Tropicana Entertainment writes down asset values in fourth quarter

By Steve Green

Monday, March 14, 2011 | 5:51 p.m.

Tropicana Entertainment Inc., investor Carl Icahn's gaming company, on Monday said it took $20.7 million in noncash accounting charges to write down the value of certain intangible assets in the fourth quarter.

The company, for the period March 8, 2010-Dec. 31, 2010, reported breakeven results when factoring out those expenses.

Tropicana said in its annual report that including the asset-writedown expenses, it lost $20.9 million on net revenue of $539 million for the March-December period.

Comparable results for the same period in 2009 aren't available since the company reported results beginning on March 8, 2010, when it acquired the Tropicana in Atlantic City.

Tropicana Entertainment acquired several casinos out of the Tropicana Entertainment Holdings LLC bankruptcy.

The Tropicana Las Vegas hotel-casino was acquired out of the bankruptcy by a different group of investors.

Besides the 2,129-room Tropicana Atlantic City, Icahn's Las Vegas-based Tropicana Entertainment Inc. has smaller properties in Evansville, Ind.; Laughlin and South Lake Tahoe, Nev.; Greenville and Vicksburg, Miss.; Baton Rouge, La.; and in Aruba.

The fourth quarter charges included $3.7 million to write down the value of the Tropicana trade name, $10.5 million related to the gaming license at Casino Aztar in Indiana, $4.8 million related to the gaming license at Belle of Baton Rouge, La., and $1.7 million related to the impairment of goodwill at Belle of Baton Rouge.

"The trade name and Baton Rouge impairments were primarily due to reduced revenue and cash flow projections while the impairment at Casino Aztar was primarily due to higher capital expenditure assumptions, lower free cash flow amounts and changes in the weighted average cost of capital, which reduced the fair value of the gaming license," the company said.

Net revenue from the Atlantic City Tropicana from March to December was $257.4 million. Casino Aztar generated $98.4 million in net revenue, the Southern properties contributed $79 million and the Nevada properties contributed $104 million.

Tropicana said that for the Nevada casinos, net revenue in the 2010 reporting period was down 11.2 percent from 2009.

This 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 the hotel occupancy rate.

The average daily room rate for the Nevada casinos was $40, down 1.4 percent from 2009.

"Net revenues in the West region continue to be negatively impacted by the deterioration of casino revenue in the Laughlin and South Lake Tahoe markets resulting from the continuing economic slowdown and reduced consumer discretionary spending," Tropicana said.

The Nevada properties are the 437-room MontBleu in South Lake Tahoe and in Laughlin the 1,495-room Tropicana and the 1,001-room River Palms.

Tropicana Entertainment noted in its filing it remains in trademark litigation over the Tropicana name with the Las Vegas Tropicana.

Icahn through another company owns the mothballed Fontainebleau casino resort project on the Las Vegas Strip.

Tropicana Entertainment ended the year with a strong balance sheet: Assets valued at $848.9 million against debt and liabilities of $263.5 million, leaving Icahn and other shareholders with equity of $585.4 million.