboats and barges		5 - 15		18,450			18,450
Construction in progress		—		6,199			4,392

				484,580			482,517
Accumulated depreciation				(43,983	)		(34,471	)

	Property and equipment, net		$	440,597		$	448,046

NOTE 6—GOODWILL AND INTANGIBLE ASSETS

In connection with the application of fresh-start reporting, we recorded goodwill and intangible assets which were adjusted during our annual impairment testing in the fourth quarter of 2010. As of March 31, 2011 and December 31, 2010, the Company had goodwill of $24.9 million of which $14.2 million related to Casino Aztar and the remaining $10.7 million related to the Company.

Intangible assets consist of the following (in thousands):

				Successor

				Estimated life (years)	March 31, 2011			December 31, 2010
					(unaudited)
Trade name				Indefinite	$	25,800		$	25,800
Gaming licenses				Indefinite		28,700			28,700
Customer lists				3		3,079			3,079
Favorable lease				5 - 42		24,100			24,100

	Total intangible assets					81,679			81,679
Less accumulated amortization:
	Customer lists					(1,112	)		(855	)
	Favorable lease					(1,451	)		(1,085	)

		Total accumulated amortization				(2,563	)		(1,940	)

			Intangible assets, net		$	79,116		$	79,739

Upon the adoption of fresh-start reporting, the Company recognized $29.5 million in an indefinite life trade name related to the "Tropicana" trade name which was reduced by a $3.7 million impairment loss during the fourth quarter of 2010. The Company also recognized, upon the adoption of fresh-start reporting, $44.0 million of indefinite life gaming licenses related to entities that are located in gaming jurisdictions where competition is limited to a specified number of licensed gaming operators, which

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 6—GOODWILL AND INTANGIBLE ASSETS (Continued)

was reduced by a $15.3 million impairment loss during the fourth quarter of 2010. At March 31, 2011, $28.7 million of indefinite life gaming license is related to Casino Aztar.

Customer lists, which represent the value associated with customers enrolled in our customer loyalty programs, were valued at $1.7 million upon adoption of fresh-start reporting and $1.4 million was also recognized in connection with the Tropicana AC acquisition and are being amortized on a straight-line basis over three years. Amortization expense related to customer lists, which is amortized to depreciation and amortization expense, for the quarter ended March 31, 2011 and the Successor Period was $0.3 million and $0.1 million, respectively. Estimated annual amortization expense related to the Company's customer lists for the years ended December 31, 2011, 2012, and 2013 is anticipated to be $1.0 million, $1.0 million, and $0.2 million, respectively.

Favorable lease arrangements were valued at $8.6 million upon adoption of fresh-start reporting and are being amortized to rental expense on a straight-line basis over 30 years, which approximates the remaining useful life of the respective leased facility. In connection with the Tropicana AC acquisition, the Company also recognized $5.2 million of intangibles assets relating to favorable lease arrangements which are being amortized to tenant income on a straight-line basis over the terms of the various leases. Additionally, in connection with the acquisition of Tropicana Aruba, the Company recognized $10.3 million of intangible assets relating to a favorable land lease arrangement which is amortized to rental expense on a straight-line basis over the remaining term of the land lease of approximately 42 years. Amortization expense related to favorable lease arrangements for the quarter ended March 31, 2011 and the Successor Period, which is amortized to rental expense or tenant income, as applicable, was $0.4 million and $0.1 million, respectively. Estimated annual amortization related to the Company's favorable lease arrangements is anticipated to be $1.4 million in each of the years ended December 31, 2011, 2012, 2013, 2014 and 2015.

Intangible assets related to the acquisition of the Predecessors and Tropicana AC were valued using the income and cost based methods as appropriate. The "Tropicana" trade name was valued based on the relief from royalty method which is a function of projected revenue, the royalty rate that would hypothetically be charged by a licensor of an asset to an unrelated licensee, and a discount rate. The royalty rate was based on factors such as age, market competition, absolute and relative profitability, market share and prevailing rates for similar assets to reach a 1% royalty rate. The discount rate applied was 14%, based on the weighted average cost of capital of the properties benefiting from the trade name. Gaming licenses were valued based on the Greenfield method, which is the function of the cost to build a new casino operation, the build out period, projected cash flows attributed to the casino once operational, and a discount rate. The projected cash flows assumed a revenue growth rate of 2% and effective tax rate of 40%. The discount rate assumed was 16%, based on the weighted average cost of capital for the respective property plus a premium to reflect the additional risks of achieving individual cash flows. The value assigned to customer lists is based on the present value of future earnings using the replacement cost method based on internally developed estimates.

In connection with fresh-start reporting, the Predecessors' intangible assets were eliminated on the Effective Date. Amortization expense for TEH and CP Vicksburg for the Predecessor Period was $27,000 and $2,000, respectively. JMBS Casino recognized no amortization expense for the Predecessor Period as the intangible assets were fully amortized.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 7—INVESTMENTS

The New Jersey Casino Control Act provides, among other things, for an assessment of licenses equal to 1.25% of gross gaming revenues in lieu of an investment alternative tax equal to 2.5% of gross gaming revenues. The Company may satisfy this investment obligation by investing in qualified eligible direct investments, by making qualified contributions or by depositing funds with the CRDA. Funds deposited with the CRDA may be used to purchase bonds designated by the CRDA or, under certain circumstances, may be donated to the CRDA in exchange for credits against future CRDA investment obligations. The carrying value of the total investments at March 31, 2011 and December 31, 2010 approximate their fair value.

Investments consist of the following (in thousands):

		Successor

		March 31, 2011			December 31, 2010
		(unaudited)
Investment in bonds—CRDA		$	14,394		$	13,933
Less unamortized discount			(2,160	)		(3,857	)
Less valuation allowance			(4,480	)		(2,065	)
Deposits—CRDA			30,021			29,819
Less valuation allowance			(7,636	)		(7,598	)
Direct investment—CRDA			3,685			3,685
Less valuation allowance			(640	)		(646	)

	Total investments	$	33,184		$	33,271

The CRDA bonds have various contractual maturities that range from 5 to 40 years. Actual maturities may differ from contractual maturities because of prepayment rights.

NOTE 8—OTHER ASSETS

Other assets consist of the following (in thousands):

		Successor

		March 31, 2011		December 31, 2010
		(unaudited)
Debt issuance costs		$	6,262	$	6,825
Casino Aztar prepaid rent			9,993		10,633
Deposits			9,007		9,195
Other			3,064		3,776

	Other assets	$	28,326	$	30,429

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NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 9—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):

		Successor

		March 31, 2011		December 31, 2010
		(unaudited)
Accrued payroll and related		$	28,658	$	25,281
Accrued gaming and related			14,147		16,226
Accrued taxes			9,401		13,194
Predecessors' administrative tax claim			13,628		13,628
Other accrued expenses and current liabilities			10,909		13,721

	Total accrued expenses and other current liabilities	$	76,743	$	82,050

The predecessors' administrative tax claim amounts represent certain tax liabilities related to our Predecessors. We are in the process of determining the timing and amount to be settled.

NOTE 10—DEBT

Debt consists of the following (in thousands):

		Successor

		March 31, 2011			December 31, 2010
		(unaudited)
Term Loan Facility, due 2013, interest at 15% at March 31, 2011, net of unamortized discount of $18.3 million and $20.7 million at March 31, 2011 and December 31, 2010, respectively.		$	110,357		$	109,307
Other long-term debt			161			170

	Total long-term debt		110,518			109,477
Less current portion of debt			(1,340	)		(1,339	)

	Total long-term debt, net	$	109,178		$	108,138

Successor

Exit Facility

On December 29, 2009, TEI entered into a credit facility (the "Exit Facility") with multiple lenders including Icahn Capital LP ("Icahn Capital"), as further discussed in Note 11, which consists of (i) a $130 million senior secured term loan credit facility issued at a discount of 7% (the "Term Loan Facility") and (ii) a $20 million senior secured revolving credit facility (the "Revolving Facility"). The Exit Facility matures on March 8, 2013. The Term Loan Facility requires mandatory principal payments of $1.3 million annually on March 8, 2011 and 2012. The Revolving Facility generally does not require mandatory borrowing or principal payments. Additionally, the Company issued 1,312,500 Penny Warrants to purchase its Common Stock at a strike price of $0.01 to participating lenders under the Exit Facility. On the Effective Date the proceeds of the Exit Facility were used to repay certain

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NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 10—DEBT (Continued)

indebtedness, including TEH's DIP Credit Facility, to pay Bankruptcy Court-approved administrative claims and expenses, to provide for working capital, to pay fees and expenses related to the Exit Facility and for other general corporate purposes. All amounts outstanding under the Exit Facility bear interest at a rate per annum of 15% so long as no default or event of default has occurred and is continuing, or at a rate per annum of 17% in the event that a default or event of default has occurred and is continuing. In addition, the Company is required to pay an annual administrative fee of $100,000 and an unused line fee equal to 0.75% of the daily average undrawn portion of the Revolving Facility. The Exit Facility is guaranteed by substantially all the existing and future subsidiaries of TEI.

