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Section 1: 8-K (8-K)

8-K
false 0001590895 0001590895 2019-12-06 2019-12-06

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 6, 2019

 

Eldorado Resorts, Inc.

(Exact Name of registrant as specified in its charter)

 

Nevada

 

001-36629

 

46-3657681

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

100 West Liberty Street, Suite 1150

Reno, Nevada

 

89501

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (775) 328-0100 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading
Symbol(s)

 

Name of each exchange
on which registered

Common Stock, $0.00001 par value

 

ERI

 

NASDAQ Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 


Item 2.01 Completion of Acquisition or Disposition of Assets.

As previously disclosed, on June 17, 2019, (i) Eldorado Resorts, Inc., a Nevada corporation, and its wholly-owned subsidiaries MTR Gaming Group, Inc., a Delaware corporation (“MTR”), and Isle of Capri Casinos LLC, a Delaware limited liability company (“IOC” and together with MTR, the “Sellers”), entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Century Casinos, Inc., a Delaware corporation (“Century”), and VICI Properties L.P., a Delaware limited partnership (“PropCo” and together with Century, collectively, the “Acquirors”), and (ii) MTR, IOC and PropCo entered into a Real Estate Purchase Agreement (the “Real Estate Purchase Agreement” and together with the Equity Purchase Agreement, the “Transaction Agreements”), pursuant to which (A) PropCo would purchase for approximately $278 million the real property relating to Lady Luck Casino Caruthersville, Isle Casino Cape Girardeau and Mountaineer Casino, Racetrack & Resort and (B) immediately thereafter, Century would purchase for approximately $107 million all of the outstanding equity interests in Mountaineer Park, Inc., a West Virginia corporation, IOC-Caruthersville, LLC, a Missouri limited liability company, and IOC-Cape Girardeau LLC, a Missouri limited liability company, for aggregate consideration of $385 million (the “Sale”).

On December 6, 2019, the Sale was consummated in accordance with the terms of the Transaction Agreements.

Item 9.01 Financial Statements and Exhibits.

(b) Pro forma financial information

The following unaudited pro forma condensed combined financial statements giving effect to the Sale are attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference:

  Unaudited pro forma condensed combined balance sheet as of September 30, 2019

  Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2018

  Unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2019

(d) Exhibits

Exhibit
    No.    

   

Description

         
 

99.1

   

Press Release, dated December 6, 2019, of Eldorado Resorts, Inc. announcing completion of sale.

         
 

99.2

   

Unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2019 and for the year ended December 31, 2018 and unaudited pro forma condensed combined balance sheet as of September 30, 2019.

         
 

104

   

Cover Page Interactive Data File (embedded within the Inline XBRL document).


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 hereunto duly authorized.

 

 

 

ELDORADO RESORTS, INC.

             

Date: December 10, 2019

 

 

By:

 

/s/ Thomas R. Reeg

 

 

Name:

 

Thomas R. Reeg

 

 

Title:

 

Chief Executive Officer

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

LOGO

ELDORADO RESORTS COMPLETES TRANSACTION TO DIVEST MOUNTAINEER

CASINO RACETRACK AND RESORT, ISLE CASINO CAPE GIRARDEAU AND LADY LUCK CASINO CARUTHERSVILLE FOR $385 MILLION IN CASH

Reno, Nevada (December 6, 2019) – Eldorado Resorts, Inc. (NASDAQ: ERI) (“Eldorado,” “ERI,” or “the Company”) announced today that it completed its previously announced transaction to divest Mountaineer Casino Racetrack and Resort, Isle Casino Cape Girardeau and Lady Luck Casino Caruthersville for $385 million in cash. Pursuant to the terms of the agreements, Century Casinos, Inc. (NASDAQ: CNTY) acquired the operating assets of the three properties for approximately $107 million and VICI Properties Inc. (NYSE: VICI) acquired the land and real estate assets of the three properties for approximately $278 million.

Tom Reeg, Chief Executive Officer of Eldorado, commented, “The agreements to divest Mountaineer Casino, Isle Casino Cape Girardeau and Lady Luck Casino Caruthersville are consistent with our continued focus on reducing debt ahead of the expected closing for the Caesars transaction in the first half of 2020.”

Macquarie Capital is acting as exclusive financial advisor and Milbank LLP is acting as legal counsel to Eldorado in connection with the proposed transactions.

About Eldorado Resorts, Inc.

