TRMP Trump Entertainment Resorts (MM)

Trump Entertainment Resorts, Inc. (NASDAQ: TRMP) (the �Company�) today reported its results for the three months and year ended December 31, 2007 and other related news. In making the announcement, Mark Juliano, Chief Executive Officer of the Company, said, �2007 was a year of accomplishment and challenge for our company. Generally, we are pleased that our initiatives aimed at attracting new cash business, targeting our marketing dollars, controlling costs and delivering a high quality experience through facility innovation and service enhancement led us to increase our overall market share and deliver consistent margins at two of our three properties. Certainly the introduction of gaming in Pennsylvania had a more severe impact than had been anticipated. Due to the effects of current competitive and economic pressures, and in accordance with generally accepted accounting principles, we recorded non-cash write-downs to certain of our intangible and other assets during the quarter that had a substantial impact on our earnings. �We viewed 2007 as an opportunity to continue investing in a new business model focused on increasing the quality of our customers, length of stay and diversifying our revenue streams to include more non-gaming amenities. The critical changes we have made during the past two years to accomplish these goals led us, in my view, to outperform the market revenue trends for the fourth quarter and full year. While the year posed challenges for each of our properties and the entire Atlantic City gaming market, we are encouraged by the results our strategic initiatives have produced and are confident we have made great accomplishments in building the company we have been envisioning for nearly three years. �The refinancing of our credit facility in the fourth quarter was a significant accomplishment for the Company. By extending the maturity period, providing a favorable interest rate in a difficult credit market and eliminating certain financial convenants, this development further assured the necessary liquidity for the Company to implement its strategic plan. �Now, as we prepare to open our new 782-room hotel tower at the Taj Mahal, which will be joined by other new hotel rooms in Atlantic City this year, we have an optimistic outlook on the future as we believe that Atlantic City is developing into a regional resort destination, that the worst of the impact of Pennsylvania is now behind us, and that we have built a Company prepared to grow by operating smarter and more efficiently than before.� CONSOLIDATED RESULTS The following table outlines the financial results (dollars in millions, except share data. Unaudited): � Three Months Ended � Year Ended December 31, December 31, 2007 � 2006 2007 � 2006 Net revenues $228.6 $244.2 $988.2 $1,026.3 Adjusted EBITDA1 $22.6 $34.2 $144.4 $168.0 Depreciation and amortization (16.4) (16.3) (65.6) (68.1) Income from legal settlements, net of legal fees 28.8 - 28.8 1.7 Goodwill and other asset impairment charges (238.7) - (238.7) - (Loss) income from operations $(203.7) $17.9 $(131.1) $101.6 Loss from continuing operations $(183.2) $(10.3) $(198.2) $(19.1) Income from discontinued operations - 0.6 - 0.6 Net loss $(183.2) $(9.7) $(198.2) $(18.5) Basic and diluted share data: Continuing operations $(5.89) $(0.33) $(6.38) $(0.62) Discontinued operations - 0.02 - 0.02 Basic and diluted net loss per share $(5.89) $(0.31) $(6.38) $(0.60) The majority of the Company�s loss from continuing operations during the quarter and year ended December 31, 2007 is attributable to (i) non-cash charges of $238.7 million in goodwill and other asset impairment charges and $4.1 million relating to the refinancing of the Company�s credit facility, and (ii) the decrease in net revenues attributable to a decrease in gaming revenues of $18.6 million and $57.6 million for the quarter and year ended December 31, 2007, respectively. The Company attributes the decline in gaming revenues primarily to increased regional competition. These items were partially offset by $28.8 million in income, net of legal fees, resulting from the settlement with the City of Atlantic City of various property tax appeals during 1997 through 2007, including $12 million in cash. In accordance with Statement of Financial Accounting Standards No.142 and No. 144, the Company performed its