The Exit Facility, as amended in February 2011, contains mandatory prepayment provisions from proceeds received by TEI and its subsidiaries as a result of asset sales and the incurrence of indebtedness (subject in each case to certain exceptions). Key covenants binding TEI and its subsidiaries include (i) $50 million limitation per annum on capital expenditures, (ii) compliance with a fixed charge coverage ratio of not less than 1.00 to 1.00 prior to December 31, 2011 (other than December 31, 2010 which had no requirement) and not less than 2.00 to 1.00 after December 31, 2011 and (iii) compliance with a total leverage ratio not to exceed 4.25 to 1.00. Financial covenants will be tested at the end of each fiscal quarter on a last twelve months basis. Key defaults (termination provisions) include (i) failure to repay principal, interest, fees and other amounts owing under the facility, (ii) cross default to other material indebtedness, (iii) the rendering of a material judgment against TEI or any subsidiary, (iv) failure of security documents to create valid liens on property securing the facility and to perfect such liens, (v) revocation of casino, gambling or gaming licenses, and (vi) the bankruptcy or insolvency of TEI or any of its subsidiaries. Many defaults are also subject to cure periods prior to such default giving rise to the right of the lenders to accelerate the loans and to exercise remedies. TEI was in compliance with the covenants of the Exit Facility, as amended, at March 31, 2011.

NOTE 11—RELATED PARTY TRANSACTIONS

Cayman Company

On August 31, 2010 the Company, through a subsidiary, purchased all of the issued and outstanding shares of capital stock of Cayman Company for a total purchase price of approximately $12.0 million. Cayman Company was an entity controlled by Carl C. Icahn. Pursuant to a securities purchase agreement, the Company indirectly acquired all of the membership interests of Cayman Company's wholly owned subsidiary Abura Development Corp. VBA, which in June 2010 acquired out of bankruptcy The Aruban Resort & Casino at Eagle Beach as discussed in Note 1.

Icahn Capital

On May 4, 2009, pursuant to the Plan, the Company entered into a commitment letter (the "Commitment Letter") with Icahn Capital, an affiliate of Mr. Icahn, pursuant to which Icahn Capital committed to provide, on a fully underwritten basis, the Exit Facility. Furthermore, entities affiliated with Mr. Icahn are lenders under the Exit Facility and hold more than 50% of the loans extended under the Exit Facility. In addition, an entity affiliated with Mr. Icahn is the administrative agent and collateral agent under the Exit Facility. Pursuant to the Commitment Letter, the Company was also responsible for various professional fees, including legal costs and gaming license costs, on behalf of Mr. Icahn. The Company expensed $0.3 million during the Successor Period related to these costs.

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NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 11—RELATED PARTY TRANSACTIONS (Continued)

TEH expensed $1.1 million during the Predecessor Period related to these costs. The Company and TEH paid a total of $9.5 million in debt issuance costs related to the Exit Facility. Unamortized debt issuance costs of $6.3 million and $6.8 million were included in other assets, net on the accompanying condensed balance sheet as of March 31, 2011 and December 31, 2010, respectively.

Icahn Sourcing, LLC

Icahn Sourcing, LLC ("Icahn Sourcing") is an entity formed and controlled by Mr. Icahn in order to maximize the potential buying power of a group of entities with which Mr. Icahn has a relationship in negotiating with a wide range of suppliers of goods, services and tangible and intangible property. We are a member of the buying group and, as such, are afforded the opportunity to purchase goods, services and property from vendors with whom Icahn Sourcing has negotiated rates and terms. Icahn Sourcing does not guarantee that we will purchase any goods, services or property from any such vendors, and we are under no obligation to do so. We do not pay Icahn Sourcing any fees or other amounts with respect to the buying group arrangement. We may purchase a variety of goods and services as members of the buying group at prices and on terms that we believe are more favorable than those which would be achieved on a stand-alone basis.

NOTE 12—COMMITMENTS AND CONTINGENCIES

Leases

MontBleu Lease

The Company has a lease agreement with respect to the land and building which MontBleu operates, through December 31, 2028. Under the terms of the lease, rent is $333,333 per month, plus 10% of gross revenues in excess of $50 million through December 31, 2011. After December 31, 2011, rent will be equal to the greater of (i) $333,333 per month as increased by the same percentage that the consumer price index has increased from 2009 thereafter, or (ii) 10% of gross revenues. In connection with fresh-start reporting, the Company recognized an unfavorable lease liability of $9.6 million related to this lease that will be amortized on a straight-line basis to rental expense over the remaining term of the lease. The unfavorable lease liability balance was $9.1 million on the accompanying condensed balance sheets as of March 31, 2011.

Casino Aztar Land Lease

The Company leases from the City of Evansville, Indiana approximately ten acres of the approximately 20 acres on which Casino Aztar is situated. Under the terms of the lease, the Company may extend the lease term through November 30, 2040 by exercising up to seven five-year renewal options. In March 2010, the Company amended the Casino Aztar land lease and exercised its second of its seven renewal options which extends the lease term through November 2015. Under the terms of the lease renewal, effective December 1, 2010, the Company is required to pay a percentage of the adjusted gross receipts ("AGR") for the year in rent with a minimum annual rent of no less than $2 million. The percentage rent shall be equal to 2% of the AGR up to $25 million, plus 4% of the AGR in excess of $25 million up to $50 million, plus 6% of the AGR in excess of $50 million up to $75 million, plus 8% of the AGR in excess of $75 million up to $100 million and plus 12% of the AGR in excess of $100 million. In accordance with the lease renewal, during the Successor Period the Company paid a total of $13.5 million for the prepayment of rent to the City of Evansville for the

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 12—COMMITMENTS AND CONTINGENCIES (Continued)

period between January 2011 and December 2015. In addition, per the terms of the lease, the Company has agreed to construct a pedestrian bridge to Casino Aztar as a leasehold improvement at an estimated cost of approximately $3.0 million to be completed within three years after the Effective Date.

Belle of Baton Rouge Lease

Belle of Baton Rouge leases certain land and buildings under separate leases, with annual payments of $0.2 million which run through 2013 with options to extend for up to 70 years. In addition, Belle of Baton Rouge leases a parking lot with annual rent of $0.6 million through August 2012.

Lighthouse Point Lease

Lighthouse Point leases approximately four acres of land on which the docking, entry and parking facilities of the casino are situated. Lighthouse Point is required to pay an amount equal to 2% of its monthly gross gaming revenues in rent, with a minimum monthly payment of $75,000. In addition, in any given year in which annual gross gaming revenues exceed $36.6 million, Lighthouse Point is required to pay 8% of the excess amount as rent pursuant to the terms of the lease. The current lease expires in 2014 with an option to extend its term through 2044.

Jubilee Lease

The Company has a lease agreement with the City of Greenville, Mississippi, for the moorage, docking and berthing used in the operations of Jubilee. The current lease with the City of Greenville requires annual rental payments of $420,000 which expires in August 2020 and provides the Company with the option of two five-year renewals.

Tropicana Aruba Land Lease

The Company assumed a land lease in August 2010 for approximately 14 acres of land on which Tropicana Aruba is situated through July 30, 2051. Under the terms of the land lease, the annual rent is $93,000.

Horizon Vicksburg Lease (Discontinued Operations)

The Company's lease agreement with the City of Vicksburg that permitted the development of Horizon Vicksburg and provided for ongoing payments to the City of Vicksburg, was assigned to Delta upon consummation of the sale of Horizon Vicksburg in March 2011.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 12—COMMITMENTS AND CONTINGENCIES (Continued)

Other Commitments and Contingencies

2008 NJSEA Subsidy Agreement

Effective August 14, 2008, the casinos located in Atlantic City ("AC Casinos"), including Tropicana AC, executed a new subsidy agreement with New Jersey Sports and Exposition Authority ("NJSEA") for the benefit of the horse racing industry for $30.0 million annually for a three-year period ("2008 NJSEA Subsidy Agreement"). In addition, the New Jersey Casino Control Commission (the "NJCCC") adopted regulations effective September 22, 2008 that established procedures by which the AC Casinos may implement the promotional gaming credit tax deduction. The 2008 NJSEA Subsidy Agreement provides that the AC Casinos will pay the NJSEA $90.0 million to be used solely for purse enhancements, breeder's purses and expenses to establish off-track wagering facilities which it incurs through 2011. The payments will be made in eleven installments from September 29, 2008 through November 15, 2011 and were $30.0 million in 2010 and will be $7.5 million in 2011. Each AC Casino will pay a share equal to a percentage representing the gross gaming revenue it reported for the prior calendar year compared to that reported by all AC Casinos for that year. The Company estimates its portion of this industry obligation is approximately 7.9%.

