Continued from page 1.
The Golden Nugget Las Vegas is the leading downtown hotel-casino and the largest by number of guestrooms in downtown Las Vegas, offering 1,805 deluxe guest rooms and 102 suites and penthouses. Winner of the AAA Four-Diamond Award for 27 consecutive years, the Golden Nugget is the most luxurious resort in downtown Las Vegas. A 36,000 square-foot casino space features more than 1,260 of the most popular slot and video poker machines, 58 table games including blackjack, roulette and craps, as well as keno and a complete race and sports book and a poker room. The property is a foundation member of the Fremont Street Experience, developed in 1996 to attract and entertain visitors to the area. Amenities of the property include headline entertainment, five award-winning restaurants, a complete spa and salon, 12 meeting and banquet rooms accommodating up to 400 people, and a year-round outdoor swimming pool with cabanas. Additional information and online reservations and travel packages are available at www.goldennugget.com.
About Golden Nugget Laughlin
Golden Nugget Laughlin is an intimate, 300-room resort located on the banks of the Colorado River in Laughlin, Nevada, 90-miles southeast of Las Vegas. The tropical-themed casino features slot and video poker machines, which include progressive-play machines; table games, including blackjack, craps, roulette, and three-card poker; keno; and a complete race and sports book, which is linked to the Golden Nugget Las Vegas for the most up-to-the-minute betting lines. The Golden Nugget's race book offers pari-mutuel betting, providing access to major sporting events from around the world. Additional information is available online: www.gnlaughlin.com.
Cautions Regarding Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of federal securities and case law. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. When used in this release, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes" and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, our examination of historical operating trends, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that our expectations, beliefs and projections will be realized.
We disclaim any obligation to publicly update the forward-looking statements in this release or disclose any difference between our actual results and those reflected in the forward-looking statements. You are cautioned that any forward-looking statements, including statements regarding our intent, belief or current expectations, are not guarantees of future performance and involve risks and uncertainties, and that actual results may vary materially from those reflected in the forward-looking statements.
Risks and uncertainties that could cause our actual results to vary materially from those reflected in the forward-looking statements include general economic conditions in the markets in which we operate, industry-based factors and factors more specific to us such as:
-- our substantial indebtedness and our ability to meet our debt
service obligations;
-- competition within the gaming industry;
-- expansion of gaming on Native American lands, including lands
in California;
-- changes in gaming and non-gaming laws and regulations
(including the potential legalization of gaming in a number of
jurisdictions);
-- our ability to maintain licenses and regulatory approvals for
the Golden Nugget properties and the ability of our officers,
directors and key employees to maintain and/or obtain licenses
and approvals; and
-- changes in federal, state or local tax laws or the
administration of such laws.
Additional factors that could cause our actual results to vary materially from those reflected in the forward-looking statements are described in the "Risk Factors" section of the prospectus forming part of the Form S-4 registration statement we filed with the SEC on April 8, 2004 and our future filings with the SEC.
Continued from page 2.
TABLE 1
Consolidated Results of Operations for
the Quarter Ended March 31, 2004
Amounts are on a historical basis and reflect the results of
operations for the Golden Nugget Group for the sixty-nine day period
from acquisition (January 23, 2004) through March 31, 2004
(dollars in thousands)
Revenues
Casino $37,039
Rooms 10,299
Food and beverage 10,828
Entertainment, retail and other 2,957
-------------
61,123
Less: Promotional allowances (7,241)
-------------
53,882
-------------
Expenses
Casino 20,376
Rooms 3,809
Food and beverage 6,266
Entertainment, retail and other 2,352
Provision for doubtful accounts 611
General and administrative 10,579
Depreciation and amortization 2,769
-------------
46,762
-------------
Operating Income 7,120
-------------
Non-operating Income (Expense)
Equity in loss of unconsolidated subsidiary (157)
Interest income 77
Interest expense, net (3,950)
-------------
(4,030)
-------------
Net income (loss) 3,090
=============
TABLE 2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following unaudited pro forma condensed combined statements of
operations give effect to the Acquisition, including the additional
capital contribution and borrowings under our senior credit facility
as if they had occurred on January 1, 2003. The pro forma financial
statements are presented for information purposes only and are not
necessarily indicative of the operating results or financial position
that would have occurred if the Acquisition, the offering of the notes
and borrowings under our senior credit facility had been completed as
of the dates indicated, nor is it necessarily indicative of future
operating results or financial position.
The pro forma adjustments are based on available information and
upon assumptions that we believe are reasonable under the
circumstances, including the allocation of the purchase price to the
assets acquired and liabilities assumed.