Eldorado Resorts is a leading casino entertainment company that owns and operates twenty-three properties in eleven states, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, and Ohio. In aggregate, Eldorado’s properties feature approximately 24,100 slot machines, VLTs and e-tables and approximately 670 table games, and over 11,400 hotel rooms. For more information, please visit www.eldoradoresorts.com.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements regarding the expected timing of the completion of the Caesars transaction. When used in this press release, the terms or phrases such as “anticipates,” “believes,” “projects,” “plans,” “intends,” “expects,” “might,” “may,” “estimates,” “could,” “should,” “would,” “will likely continue,” and variations of such words or similar expressions are intended to identify forward-looking statements. Although our expectations, beliefs and projections are expressed in good faith and with what we believe is a reasonable basis, there can be no assurance that these expectations, beliefs and projections will be realized. There is no assurance that the Caesars transaction will be consummated and there are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements made herein. Such risks, uncertainties and other important factors include, but are not limited to: (a) risks related to the combination of Caesars and Eldorado and the integration of their respective businesses and assets; (b) the possibility that the Caesars transaction and related transactions do not close when expected or at all because required regulatory or other approvals are not received or other conditions to the consumption thereof are not satisfied on a timely basis or at all; (c) the risk that the financing required to fund the Caesars transaction and related transactions is not obtained on the terms anticipated or at all; (d) potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; (e) litigation challenging the Caesars transaction; (f) the possibility that the anticipated benefits of the Caesars transaction, including cost savings and expected synergies, are not realized when expected or at all, including as a result of the impact of, or issues arising from, the implementation of our operating strategies and integration of our business and Caesars’ business; (g) conditions imposed on the companies in order to obtain required regulatory approvals; (h) uncertainties in the global economy and credit markets and its potential impact on our ability to finance the Caesars transaction; (i) the possibility that the Caesars transaction may be more expensive to complete than expected, including as a result of unexpected factors or events; (j) diversion of management’s attention from ongoing business operations and opportunities; (k) the ability to retain certain of our key employees and Caesars’ key employees; (l) risks associated with increased leverage from the Caesars transaction; (m) changes in the value of Eldorado’s common stock between the date of the merger agreement and the closing of the Caesars transaction; (n) competitive responses to the Caesars transaction; (o) legislative, regulatory and economic developments; (p) uncertainties as to the timing of the consummation of the Caesars transaction and the ability of each party to consummate the Caesars transaction; (q) the impact of provisions of the Merger Agreement limiting the operation of our business prior to the closing of Caesars transaction and (r) additional factors discussed in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission.


In light of these and other risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur. These forward-looking statements speak only as of the date of this press release, even if subsequently made available on our website or otherwise, and we do not intend to update publicly any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as may be required by law.

Contact:

 

Brian Agnew   Joseph N. Jaffoni, Richard Land, James Leahy
Eldorado Resorts   JCIR
775-328-0112   212-835-8500
[email protected]   [email protected]
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Section 3: EX-99.2 (EX-99.2)

EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The unaudited pro forma condensed combined financial information (“Unaudited Pro Forma Financial Statements”) included herein present the unaudited pro forma condensed combined balance sheet (“Unaudited Pro Forma Balance Sheet”) and the unaudited pro forma condensed combined statements of operations (“Unaudited Pro Forma Statement of Operations”) based upon the combined audited and unaudited historical financial statements of Eldorado Resorts, Inc. (“ERI”), Tropicana Entertainment, Inc. (“Tropicana”) (acquisition consummated October 1, 2018) and Elgin Riverboat Resort – Riverboat Casino d/b/a Grand Victoria Casino (“Elgin”) (acquisition consummated August 7, 2018), after giving effect to the Century Sale (as defined below), the Tropicana Acquisition (as defined below), the Elgin Acquisition (as defined below), the GLPI Master Lease (consummated October 1, 2018), ERI Financing Transactions (as defined below), ERI Dispositions (as defined below) (together the “Combined Transactions”), and the adjustments described in the accompanying notes.

Basis for Historical Information

The Unaudited Pro Forma Financial Statements have been prepared by management for illustrative purposes only and do not purport to represent what the results of operations, balance sheet data or other financial information of ERI would have been if the Combined Transactions had occurred as of the dates indicated or what such results will be for any future periods. The pro forma adjustments are based on the preliminary assumptions and information available at the time of the preparation of this report. The historical financial information has been adjusted to give effect to pro forma events that are: (1) directly attributable to the Combined Transactions, (2) factually supportable, and (3) with respect to the Unaudited Pro Forma Statement of Operations, expected to have a continuing impact on the combined results of ERI. As such, the Unaudited Pro Forma Statement of Operations for the nine months ended September 30, 2019 and for the year ended December 31, 2018 do not reflect non-recurring charges that will be incurred in connection with the Combined Transactions. The Unaudited Pro Forma Statement of Operations also do not reflect any cost savings from potential operating efficiencies or associated costs to achieve such savings or synergies that are expected to result from the Combined Transactions, nor does it include any costs associated with restructuring or integration activities resulting from the Combined Transactions, as they are currently not known, and, to the extent they arise, they are expected to be non-recurring and will not have been incurred at the closing date of the Combined Transactions. However, such costs could affect the combined company following the Combined Transactions in the period the costs are incurred.

The Century Sale

On June 17, 2019, ERI and its wholly-owned subsidiaries MTR Gaming Group, Inc., a Delaware corporation (“MTR”), and Isle of Capri Casinos LLC (“IOC”), a Delaware limited liability company entered into an equity purchase agreement with Century Casinos, Inc. (“Century”) and VICI Properties L.P., a Delaware limited partnership (“PropCo”) and (ii) MTR, IOC and PropCo entered into a Real Estate Purchase Agreement, pursuant to which (A) PropCo will purchase for $278 million the real property relating to Lady Luck Casino Caruthersville, Isle Casino Cape Girardeau and Mountaineer Casino, Racetrack & Resort and (B) immediately thereafter, Century will purchase for $107 million all of the outstanding equity interests in Mountaineer Park, Inc., a West Virginia corporation, IOC-Caruthersville, LLC, a Missouri limited liability company, and IOC-Cape Girardeau LLC, a Missouri limited liability company, for aggregate consideration of $385 million (the “Century Sale”). The Century Sale closed on December 6, 2019 resulting in a gain on sale of $1.4 million, net of fees, estimated working capital adjustments, and taxes.

