Tropicana attributes fourth-quarter loss to economy
Tropicana Entertainment Inc.’s fourth quarter earnings continued to be affected by the sluggish economy and several financial charges associated with the decline in the value of a number of company assets, according to the company’s earnings report.
The Las Vegas-based hotel-casino company took a $20.7 million in noncash accounting charges to write down the value of assets in the fourth quarter. Without the charges, Tropicana Entertainment would have broken even in the fourth quarter.
In a regulatory filing released late Monday, Tropicana reported that including expenses attributed to the writedown of assets, it lost $20.9 million on revenue of $539 million. The charges included $3.7 million to write down the value of the Tropicana trade name and $10.5 million associated with the gaming license at Casino Aztar in Indiana.
Comparable results for the same period in 2009 aren’t available since the company began reporting results on March 8, 2010, when it acquired the Tropicana in Atlantic City, according to the report.
“Many casino operators have invested in expanding existing facilities, developing new facilities, and acquiring established facilities in existing markets,” the company said. “Our properties, on the other hand, have been largely unable to invest in the upkeep and expansion of their facilities due to limitations on capital expenditures resulting from the Chapter 11 cases. Our ability to invest in our properties going forward may continue to be constrained.”
Besides the Tropicana Atlantic City, the company controlled by investor Carl Icahn, owns properties in Laughlin and South Lake Tahoe, Nev. Evansville, Ind., Greenville and Vicksburg, Miss, Baton Rouge, La., and in Aruba,
The Tropicana Las Vegas hotel-casino was acquired out of bankruptcy by a different group of investors. Icahn also owns the stalled Fontainebleau project toward the northern end of the Strip, which he purchased in February 2010 for $104.6 million in cash.
In its report, the company said net revenue in 2010 for its Nevada casinos was down 11.2 percent from 2009. The decline was driven by a 15.5 percent decline in slot volume, an 11 percent decline in table game volume and a 4.3 percentage point decline in hotel occupancy.
“Slot machine revenue represents a substantial portion of our revenue. The concentration and evolution of the slot machine manufacturing industry could impose additional costs on our operations,” the company said.
The average daily room rate for the Nevada casinos was $40, down 1.4 percent from 2009. Tropicana Entertainment remains in trademark litigation over the Tropicana name with the Las Vegas Tropicana, according to its filing with the Securities and Exchange Commission.
Tropicana Entertainment ended 2010 with $848.9 million in assets and $263.5 million in debt.
“Our indebtedness could adversely affect our business, financial condition and results of operations and prevent us from fulfilling our obligations under the terms of our indebtedness,” the company said.
In the report, the Tropicana warned their ability to “meet debt service requirements will depend on our future performance.” The company also tied that ability to sustained sales conditions in the cities where they operate, the economy, and other business factors beyond their control.
Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.