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03.01.2011

LAS VEGAS, March 1, 2011 /PRNewswire-FirstCall/ -- ACME Inc. (NYSE: ) today reported financial results for the fourth quarter and full year ended December 31, 2010.  

For the fourth quarter 2010, we reported a net loss of $7.1 million, or $0.08 per share, compared to a net loss of $1.0 million, or $0.01 per share, in the same period last year.  

Adjusted Earnings(1) for the fourth quarter 2010 reflect a loss of $3.9 million, or $0.05 per share, compared to earnings of $0.2 million, or less than $0.01 per share, for the same period in 2009.  Certain pre-tax items included in Adjusted Earnings for the fourth quarter of 2010 resulted in a net increase in income of $4.9 million ($3.2 million, net of tax, or $0.03 per share).  By comparison, certain pre-tax items included in Adjusted Earnings for the fourth quarter 2009 resulted in a net increase in income of $2.0 million ($1.2 million, net of tax, or $0.01 per share).  Pre-tax items included in adjusted earnings are listed in a table at the end of this press release.

Net revenues were $551.9 million for the fourth quarter 2010, compared to $560.4 million(2) during the same quarter in 2009, a decrease of 1.5%.  Total Adjusted EBITDA was $100.0 million for the quarter, a decrease of 3.1% from $103.2 million(2) in the prior year.

Commenting on the quarter, Keith Smith, President and Chief Executive Officer of ACME Inc., said, "As expected, fourth-quarter comparisons were the best of the year, as business conditions and consumer confidence continued to improve.  As the economic recovery gains momentum, we anticipate we will see increases in both visitation and spend-per-visit, resulting in a return to consistent growth across our business this year."  

(1) See footnotes at the end of the release for additional information relative to non-GAAP financial measures.

 

(2) See financial schedules at the end of this release for reconciliations relative to the pro forma effect of the consolidation of Borgata as if such consolidation had occurred as of the beginning of the period presented.

 
 

 

Full-Year 2010 Results

We reported net income for the year ended December 31, 2010, of $10.3 million, or $0.12 per share. By comparison, we reported net income of $4.2 million, or $0.05 per share for the full year ended December 31, 2009.  

Adjusted Earnings for the full year 2010 were $10.6 million, or $0.12 per share, compared to $31.6 million, or $0.37 per share for the full year 2009.

Net revenues as reported were $2.14 billion and $1.64 billion for the full year ended December 31, 2010 and December 31, 2009, respectively. Total Adjusted EBITDA was $420.3 million for 2010, as compared to $389.5 million in 2009.  The 2010 results reflect the consolidation of Borgata, effective March 24, 2010.  

Consolidating Borgata on a pro forma basis for the full year 2010 and 2009, net revenues were $2.30 billion and $2.42 billion, respectively, and Adjusted EBITDA on a comparable basis was $445.2 million and $527.7 million for those periods, respectively.

Key Operations Review

Las Vegas Locals

In our Las Vegas Locals segment, fourth-quarter 2010 net revenues were $152.1 million versus $155.0 million for the fourth quarter of 2009.  Fourth-quarter 2010 Adjusted EBITDA was $34.1 million, compared to $34.7 million reported in the same quarter of 2009.  These results marked the region's best year-over-year comparison in 12 quarters, as our operating margins remained consistent and local economic conditions began to stabilize.

Downtown

Our Downtown Las Vegas properties generated net revenues of $57.1 million for the fourth quarter 2010, compared to $58.0 million in the fourth quarter 2009. Adjusted EBITDA was $10.9 million, down from $12.2 million in the fourth quarter 2009.  While we continued to expand our leading market share Downtown, business results were impacted by our Hawaiian charter operation.

Midwest and South

In our Midwest and South region, we recorded $172.5 million in net revenues for the fourth quarter 2010, up from $170.3 million for the same period in 2009.  Adjusted EBITDA for the current period was $30.4 million, an increase of 3.4% from the $29.4 million reported in the fourth quarter of 2009.  This increase was the region's best year-over-year comparison in five quarters.  The gain was primarily driven by strong business volumes at our southern Louisiana properties.

Borgata

Borgata's net revenues for the fourth quarter 2010 were $168.8 million, versus $175.4 million in the fourth quarter 2009.  Adjusted EBITDA was $34.1 million, down 6.3% from $36.4 million in the comparable period in 2009. While we were encouraged by growth in slot win, non-gaming revenue and overall market share, these gains were offset by higher promotional expense, declines in table game hold and volume, and increased regional competition.