Acquisitions

The Tropicana Acquisition

On October 1, 2018, ERI completed its acquisition of Tropicana (the “Tropicana Acquisition”) in a cash transaction valued at $1,900 million. Immediately prior to such merger, Tropicana sold Tropicana Aruba Resort and Casino (“Tropicana Aruba”) and Gaming and Leisure Properties, Inc. (“GLPI”) acquired substantially all of Tropicana’s real estate, other than the real estate underlying MontBleu Casino Resort & Spa (“MontBleu”) and Lumière Place Casino (“Lumière”), for approximately $964 million and ERI acquired Tropicana’s operations and certain real estate for $927 million. Substantially concurrently with the acquisition of the real estate portfolio by GLPI, ERI also entered into a triple net master lease with GLPI (the “GLPI Master Lease”). ERI funded the purchase of the real estate underlying Lumière with the proceeds of a $246 million loan and funded the remaining consideration payable with cash on hand at ERI and Tropicana, borrowings under ERI’s revolving credit facility and proceeds from ERI’s offering of $600 million in aggregate principal amount of 6% senior notes due 2026.


The Elgin Acquisition

On August 7, 2018, ERI completed its acquisition of Elgin (the “Elgin Acquisition” and together with the Tropicana Acquisition, the “Acquisitions”). ERI purchased Elgin for $328 million plus a $1 million working capital adjustment. The Elgin Acquisition was financed using cash on hand and borrowings under ERI’s revolving credit facility.

GLPI Master Lease

The GLPI Master Lease entered into in conjunction with the Tropicana Acquisition on October 1, 2018 was accounted for as a financing obligation equal to the fair value of the leased real estate assets acquired in purchase accounting. The fair value of the real estate assets and the financing obligation was estimated based on the present value of the estimated future lease payments over the lease term of 35 years, including renewal options, using an imputed discount rate of approximately 10.2%. The value of the financing obligation is dependent upon assumptions regarding the amount of the lease payments and the estimated discount rate of the lease payments required by a market participant.

The GLPI Master Lease provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operation of the leased properties. The GLPI Master Lease provides for an initial term of fifteen years with no purchase option. At ERI’s option, the GLPI Master Lease may be extended for up to four five-year renewal terms beyond the initial 15-year term. If ERI elects to renew the term of the GLPI Master Lease, the renewal will be effective as to all, but not less than all, of the leased property then subject to the GLPI Master Lease. ERI does not have the ability to terminate its obligations under the GLPI Master Lease prior to its expiration without GLPI’s consent.

The rent payable under the GLPI Master Lease is comprised of “base rent” and “percentage rent.” Base rent is the sum of:

 

   

Building Base Rent: a fixed component equal to $61 million during the first year of the GLPI Master Lease, and thereafter escalated annually by 2%, subject to a cap that would cause the preceding year’s adjusted revenue to rent ratio for the properties in the aggregate not to fall below 1.20:1.00 for the first five years of the GLPI Master Lease and 1.80:1.00 thereafter; plus

 

   

Land Base Rent: an additional fixed component equal to $13 million, subject to adjustment in the event of the termination of the GLPI Master Lease with respect to any of the leased properties.

The percentage rent payable under the GLPI Master Lease is adjusted every two years based on the actual net revenues of the leased properties during the two-year period then ended. The initial variable rent, which is fixed for the first two years, is $13 million per year. The actual percentage increase is based on actual performance and is subject to change.

The initial annual rent under the terms of the lease is approximately $88 million.

Under the GLPI Master Lease, ERI is required to pay the following, among other things: lease payments to the underlying ground lessor for properties that are subject to ground leases, facility maintenance costs, all insurance premiums for insurance with respect to the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor) and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.

The estimated future lease payments include the minimum lease payments and were adjusted to reflect estimated lease payments as described in the agreements, including an annual escalator of up to 2%.

ERI Financing Transactions

Tropicana Financing

In connection with the Tropicana Acquisition on October 1, 2018, ERI completed a debt financing transaction (the “Tropicana Financing”) comprised of $600 million aggregate principal amount of 6.0% senior unsecured notes due 2026. The proceeds of such borrowings were used to pay the cash consideration payable in the Tropicana Acquisition and pay transaction fees and expenses related to the foregoing. Additionally, substantially concurrent with the consummation of the Tropicana Acquisition, ERI amended its credit facility to increase its revolving credit facility from $300 million to approximately $500 million and extend the maturity of the revolving credit facility from April 2022 to October 1, 2023, the fifth anniversary following the consummation of the Tropicana Acquisition.


Lumière Financing

ERI borrowed $246 million from GLPI (the “Lumière Loan” and together with the Tropicana Financing, the “ERI Financing Transactions”) to fund the purchase price of the real estate underlying Lumière. The Lumière Loan bears interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until October 1, 2020, and matures on October 1, 2020. The Lumière Loan is secured by a first priority mortgage on the Lumière real property until October 1, 2019. In connection with the issuance of the Lumière Loan, ERI agreed to use its commercially reasonable efforts to transfer one or more of the Grand Victoria Casino, Isle Casino Bettendorf, Isle Casino Hotel Waterloo, Isle of Capri Lula, Lady Luck Casino Vicksburg and Mountaineer Casino, Racetrack and Resort or such other property or properties mutually acceptable to us and GLPI, provided that the aggregate value of such property, individually or collectively, is at least $246 million (the “Replacement Property”), to GLPI with a simultaneous leaseback to ERI of such Replacement Property. In connection with such Replacement Property sale, ERI and GLPI will enter into an amendment to the GLPI Master Lease to revise the economic terms to include the Replacement Property, GLPI, or one of its affiliates, will assume the Lumière Loan and Tropicana St. Louis RE LLC’s obligations under the Lumière Loan in consideration of the acquisition of the Replacement Property and ERI’s obligations under the Lumière Loan will be deemed to have been satisfied, the Lumière Real Property will be released from the lien placed on it in connection with the Lumière Loan (if such lien has not yet been released in accordance with the terms of the Lumière Loan) and in the event the value of the Replacement Property is greater than the outstanding obligations under the Lumière Loan, GLPI will pay ERI the difference between the value of the Replacement Property and the amount of outstanding obligations under the Lumière Loan. If such Replacement Property transaction is not consummated prior to the maturity date of the Lumière Loan, other than as a result of certain failures to perform by GLPI, then the amounts outstanding under the Lumière Loan are required to be paid in full on the maturity date thereof and the rent under the GLPI Master Lease will automatically increase, subject to certain escalations.