Unaudited Pro Forma Condensed Consolidated
Statement of Operations
For the Three Months Ended March 31, 2004
-------------------------------------------
Historical Adjustments Pro Forma
---------------- ------------- ---------
(dollars in thousands)
Net Revenues 53,882 14,805 (a) $68,687
Cost and expenses
Casino-hotel operations 33,414 9,423 (a) 42,837
General and administrative 10,579 2,525 (a)
(1,565) (b)
78 (c)
33 (d)
102 (e)
(72) (f) 11,681
Management Fee 844 (a)
(844) (c) -
Depreciation and amortization 2,769 472 (g) 3,241
----------- ------------- ---------
Total costs and expenses 46,762 10,997 57,759
----------- ------------- ---------
Operating income 7,120 3,808 10,928
Other income (expense)
Equity in loss of joint venture (157) (55)(a) (212)
Interest income 77 (52)(h) 25
Intercompany interest (206)(a)
206 (i) -
Interest expense (3,950) (66)(j) (4,016)
---------------- ------------- ---------
Other expense (4,030) (173) (4,203)
---------------- ------------- ---------
Income (loss) before
income taxes 3,090 3,636 6,726
Income tax provision (298)(a)
298 (k) -
---------------- ------------- ---------
Net income (loss) $3,090 $3,636 $6,726
================ ============= =========
Unaudited Pro Forma Condensed Consolidated
Statement of Operations
For the Three Months Ended March 31, 2003
-----------------------------------------------------
Historical Pro Forma
------------------------- -------------
Poster Poster
Financial Golden Nugget Financial
Group, Inc. Group Adjustments Group, Inc.
----------- ------------- ----------- -------------
(dollars in thousands)
Net Revenues $- 61,674 - $61,674
Cost and expenses
Casino-hotel
operations - 38,447 - 38,447
General and
administrative - 10,807 325 (l)
139 (m)
422 (n)
(453)(o) 11,240
(Gain) loss on
sale of assets - (32) - (32)
Depreciation
and amortization - 3,434 (193)(p) 3,241
Management fee - 3,490 (3,490)(l) -
----------- ------------- ----------- -------------
Total costs
and expenses - 56,146 (3,250) 52,896
----------- ------------- ----------- -------------
Operating income - 5,528 3,250 8,778
Other income
(expense)
Equity in loss
of joint venture - (204) - (204)
Interest income - 10 - 10
Interest expense - (13) (4,019)(q) (4,032)
Intercompany
interest expense - (884) 884 (r) -
----------- ------------- ----------- -------------
Other expense - (1,091) (3,135) (4,226)
----------- ------------- ----------- -------------
Income (loss)
before income taxes - 4,437 116 4,553
Income tax
provision - (1,395) 1,395 (s) -
----------- ------------- ----------- -------------
Net income (loss) $- $3,042 $1,511 $4,553
=========== ============= =========== =============
Notes to Table 2 for 2004 Amounts
a) Reflects the addition of actual, historical operating results for
the Golden Nugget Group for the period during the quarter prior to
acquisition by Poster (January 1, 2004 through January 22, 2004).
b) Reflects the elimination of the signing bonuses paid to key
executives upon completion of the Acquisition, the cost of which
are included in results of operations for the quarter. Such
bonuses are non-recurring in nature and not reflective of the
results of operations on a pro forma basis.
c) Reflects elimination of the management fee historically charged by
MGM MIRAGE for certain corporate functions and for the use of the
Golden Nugget name and related trademark. In connection with the
Acquisition, Poster acquired the rights to the Golden Nugget name
and related trademarks; no fee for their use (or amortization of
the cost basis) will be incurred. Also reflects the cost of the
replacement of corporate functions previously provided by MGM
MIRAGE, and which were included in the management fee, for a
period of 22 days prior to the Acquisition (approximately $1.3
million on an annual basis).
d) Reflects for the period of 22 days, the net increase in base
salaries and minimum bonuses for key executives of Poster and of
the Golden Nugget Group under employment contracts that became
effective upon completion of the Acquisition ($555,000 on an
annual basis).
e) The employment contracts also provide for annual incentive bonuses
in the event that post-acquisition cumulative EBITDA (as defined)
exceeds $30.0 million in 2004, $60.0 million in 2005 and $90.0
million in 2006. The adjustment of $102,000 represents that
portion of an accrual that would have been recorded in the first
22 days of the fiscal quarter, prior to closing of the
Acquisition.
f) Reflects for a period of 22 days the elimination of (i) allocations
for certain customer service offices and other MGM MIRAGE programs
that were not part of the Acquisition ($13,000 for the period) and
(ii) rent expense for slot equipment leased from an affiliate, and
which were purchased in the Acquisition ($59,000 for the period).
g) Reflects a net increase in depreciation expense and amortization of
an intangible asset for the players club, resulting from the
impact of purchase price adjustments.
h) Reflects the elimination of interest earned on funds placed in
escrow, pending completion of the Acquisition.
i) To eliminate 22 days of inter-company interest on the note payable
to MGM MIRAGE, which note is no longer an obligation of the
Company upon the Acquisition.
j) The Company's Senior Notes were outstanding for the entire quarter.
