Greektown Superholdings, Inc. Reports Third Quarter 2012 Financial Results

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Greektown Superholdings, Inc.

Nov 13, 2012, 10:50 ET

DETROIT, Nov. 13, 2012 /PRNewswire/ -- Greektown Superholdings, Inc. ("Greektown" or the "company") today reported financial results for its third quarter ended September 30, 2012. Financial highlights for the third quarter include:

  • Net revenues for the three months ended September 30, 2012 were $79.5 million compared to $80.0 million for the same quarter of 2011, a decrease of 0.6%.
  • Income from operations for the third quarter increased to $9.6 million compared to $9.5 million a year ago.
  • Net loss decreased to $6.7 million compared to $7.2 million a year ago.
  • EBITDA(1) decreased by 4.5%, to $17.0 million in the third quarter of 2012 from $17.8 million in the same quarter of 2011.

"Although the Detroit gaming market continued to experience softness in the third quarter, we remain committed to advancing the numerous property improvements that are underway," said Michael Puggi, Greektown's president and chief executive officer. "Our new 850-space valet garage is on track for an expected first quarter 2013 opening, and several complementary projects are anticipated to be completed in advance of the opening, including expanded dinning options. Our fine-dining restaurant will offer an enticing menu served in a distinctive surrounding, while guests interested in a more casual dining experience will find a diverse selection of items at our new market-style venue. Both will be located within the casino, to allow our guests convenient access to the high quality dining of their choice."

"We are also enhancing the gaming experience at Greektown," continued Puggi. "Over 185 new slot machines are expected to be in place by the end of 2012, including the most popular new themes and the most engaging gameplay."

"These initiatives are designed to work together to move Greektown forward. We expect our current guests to react favorably to the investments we are making, and want to give new guests more reasons to choose Greektown."

Year-To-Date Results

Net revenues for the nine months ended September 30, 2012 were $254.8 million compared to $249.4 million for the same period ended of 2011, an increase of 2.2%. Income from operations for the nine months ended September 30, 2012 increased to $34.4 million compared to $27.7 million a year ago, and net loss decreased to $14.3 million compared to $19.0 million a year ago. EBITDA(1) increased by 6.5%, to $59.1 million for the nine months ended 2012 from $55.5 million in the same period of 2011. Net loss for the nine months ended September 30, 2011 included $1.1 million of expense related to Chapter 11 reorganization items and $3.8 million of deferred income tax benefit related to the repeal of the Michigan Business Tax.

Cash and cash equivalents were $44.5 million at September 30, 2012, compared to $45.9 million at September 30, 2011, and the company did not borrow against its revolving loan agreement during the nine months ended September 30, 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 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 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) and unanticipated construction delays, 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 September 30,

Nine months ended September 30, 

2012

2011

2012

2011

Revenues 




Casino

$           83,612

$          82,184

$        266,841

$        260,103

Food and beverage

5,232

5,320

17,497

17,236

Hotel

3,257

2,848

9,317

8,240

Other

1,350

1,060

4,048

3,554

Gross revenues

93,451

91,412

297,703

289,133

Less promotional allowances

13,999

11,422

42,883

39,699

Net revenues 

79,452

79,990

254,820

249,434




Operating expenses




Casino

19,228

19,791

60,658

59,884

Gaming taxes 

18,071

17,719

57,515

56,058

Food and beverage

3,377

4,070

12,142

14,320

Hotel

2,555

2,288

7,665

6,918

Marketing, advertising, and entertainment  

1,746

1,732

5,540

5,429

Facilities

4,982

4,997

15,089

15,245

Depreciation and amortization

7,443

8,301

24,623

28,888

General and administrative expenses 

12,122

11,525

36,512

34,694

Other

323

85

632

271

Operating expenses

69,847

70,508

220,376

221,707

Income from operations

9,605

9,482

34,444

27,727




Other (expenses) income 




Interest expense

(12,657)

(12,632)

(37,908)

(37,853)

Amortization of finance fees and accretion of discount on senior notes

(1,929)

(1,777)

(5,610)

(5,168)

Interest income




Other income (expense), net

2

(2)

59

(11)

Net loss on Chapter 11 related reorganization items 

-

-

(1,149)

Total other expense, net

(14,584)

(14,411)

(43,459)

(44,181)




Loss before income taxes 

(4,979)

(4,929)

(9,015)

(16,454)




Income tax expense  – current

(74)

(556)

(220)

(1,419)

Income tax expense - deferred

(1,682)