The 2008 NJSEA Subsidy Agreement also provides that the NJSEA, all other entities which receive any portion of the payments and affiliates of either shall not operate, conduct, maintain or permit any casino gaming, including video lottery gaming, in any New Jersey location other than Atlantic City prior to 2012 and that the AC Casinos may bring an action in New Jersey Superior Court against any entity that does so to enforce this prohibition by specific performance.

The 2008 NJSEA Subsidy Agreement further provides that if, prior to 2012, any such statewide public question is approved by New Jersey voters or any New Jersey legislation is enacted or other New Jersey governmental action is taken authorizing such gaming or any such gaming is actually operated, conducted or maintained, then the AC Casinos shall make no further payments to NJSEA and, in certain circumstances, NJSEA shall return some or all of the payments it previously received from the AC Casinos.

2011 New Jersey Legislation

On February 1, 2011, the Governor of New Jersey signed two pieces of legislation, effective on that date, S-11 (the "Tourism District Bill") and S-12 (the "Deregulation Bill"). The overall intent of the Tourism District Bill among other things delegates redevelopment authority and creation of a master plan to the CRDA and allows the CRDA the ability to enter into a five year public private partnership with the casinos in Atlantic City that have formed the Atlantic City Alliance ("ACA") to jointly market the city. Through this legislation the AC Casinos are required to contribute $5 million prior to 2012. Thereafter, the legislation obligates the AC Casinos either through the ACA or, if not a member of the ACA, through individual assessments, to provide funding for the Tourism District Bill in the aggregate amount of $30 million annually over the next five years. Each AC Casino's proportionate share of the assessment will be based on the gross revenue generated in the preceding fiscal year. The Company estimates its portions of these industry obligations to be approximately 8.4%.

The Deregulation Bill removes duplicative and onerous functions that both the NJCCC and the Division of Gaming Enforcement currently require the AC Casinos to perform. Reforms in technology, internal controls, licensing and licensing requirements are among the many sections that are being

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 12—COMMITMENTS AND CONTINGENCIES (Continued)

amended in the New Jersey Casino Control Act, which is expected to provide the industry significant cost savings and make it more competitive in the market. However, it is too premature to quantify these savings as the regulations at this time are still being drafted.

New Jersey CRDA

The NJCCC imposes an annual tax of eight percent on gross casino revenue. Pursuant to legislation adopted in 1984, casino licensees are required to invest an additional one and one-quarter percent of gross casino revenue for the purchase of bonds to be issued by the CRDA or make other approved investments equal to that amount; in the event the investment requirement is not met, the casino licensee is subject to a tax of two and one-half percent on gross casino revenue. As mandated by the legislation, the interest rate of the CRDA bonds purchased by the licensee will be two-thirds of the average market rate for bonds available for purchase and published by a national bond index at the time of the CRDA bond issuance.

Tropicana Trademark Litigation

Certain parties (the "Plaintiffs") affiliated with the new owners of Tropicana Hotel & Casino ("Tropicana LV") filed a declaratory judgment action in the District Court, Clark County, Nevada, on July 20, 2009, against Aztar Corporation ("Aztar") and Tropicana Entertainment, LLC ("TE") originally seeking a declaratory judgment that Tropicana LV had the right to operate a hotel and casino under the name "Tropicana" without any interference by or payment to Aztar or TE (together, the "Defendants"). The Plaintiffs' complaint sought no damages or injunctive relief. On August 10, 2009, Defendants removed the action to the District of Nevada and filed an answer and counterclaim asserting Plaintiffs' use of "Tropicana" infringes upon Defendants' rights in three federally registered trademarks. The Plaintiffs filed a motion to remand the action to Nevada state court, which was granted on January 21, 2010. The parties are currently engaged in discovery.

During the course of proceedings, the Plaintiffs and Defendants each filed a motion for summary judgment claiming ownership of the "Tropicana" trademark. Both motions were denied, although the Nevada state court preliminarily found that the Plaintiffs might have an unexercised reversionary ownership interest in the trademark as a result of an agreement that is 30 years old. Nonetheless, because any exercise of this purported reversionary interest by Tropicana LV could potentially deprive the Company, as successor to TE, of its asserted ownership of the Tropicana trademark, the Defendants filed a motion in the Chapter 11 Cases for an order rejecting the 1980 trade name agreement. In addition, the Company, together with its subsidiary, New Tropicana Holdings, Inc. ("New Tropicana"), and certain affiliates of Icahn Capital, as secured lenders to the Company, filed a complaint in the Chapter 11 Cases against the Plaintiffs, seeking a declaration that, consistent with prior, uncontested orders of the Bankruptcy Court, New Tropicana is the owner of the "Tropicana" trademark, the Exit Facility lenders have a perfected security interest in that property, and the Nevada state court action, to the extent it seeks to assert ownership over the trademark or question the validity of the security interest, violates the automatic stay. The complaint also demands an injunction against any further efforts by the Plaintiffs to re-litigate the ownership issue, and seeks other remedies on behalf of the Exit Facility lenders. A motion by the Plaintiffs to dismiss the complaint is pending.

If the Plaintiffs are successful in the Nevada State Court action, they would have rights to continued use of the "Tropicana" trademark in perpetuity in connection with Tropicana LV and

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 12—COMMITMENTS AND CONTINGENCIES (Continued)

associated operations without control by the Company or payment of any royalty or license fee to the Company. Their continued use of the trademark without restriction could dilute the "Tropicana" brand and be detrimental to the Company's future properties that utilize that brand. Furthermore, if the Plaintiffs are successful in the Nevada State Court action and the Defendants and the Company are not successful in the Bankruptcy Court proceedings, the Plaintiffs may establish ownership rights and the Company's right to continued use of the "Tropicana" name, in a particular geographic area, on an exclusive basis, or at all, could be adversely affected.

Wimar and CSC Administrative Expense Claims

On March 31, 2009, Wimar Tahoe Corporation ("Wimar") and Columbia Sussex Corporation ("CSC") filed separate proceedings with the Bankruptcy Court related to administrative expense claims against the Predecessors. On August 4, 2010, Wimar and CSC separately filed motions for summary judgment seeking payment on account of these claims from the Company totaling approximately $5.4 million. In its objection to Wimar and CSC's motions for summary judgment, the Company disputes the administrative expense and/or priority status of certain amounts claimed and also contends that any payment to CSC or Wimar should await the resolution of the adversary proceeding instituted by Lightsway Litigation Services, LLC, as Trustee of the Tropicana Litigation Trust established in the Chapter 11 Cases, against CSC and Wimar.

Aztar v. Marsh

Aztar filed a broker malpractice and breach of contract action in the Superior Court of New Jersey, Atlantic County, on August 12, 2010, against Marsh & McLennan Companies, Marsh, Inc., Marsh USA, Inc. and various fictitious Marsh entities (together, the "Marsh Defendants"). The claim seeks $100 million or more in compensatory damages against the Marsh Defendants, Aztar's risk management and insurance brokers at the time of a 2002 expansion of Tropicana AC by Aztar, including, but not limited to, lost profits, expenses arising from the interruption of operations, attorneys' fees, loss of the use of the insurance proceeds at issue, and litigation expenses resulting from the Marsh Defendants' failure to secure for Aztar business interruption and property damage coverage covering losses sustained by Aztar from the collapse of a parking garage that occurred at Tropicana AC on October 30, 2003. The Marsh Defendants filed an answer on October 20, 2010 denying the material allegations of the complaint. Any recovery obtained by Aztar in this action will be recoverable by the Company as the current owner of Tropicana AC.

Litigation in General

The Company is a party to various litigation that arises in the ordinary course of business. In the opinion of management, all pending legal matters are either adequately covered by insurance or, if not insured, will not have a material adverse effect on the financial position or the results of operations of the Company.

NOTE 13—STOCKHOLDERS' EQUITY

Common Stock

We are authorized to issue up to 100 million shares of our Common Stock, of which 26,312,500 shares were issued and outstanding as of March 31, 2011. Each holder of the Common Stock is entitled

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NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 13—STOCKHOLDERS' EQUITY (Continued)

to one vote for each share held of record on each matter submitted to a vote of stockholders. The holders of our Common Stock have no cumulative voting rights, preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our Common Stock. Subject to any preferences that may be granted to the holders of our preferred stock, each holder of Common Stock is entitled to receive ratably, such dividends as may be declared by the Board of Directors out of funds legally available therefore, as well as any distributions to the stockholders and, in the event of our liquidation, dissolution or winding up is entitled to share ratably in all our assets remaining after payment of liabilities.

