Quarterly report pursuant to Section 13 or 15(d)

Acquisition of Rising Star And Grand Lodge Casinos

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Acquisition of Rising Star And Grand Lodge Casinos
 9 Months Ended
Sep. 30, 2011
Acquisition of Rising Star And Grand Lodge Casinos [Abstract]  
ACQUISITION OF RISING STAR AND GRAND LODGE CASINOS
10.  
ACQUISITION OF RISING STAR AND GRAND LODGE CASINOS
On September 10, 2010, the Company entered into definitive agreements with Grand Victoria Casino and Resort L.P. to acquire all of the operating assets of the property, located in Rising Sun, Indiana on the Ohio River. The purchase price was $42.4 million, exclusive of working capital adjustment, property cash and fees, as of March 31, 2011. The Company entered into the Credit Agreement with Wells Fargo on October 29, 2010, as discussed in Note 7, and regulatory approvals were obtained to accommodate a closing effective April 1, 2011. In August 2011, the property was renamed Rising Star Casino Resort (“Rising Star”).
Through September 30, 2011 and December 31, 2010, the Company had incurred $0.5 million and $0.2 million in acquisition related expenses, respectively, which are included in project development and acquisition expense. In conjunction with closing on the financing commitment, the Company has incurred $2.6 million in financing related fees located on the balance sheet in other intangibles.
The Rising Star purchase price was allocated in the second quarter of 2011 as follows (in millions):
         
Land and land improvements
  $ 8.1  
Buildings and building improvements
    16.8  
Equipment and boat related assets
    6.3  
Gaming license
    9.9  
Player loyalty program
    1.7  
Goodwill (excess purchase price over the assets purchased)
    1.6  
Working capital (deficit)
    (2.0 )
 
     
 
  $ 42.4  
 
     
On June 28, 2011, the Company, through a wholly-owned subsidiary, Gaming Entertainment (Nevada) LLC, entered into definitive agreements with HCC Corporation dba Grand Lodge Casino to acquire specific gaming related operating assets and liabilities of the property, located in Incline Village, Nevada. The purchase price was $0.7 million, exclusive of operating cash and working capital, as of September 1, 2011. Concurrently, Gaming Entertainment (Nevada) LLC entered into a lease agreement with Hyatt Equities LLC for a five-year term to lease the casino space operating as Grand Lodge Casino for $125,000 per month, over the initial term of the lease.
The Grand Lodge purchase price was allocated in the third quarter of 2011 as follows (in millions):
         
Gaming Equipment
  $ 0.7  
Working capital, including cash acquired
    0.7  
 
     
 
  $ 1.4  
 
     
The following unaudited, condensed consolidated pro forma data summarizes the Company’s results of operations for the periods indicated as if the acquisitions had occurred as of January 1, 2010. This unaudited pro forma consolidated financial information is not necessarily indicative of what the Company’s actual results would have been had the acquisition been completed on that date, or of future financial results. The estimated net income attributable to the Company and the net income per share has been adjusted for Rising Star’s effective tax rate in the State of Indiana.
                                 
In thousands, except for per   Three months ended Sept 30,     Nine months ended Sept 30,  
share amounts   2011     2010     2011     2010  
 
                               
Net revenues
  $ 37,103     $ 69,499     $ 109,527     $ 108,405  
Depreciation and amortization
    2,153       3,202       6,924       8,782  
Operating income
    1,580       9,316       15,069       20,737  
Net income attributable to the Company
    (570 )     2,574       2.602       4,889  
Net income per share
  $ (0.03 )   $ 0.14     $ 0.14     $ 0.27