Key Financial Statistics

The following is additional information as of December 31, 2010:

  • Cash, excluding Borgata: $103.2 million
  • Cash at Borgata: $42.1 million
  • Debt, excluding Borgata: $2.39 billion (including $1.43 billion outstanding under ACME Inc.'s bank credit facility)
  • Debt at Borgata: $860.9 million (including $60.9 million outstanding under Borgata's bank credit facility)

 

Conference Call Information

We will host our fourth-quarter and full-year 2010 conference call today, March 1, at 12:00 p.m. Eastern.  The conference call number is 888.680.0878 and the passcode is 40848173.  Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.  

The conference call will also be available live on the Internet at www.google.com, www.google.com, or:

http://www.google.com/

Following the call's completion, a replay will be available by dialing 888.286.8010 today, March 1, beginning at 3:00 p.m. Eastern and continuing through Tuesday, March 8.  The passcode for the replay will be 65093144.  The replay will also be available on the Internet at www.google.com.

The results of Borgata for the period from October 1, 2010 through December 31, 2010 are included in our condensed consolidated statement of operations for the three months ended December 31, 2010, and its results for the period from March 24, 2010 through December 31, 2010 are included in our condensed consolidated statement of operations for the year ended December 31, 2010.

 
                 
 

Three Months Ended

 

Year Ended

 
 

December 31,

 

December 31,

 
 

2010

 

2009

 

2010

 

2009

 
 

(In thousands, except per share data)

 

Revenues

               

   Gaming

$                     468,204

 

$                     320,377

 

$                  1,812,487

 

$                  1,372,091

 

   Food and beverage

92,422

 

55,950

 

347,588

 

229,374

 

   Room

56,799

 

29,054

 

211,046

 

122,305

 

   Other

32,008

 

24,253

 

123,603

 

100,396

 

Gross revenues

649,433

 

429,634

 

2,494,724

 

1,824,166

 

Less promotional allowances

97,493

 

44,686

 

353,825

 

183,180

 

       Net revenues

551,940

 

384,948

 

2,140,899

 

1,640,986

 
                 

Costs and expenses

               

   Gaming

224,357

 

162,710

 

859,818

 

664,739

 

   Food and beverage

48,359

 

31,306

 

180,840

 

125,830

 

   Room

12,556

 

9,443

 

49,323

 

39,655

 

   Other

25,125

 

19,110

 

99,458

 

77,840

 

   Selling, general and administrative

98,576

 

67,445

 

369,217

 

284,937

 

   Maintenance and utilities

35,952

 

22,185

 

140,722

 

92,296

 

   Depreciation and amortization

51,370

 

39,103

 

199,275

 

164,427

 

   Corporate expense

12,225

 

12,540

 

48,861

 

47,617

 

   Preopening expenses

3,415

 

3,025

 

8,405

 

17,798

 

   Write-downs and other items, net

(219)

 

365

 

4,713

 

41,780

 

       Total costs and expenses

511,716

 

367,232

 

1,960,632

 

1,556,919

 
                 

Operating income from Borgata

-

 

8,205

 

8,146

 

72,126

 

Operating income

40,224

 

25,921

 

188,413

 

156,193

 
                 

Other expense (income)

               

   Interest income

(1)

 

(1)

 

(5)

 

(6)

 

   Interest expense, net of amounts capitalized

55,016

 

33,024

 

164,454

 

146,830

 

   Fair value adjustment of derivative instruments

480

 

-

 

480

 

-

 

   (Gain) loss on early retirements of debt, net

1,191

 

(3,223)

 

(2,758)

 

(15,284)

 

   Gain on equity distribution

-

 

-

 

(2,535)

 

-

 

   Other income

-

 

-

 

(10,000)

 

-

 

   Other non-operating expenses

-

 

3

 

-

 

33

 

   Other non-operating expenses from Borgata, net

-

 

3,073

 

3,133

 

19,303

 

       Total other expense, net

56,686

 

32,876

 

152,769

 

150,876

 
                 

Income (loss) before income taxes

(16,462)

 

(6,955)

 

35,644

 

5,317

 

Income taxes

7,296

 

5,931

 

(8,236)

 

(1,076)

 

Net income (loss)

(9,166)

 

(1,024)

 

27,408

 

4,241

 

Noncontrolling interest

2,068

 

-

 

(17,098)

 

-

 

Net income (loss) attributable to ACME Inc.

$                       (7,098)

 

$                       (1,024)

 

$                       10,310

 

$                         4,241

 
                 

Basic net income (loss) per common share

$                         (0.08)

 

$                         (0.01)

 

$                           0.12

 

$                           0.05

 
                 

Weighted average basic shares outstanding

86,877

 

86,276

 

86,601

 

86,429

 
                 

Diluted net income (loss) per common share

$                         (0.08)

 

$                         (0.01)

 

$                           0.12

 

$                           0.05

 
                 

Weighted average diluted shares outstanding

86,877

 

86,276

 

86,831

 

86,517

 
               

 

The following table sets forth the consolidation of Borgata from a basis comparable to the historical reporting by ACME Inc.. For purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the entire period presented, or for the period from October 1, 2010 through December 31, 2010. The historical column reflects equity method accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of ACME Inc..