annual goodwill and other intangible asset impairment test during the fourth quarter of 2007. The goodwill and other intangibles were recorded in May 2005 when the Company utilized fresh-start accounting at a time when Atlantic City was reaching towards an all-time revenue peak, and general economic and credit market conditions were strong relative to today. Based upon the results of the impairment testing, the Company determined that, due to the effects of the recent increase in regional competition, the partial smoking ban in Atlantic City, and a general weakening of the economy and the credit markets, goodwill and trademarks had been impaired relative to the May 2005 valuation. As a result, the Company recognized goodwill and other intangible asset impairment charges totaling $147.4 million, of which $30.4 million related to the Taj Mahal, $53.1 million related to Trump Plaza and $63.9 million related to Trump Marina. In addition, the Company recorded an asset impairment charge totaling $91.3 million related to long-lived assets of Trump Marina. During quarter and year ended December 31, 2007, the Company�s gaming revenues outperformed the Atlantic City marketplace, as reported to the New Jersey Casino Control Commission. The following chart outlines those revenues: � � � Three Months Ended December 31, � � � � Year Ended December 31, � (in millions) 2007 � 2006 Change FY2007 � FY2006 Change Trump $241.3 $258.5 -6.7% $1,030.8 $1,087.3 -5.2% Competitors 889.0 978.2 -9.1% 3,889.9 4,130.4 -5.8% Full Market $1,130.3 $1,236.7 -8.6% $4,920.8 $5,217.7 -5.7% Slot revenue for the quarter decreased by 7.3%, or $13.0 million, on a year-over-basis, compared to a 14.4% combined decrease for other Atlantic City gaming operators. For the full year 2007, the Company�s slot revenue declined by 7.8%, or $59.1 million, compared to a combined decrease of 9.2% by competitors on a year-over-year basis. The company attributes this decrease primarily to regional competition in Pennsylvania. Table revenue for the quarter decreased by 5.2%, or $4.2 million, on a year-over-year basis, compared to an overall 5.9% increase for the Company�s competitors. For the quarter, table drop increased by $20.9 million, or 4.5%. Table hold decreased by 157 basis points to 14.7%, resulting in a decrease in table win of $7.7 million, or 9.6%. For the full year 2007, the Company�s table game revenue increased by 0.8%, compared to an overall increase of 3.7% for the Company�s competitors. For the same period, table drop increased $65.1 million, or 3.4%. Table hold decreased by 36 basis points to 15.5%, resulting in a decrease in table win of $7.1 million. TrumpONE, the Company�s unified marketing program and players� club, showed strong signs of success and customer acceptance since its launch in late June 2007. Between July and December 2007, 16% of database customers played at two or more properties, compared to 10% for the same period of 2006. This resulted in an increase of 41%, or $9.3 million, in cross-property win. In addition, the Company launched retail stores and a merchandise catalogue in 2007 for customer points redemption, and plans to begin a cross-property shuttle in the coming weeks. Revenue management initiatives continued to produce positive results as, for the year, hotel occupancy improved to 87.3% from 85.1%, revenue per available room (�RevPAR�) increased 7.7% to $79.89, and cash room revenue increased $7.9 million to $33.8 million. Cost savings initiatives also continued to produce positive measurable results to the Company�s bottom line, resulting in annual property-level payroll and benefit cost savings of $15 million, or 4.1%, on a year-over-year basis. The new Taj Mahal hotel tower remains on schedule and budget. The $255 million project is expected to begin a phased opening by Labor Day 2008, and to be completed by the conclusion of the year. Capital redevelopment projects at the Company�s properties were substantially complete as of the end of the fourth quarter of 2007. At the Taj Mahal, the High Limit Gaming Salon was completed and casino floor renovations continued during the fourth quarter. Additionally, a refurbishment of the poker room has been completed in early 2008 and construction has begun on the Italian restaurant Il Mulino New York at the Taj Mahal, which is scheduled to open adjacent to the casino floor in August 2008. Corporate & Other Expenses Corporate and development costs decreased $5.1 million and $5.8 million for the quarter and year ended December 31, 2007, respectively, primarily due to lower development costs and a reduction in corporate payroll and benefit costs. Capital Structure The Company reported that as of December 31, 2007 it had cash of $121.3 million excluding $52.7 million of cash restricted in use primarily to fund construction of the new hotel tower at the Trump Taj Mahal. The Company indicated total debt had increased by $236.5 million since December 31, 2006 to $1,643.9 million at December 31, 2007. Capital expenditures for the year ended December 31, 2007 were approximately $232 million, consisting of $38 million maintenance capital, $106 million renovation, and $88 million for the Taj Mahal tower. Capitalized interest during the year ended December 31, 2007 was $4.2 million compared to $1.2 million during the year ended December 31, 2006. Conference Call Information The Company will conduct a conference call at 11:00 a.m. Eastern Time (ET) on March 5, 2008, during which management will discuss the results and other matters addressed in the earnings release, which will be available live on the investor relations page of Company�s website, www.trumpcasinos.com. Members of the financial community and interested investors who wish to participate in the conference call may do so via telephone by calling toll free (866) 761-0749 or, for callers outside the United States, (617) 614-2707, not earlier than 15 minutes before the call is scheduled to begin. The passcode for the call is 12743217. A replay of the conference call will be available on the Company's website, as well as via telephone from 4:00 p.m. ET on March 5, 2008 until midnight ET on March 12, 2008. The replay number is toll free (888) 286-8010 or, for callers outside the United States and Canada, (617) 801-6888. The replay passcode is 29322862. About Trump Entertainment Resorts, Inc. Trump Entertainment Resorts, Inc. is a leading gaming company that owns and operates three properties. The Company�s properties are Trump Taj Mahal Casino Resort and Trump Plaza Hotel and Casino, located on the Boardwalk in Atlantic City, New Jersey, and Trump Marina Hotel Casino, located in Atlantic City�s Marina District. The Company is the sole vehicle through which Donald J. Trump, the Company�s Chairman and largest stockholder, conducts gaming activities and is separate and distinct from Mr. Trump�s real estate and other holdings. PSLRA Safe Harbor for Forward-Looking Statements and Additional Available Information The Private Securities Litigation Reform Act of 1995 provides a �safe harbor� for forward-looking statements so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in such statements. All statements and information concerning plans, expectations, estimates and beliefs, as well as other statements including words such as �anticipate,� �believe,� �plan,� �estimate,� �expect,� �intend,� �will,� �could,� �optimistic,� �can� and other similar expressions, constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. In connection with certain forward-looking statements contained in this release and those that may be made in the future by or on behalf of Trump Entertainment Resorts, Inc., the Company notes that there are various factors that could cause actual results to differ materially from those set forth in any such forward-looking statements. The forward-looking statements contained in this release reflect the opinion of management as of the date of this release and are qualified by, and subject to, significant business, economic, competitive, regulatory and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of the Company. Accordingly, there can be no assurance that the forward-looking statements contained in this release will be realized. Readers are hereby advised that developments subsequent to this release are likely to cause these statements to become outdated with the passage of time or other factors beyond the control of the Company. The Company does not intend, however, to update the guidance provided herein prior to its next release or unless otherwise required to do so. Readers of this release should consider these facts in evaluating the information contained herein. In light of the foregoing, readers of this release are cautioned not to place undue reliance