Preferred Stock

We are authorized to issue up to 10 million shares of our preferred stock, $0.01 par value per share, of which none were issued as of March 31, 2011. The Board of Directors, without further action by the holders of Common Stock, may issue shares of preferred stock in one or more series and may fix or alter the rights, preferences, privileges and restrictions, including the voting rights, redemption provisions (including sinking fund provisions), dividend rights, dividend rates, liquidation rates, liquidation preferences, conversion rights and the description and number of shares constituting any wholly unissued series of preferred stock. Except as described above, the Board of Directors, without further stockholder approval, may issue shares of preferred stock with rights that could adversely affect the rights of the holders of Common Stock. The issuance of shares of preferred stock under certain circumstances could have the effect of delaying or preventing a change of control of TEI or other corporate action.

Warrants

In accordance with the Plan, holders of the Predecessors' $960 million of 9⁵/8% Senior Subordinated Notes and general unsecured claims received Ordinary Warrants to purchase 3,750,000 shares of our Common Stock. The Ordinary Warrants have a four year, six month term and an exercise price of $52.44 per share. The Company evaluated the Ordinary Warrants under current accounting pronouncements and determined they were properly classified as equity on the accompanying condensed balance sheet. The Company valued the Ordinary Warrants using the Black-Scholes option valuation model assuming a life of 4.5 years, a volatility factor of 61% and a risk free interest rate of 2.36%. The resulting value of $11.5 million was recorded as a reorganization item of the Predecessors on the accompanying condensed statements of operations.

In addition, pursuant to the terms of the Exit Facility, we issued Penny Warrants to purchase 1,312,500 shares of our Common Stock at a strike price of $0.01 to participating lenders on the Effective Date. The Penny Warrants had a term of 3 months. The Company valued the Penny Warrants using the Black-Scholes option valuation model assuming a life of 0.24 years, a volatility factor of 41% and a risk free rate of 0.16%. The resulting value of $19.5 million is treated as a debt discount and netted against the carrying value of the Exit Facility on the accompanying condensed balance sheet as of March 31, 2011 and December 31, 2010. The discount is amortized at a constant rate applied to the outstanding balance of the Exit Facility with a corresponding increase in non-cash interest expense. During the Successor Period, all 1,312,500 Penny Warrants were exercised at $0.01 per share.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 13—STOCKHOLDERS' EQUITY (Continued)

Significant Ownership

At March 31, 2011, Mr. Icahn indirectly controlled approximately 51.5% of the voting power of the Company's Common Stock and, by virtue of such stock ownership, is able to exert substantial influence over the Company, including the election of directors. The existence of a significant stockholder may have the effect of making it difficult for, or may discourage or delay, a third party from seeking to acquire a majority of the Company's outstanding Common Stock. Mr. Icahn's interests may not always be consistent with the Company's interests or with the interests of the Company's other stockholders. Mr. Icahn and entities controlled by him may also pursue acquisitions or business opportunities that may or may not be complementary to the Company's business. To the extent that conflicts of interest may arise between the Company and Mr. Icahn and his affiliates, those conflicts may be resolved in a manner adverse to the Company or its other shareholders.

NOTE 14—BASIC AND DILUTED NET INCOME PER SHARE

The Company computes net income per share in accordance with accounting guidance that requires presentation of both basic and diluted earnings per share ("EPS") on the face of the income statement. Basic EPS is computed by dividing net income for the period by the weighted average number of shares outstanding during the period. Diluted EPS is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period, increased by potentially dilutive common shares that were outstanding during the period. Potentially dilutive common shares include warrants. Diluted EPS excludes all potential dilutive shares if their effect is anti-dilutive.

Excluded from the calculation of diluted earnings per share are the Ordinary Warrants to purchase 3,750,000 shares of our Common Stock as they were anti-dilutive for all periods presented.

NOTE 15—DISCONTINUED OPERATIONS

As discussed in Note 1, on December 1, 2010, the Company, through CP Vicksburg, entered into an agreement to sell substantially all of the assets of Horizon Vicksburg, and as a result, its operations are presented as discontinued operations in the accompanying condensed statements of operations for the three months ended March 31, 2011 and the Successor Period while its assets and liabilities are presented as held for sale in the accompanying condensed balance sheet as of December 31, 2010. The cash flows of the discontinued operations are included with the cash flows of continuing operations in the accompanying condensed statements of cash flows.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 15—DISCONTINUED OPERATIONS (Continued)

The assets and liabilities of Horizon Vicksburg are presented as held for sale as follows (in thousands):

		Successor

		TEI
		December 31, 2010
Cash		$	1,488
Receivables, net			25
Property and equipment, net			2,741
Other assets			399

	Total assets held for sale	$	4,653

Accounts payable		$	294
Accrued expenses and other liabilities			1,377

	Total liabilities related to assets held for sale	$	1,671

Operating results of discontinued operations are summarized as follows (in thousands, unaudited):

		Successor

		TEI(a)
		Three months ended March 31, 2011			Period from March 8, 2010 through March 31, 2010
Net revenues		$	1,652		$	493
Operating costs and expenses			2,416			638

	Loss from operations		(764	)		(145	)
Interest income, net			1			—
Gain from disposal of discontinued operations, net			1,007			—
Income tax (expense) benefit			(86	)		48

	Gain (loss) from discontinued operations, net	$	158		$	(97	)

(a): Represents the operating results of Horizon Vicksburg.

Gain from Disposal of Discontinued Operations, Net

The Company no longer owned or operated Horizon Vicksburg as of March 25, 2011. As a result, the Company recorded a gain from the disposition of Horizon Vicksburg in the three months ended March 31, 2011 of $1.0 million, which is included in the gain from discontinued operations in the accompanying condensed statements of operations.

NOTE 16—INCOME TAXES

The Company's effective income tax rate from continuing operations for the three months ended March 31, 2011 and the Successor Period was 39.7% and 33.1%, respectively. The difference between

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 16—INCOME TAXES (Continued)

the federal statutory rate of 35% and the Company's effective tax rate for both the three months ended March 31, 2011 and the Successor Period was primarily related to state income taxes (net of federal benefit), non-deductible meals and entertainment and other permanent differences. Looking forward, our effective income tax rate may fluctuate due to changes in tax legislation, changes in our estimates of federal tax credits, changes in our assessment of uncertainties as valued under accounting guidance for uncertainty in income taxes, as well as accumulated interest and penalties.

TEH's effective tax rate for the Predecessor Period was 1.3%. The difference between the federal statutory rate of 35% and TEH's tax rate for the Predecessor Period was primarily due to reorganization charges for which no tax benefit was recognized.

CP Vicksburg and JMBS Casino were pass-through entities for federal and state income tax purposes. As pass-through entities, the tax attributes of CP Vicksburg and JMBS Casino would pass through to its members who owed any related income taxes. As a result, no provision for income taxes was recorded in the accompanying financial statements for CP Vicksburg and JMBS Casino.

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TROPICANA ENTERTAINMENT INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 17—SEGMENT INFORMATION

The Company views each property as an operating segment which we aggregate by region in order to present our reportable segments: (i) East, (ii) Central, (iii) West, (iv) and South and other. The Company uses operating income to compare operating results among its segments and allocate resources.

The following table highlights by segment our net revenues and operating income (loss), and reconciles operating income (loss) to income (loss) from continuing operations before income taxes for the three months ended March 31, 2011, the Successor Period and the Predecessor Period (in thousands, unaudited):

		Successor						Predecessors

		Three months ended March 31, 2011			Period from March 8, 2010 through March 31, 2010			Period from January 1, 2010 through March 7, 2010
											Discontinued Operations
		TEI						TEH			CP Vicksburg			JMBS Casino
Net revenues:
	East	$	64,393		$	19,666		$	—		$	—		$	—
	Central		31,327			8,217			22,432			—			—
	West		32,969			9,558			25,999			—			—
	South and other		28,540			6,942			16,043			1,271			3,552
	Corporate		—			39			45			—			—

Total net revenues		$	157,229		$	44,422		$	64,519		$	1,271		$	3,552

Operating income (loss):
	East	$	(4,030	)	$	(217	)	$	—		$	—		$	—
	Central		6,353			1,780			4,691			—			—
	West		3,246			1,226			1,731			—			—
	South and other		4,985			1,214			2,603			(874	)		933
	Corporate		(5,403	)		(2,210	)		(4,604	)		—			—