 
                 
 

Three Months Ended December 31, 2010

 
 

ACME Inc.

         

ACME Inc.

 
 

Historical

 

Borgata

 

Adjustments

 

Consolidated

 
 

(In thousands, except per share data)

 

Revenues

               

   Gaming

$                     319,445

 

$                      148,759

 

$                                 -

 

$                     468,204

 

   Food and beverage

58,260

 

34,162

 

-

 

92,422

 

   Room

29,795

 

27,004

 

-

 

56,799

 

   Other

22,303

 

9,705

 

-

 

32,008

 

Gross revenues

429,803

 

219,630

 

-

 

649,433

 

Less promotional allowances

46,649

 

50,844

 

-

 

97,493

 

       Net revenues

383,154

 

168,786

 

-

 

551,940

 
                 

Costs and expenses

               

   Gaming

162,044

 

62,313

 

-

 

224,357

 

   Food and beverage

31,963

 

16,396

 

-

 

48,359

 

   Room

9,343

 

3,213

 

-

 

12,556

 

   Other

17,444

 

7,681

 

-

 

25,125

 

   Selling, general and administrative

68,066

 

30,510

 

-

 

98,576

 

   Maintenance and utilities

21,376

 

14,576

 

-

 

35,952

 

   Depreciation and amortization

34,797

 

16,573

 

-

 

51,370

 

   Corporate expense

12,225

 

-

 

-

 

12,225

 

   Preopening expenses

3,415

 

-

 

-

 

3,415

 

   Write-downs and other items, net

(203)

 

(16)

 

-

 

(219)

 

       Total costs and expenses

360,470

 

151,246

 

-

 

511,716

 
                 

Operating income from Borgata

8,770

 

-

 

(8,770)

 

-

 

Operating income

31,454

 

17,540

 

(8,770)

 

40,224

 
                 

Other expense (income)

               

   Interest income

(1)

 

-

 

-

 

(1)

 

   Interest expense, net of amounts capitalized

33,225

 

21,791

 

-

 

55,016

 

   Fair value adjustment of derivative instruments

480

 

-

 

-

 

480

 

   Gain on early retirements of debt

1,191

 

-

 

-

 

1,191

 

   Other income

-

 

-

 

-

 

-

 

   Other non-operating expenses from Borgata, net

10,838

 

-

 

(10,838)

 

-

 

       Total other expense, net

45,733

 

21,791

 

(10,838)

 

56,686

 
                 

Income (loss) before income taxes

(14,279)

 

(4,251)

 

2,068

 

(16,462)

 

Income taxes

7,181

 

115

 

-

 

7,296

 

Net income (loss)

(7,098)

 

(4,136)

 

2,068

 

(9,166)

 

Noncontrolling interest

-

 

-

 

2,068

 

2,068

 

Net income (loss) attributable to ACME Inc.

$                       (7,098)

 

$                        (4,136)

 

$                         4,136

 

$                       (7,098)

 
                 

Basic net income (loss) per common share

$                         (0.08)

         

$                         (0.08)

 
                 

Weighted average basic shares outstanding

86,877

         

86,877

 
                 

Diluted net income (loss) per common share

$                         (0.08)

         

$                         (0.08)

 
                 

Weighted average diluted shares outstanding

86,877

         

86,877

 
               

 

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on October 1, 2009 for the three months ended December 31, 2009, to provide a basis of comparability to the three months ended December 31, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
                 
 

Three Months Ended December 31, 2009

 
 

ACME Inc.

         

ACME Inc.

 
 

Historical

 

Borgata

 

Adjustments

 

Pro Forma

 
 

(In thousands, except per share data)

 

Revenues

               

   Gaming

$                            320,377

 

$                                  153,387

 

$                                -

 

$                      473,764

 

   Food and beverage

55,950

 

32,297

 

-

 

88,247

 

   Room

29,054

 

26,087

 

-

 

55,141

 

   Other

24,253

 

10,124

 

-

 

34,377

 

Gross revenues

429,634

 

221,895

 

-

 

651,529

 

Less promotional allowances

44,686

 

46,487

 

-

 

91,173

 

       Net revenues

384,948

 

175,408

 

-

 

560,356

 
                 

Costs and expenses

               

   Gaming

162,710

 

65,352

 

-

 

228,062

 