ERI Dispositions

Churchill Downs Incorporated

On February 28, 2018, ERI entered into definitive agreements to sell substantially all of the assets and liabilities of Presque Isle Downs & Casino (“Presque Isle Downs”) to Churchill Downs Incorporated (“CDI”). Under the terms of the agreements, CDI agreed to purchase Presque Isle Downs for approximately $179 million (the “Presque Isle Downs Sale”).

On August 10, 2018, ERI entered into a definitive agreement to sell substantially all of the assets and liabilities of Lady Luck Casino Nemacolin (“Nemacolin”) to CDI (the “Nemacolin Sale” and together with the Presque Isle Downs Sale, the “ERI Dispositions”). Under the terms of the agreement, CDI agreed to purchase Nemacolin for approximately $100,000, subject to a customary working capital adjustment. As a result of the agreement to sell Nemacolin, an impairment charge of $4 million was recorded in the third quarter of 2018 due to the carrying value of the net property and equipment being sold exceeding the estimated net sales proceeds.

The Presque Isle Downs Sale closed on January 11, 2019 resulting in a gain on sale of $22 million, net of final working capital adjustments, for the nine months ended September 30, 2019. The sale of Nemacolin closed on March 8, 2019 resulting in a gain on sale of $100,000, net of final working capital adjustments, for the nine months ended September 30, 2019.


UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2019

(Dollars in Thousands)

 

    Historical                 Pro Forma  
    As of September 30,
2019
                As of September 30,
2019
 
    ERI     Century
Disposition
Adjustments
    Other
Adjustments
    ERI (Adjusted)  

ASSETS

       

CURRENT ASSETS:

       

Cash and cash equivalents

  $ 208,831     $ 338,812   (a), (b)    $ (360,200 )  (d), (e)    $ 187,443  

Restricted cash and investments

    22,242       —         —         22,242  

Marketable securities

    20,433       —         —         20,433  

Accounts receivable, net

    48,150       —         —         48,150  

Due from affiliates

    2,823       —         —         2,823  

Inventories

    17,684       —         —         17,684  

Prepaid expenses

    37,429       —         —         37,429  

Assets held for sale

    605,947       (348,109 ) (b)      —         257,838  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

    963,539       (9,297     (360,200     594,042  

Investment in and advances to unconsolidated affiliates

    129,796       —         —         129,796  

Property and equipment, net

    2,635,111       —         —         2,635,111  

Gaming licenses and other intangibles, net

    1,118,855       —         —         1,118,855  

Goodwill

    909,717       —         —         909,717  

Right-of-use assets

    245,344       —         —         245,344  

Other assets, net

    78,879       —         —         78,879  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 6,081,241     $ (9,297   $ (360,200   $ 5,711,744  
 

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

       

CURRENT LIABILITIES:

       

Current portion of long-term debt

  $ 238     $ —       $ —       $ 238  

Accounts payable

    50,024       —         —         50,024  

Accrued property, gaming and other taxes

    54,628       —         —         54,628  

Accrued payroll and related

    72,999       —         —         72,999  

Accrued interest

    34,637       —         —         34,637  

Income tax payable

    15,425       —         —         15,425  

Short-term lease obligation

    21,963       —         —         21,963  

Accrued other liabilities

    108,999       —         —         108,999  

Liabilities related to assets held for sale

    56,058       (10,705 ) (b)      —         45,353  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

    414,971       (10,705     —         404,266  

Long-term financing obligations to GLPI

    967,982       —         —         967,982  

Long-term debt, less current portion

    2,950,955       —         (359,853 ) (e)      2,591,102  

Deferred income taxes

    224,877       —         —         224,877  

Long-term lease obligation

    229,297       —         —         229,297  

Other long-term liabilities

    166,381       —         —         166,381  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    4,954,463       (10,705     (359,853     4,583,905  
 

 

 

   

 

 

   

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

       

STOCKHOLDERS’ EQUITY:

       

Common stock

    1       —         —         1  

Paid-in capital

    756,225       —         —         756,225  

Retained earnings

    379,682       1,408   (c)      (347 ) (d), (e)      380,743  

Treasury stock

    (9,131     —         —         (9,131

Accumulated other comprehensive income

    1       —         —         1  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

    1,126,778       1,408       (347     1,127,839  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

  $ 6,081,241     $ (9,297   $ (360,200   $ 5,711,744  
 

 

 

   

 

 

   

 

 

   

 

 

 


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE

YEAR ENDED DECEMBER 31, 2018

(Dollars in Thousands, Except Share and Per Share Data)

 

     Pro Forma                 Pro Forma  
     Fiscal Year Ended
December 31, 2018
                Fiscal Year Ended
December 31, 2018
 
     ERI
(Adjusted for acquisition of
Tropicana and Elgin and
disposition of Presque Isle Downs
and Nemacolin) (Note 2(h))
    Century Disposition
Adjustments (Note 2(f))
    Other Adjustments     ERI (Adjusted)  

REVENUES:

        

Casino

   $ 1,905,571     $ (186,409   $ —       $ 1,719,162  

Pari-mutuel commissions

     15,733       (3,134     —         12,599  

Food and beverage

     331,806       (16,268     —         315,538  

Hotel

     302,983       (7,929     —         295,054  

Other

     102,985       (5,424     —         97,561  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenues

     2,659,078       (219,164     —         2,439,914  

EXPENSES:

        

Casino

     855,841       (104,938     —         750,903  

Pari-mutuel commissions

     13,441       (3,374     —         10,067  

Food and beverage

     262,288       (13,398     —         248,890  

Hotel

     107,373       (2,943     —         104,430  

Other

     48,162       (2,378     —         45,784  

Marketing and promotions

     169,630       (9,987     —         159,643  

General and administrative

     490,423       (31,429     —         458,994  

Corporate

     65,537       —         —         65,537  

Impairment charges

     10,396       —         —         10,396  

Depreciation and amortization

     219,295       (17,872     —         201,423  

Real estate tax settlement

     (880     —         —         (880
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     2,241,506       (186,319     —         2,055,187  

Gain (loss) on sale of disposal of property and equipment

     (805     685       —         (120

Proceeds from terminated sale

     5,000       —         —         5,000  

Transaction expenses

     (20,842     —         —         (20,842

Income (loss) from unconsolidated affiliates

     (213     —         —         (213
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     400,712       (32,160     —         368,552  

OTHER INCOME (EXPENSE):

        

Interest expense, net

     (291,024     4       11,651   (e)      (279,369

Loss on early retirement of debt, net

     (693     —         —         (693

Unrealized loss on restricted investment

     (2,587     —         —         (2,587

Other income/(loss)

     115       —         —         115  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (294,189     4       11,651       (282,534
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     106,523       (32,156     11,651       86,018  

(Provision) benefit for income taxes

     (33,532     6,692       (2,913 ) (g)      (29,753
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 72,991     $ (25,464   $ 8,738     $ 56,265  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) per share of Common Stock:

        

Basic

   $ 1.23         $ 0.73  

Diluted

   $ 1.22         $ 0.72  

Weighted Average Basic Shares Outstanding

     77,458,902           77,458,902  

Weighted Average Diluted Shares Outstanding

     78,282,101           78,282,101  


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Dollars in Thousands, Except Share and Per Share Data)

 

     Historical                 Pro Forma  
     Nine Months Ended
September 30, 2019
                Nine Months Ended
September 30, 2019
 
     ERI
(adjusted for disposition
of Presque Isle Downs
and Nemacolin
(Note 2(h))
    Century Disposition
Adjustments (Note 2(f))
    Other Adjustments     ERI (Adjusted)  

REVENUES:

        

Casino and pari-mutuel commissions

   $ 1,378,445     $ (143,750   $ —       $ 1,234,695  

Food and beverage

     228,537       (11,347     —         217,190  

Hotel

     237,493       (6,125     —         231,368  

Other

     83,579       (4,545     —         79,034  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenues

     1,928,054       (165,767     —         1,762,287  

EXPENSES:

        

Casino and pari-mutuel commissions

     610,711       (80,980     —         529,731  

Food and beverage

     179,701       (9,048     —         170,653  

Hotel

     76,101       (2,097     —         74,004  

Other

     34,006       (1,737     —         32,269  

Marketing and promotions

     97,272       (5,549     —         91,723  

General and administrative

     358,608       (24,105     —         334,503  

Corporate

     50,819       —         —         50,819  

Impairment charges

     958       —         —         958  

Depreciation and amortization

     166,882       (7,810     —         159,072  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,575,058       (131,326     —         1,443,732  

Gain (loss) on sale of disposal of property and equipment

     21,668       (14     —         21,654  

Transaction expenses

     (21,628     —         —         (21,628

Income (loss) of unconsolidated affiliates

     (2,132     —         —         (2,132
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING INCOME

     350,904       (34,455     —         316,449  

OTHER INCOME (EXPENSE):

        

Interest expense, net

     (217,182     —         11,608   (e)      (205,574

Loss on early retirement of debt, net

     (1,204     —         —         (1,204

Unrealized gain on restricted investments

     460       —         —         460  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (217,926     —         11,608       (206,318
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     132,978       (34,455     11,608       110,131  

(Provision) benefit for income taxes

     (38,892     8,087       (2,902 ) (g)      (33,707
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 94,086     $ (26,368   $ 8,706     $ 76,424  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) per share of Common Stock:

        

Basic

   $ 1.21         $ 0.98  

Diluted

   $ 1.20         $ 0.97  

Weighted Average Basic Shares Outstanding

     77,657,553           77,657,553  

Weighted Average Diluted Shares Outstanding

     78,588,517           78,588,517  


Note 1—Basis of presentation

The following Unaudited Pro Forma Financial Statements present the pro forma effects of the following transactions:

 

   

The Century Sale;

 

   

The Acquisitions;

 

   

The GLPI Master Lease;

 

   

ERI Financing Transactions; and

 

   

ERI Dispositions.

The Unaudited Pro Forma Financial Statements are prepared in accordance with Article 11 of Regulation S-X. The historical financial information has been adjusted to give effect to transactions that are (i) directly attributable to the Combined Transactions, (ii) factually supportable and (iii) with respect to the Unaudited Pro Forma Statement of Operations, expected to have a continuing impact on the operating results of the combined company. The historical information of ERI (including Tropicana and Elgin) is presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The Unaudited Pro Forma Balance Sheet as of September 30, 2019 was prepared using the historical unaudited consolidated balance sheets of ERI as of September 30, 2019 and shows the financial position of ERI as if the Century Sale had occurred on September 30, 2019. The Acquisitions, GLPI Master Lease, ERI Financing Transactions, and the ERI Dispositions are already reflected in ERI’s historical unaudited consolidated balance sheet as of September 30, 2019. Therefore, no pro forma balance sheet adjustments are necessary to show the pro forma impact of these transactions.