Total operating income (loss)		$	5,151		$	1,793		$	4,421		$	(874	)	$	933

Reconciliation of operating income (loss) to income (loss) from continuing operations before income taxes:
Operating income (loss)		$	5,151		$	1,793		$	4,421		$	(874	)	$	933
	Interest expense		(8,050	)		(2,150	)		(2,005	)		—			(2	)
	Interest income		222			46			11			40			103
	Reorganization items, net		—			—			2,093,098			2,288,185			2,266,609

Income (loss) from continuing operations before income taxes		$	(2,677	)	$	(311	)	$	2,095,525		$	2,287,351		$	2,267,643

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NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (Continued)

NOTE 17—SEGMENT INFORMATION (Continued)

		Successor

		March 31, 2011		December 31, 2010
Assets by segment:
	East	$	334,125	$	339,189
	Central		161,645		163,576
	West		115,120		120,691
	South and other		119,107		121,331
	Corporate		107,646		99,452
	Assets held for sale		—		4,653

Total assets		$	837,643	$	848,892

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. Such statements contain 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 plans, our competition, financing, revenues, tax benefits, our beliefs regarding the sufficiency of our existing cash and credit sources, including our Exit Facility (as defined below) 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 over the next twelve months, 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. 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. You should consider 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, 2010. 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 three casinos in Nevada, two casinos in Mississippi, and one casino in each of Indiana, Louisiana 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 March 31, 2011, our properties collectively included approximately 411,000 square feet of gaming space with 7,806 slot machines, 228 table games and 6,034 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. Our operations by region include the following:

•: East—Tropicana Casino and Resort, Atlantic City ("Tropicana AC") located in Atlantic City, New Jersey;
•: Central—Casino Aztar Evansville ("Casino Aztar") located in Evansville, Indiana;
•: West—Tropicana Laughlin Hotel and Casino ("Tropicana Laughlin") located in Laughlin, Nevada; River Palms Hotel and Casino ("River Palms") 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; Bayou Caddy's Jubilee Casino ("Jubilee") located in Greenville, Mississippi; Lighthouse Point Casino ("Lighthouse Point") located in Greenville, Mississippi; and Tropicana Aruba Resort and Casino ("Tropicana Aruba") located in Noord, Aruba.

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We are a Delaware corporation that was 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 under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). We also acquired CP Vicksburg, JMBS Casino, LLC ("JMBS Casino") and CP Laughlin Realty, LLC all of whom were part of the same plan of reorganization (the "Plan") as TEH (collectively, the "Predecessors"). Except where the context suggests otherwise, the terms "we," "us," "our," and "the Company" refer to Tropicana Entertainment Inc. and its subsidiaries.

In addition, we acquired certain assets of Adamar of New Jersey, Inc. ("Adamar"), an unconsolidated subsidiary of TEH, including Tropicana AC. The results of operations of Tropicana AC are not presented for the Predecessor Period (as defined below). The results of operations of Tropicana AC are included from the Effective Date (as defined below).

On May 5, 2008, the Predecessors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). 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. 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.

Upon the Effective Date and following the completion of the Restructuring Transactions, we adopted fresh-start reporting in accordance with accounting guidance on reorganizations. As a result, the value of the Predecessors' assets, including intangible assets and liabilities have been adjusted to their estimated fair values on our condensed balance sheet.

The historical financial results of the Predecessors and Adamar are not indicative of our current financial condition or our future results of operations following the Effective Date. Our future results of operations will be subject to significant business, economic, regulatory and competitive uncertainties and contingencies, some of which are beyond our control.

Presentation

References in this Quarterly Report on Form 10-Q to "Successor" refer to the Company on or after March 8, 2010, after giving effect to (i) the issuance of 12,098,053 shares of common stock ($0.01 par value per share, the "Common Stock") and warrants to purchase an additional 3,750,000 shares of our Common Stock (the "Ordinary Warrants")in accordance with the Plan, (ii) the entering into our credit facility in an aggregate principal amount of $150 million (the "Exit Facility") in accordance with the Plan, which included the issuance to certain lenders of warrants to purchase an additional 1,312,500 shares of our Common Stock at $.01 per share (the "Penny Warrants"), (iii) the application of fresh-start reporting and (iv) the issuance of 12,901,947 shares of Common Stock related to the acquisition of Tropicana AC. References to "Predecessors" refer to the Predecessors prior to March 8, 2010.

Due to the adoption of fresh-start reporting on March 8, 2010, the accompanying condensed statements of operations and cash flows for the three months ended March 31, 2010 are presented for two periods: January 1, 2010 through March 7, 2010 (the "Predecessor Period") for each of the Predecessors, and March 8, 2010 through March 31, 2010 (the "Successor Period") for the Company. The Predecessor Period reflects the historical accounting basis in the Predecessors' assets and liabilities, while the Successor Period reflects the assets and liabilities at fair value by allocating the Company's

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enterprise value to its assets and liabilities pursuant to accounting guidance related to business combinations.

Because we conducted no business prior to March 8, 2010, we have presented the results of the Predecessor Period for comparison purposes. We refer to our three months ended March 31, 2010 results as "2010 Combined," derived from the summation of the results of TEI for the Successor Period and TEH and JMBS Casino for the Predecessor Period. CP Vicksburg is excluded from the 2010 Combined period as it is classified as discontinued operations. However, CP Vicksburg is one of our Predecessors and we are required to report the historical results of our Predecessors and accordingly have presented CP Vicksburg as discontinued operations in our management's discussion and analysis of financial condition and results of operations. The discussion of our results of operations contains a comparison of our results for the three months ended March 31, 2011 and our results for the 2010 Combined period. The application of fresh-start reporting did not materially affect the Company's continuing operations; however the 2010 Combined period may yield results that are not fully comparable on a period-by-period basis, particularly with respect to depreciation and amortization and interest expense. The combined presentation does not comply with generally accepted accounting principles in the United States ("GAAP") or with the rules of the Securities and Exchange Commission (the "SEC") for pro forma presentation; however, it is presented because we believe it is the most meaningful comparison of our results between periods.

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 income of our customers, competitive factors, gaming tax increases and other regulatory changes, the opening of new gaming operations, the negative impact the Predecessors' bankruptcy filings had on our facilities, our ability to reinvest in our properties, potential future exposure for liabilities of the Predecessors that we assumed, our limited operating history, 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.

Revenues are one of our main performance indicators with more than 85% of net revenues generated from casino operations. 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 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:

•: Tropicana AC. We acquired Tropicana AC on March 8, 2010 and its operating results are included only from the Effective Date. For the three months ended March 31, 2011, our operating results include a full period of Tropicana AC results compared to 24 days of operations in the Successor Period.

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•: Fresh-Start Reporting. As noted above, we adopted fresh-start reporting on March 8, 2010 and as a result our results of operations are not comparable to those of the Predecessors. In particular, the assets and liabilities of the Predecessors have been adjusted to fair value and certain assets and liabilities not previously recognized in the Predecessors' financial statements have been recognized under fresh-start reporting. The most significant changes are in depreciation and amortization as we recorded our property and equipment at their estimated fair values upon the Effective Date.
•: General Economic Conditions. Weak economic conditions continue to adversely impact the gaming industry and the Company. We believe our guests have reduced their discretionary spending as a result of uncertainty and instability relating to employment and the credit, investment and housing markets.
•: Debt and Interest Expense. On December 29, 2009, we entered into the Exit Facility, which consists of (i) a $130 million senior secured term loan credit facility issued at a discount of 7% (the "Term Loan Facility") and (ii) a $20 million senior secured revolving credit facility (the "Revolving Facility"). The Exit Facility matures on March 8, 2013. The Term Loan Facility requires principal payments of $1.3 million annually on March 8, 2011 and 2012. The Revolving Facility does not generally require principal payments prior to the maturity date. All amounts outstanding under the Exit Facility bear interest at a rate per annum of 15% so long as no default or event of default has occurred and is continuing, or at a rate per annum of 17% in the event that a default or event of default has occurred and is continuing. On the Effective Date, the proceeds of the Term Loan Facility were used to repay certain indebtedness, including TEH's $65 million post-petition, debtor-in-possession financing (the "DIP Credit Facility"), to pay Bankruptcy Court-approved administrative claims and expenses, to provide for working capital, to pay fees and expenses related to the Exit Facility and for other general corporate purposes. As a result of entering into the Exit Facility, our interest expense was $8.1 million and $2.2 million for the three months ended March 31, 2011 and the Successor Period, respectively, which includes $3.1 million and $0.8 million of amortization of the related debt discount, Penny Warrants and debt issuance costs for the three months ended March 31, 2011 and the Successor Period, respectively. The Exit Facility is guaranteed by substantially all our existing and future subsidiaries.
•: Acquisitions. On August 31, 2010 we purchased an approximately 361-unit timeshare casino resort in Aruba, including the unsold fractional timeshares attached to such property, a temporary casino currently not in operation and an unfinished permanent casino structure. The Company renamed the property Tropicana Aruba Resort & Casino. We are currently operating the timeshare facilities, intend to open a temporary casino in 2011 and are currently developing a permanent casino. However, our development plans have not been finalized and we may decide not to proceed.