   Food and beverage

31,306

 

15,395

 

-

 

46,701

 

   Room

9,443

 

2,942

 

-

 

12,385

 

   Other

19,110

 

8,323

 

-

 

27,433

 

   Selling, general and administrative

67,445

 

31,914

 

-

 

99,359

 

   Maintenance and utilities

22,185

 

15,034

 

-

 

37,219

 

   Depreciation and amortization

39,103

 

19,380

 

324

 

58,807

 

   Corporate expense

12,540

 

-

 

-

 

12,540

 

   Preopening expenses

3,025

 

-

 

-

 

3,025

 

   Write-downs and other items, net

365

 

10

 

-

 

375

 

       Total costs and expenses

367,232

 

158,350

 

324

 

525,906

 
                 

Operating income from Borgata

8,205

 

-

 

(8,205)

 

-

 

Operating income

25,921

 

17,058

 

(8,529)

 

34,450

 
                 

Other expense (income)

               

   Interest income

(1)

 

-

 

-

 

(1)

 

   Interest expense, net of amounts capitalized

33,024

 

5,787

 

-

 

38,811

 

   Gain on early retirements of debt

(3,223)

 

-

 

-

 

(3,223)

 

   Other non-operating expenses

3

 

-

 

-

 

3

 

   Other non-operating expenses from Borgata, net

3,073

 

-

 

(3,073)

 

-

 

       Total other expense, net

32,876

 

5,787

 

(3,073)

 

35,590

 
                 

Income (loss) before income taxes

(6,955)

 

11,271

 

(5,456)

 

(1,140)

 

Income taxes

5,931

 

(359)

 

-

 

5,572

 

Net income (loss)

(1,024)

 

10,912

 

(5,456)

 

4,432

 

Noncontrolling interest

-

 

-

 

(5,456)

 

(5,456)

 

Net income (loss) attributable to ACME Inc.

$                              (1,024)

 

$                                    10,912

 

$                     (10,912)

 

$                        (1,024)

 
                 

Basic net income (loss) per common share

$                                (0.01)

         

$                          (0.01)

 
                 

Weighted average basic shares outstanding

86,276

         

86,276

 
                 

Diluted net income (loss) per common share

$                                (0.01)

         

$                          (0.01)

 
                 

Weighted average diluted shares outstanding

86,276

         

86,276

 
               

 

The following table sets forth the consolidation of Borgata from a basis comparable to the historical reporting by ACME Inc.. For purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the period from March 24, 2010 through December 31, 2010. The historical column reflects the equity method accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of ACME Inc..

 
                 
                 
                 
                 
 

Year Ended December 31, 2010

 
 

ACME Inc.

 

Borgata

     

ACME Inc.

 
 

Historical

 

Stub

 

Eliminations

 

Consolidated

 
 

(In thousands, except per share data)

 

Revenues

               

   Gaming

$                         1,306,414

 

$                            506,073

 

$                                        -

 

$                         1,812,487

 

   Food and beverage

231,054

 

116,534

 

-

 

347,588

 

   Room

120,000

 

91,046

 

-

 

211,046

 

   Other

89,851

 

33,752

 

-

 

123,603

 

Gross revenues

1,747,319

 

747,405

 

-

 

2,494,724

 

Less promotional allowances

186,561

 

167,264

 

-

 

353,825

 

       Net revenues

1,560,758

 

580,141

 

-

 

2,140,899

 
                 

Costs and expenses

               

   Gaming

655,856

 

203,962

 

-

 

859,818

 

   Food and beverage

124,851

 

55,989

 

-

 

180,840

 

   Room

37,517

 

11,806

 

-

 

49,323

 

   Other

72,249

 

27,209

 

-

 

99,458

 

   Selling, general and administrative

274,234

 

94,983

 

-

 

369,217

 

   Maintenance and utilities

90,809

 

49,913

 

-

 

140,722

 

   Depreciation and amortization

146,389

 

52,886

 

-

 

199,275

 

   Corporate expense

48,861

 

-

 

-

 

48,861

 

   Preopening expenses

8,405

 

-

 

-

 

8,405

 

   Write-downs and other items, net

4,721

 

(8)

 

-

 

4,713

 

       Total costs and expenses

1,463,892

 

496,740

 

-

 

1,960,632

 
                 

Operating income from Borgata

49,846

 

-

 

(41,700)

 

8,146

 

Operating income

146,712

 

83,401

 

(41,700)

 

188,413

 
                 

Other expense (income)

               

   Interest income

(5)

 

-

 

-

 

(5)

 

   Interest expense, net of amounts capitalized

119,316

 

45,138

 

-

 

164,454

 

   Fair value adjustment of derivative instruments

480

 