The Unaudited Pro Forma Statement of Operations for the nine months ended September 30, 2019 give effect to the Century Sale and the ERI Dispositions as if they had occurred on January 1, 2018 and reflect pro forma adjustments that are expected to have a continuing impact on the results of operations. The Unaudited Pro Forma Statement of Operations for the year ended December 31, 2018 give effect to the Century Sale, the Acquisitions, the ERI Financing Transactions, the GLPI Master Lease and the ERI Dispositions as if they had occurred on January 1, 2018 and reflect pro forma adjustments that are expected to have a continuing impact on the results of operations.

The Elgin Acquisition was consummated on August 7, 2018, and as such, is already reflected in ERI’s historical audited consolidated statement of operations for the period from August 7, 2018 to December 31, 2018 and historical unaudited consolidated statement of operations for the nine months ended September 30, 2019. Accordingly, an adjustment to reflect the effect of the Elgin Acquisition is included in the Unaudited Pro Forma Statement of Operations from January 1, 2018 to August 6, 2018.

The Tropicana Acquisition was consummated on October 1, 2018, and as such, is already reflected in ERI’s historical audited consolidated statement of operations for the period from October 1, 2018 to December 31, 2018 and historical unaudited consolidated statement of operations for the nine months ended September 30, 2019. Accordingly, an adjustment to reflect the effect of the Tropicana Acquisition is included in the Unaudited Pro Forma Statement of Operations from January 1, 2018 to September 30, 2018.

ERI’s historical financial and operating data for the year ended December 31, 2018 and the nine months ended September 30, 2019 is derived from the financial data in its audited consolidated financial statements for the year ended December 31, 2018 and from its unaudited consolidated financial statements for the nine months ended September 30, 2019. The historical financial and operating data for Tropicana for the period from January 1, 2018 to September 30, 2018 is derived from the financial data in its unaudited consolidated financial statements for the nine months ended September 30, 2018. The historical financial and operating data for Elgin for the period from January 1, 2018 to August 6, 2018 is derived from the financial data in its unaudited consolidated financial statements for the period ended August 6, 2018.

Certain reclassifications have been made to the historical financial statements of Tropicana and Elgin to align their presentation in the Unaudited Pro Forma Financial Statements.

Note 2—Unaudited Pro Forma Financial Statements transaction adjustments

 

a)

Represents the net cash proceeds from the Century Sale of $349.9 million, inclusive of $35.1 million of fees, estimated working capital adjustments, and taxes.

 

b)

Represents the elimination of assets and liabilities of Mountaineer Casino Racetrack & Resort, Isle Casino Cape Girardeau, and Lady Luck Casino Caruthersville as part of the Century Sale. The sale met the requirements for presentation as assets held for sale under U.S. GAAP as of September 30, 2019. However, they did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations. Included in the assets and liabilities eliminated as part of the Century Sale is net cash and cash equivalents related to the disposed properties of $11.1 million.


c)

The gain from the Century Sale of approximately $1.4 million has been reflected as an adjustment to retained earnings. The gain related to the disposition has not been reflected in the Unaudited Pro Forma Statement of Operations as it is considered to be non-recurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the purchase agreement.

 

d)

ERI incurred additional estimated transaction costs of approximately $0.2 million from October 1, 2019 through the closing of the sale. Such costs consist primarily of legal, financial advisor, accounting and consulting costs, and is shown as a pro forma adjustment reducing retained earnings. These costs are not reflected in the Unaudited Pro Forma Statement of Operations because they are non-recurring items that are directly related to the sale.

 

e)

For purposes of the pro forma adjustment, it is assumed that the net cash proceeds from the Century Sale and ERI’s cash on hand was used to repay $360 million on ERI’s existing term loan facility.

The following table illustrates the pro forma adjustments to interest expense as a result of the repayment of ERI’s existing term loan facility for the nine months ended September 30, 2019 and the year ended December 31, 2018 (dollars in thousands):

 

     Nine months ended
September 30, 2019
    Year ended
December 31, 2018
 

Interest expense on ERI’s term loan facility

   $ (22,204   $ (30,020

Reversal of ERI’s historical interest expense and amortization of deferred financing cost

     33,812       41,671  
  

 

 

   

 

 

 

Total adjustments to interest expense, net

   $ 11,608     $ 11,651  
  

 

 

   

 

 

 

 

f)

Reflects the elimination of historical revenues, expenses, and other income of Mountaineer Casino Racetrack & Resort, Isle Casino Cape Girardeau, and Lady Luck Casino Caruthersville for the nine months ended September 30, 2019 and the year ended December 31, 2018. Not included in the pro forma results are anticipated savings due to costs that may be reduced or eliminated.

