Attached files
| file | filename |
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| 8-K/A - 8-K/A - Tropicana Entertainment Inc. | lumiereacquisitionproforma.htm |
| EX-99.1 - EXHIBIT - Tropicana Entertainment Inc. | ex991lumierehistoricalfina.htm |
Exhibit 99.2
TROPICANA ENTERTAINMENT INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information are presented to give effect to the acquisition of Casino One Corporation d/b/a Lumière Place Casino (“Casino One”), PNK (ES), LLC , PNK (St. Louis RE), LLC and PNK (STLH), LLC (collectively, “Lumière”). The unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statement of continuing operations as of and for the year ended December 31, 2013 have been derived from the consolidated historical financial statements of Tropicana Entertainment Inc. (“TEI”) and the combined historical financial statements of Lumière.
The unaudited pro forma condensed combined balance sheet presents the financial position of TEI at December 31, 2013 after giving effect to the acquisition of Lumière (the “Acquisition”). The unaudited pro forma condensed combined statement of continuing operations for the year ended December 31, 2013 give effect to the Acquisition and refinancing of TEI's debt and additional borrowings as if it occurred on January 1, 2013.
The unaudited pro forma condensed combined financial information has been prepared based upon currently available information and assumptions deemed appropriate by TEI's management and is provided for informational purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transaction had been completed as of the dates set forth above, nor is it indicative of the future results or current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the transaction or any integration costs. Furthermore, the unaudited pro forma condensed combined statement of continuing operations do not include certain nonrecurring charges and the related tax effects which resulted directly from the Acquisition as described in the notes to the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information should be read in conjunction with the separate historical financial statements and accompanying notes of TEI and Lumière.
Exhibit 99.2
Tropicana Entertainment Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2013
(amounts in thousands)
Historical | |||||||||||||||||
Tropicana Entertainment Inc. | Lumière Place Casino and Affiliates | Acquisition Pro Forma Adjustments | Notes | Pro Forma Combined | |||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | 356,755 | $ | 15,079 | $ | (248,386 | ) | (a) | $ | 123,448 | |||||||
Restricted cash | 30,856 | — | (15,009 | ) | (a) | 15,847 | |||||||||||
Receivables, net | 28,786 | 1,481 | — | 30,267 | |||||||||||||
Inventories | 4,435 | 1,147 | — | 5,582 | |||||||||||||
Prepaid expenses and other assets | 11,243 | 654 | — | 11,897 | |||||||||||||
Deferred tax assets | — | — | — | — | |||||||||||||
Assets held for sale | 9,249 | — | — | 9,249 | |||||||||||||
Total current assets | 441,324 | 18,361 | (263,395 | ) | 196,290 | ||||||||||||
Property and equipment, net | 460,745 | 260,151 | (260,151 | ) | (b) | ||||||||||||
248,763 | (b) | 709,508 | |||||||||||||||
Goodwill | 24,928 | — | 16,785 | (b) | 41,713 | ||||||||||||
Intangible assets, net | 67,014 | — | 11,160 | (b) | 78,174 | ||||||||||||
Investments | 33,640 | — | — | 33,640 | |||||||||||||
Other assets, net | 15,970 | 5 | — | 15,975 | |||||||||||||
Total assets | $ | 1,043,621 | $ | 278,517 | $ | (246,838 | ) | $ | 1,075,300 | ||||||||
LIABILITIES AND EQUITY | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Current portion of long-term debt | $ | 3,000 | $ | — | $ | — | $ | 3,000 | |||||||||
Liabilities related to assets held for sale | 1,648 | — | — | 1,648 | |||||||||||||
Accounts payable | 38,865 | 11,307 | — | 50,172 | |||||||||||||
Accrued expenses and other current liabilities | 64,355 | 20,197 | — | 84,552 | |||||||||||||
Total current liabilities | 107,868 | 31,504 | — | 139,372 | |||||||||||||
Long-term debt, net | 294,771 | — | — | 294,771 | |||||||||||||
Other long-term liabilities | 7,198 | 175 | — | 7,373 | |||||||||||||
Deferred tax liabilities | 19,659 | — | — | 19,659 | |||||||||||||
Total liabilities | 429,496 | 31,679 | — | 461,175 | |||||||||||||
Total equity | 614,125 | 246,838 | (246,838 | ) | (c) | 614,125 | |||||||||||
Total liabilities and equity | $ | 1,043,621 | $ | 278,517 | $ | (246,838 | ) | $ | 1,075,300 | ||||||||
Exhibit 99.2
Tropicana Entertainment Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the year ended December 31, 2013
(amounts in thousands, except per share data)
Historical | |||||||||||||||||