-

 

-

 

480

 

   Gain on early retirements of debt

(2,758)

 

-

 

-

 

(2,758)

 

   Gain on equity distribution

(2,535)

 

-

 

-

 

(2,535)

 

   Other income

(10,000)

 

-

 

-

 

(10,000)

 

   Other non-operating expenses from Borgata, net

27,736

 

-

 

(24,603)

 

3,133

 

       Total other expense, net

132,234

 

45,138

 

(24,603)

 

152,769

 
                 

Income before income taxes

14,478

 

38,263

 

(17,097)

 

35,644

 

Income taxes

(4,168)

 

(4,068)

 

-

 

(8,236)

 

Net income

10,310

 

34,195

 

(17,097)

 

27,408

 

Noncontrolling interest

-

 

-

 

(17,098)

 

(17,098)

 

Net income attributable to ACME Inc.

$                              10,310

 

$                              34,195

 

$                             (34,195)

 

$                              10,310

 
                 

Basic net income per common share

$                                  0.12

         

$                                  0.12

 
                 

Weighted average basic shares outstanding

86,601

         

86,601

 
                 

Diluted net income per common share

$                                  0.12

         

$                                  0.12

 
                 

Weighted average diluted shares outstanding

86,831

         

86,831

 
               

 

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on January 1, 2010 (as opposed to March 24, 2010) for the year ended December 31, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
                 
                 
                 
                 
 

Year Ended December 31, 2010

 
 

ACME Inc.

 

Borgata

     

ACME Inc.

 
 

Historical

 

Historical

 

Eliminations

 

Pro Forma

 
 

(In thousands, except per share data)

 

Revenues

               

   Gaming

$                         1,306,414

 

$                            643,904

 

$                                        -

 

$                              1,950,318

 

   Food and beverage

231,054

 

147,751

 

-

 

378,805

 

   Room

120,000

 

115,199

 

-

 

235,199

 

   Other

89,851

 

42,931

 

-

 

132,782

 

Gross revenues

1,747,319

 

949,785

 

-

 

2,697,104

 

Less promotional allowances

186,561

 

211,356

 

-

 

397,917

 

       Net revenues

1,560,758

 

738,429

 

-

 

2,299,187

 
                 

Costs and expenses

               

   Gaming

655,856

 

263,823

 

-

 

919,679

 

   Food and beverage

124,851

 

69,489

 

-

 

194,340

 

   Room

37,517

 

13,992

 

-

 

51,509

 

   Other

72,249

 

34,334

 

-

 

106,583

 

   Selling, general and administrative

274,234

 

123,963

 

-

 

398,197

 

   Maintenance and utilities

90,809

 

63,435

 

-

 

154,244

 

   Depreciation and amortization

146,389

 

69,640

 

-

 

216,029

 

   Corporate expense

48,861

 

-

 

-

 

48,861

 

   Preopening expenses

8,405

 

-

 

-

 

8,405

 

   Write-downs and other items, net

4,721

 

60

 

-

 

4,781

 

       Total costs and expenses

1,463,892

 

638,736

 

-

 

2,102,628

 
                 

Operating income from Borgata

49,846

 

-

 

(49,846)

 

-

 

Operating income

146,712

 

99,693

 

(49,846)

 

196,559

 
                 

Other expense (income)

               

   Interest income

(5)

 

-

 

-

 

(5)

 

   Interest expense, net of amounts capitalized

119,316

 

50,199

 

-

 

169,515

 

   Fair value adjustment of derivative instruments

480

     

-

 

480

 

   Gain on early retirements of debt

(2,758)

 

-

 

-

 

(2,758)

 

   Gain on controlling interest in Borgata

(2,535)

     

-

 

(2,535)

 

   Other income

(10,000)

 

-

 

-

 

(10,000)

 

   Other non-operating expenses from Borgata, net

27,736

 

-

 

(27,736)

 

-

 

       Total other expense, net

132,234

 

50,199

 

(27,736)

 

154,697

 
                 

Income before income taxes

14,478

 

49,494

 

(22,110)

 

41,862

 

Income taxes

(4,168)

 

(5,273)

 

-

 

(9,441)

 

Net income

10,310

 

44,221

 

(22,110)

 

32,421

 

Noncontrolling interest

-

 

-

 

(22,111)

 

(22,111)

 

Net income attributable to ACME Inc.

$                              10,310

 

$                              44,221

 

$                             (44,221)

 

$                                   10,310

 
                 

Basic net income per common share

$                                  0.12

         

$                                       0.12

 
                 

Weighted average basic shares outstanding

86,601

         

86,601

 
                 

Diluted net income per common share

$                                  0.12

         

$                                       0.12

 
                 

Weighted average diluted shares outstanding

86,831

         

86,831

 
               

 

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on January 1, 2009 for the year ended December 31, 2009, to provide a basis of comparability to the year  ended December 31, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
                 
                 
 

 Year Ended December 31, 2009

 
 

ACME Inc.