 

g)

Reflects the estimated income tax effect of the pro forma adjustments as a result of the Century Sale. The tax effect of the pro forma adjustments was calculated using the historical statutory rates in effect for the periods presented.


h)

As described above, ERI acquired Elgin on August 7, 2018 and Tropicana on October 1, 2018. The sale of Presque Isle Downs closed on January 11, 2019 and the sale of Nemacolin closed on March 8, 2019. The following tables discuss the pro forma adjustments to ERI’s historical financial statements related to these acquisitions and dispositions (dollars in thousands):

 

    Historical                 Pro Forma  
    Fiscal Year
Ended
December 31,
2018
    Period from
January 1, 2018 to
September 30,
2018
    Period from
January 1, 2018 to
August 6, 2018
    Fiscal Year
Ended
December 31,
2018
    Fiscal Year
Ended
December 31,
2018
                Fiscal Year Ended
December 31, 2018
 
    ERI     Tropicana (As
adjusted for
Aruba (6)
    Elgin     Presque Isle
Downs &
Casino
    Lady Luck
Casino
Nemacolin
    Reclassification
Adjustments (5)
    Pro Forma
Adjustments
    ERI
(adjusted for acquisition of
Tropicana and Elgin and
disposition of Presque Isle
Downs and Nemacolin)
 

REVENUES:

               

Casino

  $ 1,534,954     $ 438,070     $ 92,817     $ (125,524   $ (30,529   $ (4,217   $ —       $ 1,905,571  

Pari-mutuel commissions

    18,437       —         —         (2,704     —         —         —         15,733  

Food and beverage

    247,332       90,112       7,208       (9,012     (2,531     (1,303     —         331,806  

Hotel

    183,798       127,018       —         —         —         (7,833     —         302,983  

Other

    71,486       24,385       3,369       (2,753     (401     6,899       —         102,985  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net revenues

    2,056,007       679,585       103,394       (139,993     (33,461     (6,454     —         2,659,078  

Less-promotional allowances

    —         —         (6,453     —         —         6,453       —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net revenues

    2,056,007       679,585       96,941       (139,993     (33,461     (1     —         2,659,078  

EXPENSES:

               

Casino

    732,580       175,842       50,945       (86,397     (20,580     3,451       —         855,841  

Pari-mutuel commissions

    16,709       —         —         (3,268     —         —         —         13,441  

Food and beverage

    202,618       72,241       2,861       (7,247     (2,526     (5,659     —         262,288  

Hotel

    65,009       47,885       —         —         —         (5,521     —         107,373  

Other

    38,676       15,200       7,045       (1,323     (71     (11,365     —         48,162  

Marketing and promotions

    106,161       54,605       —         (4,789     (1,755     15,408       —         169,630  

General and administrative

    349,598       112,073       7,804       (14,390     (6,191     43,039       (1,510 ) (1)      490,423  

Charitable donations

    —         —         5,417       —         —         (5,417     —         —    

Preferred distribution

    —         —         970       —         —         (970     —         —    

Corporate

    46,632       —         —         —         —         18,905       —         65,537  

Impairment charges

    13,602       581       —         —         (3,787     —         —         10,396  

Depreciation and amortization

    157,429       59,848       4,420       (1,255     (377     —         (770 ) (2)      219,295  

Maintenance and utilities

    —         51,703       —         —         —         (51,703     —         —    

Real estate tax settlement

    —         (880     —         —         —         —         —         (880
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    1,729,014       589,098       79,462       (118,669     (35,287     168       (2,280     2,241,506  

Gain (loss) on sale of disposal of property and equipment

    (835     —         —         23       7       —         —         (805

Proceeds from terminated sale

    5,000       —         —         —         —         —         —         5,000  

Transaction expenses

    (20,842     —         —         —         —         —         —         (20,842

Income (loss) from unconsolidated affiliates

    (213     —         —         —         —         —         —         (213
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

    310,103       90,487       17,479       (21,301     1,833       (169     2,280       400,712  

OTHER INCOME (EXPENSE):

               

Interest expense, net

    (171,732     (3,720     3       (22     204       —         (115,757 ) (3)      (291,024

Loss on early retirement of debt, net

    (162     (531     —         —         —         —         —         (693

Unrealized loss on restricted investment

    (2,587     —         —         —         —         —         —         (2,587

Other non-operating income

    —         115       —         —         —         —         —         115  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

    (174,481     (4,136     3       (22     204       —         (115,757     (294,189
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

    135,622       86,351       17,482       (21,323     2,037       (169     (113,477     106,523  

(Provision) benefit for income taxes

    (40,387     (24,095     —         4,515       (1,936     —         28,371  (4)      (33,532
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS)

  $ 95,235     $ 62,256     $ 17,482     $ (16,808   $ 101     $ (169   $ (85,106   $ 72,991  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


     Historical     Pro Forma  
     Nine Months Ended
September 30, 2019
    Period from January 1,
2019 to January 10, 2019
    Period from January 1,
2019 to March 7, 2019
    Nine Months Ended
September 30, 2019
 
     ERI     Presque Isle Downs &
Casino
    Lady Luck Casino
Nemacolin
    ERI
(adjusted for disposition of
Presque Isle Downs
and Nemacolin)
 

REVENUES:

        

Casino and pari-mutuel commissions

   $ 1,385,848     $ (2,993   $ (4,410   $ 1,378,445  

Food and beverage

     229,072       (172     (363     228,537  

Hotel

     237,493       —         —         237,493  

Other

     83,712       (70     (63     83,579  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenues

     1,936,125       (3,235     (4,836     1,928,054  

EXPENSES:

        

Casino and pari-mutuel commissions

     616,101       (2,226     (3,164     610,711  

Food and beverage

     180,288       (196     (391     179,701  

Hotel

     76,101       —         —         76,101  

Other

     34,064       (49     (9     34,006  

Marketing and promotions

     97,673       (153     (248     97,272  

General and administrative

     360,086       (368     (1,110     358,608  

Corporate

     50,819       —         —         50,819  

Impairment Charges

     958       —         —         958  

Depreciation and amortization

     166,882       —         —         166,882  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,582,972       (2,992     (4,922     1,575,058  

Gain (loss) on sale of disposal of property and equipment

     21,668       —         —         21,668  

Transaction expenses

     (21,628     —         —         (21,628

Income (loss) from unconsolidated affiliates

     (2,132     —         —         (2,132
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     351,061       (243     86       350,904  