On October 28, 2010, we elected to effect a merger in order to purchase the minority interests in Greenville Riverboat, LLC, our subsidiary that owns Lighthouse Point. The minority owner received $2.5 million in cash, and exercised appraisal rights, requesting an additional $3.2 million as payment for its minority interest. The Company has contested any additional payment for the minority interest, however there can be no assurance that the Company will not be required to make an additional payment to the minority owner.

•: Horizon Vicksburg. On December 1, 2010, the Company, through CP Vicksburg, entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Delta Investments & Development, LLC ("Delta") pursuant to which it agreed to sell substantially all of the assets associated with the operation of Horizon Vicksburg in exchange for $3.25 million in cash and the assumption by Delta of certain liabilities associated with Horizon Vicksburg. The transaction

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closed in March 2011, resulting in a gain of $1.0 million, which is included in the gain from discontinued operations in the accompanying condensed statements of operations for the three months ended March 31, 2011.

Three Months Ended March 31, 2011 compared to Three Months Ended March 31, 2010

The following table sets forth certain information concerning our results of operations (dollars in thousands):

			Successor(a)						Predecessor(a)

			Three months ended March 31, 2011			Period from March 8, 2010 through March 31, 2010			Period from January 1, 2010 through March 7, 2010
												Discontinued Operations
			TEI						TEH			CP Vicksburg			JMBS Casino
Net revenues:
	East		$	64,393		$	19,666		$	—		$	—		$	—
	Central			31,327			8,217			22,432			—			—
	West			32,969			9,558			25,999			—			—
	South and other			28,540			6,942			16,043			1,271			3,552
	Corporate			—			39			45			—			—

		Total net revenues	$	157,229		$	44,422		$	64,519		$	1,271		$	3,552

Operating income (loss):
	East		$	(4,030	)	$	(217	)	$	—		$	—		$	—
	Central			6,353			1,780			4,691			—			—
	West			3,246			1,226			1,731			—			—
	South and other			4,985			1,214			2,603			(874	)		933
	Corporate			(5,403	)		(2,210	)		(4,604	)		—			—

		Total operating income (loss)	$	5,151		$	1,793		$	4,421		$	(874	)	$	933

Operating income (loss) margin(b):
	East			(6.3	)%		(1.1	)%		—			—			—
	Central			20.3	%		21.7	%		20.9	%		—			—
	West			9.8	%		12.8	%		6.7	%		—			—
	South and other			17.5	%		17.5	%		16.2	%		(68.8	)%		26.3	%
		Total operating income (loss) margin		3.3	%		4.0	%		6.9	%		(68.8	)%		26.3	%

(a): The results for the Successor are not comparable to the Predecessors due to the completion of the Restructuring Transactions on March 8, 2010, particularly for results related to depreciation, amortization and interest expense.
(b): Operating income (loss) margin is operating income (loss) as a percentage of net revenues.

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

		Successor(c)						Predecessor(c)

		Three months ended March 31, 2011			Period from March 8, 2010 through March 31, 2010			Period from January 1, 2010 through March 7, 2010
											Discontinued Operations
		TEI						TEH			CP Vicksburg			JMBS Casino
Revenues:
Casino		$	142,550		$	39,728		$	55,416		$	1,189		$	3,498
Room			25,397			6,988			7,101			86			45
Food and beverage			22,381			6,213			9,306			75			78
Other			5,735			1,764			1,559			16			30

	Gross revenues		196,063			54,693			73,382			1,366			3,651
Less promotional allowances			(38,834	)		(10,271	)		(8,863	)		(95	)		(99	)

	Net revenues	$	157,229		$	44,422		$	64,519		$	1,271		$	3,552

(c): The results for the Successor are not comparable to the Predecessors due to the completion of the Restructuring Transactions on March 8, 2010.

Net Revenues

In the East region, net revenues were $64.4 million for the three months ended March 31, 2011 compared to $19.7 million for the Successor Period, all of which were attributable to the acquisition of Tropicana AC. The Predecessor Period does not include the results of operations of Tropicana AC as compared to the Successor Period which includes 24 days of operations of Tropicana AC. The Atlantic City market experienced year over year declines in casino revenue of 7.3% in the three months ended March 31, 2011.

In the Central region, net revenues were $31.3 million for the three months ended March 31, 2011, an increase over the 2010 Combined period due to a 2.4% increase in the slot volumes, which we believe is partially attributable to new slot product and marketing initiatives at Casino Aztar. The average daily room rate at our Central region property was $86 for the three months ended March 31, 2011, a 10.7% increase over the 2010 Combined period. However, the occupancy rate for the three months ended March 31, 2011 was 68.5%, which is a 3.6 point decline from the 2010 Combined period.

In the West region, net revenues were $33.0 million for the three months ended March 31, 2011, a decrease of 7.3% compared to the 2010 Combined period. The decrease was primarily driven by a 9.6% decline in slot volumes and a 6.1% decline in table volumes for the West region. Net revenues in the West region continue to be negatively impacted by the deterioration of casino revenue in the Laughlin and South Lake Tahoe markets resulting from the continuing economic slowdown and reduced consumer discretionary spending. Based on the most recent market data available, the Laughlin market as a whole witnessed a first quarter of 2011 decline in casino revenue of 3.1% compared to the first quarter of 2010. The occupancy rate for the three months ended March 31, 2011 at our properties in the West region was 67.1%, a 7.9 point increase from the 2010 Combined period. The average daily room rate for the West region was $37 for the three months ended March 31, 2011, a 12.2% decline over the 2010 Combined period, which is attributable to a decline in room rates in an effort to increase occupancy.

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In the South and other region, net revenues were $28.5 million for the three months ended March 31, 2011, an increase of 7.5% compared to the 2010 Combined period. The increase was driven by a 0.5 point increase in the slot hold percentage and a 2.9% increase in table games volume. The increase in net revenues in the South and other region was attributable to the Belle of Baton Rouge, where increases were the result of increased gaming volumes, which we believe is being driven by improved property marketing. Slot volumes increased 6.9% and table game volumes increased 7.3% at the Belle of Baton Rouge for the three months ended March 31, 2011 when compared to the 2010 Combined period. The increases in gaming volumes in the three months ended March 31, 2011 were due to a new marketing initiative to increase customer visitation through the use of complimentaries. The occupancy rate for the three months ended March 31, 2011 at our properties in the South and other region was 59.6%, a 14.0 point increase from the 2010 Combined period, primarily attributable to an occupancy rate increase at the Belle of Baton Rouge. The average daily room rate for the South region was $76 for the three months ended March 31, 2011, a 9.1% decline from the 2010 Combined period resulting from the re-branding of the hotel at the Belle of Baton Rouge late in the first quarter of 2010.

Operating Income

In the East region, the three months ended March 31, 2011 includes an operating loss of $4.0 million attributable to Tropicana AC, compared to an operating loss of $0.2 million included in the Successor Period, which was only 24 days. The decline in the operating income in the East Region is related to the decline in market revenues. Tropicana AC continues to monitor and reduce its operating expenses to maintain profitability in response to the declining revenues due to the current weak economic conditions.

In the Central region, operating income for the three months ended March 31, 2011 was $6.4 million or 1.8% lower than the 2010 Combined period. The decreased operating income is related to increased rent expense and increased depreciation and amortization in the current year period. Under the terms of the lease renewal, effective December 2010, for the land on which Casino Aztar is situated, rent expense increased approximately $0.9 million in the three months ended March 31, 2011 from the 2010 Combined period. Increased depreciation and amortization expense is related to fresh-start reporting and prior year capital expenditures that were placed in service in the latter part of 2010.

In the West region, the operating income for the three months ended March 31, 2011 was $3.2 million, an increase of 9.8% compared to the 2010 Combined period. The increase is related to decreased depreciation and amortization expense at our properties in West region due to the valuation of our fixed assets under fresh-start reporting. Excluding depreciation and amortization expense, operating income for the West region decreased 26.7% compared to the 2010 Combined period due to the continued gaming revenue declines which are outpacing market trends due to our properties' proximity to the ongoing road construction on the main casino strip access in Laughlin.

In the South and other region operating income for the three months ended March 31, 2011 was $5.0 million, an increase of 4.9% compared to the 2010 Combined period. This increase is primarily due to decreased depreciation and amortization expense due to the effects of fresh-start reporting. In the South and other region, excluding depreciation and amortization expense, operating income decreased 5.4% in the three months ended March 31, 2011 compared to the 2010 Combined period due to the continued weak economic conditions and increased operating costs related to Tropicana Aruba, which was acquired on August 31, 2010.