         

ACME Inc.

 
 

Historical

 

Borgata

 

Adjustments

 

Pro Forma

 
 

 (In thousands, except share and per share data)

 

Revenues

               

   Gaming

$                         1,372,091

 

$                       691,428

 

$                                -

 

$                   2,063,519

 

   Food and beverage

229,374

 

143,410

 

-

 

372,784

 

   Room

122,305

 

113,143

 

-

 

235,448

 

   Other

100,396

 

42,620

 

-

 

143,016

 

Gross revenues

1,824,166

 

990,601

 

-

 

2,814,767

 

Less promotional allowances

183,180

 

213,193

 

-

 

396,373

 

       Net revenues

1,640,986

 

777,408

 

-

 

2,418,394

 
                 

Costs and expenses

               

   Gaming

664,739

 

280,620

 

-

 

945,359

 

   Food and beverage

125,830

 

64,217

 

-

 

190,047

 

   Room

39,655

 

11,940

 

-

 

51,595

 

   Other

77,840

 

34,908

 

-

 

112,748

 

   Selling, general and administrative

284,937

 

128,164

 

-

 

413,101

 

   Maintenance and utilities

92,296

 

59,900

 

-

 

152,196

 

   Depreciation and amortization

164,427

 

78,719

 

1,298

 

244,444

 

   Corporate expense

47,617

 

-

 

-

 

47,617

 

   Preopening expenses

17,798

 

699

 

-

 

18,497

 

   Write-downs and other items, net

41,780

 

(28,606)

 

-

 

13,174

 

       Total costs and expenses

1,556,919

 

630,561

 

1,298

 

2,188,778

 
                 

Operating income from Borgata

72,126

 

-

 

(72,126)

 

-

 

Operating income

156,193

 

146,847

 

(73,424)

 

229,616

 
                 

Other expense (income)

               

   Interest income

(6)

 

-

 

-

 

(6)

 

   Interest expense, net of amounts capitalized

146,830

 

27,668

 

-

 

174,498

 

   Gain on early retirements of debt

(15,284)

 

-

 

-

 

(15,284)

 

   Other non-operating expenses

33

 

-

 

-

 

33

 

    Other non-operating expenses from Borgata, net

19,303

 

-

 

(19,303)

 

-

 

       Total other expense, net

150,876

 

27,668

 

(19,303)

 

159,241

 
                 

Income before income taxes

5,317

 

119,179

 

(54,121)

 

70,375

 

Income taxes

(1,076)

 

(10,938)

 

-

 

(12,014)

 

Net income

4,241

 

108,241

 

(54,121)

 

58,361

 

Noncontrolling interest

-

 

-

 

(54,120)

 

(54,120)

 

Net income attributable to ACME Inc.

$                                4,241

 

$                       108,241

 

$                   (108,241)

 

$                          4,241

 
                 

Basic net income per common share

$                                  0.05

         

$                            0.05

 
                 

Weighted average basic shares outstanding

86,429

         

86,429

 
                 

Diluted net income per common share

$                                  0.05

         

$                            0.05

 
                 

Weighted average diluted shares outstanding

86,517

         

86,517

 
               

 

The following table reconciles the net income (loss) in accordance with GAAP to adjusted earnings (loss) and adjusted earnings (loss) per share.

 
                   
   

Three Months Ended

 

Year Ended

 
   

December 31,

 

December 31,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands, except per share data)

 

Net income (loss) attributable to ACME Inc.

 

$                 (7,098)

 

$                 (1,024)

 

$                 10,310

 

$                   4,241

 

  Adjustments related to ACME Inc.:

                 

     Preopening expenses

 

3,415

 

3,025

 

8,405

 

17,798

 

     Loss (gain) on early retirements of debt, net

 

1,191

 

(3,223)

 

(2,758)

 

(15,284)

 

     Other income

 

-

 

-

 

(10,000)

 

-

 

     Gain on equity distribution

 

-

 

-

 

(2,535)

 

-

 

     Change in fair value of derivative instruments

 

480

 

-

 

480

 

-

 

     Write-downs and other items, net

 

(203)

 

365

 

4,721

 

41,780

 

     Other non-operating expenses

 

-

 

3

 

-

 

33

 

     Accelerated interest expense for credit facility recommitment

 

-

 

1,813

 

-

 

1,813

 

     Prior period interest expense related to the finalization

                 

     of our purchase price for Dania Jai-Alai

 