OTHER INCOME (EXPENSE):

        

Interest expense, net

     (217,205     —         23       (217,182

Loss on early retirement of debt, net

     (1,204     —         —         (1,204

Unrealized gain on restricted investment

     460       —         —         460  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (217,949     —         23       (217,926
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     133,112       (243     109       132,978  

(Provision) benefit for income taxes

     (38,892     —         —         (38,892
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS)

   $ 94,220     $ (243   $ 109     $ 94,086  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1)

Tropicana has a lease agreement with respect to the land and building on which MontBleu operates through December 31, 2028. The fair value of the unfavorable lease liability balance is approximately $26.5 million. The following table illustrates the pro forma adjustments to amortization expense for the period from January 1, 2018 to September 30, 2018 (dollars in thousands):

 

     Tropicana  

To eliminate historical amortization expense related to the unfavorable lease liability

   $ 384  

To record new amortization expense related to the fair value of the unfavorable lease liability

     (1,894
  

 

 

 

Total adjustments to general and administrative expenses

   $ (1,510
  

 

 

 

 

2)

Represents an adjustment to historical depreciation and amortization expense as a result of fair value of PP&E and intangible assets recognized for Elgin for the period from January 1, 2018 to August 6, 2018 and for Tropicana for the period from January 1, 2018 to September 30, 2018. The following table illustrates the pro forma adjustments to depreciation and amortization expense (dollars in thousands):

 

     Elgin     Tropicana     Total  

To eliminate historical depreciation and amortization related to PP&E and intangibles

   $ (4,420   $ (59,848   $ (64,268

To record new depreciation expense related to the fair value adjustment to PP&E

     3,062       53,861       56,923  

To record new amortization expense related to the fair value adjustments to intangibles

     4,350       2,225       6,575  
  

 

 

   

 

 

   

 

 

 

Total adjustments to depreciation and amortization expense

   $ 2,992     $ (3,762   $ (770
  

 

 

   

 

 

   

 

 

 


3)

Reflects adjustments to interest expense as a result of current and long-term debt for borrowings to fund the Elgin and Tropicana Acquisition net of aggregate reductions in long-term debt (including unamortized original issuance discounts and unamortized deferred financing cost). The following table illustrates the pro forma adjustments to interest expense for Elgin for the period from January 1, 2018 to August 6, 2018 and for Tropicana for the period from January 1, 2018 to September 30, 2018 (dollars in thousands):

 

     Elgin     Tropicana     Total  

Interest expense on the notes

   $ —     $ (28,487   $ (28,487

Interest expense on revolving credit facility

     (4,502     —         (4,502

Interest expense on Lumière Loan

     —         (16,771     (16,771

Interest expense on GLPI liability

     —         (73,639     (73,639

Reversal of ERI’s historical interest expense

     —         3,460       3,460  

Reversal of Tropicana’s historical net interest expense and amortization of deferred financing cost

     —         4,182       4,182  
  

 

 

   

 

 

   

 

 

 

Total adjustments to interest expense, net

   $ (4,502   $ (111,255   $ (115,757
  

 

 

   

 

 

   

 

 

 

 

4)

The income tax adjustment assumes income taxes based on ERI’s historical statutory tax rate.

 

5)

Certain reclassifications have been recorded to the historical financial statements of Elgin and Tropicana to provide comparability and consistency for the post-combined company presentation. Reclassifications were made among revenue components to classify certain revenue streams consistently between the companies. These included presenting expired slot tickets in gaming revenue and other supporting revenue activities such as spa and room rentals as other revenue. Reclassifications were also made between expense line items, such as casino, gaming taxes and other costs, as well as marketing and promotions and general and administrative. Certain reclassifications were required to remain consistent with the changes made within revenue reclassifications.


6)

Column reflects adjustments related to the exclusion of Tropicana Aruba, as it was not part of the acquisition of Tropicana by ERI. The following tables discuss the adjustments related to the exclusion of Tropicana Aruba (dollars in thousands):

 

     Historical  
     Nine Months Ended
September 30, 2018
 
     Tropicana     Aruba     Tropicana
(As adjusted for Aruba)
 

REVENUES:

      

Casino

   $ 439,641     $ (1,571   $ 438,070  

Food and beverage

     91,769       (1,657     90,112  

Hotel

     136,859       (9,841     127,018  

Other

     24,560       (175     24,385  
  

 

 

   

 

 

   

 

 

 

Net operating revenues

     692,829       (13,244     679,585  

EXPENSES:

      

Casino

     177,129       (1,287     175,842  

Food and beverage

     73,856       (1,615     72,241  

Hotel

     51,166       (3,281     47,885  

Marketing and promotions

     54,872       (267     54,605  

General and administrative

     114,753       (2,680     112,073  

Impairment charges

     581       —         581  

Maintenance and utilities

     54,366       (2,663     51,703  

Real estate tax settlement

     (880     —         (880

Depreciation and amortization

     60,769       (921     59,848  

Other

     15,200       —         15,200  
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     601,812       (12,714     589,098  
  

 

 

   

 

 

   

 

 

 

OPERATING INCOME

     91,017       (530     90,487  

OTHER INCOME (EXPENSE):

      

Interest expense, net

     (3,865     145       (3,720

Gain (loss) on extinguishment of debt

     (531     —         (531

Other non-operating income

     115       —         115  
  

 

 

   

 

 

   

 

 

 

Total other expense

     (4,281     145       (4,136
  

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     86,736       (385     86,351  

(Provision) benefit for income taxes

     (24,095     —         (24,095
  

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 62,641     $ (385   $ 62,256  
  

 

 

   

 

 

   

 

 

 
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