Tropicana Entertainment Inc. | Lumière Place Casino and Affiliates | Acquisition and Refinancing Pro Forma Adjustments | Notes | Pro Forma Combined | |||||||||||||
Revenues: | |||||||||||||||||
Casino | $ | 439,929 | $ | 137,407 | $ | 7,862 | (a) | $ | 585,198 | ||||||||
Room | 88,277 | 20,200 | 5,598 | (a) | 114,075 | ||||||||||||
Food and beverage | 75,847 | 16,981 | 9,954 | (a) | 102,782 | ||||||||||||
Other | 22,058 | 5,496 | 1,057 | (a) | 28,611 | ||||||||||||
Gross revenues | 626,111 | 180,084 | 24,471 | 830,666 | |||||||||||||
Less promotional allowances | (68,444 | ) | — | (24,471 | ) | (a) | (92,915 | ) | |||||||||
Net revenues | 557,667 | 180,084 | — | 737,751 | |||||||||||||
Operating costs and expenses: | |||||||||||||||||
Casino | 198,219 | 79,360 | (6,181 | ) | (a) | 271,398 | |||||||||||
Room | 32,160 | 16,057 | — | 48,217 | |||||||||||||
Food and beverage | 37,660 | 8,227 | — | 45,887 | |||||||||||||
Other | 15,700 | 2,024 | — | 17,724 | |||||||||||||
Marketing, advertising and promotions | 39,844 | — | 6,181 | (a) | 46,025 | ||||||||||||
General and administrative | 99,584 | 43,395 | (11,585 | ) | (a) | ||||||||||||
(706 | ) | (b) | 130,688 | ||||||||||||||
Maintenance and utilities | 56,699 | — | 11,585 | (a) | 68,284 | ||||||||||||
Depreciation and amortization | 34,551 | 18,435 | (18,435 | ) | (c) | ||||||||||||
17,262 | (c) | 51,813 | |||||||||||||||
Impairment charges, other write-downs and recoveries | 487 | 133,469 | (134,295 | ) | (d) | (339 | ) | ||||||||||
Total operating costs and expenses | 514,904 | 300,967 | (136,174 | ) | 679,697 | ||||||||||||
Operating Income | 42,763 | (120,883 | ) | 136,174 | 58,054 | ||||||||||||
Other income (expense): | |||||||||||||||||
Interest expense, net | (13,485 | ) | (313 | ) | 14,328 | (e) | |||||||||||
(12,766 | ) | (e) | (12,236 | ) | |||||||||||||
Loss on debt retirement | (4,897 | ) | — | — | (4,897 | ) | |||||||||||
Total other income (expense) | (18,382 | ) | (313 | ) | 1,562 | (17,133 | ) | ||||||||||
Income from continuing operations before taxes | 24,381 | (121,196 | ) | 137,736 | 40,921 | ||||||||||||
Income tax expense | (2,534 | ) | (3,787 | ) | 2,460 | (f) | (3,861 | ) | |||||||||
Income (loss) from continuing operations | $ | 21,847 | $ | (124,983 | ) | $ | 140,196 | $ | 37,060 | ||||||||
Income (loss) from continuing operations per share: | |||||||||||||||||
Basic and diluted | $ | 0.83 | $ | 1.41 | |||||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||
Basic and diluted | 26,313 | 26,313 | |||||||||||||||
Exhibit 99.2
Tropicana Entertainment Inc.
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Note 1. Basis of Presentation
The historical financial information for Tropicana Entertainment Inc. ("TEI") as of and for the year ended December 31, 2013 have been derived from TEI's historical financial statements and accompanying notes in its Annual Report on Form 10-K as filed with the SEC on February 25, 2014. The historical information for Lumière Place Casino and Affiliates as of and for the year ended December 31, 2013 have been derived from Lumière's historical financial statements and accompanying notes as filed in Exhibit 99.1 on this Form 8-K/A. Lumière Place Casino and Affiliates is comprised of Casino One Corporation d/b/a Lumière Place Casino (“Casino One”), PNK (ES), LLC , PNK (St. Louis RE), LLC and PNK (STLH), LLC (collectively, “Lumière”) all of which are wholly-owned indirect subsidiaries of Pinnacle Entertainment, Inc.
The historical financial information has been adjusted to give pro forma effect to events that are directly attributable to the Lumière acquisition, factually supportable, and expected to have a continuing impact on the combined results of operations. The unaudited pro forma adjustments reflecting the Lumière acquisition have been prepared in accordance with business combination accounting guidance as provided in Accounting Standards Codification ("ASC") 805, and reflect the allocations of the preliminary purchase price to the acquired assets and liabilities based upon of their estimated fair values, using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information. The allocation of the purchase price may be adjusted for working capital at the acquisition date and is subject to change upon the finalization of the valuation analysis for Lumière's assets and liabilities and the final valuations could change significantly from those used in the following unaudited pro forma condensed combined financial statements. The preliminary purchase price allocation has not been finalized for acquisition date income tax balances and any changes in the acquisition date balances could significantly change the purchase price allocation, including goodwill.