-

 

-

 

-

 

8,883

 
                   

   Adjustments related to Borgata:

                 

     Our share of Borgata's preopening expenses

 

-

 

-

 

-

 

349

 

     Our share of Borgata's write-downs and other items, net

 

-

 

5

 

34

 

(14,303)

 

     Accelerated amortization of deferred loan fees

 

-

 

-

 

2,012

     

     Write-downs and other items, net

 

(16)

 

-

 

(8)

 

-

 

           Impact on noncontrolling interest

 

8

 

-

 

(1,002)

 

-

 
                   

     Income tax effect for above adjustments

 

(1,721)

 

(758)

 

899

 

(13,680)

 

        Adjusted earnings (loss)

 

$                 (3,944)

 

$                      206

 

$                 10,558

 

$                 31,630

 
                   

     Adjusted earnings (loss) per share (Adjusted EPS)

 

$                   (0.05)

 

$                     0.00

 

$                     0.12

 

$                     0.37

 
                   

     Weighted average shares outstanding

 

86,877

 

86,276

 

86,831

 

86,517

 
                   

The following table illustrates the impact of the above adjustments on earnings per share.

                 
                   
   

Three Months Ended

 

Year Ended

 
   

December 31,

 

December 31,

 
   

2010

 

2009

 

2010

 

2009

 
                   

Net income (loss) attributable to ACME Inc.

 

$                   (0.08)

 

$                   (0.01)

 

$                     0.12

 

$                     0.05

 

  Adjustments related to ACME Inc.:

                 

     Preopening expenses

 

0.04

 

0.04

 

0.10

 

0.22

 

     Loss (gain) on early retirements of debt

 

0.01

 

(0.04)

 

(0.03)

 

(0.17)

 

     Other income

 

-

 

-

 

(0.12)

 

-

 

     Gain on equity distribution

 

-

 

-

 

(0.03)

 

-

 

     Change in fair value of derivative instruments

 

-

 

-

 

0.01

 

-

 

     Write-downs and other items, net

 

-

 

-

 

0.05

 

0.48

 

     Other non-operating expenses

 

-

 

-

 

-

 

-

 

     Accelerated interest expense for credit facility recommitment

 

-

 

0.02

 

-

 

0.02

 

     Prior period interest expense related to the finalization

                 

     of our purchase price for Dania Jai-Alai

 

-

 

-

 

-

 

0.10

 
                   

  Adjustments related to Borgata:

                 

     Our share of Borgata's preopening expenses

 

-

 

-

 

-

 

-

 

     Our share of Borgata's write-downs and other items, net

 

-

 

-

 

-

 

(0.17)

 

     Accelerated amortization of deferred loan fees

 

-

 

-

 

0.02

     

     Write-downs and other items, net

 

-

 

-

 

-

 

-

 

           Impact on noncontrolling interest

 

-

 

-

 

(0.01)

 

-

 
                   

     Income tax effect for above adjustments

 

(0.02)

 

(0.01)

 

0.01

 

(0.16)

 

         Adjusted earnings (loss) per share

 

$                   (0.05)

 

$0.00

 

$                     0.12

 

$                     0.37

 
                 

 

The following table presents Net Revenues and Adjusted EBITDA by operating segment and reconciles Adjusted EBITDA to net income (loss) attributable to ACME Inc. on our condensed consolidated statements of operations for the three months and year ended December 31, 2010 and 2009. Note that the results from Dania Jai-Alai are classified as part of total other operating costs and expenses and are not included in Adjusted EBITDA. Additionally, the results for the three months ended December 31, 2010, as reported in the table below, reflect the consolidation of Borgata for the entire period and the results for the year ended December 31, 2010 reflect the consolidation of Borgata for the period from March 24, 2010 through December 31, 2010. The three months and year ended December 31, 2009 are reported on a historical basis.

 
                 
 

Three Months Ended

 

Year Ended

 
 

December 31,

 

December 31,

 
 

2010

 

2009

 

2010

 

2009

 
 

(In thousands)

 

Net Revenues

               

   Las Vegas Locals

$                    152,123

 

$                    154,966

 

$                    607,366

 

$                    641,941

 

   Downtown Las Vegas

57,133

 

58,049

 

218,221

 

229,149

 

   Midwest and South

172,546

 

170,251

 

728,767

 

762,336

 

   Atlantic City

168,786

 

-

 

580,140

 

-

 

           Reportable Segment Net revenues

550,588

 

383,266

 

2,134,494

 

1,633,426

 

   Other

1,352

 

1,682

 

6,405

 

7,560

 

           Net revenues

$                    551,940

 

$                    384,948

 