on the forward-looking statements contained herein. Additional information concerning the potential risk factors that could affect the Company�s future performance are described from time to time in the Company�s periodic reports filed with the SEC, including, but not limited to, the Company�s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. These reports may be viewed free of charge on the SEC�s website, www.sec.gov, or on the Company�s website, www.trumpcasinos.com. (1) � Adjusted EBITDA presented in this table is (loss) income from operations excluding depreciation and amortization, goodwill and other asset impairment charges, income from our 2007 settlement with the City of Atlantic City, net of legal fees, and income from our 2006 settlement with the South Jersey Transportation Authority. The Company is presenting Adjusted EBITDA to highlight material differences that exist between periods due to unusual income and expense items. EBITDA and Adjusted EBITDA are not Generally Accepted Accounting Principles ("GAAP") measurements, but are commonly used in the gaming industry as measures of performance and as a basis for the valuation of gaming companies. Refer to the selected financial information within and accompanying this press release for a reconciliation of (loss) income from operations to Adjusted EBITDA. TRUMP ENTERTAINMENT RESORTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (unaudited) � � � � Three Months Year Ended Ended December 31, December 31, � 2007 � � 2006 � � 2007 � � 2006 � Revenues: Gaming $ 238,025 $ 256,605 $ 1,021,625 $ 1,079,245 Rooms 19,830 19,069 83,733 77,836 Food and beverage 28,339 28,218 118,959 122,611 Other � 12,855 � � 8,782 � � 46,019 � � 43,370 � 299,049 312,674 1,270,336 1,323,062 Less promotional allowances � (70,435 ) � (68,478 ) � (282,101 ) � (296,783 ) Net revenues 228,614 244,196 988,235 1,026,279 � Costs and expenses: Gaming 117,183 118,303 474,023 481,747 Rooms 3,971 3,458 16,501 12,458 Food and beverage 12,756 10,144 51,260 48,585 General and administrative 68,376 67,160 274,552 278,305 Income from settlement of property tax appeals (30,705 ) - (30,705 ) - Corporate and development 4,948 10,442 26,839 33,120 Corporate - related party 725 433 2,552 2,363 Goodwill and other asset impairment charges 238,713 - 238,713 - Depreciation and amortization � 16,392 � � 16,345 � � 65,632 � � 68,091 � � 432,359 � � 226,285 � � 1,119,367 � � 924,669 � (Loss) income from operations (203,745 ) 17,911 (131,132 ) 101,610 � Non-operating income (expense): Interest income 2,080 2,327 7,553 10,299 Interest expense (33,582 ) (32,431 ) (131,034 ) (130,144 ) Loss on early extinguishment of debt � (4,127 ) � - � � (4,127 ) � - � � (35,629 ) � (30,104 ) � (127,608 ) � (119,845 ) Loss before income taxes, minority interests and discontinued operations (239,374 ) (12,193 ) (258,740 ) (18,235 ) Provision for income taxes (150 ) (864 ) (350 ) (6,451 ) Minority interests � 56,290 � � 2,812 � � 60,895 � � 5,617 � Loss from continuing operations � (183,234 ) � (10,245 ) � (198,195 ) � (19,069 ) Income from discontinued operations: Trump Indiana - 678 - 678 Provision for income taxes - 56 - 56 Minority interest � - � � (172 ) � - � � (172 ) Income from discontinued operations � - � � 562 � � - � � 562 � Net loss $ (183,234 ) $ (9,683 ) $ (198,195 ) $ (18,507 ) � Continuing operations $ (5.89 ) $ (0.33 ) $ (6.38 ) $ (0.62 ) Discontinued operations � - � � 0.02 � � - � � 0.02 � Basic and diluted net loss per share $ (5.89 ) $ (0.31 ) $ (6.38 ) $ (0.60 ) � Weighted average shares outstanding: Basic and diluted 31,093,983 30,989,609 31,086,918 30,920,616 TRUMP ENTERTAINMENT RESORTS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (unaudited) � � December 31, � 2007 � � 2006 � Current assets: Cash and cash equivalents $ 121,309 $ 100,007 Restricted cash - 27,375 Accounts receivable, net of allowance for doubtful accounts of $15,925 and $13,032, respectively 45,053 45,342 Accounts receivable, other 6,366 9,000 Inventories 11,235 12,039 Deferred income taxes 7,421 10,351 Other current assets � 13,644 � � 13,049 � Total current assets � 205,028 � � 217,163 � � Net property and equipment 1,630,453 1,535,057 � Other assets: Restricted cash 52,702 - Goodwill 135,058 226,480 Trademarks 91,357 197,000 Intangible assets, net of accumulated amortization of $4,599 and $2,787, respectively 5,918 7,730 Deferred