Greektown Superholdings, Inc. Reports Second Quarter 2012 Financial Results

DETROIT, Aug. 14, 2012 /PRNewswire/ -- Greektown Superholdings, Inc. ("Greektown" or the "company") today reported financial results for its second quarter ended June 30, 2012. Financial highlights for the second quarter include:

  • Net revenues for the three months ended June 30, 2012 were $83.5 million compared to $84.0 million for the same quarter of 2011, a decrease of 0.5%.
  • Income from operations for the second quarter increased to $9.9 million compared to $9.3 million a year ago.
  • Net loss increased to $6.3 million compared to $3.3 million a year ago. Net loss for the second quarter of 2011 included $3.8 million of deferred income tax benefit related to the repeal of the Michigan Business Tax.
  • EBITDA(1) decreased by 5.4%, to $18.4 million in the second quarter of 2012 from $19.5 million in the same quarter of 2011.

"Although we were affected by the softness of the Detroit gaming market in the second quarter, we increased net revenues in both April and May compared to the same periods a year ago," said Michael Puggi, Greektown's president and chief executive officer. "In addition, while we believe the opening of casinos in Ohio has negatively affected the Detroit gaming market, the impact has been consistent with our expectations."

"We will continue to focus on managing expenses and increasing operating efficiencies," continued Puggi. "At the same time, we are continuing our efforts to improve the guest experience. Construction of our new 850-space valet garage continues on schedule, and is expected to open in the first quarter of 2013. In addition, we are in the process of enhancing our dining offerings, including the addition of a fine-dining restaurant within the casino and a fresh market-style dining venue. Our guests are excited about the changes, and we expect that the property enhancements we're making will draw new customers to Greektown Casino-Hotel as well."

Year-To-Date Results
Net revenues for the six months ended June 30, 2012 were $175.4 million compared to $169.4 million for the same period ended of 2011, an increase of 3.5%. Income from operations for the six months ended June 30, 2012 increased to $24.9 million compared to $18.2 million a year ago, and net loss decreased to $7.5 million compared to $11.8 million a year ago. EBITDA(1) increased by 11.7%, to $42.1 million for the six months ended 2012 from $37.7 million in the same period of 2011. Net loss for the six months ended June 30, 2011 included $1.1 million of expense related to Chapter 11 reorganization items.

Cash and cash equivalents were $58.4 million at June 30, 2012, compared to $45.1 million at June 30, 2011, and the company did not borrow against its revolving loan agreement during the first half of 2012. The company paid semiannual interest of approximately $25.0 million on its senior secured notes on July 2, 2012 and July 1, 2011.

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

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

Safe Harbor Statement
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about capitalization and performance of Greektown. All forward-looking statements involve risks and uncertainties. All statements contained herein that are not clearly historical in nature are forward-looking, and words such as "anticipate," "expect," "will," "continue," or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in other press releases, written statements or documents filed with the Securities and Exchange Commission are subject to known and unknown risks, uncertainties and contingencies, including competitive factors (such as the impact of existing and planned casinos in Ohio), as well as the potential ballot initiative to expand the number of commercial casinos within the state of Michigan, and the successful execution of potential financing transactions, and there can be no assurance that the expected benefits of our new projects will be realized. Many of these risks, uncertainties and contingencies are beyond Greektown's control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Any forward-looking statements in this release speak only as of the date of this release, and Greektown undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

 

Greektown Superholdings, Inc.

Consolidated Statements of Operations (unaudited)

(In thousands, except share and per share data)






Three months ended June 30, 

Six months ended June 30, 


2012

2011

2012

2011

Revenues 





Casino

$                87,861

$                89,616

$        183,229

$               177,919

Food and beverage

5,845

5,782

12,265

11,916

Hotel

3,110

2,740

6,060

5,392

Other

1,361

1,194

2,698

2,494

Gross revenues

98,177

99,332

204,252

197,721

Less promotional allowances

14,646

15,365

28,884

28,277

Net revenues 

83,531

83,967

175,368

169,444






Operating expenses





Casino

20,189

19,823

41,430

40,093

Gaming taxes 

18,880

19,263

39,444

38,339

Food and beverage

4,007

4,635

8,765

10,250

Hotel

2,493

2,192

5,110

4,630

Marketing, advertising, and entertainment  

2,459

1,976

3,794

3,697

Facilities

4,838

4,891

10,107

10,248

Depreciation and amortization

8,548

10,317

17,180

20,587

General and administrative expenses 

12,050

11,495

24,390

23,169

Other

166

105

309

186

Operating expenses

73,630

74,697

150,529

151,199

Income from operations

9,901

9,270

24,839

18,245






Other expenses 





Interest expense

(12,598)

(12,631)

(25,251)

(25,221)

Amortization of finance fees

(1,844)

(1,703)

(3,681)

(3,391)

Other income (expense), net

2

3

57

(9)

Chapter 11 related reorganization items 

-

(95)

-

(1,149)

Total other expense, net

(14,440)

(14,426)

(28,875)

(29,770)






Loss before provisions for state income taxes 

(4,539)

(5,156)

(4,036)

(11,525)






Income tax expense  – current

(73)

(313)

(146)

(864)

Income tax (expense) benefit – deferred

(1,682)

2,151

(3,364)

551

Net loss 

$              (6,294)

$              (3,318)

$        (7,546)

$             (11,838)






Loss per share:





Basic

$              (72.49)

$              (53.90)