(1,680)

(5,046)

(1,130)

Net loss 

$           (6,735)

$          (7,165)

$        (14,281)

$        (19,003)




Loss per share:




Basic

$           (72.68)

$          (79.43)

$        (183.78)

$        (224.42)

Diluted

$           (72.68)

$          (79.43)

$        (183.78)

$        (224.42)




Weighted average common shares outstanding

151,716

144,231

147,763

142,048

Weighted average common and common equivalent shares outstanding

151,716

144,231

147,763

142,048

Greektown Superholdings, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share data)





September 30,

December 31,

2012

2011

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$                        44,500

$                    50,754

Accounts receivable – gaming, net

790

734

Accounts receivable – other, net

1,834

1,216

Inventories

338

398

Prepaid expenses

7,131

5,605

Prepaid Michigan Gaming Control Board annual fee

1,095

8,823

Prepaid municipal services fees

-

3,346

Deposits

1,632

1,631

Total current assets

57,320

72,507

Property, building, and equipment, net 

331,250

317,085

Other assets:

 Financing fees - net of accumulated amortization 

9,104

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  

37,950

48,300

Goodwill

110,252

110,252

Total assets

$                     690,006

$                  703,845

Liabilities and shareholders' equity 

Current liabilities:

Accounts payable

17,860

15,128

Accrued interest

12,597

25,063

Accrued expenses and other liabilities

10,930

9,631

Total current liabilities

41,387

49,822

Long-term liabilities:

Other accrued income taxes

9,091

8,871

Senior secured notes - net

370,783

367,748

Obligation under capital lease

2,476

2,489

Deferred income taxes

15,140

10,094

Total long-term liabilities

397,490

389,202

Total liabilities

438,877

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 September 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 September 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 September 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 September 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,152,054 and 142,423 shares issued and outstanding at September 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

14,241

13,652

Accumulated deficit

(53,053)

(38,772)

Total shareholders' equity 

251,129

264,821

Total liabilities and shareholders' equity 

$                     690,006

$                  703,845

Greektown Superholdings, Inc.

Consolidated Statements of Cash Flows (unaudited)

(In thousands)



Nine months ended September 30,

2012

2011

Operating activities 


Net loss 

$                 (14,281)

$                 (19,003)

Adjustments to reconcile net loss net cash provided by (used in) operating activities:


Depreciation and amortization

24,623

28,888

Amortization of finance fees and accretion of discount on senior notes

5,610

5,168

Chapter 11 related reorganization items 

-

1,419

Deferred income taxes

5,046

1,130

Stock based compensation

589

400

Changes in current assets and liabilities:

-

Accounts receivable - gaming

(56)

208

Accounts receivable - other

(618)

529

Property tax refund receivable

-

3,451

Inventories

60

(12)

Prepaid expenses 

9,547

9,481

Accounts payable

2,732

1,519

Unsecured distribution liability

-

(10,000)

Accrued interest

(12,466)

(11,808)

Accrued expenses and other liabilities

(4,585)

(1,818)

Net cash provided by operating activities

16,201

9,552


Investing activities


Decrease in restricted cash

-

5,000

Capital expenditures

(22,347)

(9,946)

Disposition of real estate

-

10,681

Redemption of certificate of deposit

-

534

Net cash (provided by) used in investing activities

(22,347)

6,269


Financing activities


Financing fees paid 

(108)

(84)

Net cash used in financing activities 

(108)

(84)


Net (decrease) increase in cash and cash equivalents 

(6,254)

15,737

Cash and cash equivalents at beginning of period

50,754

30,195

Cash and cash equivalents at end of period

$                   44,500

$                  45,932


Supplemental disclosure of cash flow information 


Cash paid during the period for interest

$                   50,268

$                  50,648

Cash paid during the period for income taxes

$                             -

$                       556

Greektown Superholdings, Inc.

Reconciliation of Net Loss to EBITDA (1)

(In thousands)




Three months ended
September 30, 

Nine months ended
September 30, 

2012

2011

2012

2011

Net loss 

$          (6,735)

$          (7,165)

$         (14,281)

$         (19,003)

Other (expenses) income 

14,584

14,411

43,459

43,032

Income tax expense

1,756

2,236

5,266

2,549

Depreciation and amortization

7,443

8,301

24,623

28,888

EBITDA (1)

$         17,048

$          17,783

$           59,067

$         55,466



(1) EBITDA (earnings before interest, taxes, depreciation and amortization) is a measurement not in accordance with 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.