Corporate expenses were $5.4 million for the three months ended March 31, 2011, a 20.7% decrease from the 2010 Combined period due to a reduction in outside professional fees.

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Interest Expense

Interest expense for the three months ended March 31, 2011 was $8.1 million. The interest expense was related to our Exit Facility, which was funded on March 8, 2010 and bears interest at 15% per annum and was issued at a 7% discount. Cash paid for interest expense was $4.9 million for the three months ended March 31, 2011. During the Successor Period, interest expense and cash paid for interest related to our Exit Facility were $2.2 million and $1.3 million, respectively. Interest expense for TEH for the Predecessor Period was $2.0 million, related to the DIP Credit Facility.

Income Taxes

Income tax benefit was $1.1 million for the three months ended March 31, 2011 and our effective income tax rate was 39.7%. The difference between the federal statutory rate of 35% and the effective tax rate for the three months ended March 31, 2011 was primarily related to state income taxes (net of federal benefit), non-deductible meals and entertainment and other permanent differences. For the Successor Period, the income tax benefit was $0.1 million and our effective tax rate was 33.1%. The difference between the federal statutory rate of 35% and the effective tax rate for the Successor Period was primarily related to state income taxes (net of federal benefit), non-deductible meals and entertainment and other permanent differences.

TEH's effective income tax rate for the Predecessor Period was (1.3)%. The difference between the federal statutory rate of 35% and TEH's effective income tax rate for the Predecessor Period was primarily due to reorganization charges for which no tax benefit was recognized.

Discontinued Operations

The Company sold substantially all of CP Vicksburg's assets related to the operation of Horizon Vicksburg, in March 2011. Accordingly, the results of operations of Horizon Vicksburg are presented as discontinued operations in the accompanying condensed statements of operations for the three months ended March 31, 2011 and the Successor Period. The cash flows of the discontinued operations are included with the cash flows of continuing operations in the accompanying condensed statements of cash flows for the three months ended March 31, 2011 and the Successor Period.

Net Income (Loss)

Net loss for the three months ended March 31, 2011 and the Successor Period were $1.5 million and $0.3 million, respectively, which were impacted by the continued weakened economy.

Net income for the Predecessor Period was $2.1 billion for TEH, which included a gain of $2.1 billion related to reorganization items. CP Vicksburg's net income for the Predecessor Period was $2.3 billion, which included a gain of $2.3 billion related to reorganization items. JMBS Casino's net income for the Predecessor Period was $2.3 billion, which included a gain of $2.3 billion related to reorganization items.

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. On the Effective Date, we repaid the DIP Credit Facility with the Term Loan Facility as discussed below. We believe that we will have sufficient liquidity through anticipated borrowing availability, available cash, trade credit and cash flow from our properties to fund our cash requirements and capital expenditures for at least twelve months. We will endeavor to fund capital expenditures for maintenance of our properties through future improvements in operating results and increased borrowing availability for at least twelve months. However, we cannot provide assurance that

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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 which may result in liquidity problems, which 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. We cannot assure you that we will be able to refinance any of the indebtedness on acceptable terms or at all.

Our material cash requirements for the remainder of 2011 are expected to include (i) interest payments related to our Exit Facility of $14.9 million, (ii) capital maintenance expenditures expected to be approximately $40 million, (iii) minimum lease payments under our operating leases of $5.4 million and (iv) construction and development costs related to Tropicana Aruba which is currently in the planning and design stages. While we have not finalized our development plans related to Tropicana Aruba, we currently estimate that we will spend approximately $4 million on a temporary casino facility and maintenance projects during the remainder of 2011.

The following table summarizes our cash flows (in thousands):

		Successor(a)						Predecessor(a)

		Three months ended March 31, 2011			Period from March 8, 2010 through March 31, 2010			Period from January 1, 2010 through March 7, 2010
											Discontinued Operations
		TEI			TEI			TEH			CP Vicksburg		JMBS Casino
Cash Flow Information:
	Net cash provided by operating activities	$	1,157		$	3,047		$	1,923		$	6	$	1,000
	Net cash provided by (used in) investing activities		782			(194	)		(1,057	)		3		(11	)
	Net cash provided by (used in) financing activities		(1,301	)		(37	)		38,014			—		—

Net increase in cash and cash equivalents from continuing operations		$	638		$	2,816		$	38,880		$	9	$	989

(a): The results for the Successor are not comparable to the Predecessors due to the completion of the Restructuring Transactions on March 8, 2010, particularly related to depreciation, amortization and interest expense.

For the three months ended March 31, 2011 and the Successor Period net cash provided by operating activities include the results of Tropicana AC. Cash paid for interest expenses was $4.9 million and $1.3 million for the three months ended March 31, 2011 and the Successor Period, respectively. Interest expense in the Predecessor Period is related to the DIP Credit Facility which had an interest rate of 13.3% on an outstanding balance of $65.2 million, which was repaid in full on March 8, 2010. In addition, TEH paid approximately $3.9 million in reorganization items as a result of the Chapter 11 Cases during the Predecessor Period.

Net cash used in investing activities consists primarily of $2.8 million for capital expenditures offset by $2.7 net proceeds from the sale of Horizon Vicksburg in the three months ended March 31, 2011. 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

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equipment as a result of use and age. Capital expenditures in the three months ended March 31, 2011 were higher than the 2010 Combined period due to capital expenditures at Tropicana AC, which were not included in the Predecessor Period.

Net cash used in financing activities for the three months ended March 31, 2011 consists primarily of a principal payment made on our Exit Facility. In TEH's Predecessor Period, net cash provided by financing activities consisted of $120.9 million of net proceeds from the Exit Facility which was used to repay certain indebtedness, including $65.2 million related to the DIP Credit Facility, to pay Bankruptcy Court-approved administrative claims and expenses, to provide for working capital, to pay $1.5 million for fees and expenses related to the Exit Facility and for other general corporate purposes.

Exit Facility

On December 29, 2009, we entered into the Exit Facility, which consists of (i) the $130 million Term Loan Facility and (ii) the $20 million Revolving Facility. The Term Loan Facility was funded on the Effective Date and matures on March 8, 2013. The Term Loan Facility requires mandatory principal payments of $1.3 million annually on March 8, 2011 and 2012. The Revolving Facility requires no mandatory borrowing or principal payments. Additionally, the Company issued 1,312,500 Penny Warrants to purchase its Common Stock at a strike price of $0.01 to participating lenders of the Exit Facility. On the Effective Date, the proceeds of the Term Loan Facility were used to repay certain indebtedness, including the DIP Credit Facility, to pay Bankruptcy Court-approved administrative claims and expenses, to provide for working capital, to pay fees and expenses related to the Exit Facility and for other general corporate purposes. All amounts outstanding under the Exit Facility bear interest at a rate per annum of 15% so long as no default or event of default has occurred and is continuing, or at a rate per annum of 17% in the event that a default or event of default has occurred and is continuing. In addition, the Company is required to pay an annual administrative fee of $100,000 and an unused line fee equal to 0.75% of the daily average undrawn portion of the Revolving Facility. The Exit Facility is guaranteed by substantially all the existing and future subsidiaries of the Company. Entities affiliated with Carl C. Icahn, Chairman of our board of directors, are lenders under the Exit Facility and hold more than 50% of the loans extended under the Exit Facility.

The Exit Facility, as amended in February 2011, contains mandatory prepayment provisions from proceeds received by the Company and its subsidiaries as a result of asset sales and the incurrence of indebtedness (subject in each case to certain exceptions). Key covenants binding the Company and its subsidiaries include (i) $50 million limitation per annum on capital expenditures, (ii) compliance with a fixed charge coverage ratio of not less than 2.00 to 1.00 (other than (i) for the quarter ended December 31, 2010, which had no requirement and (ii) for each of the quarters in the year ending December 31, 2011, which requires compliance with a ratio of not less than 1.00 to 1.00), and (iii) compliance with a total leverage ratio not to exceed 4.25 to 1.00. Financial covenants are tested at the end of each fiscal quarter on a last twelve months basis. Key defaults (termination provisions) include (i) failure to repay principal, interest, fees and other amounts owing under the facility, (ii) cross default to other material indebtedness, (iii) the rendering of a material judgment against the Company or any subsidiary, (iv) failure of security documents to create valid liens on property securing the facility and to perfect such liens, (v) revocation of casino, gambling or gaming licenses, and (vi) the bankruptcy or insolvency of the Company or any of its subsidiaries. Many defaults are also subject to cure periods prior to such default giving rise to the right of the lenders to accelerate the loans and to exercise remedies. The Company was in compliance with these covenant requirements at March 31, 2011.