financing costs, net of accumulated amortization of $4,031 and $4,279, respectively 17,725 17,914 Property tax receivable 18,782 - Other assets, net of reserve of $33,209 and $36,203, respectively � 64,030 � � 59,152 � Total other assets � 385,572 � � 508,276 � Total assets $ 2,221,053 � $ 2,260,496 � Current liabilities: Accounts payable $ 59,741 $ 33,088 Accrued payroll and related expenses 25,642 28,332 Income taxes payable 8,195 24,904 Partnership distribution payable 250 260 Accrued interest payable 18,102 13,645 Self-insurance reserves 13,016 13,299 Other current liabilities 39,047 31,941 Current maturities of long-term debt � 5,646 � � 11,263 � Total current liabilities � 169,639 � � 156,732 � � Long-term debt, net of current maturities 1,638,300 1,396,170 Deferred income taxes 100,159 152,414 Other long-term liabilities 31,853 17,017 Minority interests 64,248 125,395 � Stockholders' equity: Preferred stock, $1 par value; 1,000,000 shares authorized, no shares issued and outstanding - - Common stock, $.001 par value; 75,000,000 shares authorized, 31,071,021 and 30,990,902 shares issued and outstanding, respectively 31 31 Class B Common stock, $0.001 par value; 1,000 shares authorized, 900 shares issued and outstanding - - Additional paid-in capital 460,053 457,772 Accumulated deficit � (243,230 ) � (45,035 ) Total stockholders' equity � 216,854 � � 412,768 � Total liabilities and stockholders' equity $ 2,221,053 � $ 2,260,496 � TRUMP ENTERTAINMENT RESORTS, INC. SELECTED FINANCIAL INFORMATION SUMMARY OPERATING DATA (unaudited, in millions) � � � � Three Months Year Ended Ended December 31, December 31, � 2007 � � 2006 � � 2007 � � 2006 � Gaming revenues Trump Taj Mahal $ 114.4 $ 123.9 $ 504.1 $ 525.4 Trump Plaza 66.5 72.1 277.8 298.2 Trump Marina � 57.1 � � 60.6 � � 239.7 � � 255.6 � Total $ 238.0 � $ 256.6 � $ 1,021.6 � $ 1,079.2 � � Net revenues Trump Taj Mahal $ 112.2 $ 119.6 $ 489.5 $ 502.7 Trump Plaza 61.7 67.5 267.7 278.8 Trump Marina � 54.7 � � 57.1 � � 231.0 � � 244.8 � Total $ 228.6 � $ 244.2 � $ 988.2 � $ 1,026.3 � � (Loss) income from operations Trump Taj Mahal $ (15.4 ) $ 17.9 $ 50.6 $ 80.4 Trump Plaza (29.2 ) 5.2 (12.0 ) 20.7 Trump Marina (153.3 ) 5.7 (139.9 ) 36.1 Corporate and development � (5.8 ) � (10.9 ) � (29.8 ) � (35.6 ) Total $ (203.7 ) $ 17.9 � $ (131.1 ) $ 101.6 � � Adjusted EBITDA Trump Taj Mahal $ 18.4 $ 25.9 $ 106.7 $ 114.3 Trump Plaza 6.0 10.0 37.8 40.7 Trump Marina 3.9 9.1 29.3 48.4 Corporate and development � (5.7 ) � (10.8 ) � (29.4 ) � (35.4 ) Total $ 22.6 � $ 34.2 � $ 144.4 � $ 168.0 � TRUMP ENTERTAINMENT RESORTS, INC. SELECTED FINANCIAL INFORMATION RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO ADJUSTED EBITDA (unaudited, in millions) � � � � � Three Months Ended December 31, 2007 Income (Loss) From Operations Depreciation and Amortization Income from Property Tax Settlement, Net Goodwill and Other Asset Impairment Charges Adjusted EBITDA Trump Taj Mahal $ (15.4 ) $ 7.0 $ (3.6 ) $ 30.4 $ 18.4 Trump Plaza (29.2 ) 4.7 (22.6 ) 53.1 6.0 Trump Marina (153.3 ) 4.6 (2.6 ) 155.2 3.9 Corporate and other � (5.8 ) � 0.1 � - � � - � (5.7 ) Total $ (203.7 ) $ 16.4 $ (28.8 ) $ 238.7 $ 22.6 � � � Three Months Ended December 31, 2006 Income (Loss) From Operations Depreciation and Amortization Income from SJTA Settlement Goodwill and Other Asset Impairment Charges Adjusted EBITDA Trump Taj Mahal $ 17.9 $ 8.0 $ - $ - $ 25.9 Trump Plaza 5.2 4.8 - - 10.0 Trump Marina 5.7 3.4 - - 9.1 Corporate and other � (10.9 ) � 0.1 � - � � - � (10.8 ) Total $ 17.9 � $ 16.3 $ - � $ - $ 34.2 � � � Year Ended December 31, 2007 Income (Loss) From Operations Depreciation and Amortization Income from Property Tax Settlement, Net Goodwill and Other Asset Impairment Charges Adjusted EBITDA Trump Taj Mahal $ 50.6 $ 29.3 $ (3.6 ) $ 30.4 $ 106.7 Trump Plaza (12.0 ) 19.3 (22.6 ) 53.1 37.8 Trump Marina (139.9 ) 16.6 (2.6 ) 155.2 29.3 Corporate and other � (29.8 ) � 0.4 � - � � - � (29.4 ) Total $ (131.1 ) $ 65.6 $ (28.8 ) $ 238.7 $ 144.4 � � � Year Ended December 31, 2006 Income (Loss) From Operations Depreciation and Amortization Income from SJTA Settlement Goodwill and Other Asset Impairment Charges Adjusted EBITDA Trump Taj Mahal $ 80.4 $ 33.9 $ - $ - $ 114.3 Trump Plaza 20.7 20.0 - - 40.7 Trump Marina 36.1 14.0 (1.7 ) - 48.4 Corporate and other � (35.6 ) � 0.2 � - � � - � (35.4 ) Total $ 101.6 � $ 68.1 $ (1.7 ) $ - $ 168.0 