Note 2. Preliminary Purchase Price Allocation
On April 1, 2014, TEI completed its previously announced acquisition of all of the outstanding stock of Casino One Corporation (the “Target”) and all of the outstanding membership interests of PNK (ES), LLC (“ES”), PNK (ST. LOUIS RE), LLC (“RE”), and PNK (STLH), LLC (“STLH” and together with ES, RE and the Target, the “Companies”), pursuant to the terms of an agreement, dated as of August 16, 2013, by and among a wholly owned subsidiary of TEI, and Pinnacle Entertainment, Inc. (“Pinnacle”), Casino Magic, LLC (“Casino Magic” and together with Pinnacle, the “Sellers”) and the Companies, for a purchase price of $260 million in cash, subject to adjustment (the “Transactions”). Upon consummation of the Transactions, TEI acquired the Lumière Place Casino, HoteLumière, the Four Seasons Hotel St. Louis and related excess land parcels in St. Louis, Missouri.
Exhibit 99.2
The preliminary allocation of the pro forma purchase price, subject to adjustment for working capital at the acquisition date, is as follows:
Cash paid | $ | 260,000 | ||
Working capital adjustment | 3,395 | |||
Total purchase price | $ | 263,395 | ||
Preliminary purchase price allocation: | ||||
Current assets | $ | 18,361 | ||
Property and equipment | 248,763 | |||
Goodwill | 16,785 | |||
Intangible assets | 11,160 | |||
Other assets | 5 | |||
Total assets | 295,074 | |||
Total liabilities | (31,679 | ) | ||
Total purchase price | $ | 263,395 | ||
Note 3. Pro Forma Balance Sheet Adjustments (dollars in thousands)
The pro forma balance sheet adjustments are as follows:
(a) | Reflects preliminary cash purchase price paid at closing of $263.4 million which is subject to change for the finalization of certain net working capital adjustments at the acquisition date. |
(b) | To record pro forma adjustment to record assets at estimated fair value at the acquisition date. See Note 2 for a detail of assets and liabilities included in the preliminary purchase price allocation. |
(c) | To record pro forma adjustment to eliminate Lumière's equity. |
Note 4. Pro Forma Statement of Operations Adjustments (dollars in thousands)
The pro forma statement of operations adjustments are as follows:
(a) | To record reclassification adjustments to conform Lumière's presentation to TEI's presentation. |
(b) | To record the elimination of TEI's non-recurring transaction costs related to the Acquisition. |
(c) | To record pro forma adjustments to depreciation and amortization to eliminate historical amounts and record pro forma amounts using the fair value adjustment of property and equipment and definite life intangible assets. The useful life of the assets acquired are estimated as follows: customer lists of three years, furniture and equipment of one to seven years, and buildings and improvements of 28 to 40 years. |
(d) | To record the elimination of Lumière's historical impairment of assets which was recognized by Lumière in connection with the sale to TEI. |
(e) | To record the removal of historical interest expense and the recognition of interest expense and amortization of the debt discount and deferred loan costs associated with the $300 million senior secured first lien term loan facility (the “Term Loan Facility”) of which $175 million was incurred to refinance TEI's existing debt and an additional $125 million was incurred to finance the Lumière acquisition. The pro forma interest expense has been computed using the total amount incurred under |
Exhibit 99.2
the Term Loan Facility issued at a discount of 0.5% in November 2013. The pro forma interest expense related to the refinancing is approximately $7.5 million and the remaining $5.3 million of pro forma interest expense is related to the additional debt to finance the Lumière acquisition. The Term Loan Facility bears interest, at the TEI's option, at a per annum rate equal to either (i) the LIBO Rate (as defined in the Credit Agreement) (subject to a 1.00% floor) plus an applicable margin equal to 3.00%, or (ii) the alternate base rate (as defined in the Credit Agreement) (subject to a 2.00% floor) plus an applicable margin equal to 2.00%; such that in either case, the applicable interest rate shall not be less than 4.00%. As of December 31, 2013, the interest rate on the Term Loan Facility was 4.00%. If actual interest rates increased 1/8 percent over the 4.00% floor specified in the Term Loan Facility on the $299.3 million outstanding balance as of December 31, 2013, interest expense would increase $0.4 million.
(f) | To record the estimated tax effect of the pro forma adjustments. The estimated provision for income taxes was calculated using a combined effective tax rate of (1.8)%. |