Our interest expense for the three months ended March 31, 2011 and the Successor Period was $8.1 million and $2.2 million, respectively, which includes $3.1 million and $0.8 million of amortization of the related debt discount, Penny Warrants and debt issuance costs for the three months ended March 31, 2011 and the Successor Period, respectively.

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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

Management's discussion and analysis of our results of operations and liquidity and capital resources is based on our condensed financial statements. We prepare our condensed financial statements in conformity with accounting principles generally accepted in the United States. Certain of our accounting policies require that we apply significant judgment in determining the estimates and assumptions for calculating estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based in part on our historical experience, terms of existing contracts, observance of trends in the gaming industry and information obtained from independent valuation experts or other outside sources. We cannot assure you that our actual results will conform to our estimates. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where changes in estimates and assumptions could have a material impact on our results of operations, financial position and, generally to a lesser extent, cash flows.

We believe the following items are the critical accounting policies and more significant estimates and assumptions used in the preparation of our condensed financial statements. These accounting policies conform to the accounting policies contained in our financial statements contained elsewhere in this Quarterly Report on Form 10-Q.

Business Combinations

The Company accounts for business combinations in accordance with guidance related to business combinations using the purchase method of accounting for business combinations, which requires that the assets acquired and liabilities assumed be recorded on the date of acquisition at their respective fair value and the identification and recognition of intangible assets separately from goodwill. Additionally, the guidance requires, among other things, the buyer to: (1) expense acquisition-related costs; (2) recognize assets or liabilities assumed arising from contractual contingencies on the acquisition date using acquisition-date fair values; (3) recognize goodwill as the excess of the consideration transferred plus the fair value of any noncontrolling interest over the acquisition-date fair value of net assets acquired; (4) recognize on the acquisition date any contingent consideration using acquisition-date fair values (i.e., fair value earn-outs in the initial accounting for the acquisition); and (5) eliminate the recognition of liabilities for restructuring costs expected to be incurred as a result of the business combination. In addition, if the buyer determines that some or all of its previously booked deferred tax valuation allowance is no longer needed as a result of the business combination, the guidance requires that the reduction or elimination of the valuation allowance be accounted as a reduction of income tax expense.

Fresh-Start Reporting

The adoption of fresh-start reporting results in a new reporting entity. Under fresh-start reporting, all assets and liabilities are recorded at their estimated fair values and the predecessor's accumulated deficit is eliminated. In adopting fresh-start reporting, the Company was required to determine its enterprise value, which represents the fair value of the entity before considering its interest bearing debt.

Receivables

Receivables consist primarily of casino, hotel and other receivables, net of an allowance for doubtful accounts. Receivables are typically non-interest bearing and are initially recorded at cost.

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Accounts are written off when management deems the account to be uncollectible. An estimated allowance for doubtful accounts is maintained to reduce the Company's receivables to their expected realization, which approximates fair value. The allowance is estimated based on specific review of customer accounts as well as historical collection experience and current economic and business conditions. Recoveries of accounts previously written off are recorded when received.

Property and Equipment

Long-Lived Assets

Goodwill and Intangible Assets

Our annual impairment testing for goodwill is performed at the reporting unit level and each of our casino properties is considered to be a reporting unit. The annual goodwill impairment testing utilizes a two step process. In the first step, we compare the fair value of each reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is estimated using the expected present value of future cash flows along with indications provided by the current valuation multiples of comparable publicly traded companies. If the fair value of the reporting unit exceeds its

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carrying amount, then goodwill of the reporting unit is not considered impaired. If the carrying amount of the reporting unit exceeds it fair value, then the goodwill of the reporting unit is considered impaired and we proceed to the second step of the goodwill impairment test. In the second step, we determine the implied value of the reporting unit's goodwill by allocating the fair value of the reporting unit determined in step one to the assets and liabilities of the reporting unit, as if the reporting unit had been acquired in business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

CRDA Investment

The New Jersey Casino Reinvestment Development Authority ("CRDA") deposits made by Tropicana AC are carried at cost less a valuation allowance because they have to be used to purchase CRDA bonds that carry below market interest rates unless an alternative investment is approved. The valuation allowance is established by a charge to the statement of operations as part of general and administrative expense at the time the obligation is incurred to make the deposit unless there is an agreement with the CRDA for a return of the deposit at full face value. If the CRDA deposits are used to purchase CRDA bonds, the valuation allowance is transferred to the bonds as a discount, which is amortized to interest income using the interest method. If the CRDA deposits are used to make other investments, the valuation allowance is transferred to those investments and remains a valuation allowance. The CRDA bonds are classified as held-to-maturity securities and are carried at amortized cost less a valuation allowance.

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Revenue Recognition and Promotional Allowances

Income Taxes

We account for income taxes under accounting guidance for income taxes, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the accounting guidance, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not and a valuation allowance is established for deferred tax assets which do not meet this threshold.

Recently Issued Accounting Standards

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. As primarily all our debt is associated with our Exit Facility, which is at a fixed-rate interest rate, we currently have no exposure to interest rate risk. However, as our fixed-rate debt matures, and if additional debt is acquired to fund the debt repayment, future earnings and cash flow may be affected by changes in interest rates.

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ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our Interim Chief Executive Officer and Interim President (principal executive officer) and Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer) have concluded that the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are effective as of March 31, 2011. This conclusion is based on an evaluation conducted under the supervision and with the participation of our management, including the principal executive officer and principal financial officer. Disclosure controls and procedures include, without limitation, controls and procedures which ensure that information required to be disclosed in this filing is accumulated and communicated to management and is recorded, processed, summarized and reported in a timely manner and in accordance with SEC rules and regulations.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2011, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

For a description of our previously reported legal proceedings, refer to "Item 3-Legal Proceedings" in our Annual Report on Form 10-K for the year ended December 31, 2010. There have been no material developments with respect to the legal proceedings described in our Annual Report on Form 10-K for the year ended December 31, 2010.

ITEM 1A. RISK FACTORS.

"Item 1A.—Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2010 includes a discussion of our risk factors. There have been no material changes to those risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2010. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We did not sell any securities during the period covered in this report that were not registered under the Securities Act of 1933.

We did not repurchase any shares during the period covered in this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. RESERVED

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS.

(a): Exhibits

Exhibit Number			Exhibit Description

	2.1		First Amended Joint Plan of Reorganization of Tropicana Entertainment, LLC and Certain of its Debtor Affiliates Under Chapter 11 of the Bankruptcy Code. (Incorporated by reference to the Company's Amendment No. 1 to Form 10 dated December 21, 2009)
	2.2		Amended and Restated Purchase Agreement, dated as of November 20, 2009, among Adamar of New Jersey, Inc., Manchester Mall, Inc., the Honorable Gary S. Stein, Tropicana Entertainment, LLC, Ramada New Jersey Holdings Corporation, Atlantic-Deauville, Inc., Adamar Garage Corporation, Ramada New Jersey, Inc., Credit Suisse, Tropicana Entertainment Inc., Tropicana Atlantic City Corp., and Tropicana AC Sub Corp. (Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K; the Registrant will furnish supplementally a copy of the omitted schedules to the Commission upon request.) (Incorporated by reference to the Company's Amendment No. 1 to Form 10 dated December 21, 2009)
	3.1		Amended and Restated Certificate of Incorporation of Tropicana Entertainment Inc. (Incorporated by reference to the Company's Current Report on Form 8-K dated March 11, 2010)
	3.2		Second Amended and Restated Bylaws of Tropicana Entertainment Inc. (Incorporated by reference to the Company's Current Report on Form 8-K dated January 7, 2011)
	4.1		Specimen Certificate for shares of Common Stock, par value $0.01 per share, of the Registrant. (Incorporated by reference to the Company's Post-Effective Amendment No. 1 to Form 10 dated January 25, 2010)
	4.2		Form of Stock Purchase Warrant issued to general unsecured creditors of the Predecessors. (Incorporated by reference to the Company's Amendment No. 1 to Form 10 dated December 21, 2009)
	4.3		Form of Stock Purchase Warrant issued to lenders under the Exit Facility. (Incorporated by reference to the Company's Current Report on Form 8-K dated March 11, 2010)
	10.1		Amendment No. 1 to Credit Agreement, dated as of February 28, 2011, among Tropicana Entertainment Inc., the lenders party thereto and Icahn Agency Services LLC, as administrative agent and as collateral agent. (Incorporated by reference to the Company's Current Report on Form 8-K dated March 4, 2011)
	31.1		Certification by Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2		Certification by Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32		Certification by Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

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


	TROPICANA ENTERTAINMENT INC.
Date: May 4, 2011	By:	/s/ LANCE J. MILLAGE
	Name:	Lance J. Millage
	Title:	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

Attached files

Tropicana Entertainment Inc. Reports

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