$      (110.64)

$             (144.88)

Diluted

$              (72.49)

$              (53.90)

$      (110.64)

$             (144.88)






Weighted average common shares outstanding

146,028

141,179

145,786

140,957

Weighted average common and common equivalent shares outstanding

146,028

141,179

145,786

140,957

 

Greektown Superholdings, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share data)








June 30, 

December 31,


2012

2011


(unaudited)


Assets



Current assets:



  Cash and cash equivalents

$             58,437

$           50,754

  Accounts receivable – gaming, net

695

734

  Accounts receivable – other, net

1,169

1,216

  Inventories

353

398

  Prepaid expenses

6,151

5,605

  Prepaid Michigan Gaming Control Board annual fee

3,695

8,823

  Prepaid municipal services fees

1,026

3,346

  Deposits

1,631

1,631

Total current assets

73,157

72,507




Property, building, and equipment, net 

320,996

317,085




Other assets:



 Financing fees - net of accumulated amortization 

9,972

11,571

 Deposits and other assets

30

30

 Casino development rights 

117,800

117,800

 Trade names

26,300

26,300

 Rated player relationships - net of accumulated amortization  

41,400

48,300

Goodwill

110,252

110,252




Total assets

$           699,907

$         703,845







Liabilities and shareholders' equity 



Current liabilities:



  Accounts payable

12,416

15,128

  Accrued interest

25,082

25,063

  Accrued expenses and other liabilities

10,132

9,631

Total current liabilities

47,630

49,822




Long-term liabilities:



  Other accrued income taxes

9,018

8,871

  Senior secured notes - net

369,723

367,748

  Obligation under capital lease

2,480

2,489

  Deferred income taxes

13,458

10,094

Total long-term liabilities

394,679

389,202




Total liabilities

442,309

439,024




Shareholders' equity (members' deficit):



Series A-1 preferred stock at $0.01 par value;



1,688,268 shares authorized, 1,463,535 shares issued and outstanding at June 30, 2012 and December 31, 2011

185,396

185,396

Series A-2 preferred stock at $0.01 par value;



645,065 shares authorized, 162,255 shares issued and outstanding at June 30, 2012 and December 31, 2011

20,551

20,551

Series A-1 preferred warrants at $0.01 par value;



202,511 shares issued and outstanding at June 30, 2012 and December 31, 2011

25,651

25,651

Series A-2 preferred warrants at $0.01 par value;



460,587 shares issued and outstanding at June 30, 2012 and December 31, 2011

58,342

58,342

Series A-1 common stock at $0.01 par value;



4,354,935 shares authorized,146,028 and 142,423 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively

1

1

Series A-2 common stock at $0.01 par value; 645,065 shares authorized, no shares issued

Additional paid-in capital

13,975

13,652

Accumulated deficit

(46,318)

(38,772)

Total shareholders' equity 

257,598

264,821

Total liabilities and shareholders' equity 

$           699,907

$         703,845




 

Greektown Superholdings, Inc.

Consolidated Statements of Cash Flows (unaudited)

(In thousands)





Six Months Ended June 30,


2012

2011

Operating activities 



Net loss 

$                              (7,546)

$                       (11,838)

Adjustments to reconcile net loss to net cash provided by operating activities:



Depreciation and amortization

17,180

20,587

Amortization of finance fees and accretion of discount on senior notes

3,681

3,391

Chapter 11 related reorganization items 

-

1,149

Deferred income taxes

3,364

(551)

Stock based compensation

323

203

Changes in current assets and liabilities:



Accounts receivable - gaming

39

(78)

Accounts receivable - other

47

499

Property tax refund receivable

-

3,451

Inventories

45

9

Prepaid expenses 

6,902

8,346

Accounts payable

(2,712)

1,208

Unsecured distribution liability

-

(10,000)

Accrued interest

19

(101)

Accrued expenses and other liabilities

945

(975)

Net cash provided by operating activities before reorganization costs

22,287

15,300

Operating cash flows for reorganization costs

-

(799)

Net cash provided by operating activities

22,287

14,501




Investing activities



Decrease in restricted cash

-

5,000

Capital expenditures

(14,496)

(5,051)

Redemption of certificate of deposit

-

534

Net cash (provided by) used in  investing activities

(14,496)

483




Financing activities



Financing fees paid 

(108)

(84)

Net cash used in financing activities 

(108)

(84)




Net increase in cash and cash equivalents 

7,683

14,900

Cash and cash equivalents at beginning of period

50,754

30,195

Cash and cash equivalents at end of period

$                             58,437

$                         45,095




Supplemental disclosure of cash flow information 



Cash paid during the period for interest

$                             25,101

$                         25,438

Cash paid during the period for income taxes

$                                       -

$                              451

 

Greektown Superholdings, Inc.

Reconciliation of Net Loss to EBITDA (1)

(In thousands)







Three months ended June 30, 

Six months ended June 30, 


2012

2011

2012

2011

Net loss 

$           (6,294)

$         (3,318)

$   (7,546)

$       (11,838)

Interest expense

14,439

14,331

28,932

28,612

Tax expense (benefit) tax

1,755

(1,838)

3,510

313

Depreciation and amortization

8,548

10,317

17,180

20,587

EBITDA (1)

$           18,448

$          19,492

$   42,076

$          37,674

 

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

 

SOURCE Greektown Superholdings, Inc.



RELATED LINKS
http://www.greektowncasinohotel.com

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