The accompanying adjustment reflects an increase in interest
expense, assuming that the $20.0 million term loan taken under the
credit facility (upon closing of the Acquisition) was drawn as of
January 1, 2004.
k) Reflects elimination of income tax expense for earnings during the
period prior to the Acquisition. PB Gaming has elected to be
treated as a Subchapter S corporation and has elected to have each
of Poster, GNLV and GNL treated as a qualified Subchapter S
subsidiary for federal income tax purposes. As a result, the
owners of PB Gaming will be taxed on the income of PB Gaming,
Poster and the Golden Nugget Group at a personal level and PB
Gaming, Poster and the Golden Nugget Group generally will not be
subject to federal income taxation at the corporate level.
Notes to Table 2 for 2003 Amounts
l) Reflects elimination of the management fee historically charged by
MGM MIRAGE for certain corporate functions and for the use of the
Golden Nugget name and related trademark. In connection with the
Acquisition, Poster acquired the rights to the Golden Nugget name
and related trademarks; no fee for their use (or amortization of
the cost basis) will be incurred. Also reflects the cost of the
replacement of corporate functions previously provided by MGM
MIRAGE, and which were included in the management fee
(approximately $1.3 million on an annual basis).
m) Reflects the net increase ($139,000 on a quarterly basis) in base
salaries and minimum bonuses for key executives of Poster and of
the Golden Nugget Group under employment contracts that became
effective upon completion of the Acquisition.
n) The employment contracts also provide for annual incentive bonuses
in the event that post-acquisition cumulative EBITDA (as defined)
exceeds $30.0 million in 2004, $60.0 million in 2005 and $90.0
million in 2006. The adjustment of $422,000 represents the
quarterly accrual that would have been recorded as pro forma
expense because the 2004 target EBITDA was achieved on a pro forma
basis for the year ended December 31, 2003.
o) Reflects the elimination of (i) allocations for certain customer
service offices and other MGM MIRAGE programs that were not part
of the Acquisition ($110,000 for the quarter) and (ii) rent
expense for slot equipment leased from an affiliate, and which
were purchased in the Acquisition ($343,000 for the quarter).
p) Reflects a net decrease in depreciation expense and amortization of
an intangible asset for the players club, resulting from the
impact of purchase price adjustments.
q) Reflects an increase in interest expense for the Senior Notes and
the draw of the Term Loan under the bank credit facility,
including amortization of deferred financing costs.
r) To eliminate inter-company interest on the note payable to MGM
MIRAGE, which note is no longer an obligation of the Company upon
the Acquisition.
s) PB Gaming has elected to be treated as a Subchapter S corporation
and has elected to have each of Poster, GNLV and GNL treated as a
qualified Subchapter S subsidiary for federal income tax purposes.
As a result, the owners of PB Gaming will be taxed on the income
of PB Gaming, Poster and the Golden Nugget Group at a personal
level and PB Gaming, Poster and the Golden Nugget Group generally
will not be subject to federal income taxation at the corporate
level.
Table 3
Reconciliation of Net Income to EBITDA
EBITDA consists of net income plus (i) interest expense, (ii)
income tax provision (or less income tax benefit), and (iii)
depreciation and amortization expense. EBITDA is presented as a
measure of operating performance because we believe analysts,
investors and others frequently use it in the evaluation of companies
in our industry, in particular for the ability of a company to meet
its debt service requirements. Other companies in our industry may
calculate EBITDA differently, particularly as it relates to
non-recurring, unusual items.
EBITDA is not a measurement of financial performance under GAAP
and should not be considered as an alternative to cash flow from
operating activities, as a measure of liquidity, as an alternative to
net income or as an indication of operating performance or any other
measure of performance derived in accordance with GAAP.
The following table provides a reconciliation of net income (loss)
to EBITDA (dollars in thousands):
Pro Forma
For the Fiscal Quarter
Ending March 31,
---------------------------------
2004 2003
-------------- --------------
Net income $6,726 $4,553
Interest expense 4,016 4,032
Income taxes - -
Depreciation and amortization 3,241 3,241
-------------- --------------
EBITDA $13,982 $11,826
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