$                 2,140,899

 

$                 1,640,986

 
                 

Adjusted EBITDA

               

   Las Vegas Locals

$                      34,125

 

$                      34,736

 

$                    137,464

 

$                    155,336

 

   Downtown Las Vegas

10,866

 

12,247

 

34,227

 

46,102

 

   Midwest and South

30,423

 

29,369

 

143,699

 

165,534

 

       Wholly-owned property Adjusted EBITDA

75,414

 

76,352

 

315,390

 

366,972

 

        Corporate expense

(9,500)

 

(9,581)

 

(39,565)

 

(36,934)

 

        Wholly-owned Adjusted EBITDA

65,914

 

66,771

 

275,825

 

330,038

 

   Atlantic City

34,096

 

-

 

136,278

 

-

 

       Our share of Borgata's operating income before net 

               

         amortization, preopening and other items

-

 

8,535

 

8,180

 

59,470

 

           Adjusted EBITDA

$                    100,010

 

$                      75,306

 

$                    420,283

 

$                    389,508

 
                 

Other operating costs and expenses

               

   Deferred rent

1,067

 

1,088

 

4,271

 

4,354

 

   Depreciation and amortization

51,370

 

39,428

 

199,275

 

165,725

 

   Preopening expenses

3,415

 

3,025

 

8,405

 

17,798

 

   Our share of Borgata's preopening expenses

-

 

-

 

-

 

349

 

   Our share of Borgata's write-downs and other items, net

-

 

5

 

34

 

(14,303)

 

   Share-based compensation expense

3,200

 

4,186

 

11,324

 

13,970

 

   Write-downs and other items, net

(219)

 

365

 

4,713

 

41,780

 

   Other

953

 

1,288

 

3,848

 

3,642

 

           Total other operating costs and expenses

59,786

 

49,385

 

231,870

 

233,315

 

Operating income

40,224

 

25,921

 

188,413

 

156,193

 

Other non-operating items

               

   Interest expense, net

55,015

 

33,023

 

164,449

 

146,824

 

   Fair value adjustment of derivative instruments

480

 

-

 

480

 

-

 

   Gain on early retirements of debt, net

1,191

 

(3,223)

 

(2,758)

 

(15,284)

 

   Gain on equity distribution

-

 

-

 

(2,535)

 

-

 

   Other income

-

 

-

 

(10,000)

 

-

 

   Other non-operating expenses

-

 

3

 

-

 

33

 

   Our share of Borgata's non-operating expenses, net

-

 

3,073

 

3,133

 

19,303

 

             Total other non-operating costs and expenses, net

56,686

 

32,876

 

152,769

 

150,876

 

Income (loss) before income taxes

(16,462)

 

(6,955)

 

35,644

 

5,317

 

Income taxes

7,296

 

5,931

 

(8,236)

 

(1,076)

 

Net income (loss)

(9,166)

 

(1,024)

 

27,408

 

4,241

 

Noncontrolling interest

2,068

 

-

 

(17,098)

 

-

 

Net income loss) attributable to ACME Inc.

$                       (7,098)

 

$                       (1,024)

 

$                      10,310

 

$                        4,241

 
               

 

The following table sets forth the consolidation of Borgata from a basis comparable to the historical reporting by ACME Inc.. For purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the entire period presented, or for the period from October 1, 2010 through December 31, 2010. The historical column reflects equity method accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of ACME Inc..

 
                   
   

Three Months Ended December 31, 2010

 
   

ACME Inc.

         

ACME Inc.

 
   

Historical

 

Borgata

 

Adjustments

 

Consolidated

 
   

(In thousands)

 

Net Revenues

                 

   Las Vegas Locals

 

$                       152,123

 

$                                   -

 

$                                   -

 

$                       152,123

 

   Downtown Las Vegas

 

57,133

 

-

 

-

 

57,133

 

   Midwest and South

 

172,546

 

-

 

-

 

172,546

 

   Atlantic City

 

-

 

168,786

 

-

 

168,786

 

           Reportable Segment Net revenues

 

381,802

 

168,786

 

-

 

550,588

 

   Other

 

1,352

 

-

 

-

 

1,352

 

           Net revenues

 

$                       383,154

 

$                       168,786

 

$                                   -

 

$                       551,940

 
                   

Adjusted EBITDA

                 

   Las Vegas Locals

 

$                         34,125

 

$                                   -

 

$                                   -

 

$                         34,125

 

   Downtown Las Vegas

 

10,866

 

-

 

-

 

10,866

 

   Midwest and South

 

30,423

 

-

 

-

 

30,423

 

       Wholly-owned property Adjusted EBITDA

 

75,414

 

-

 

-

 

75,414

 

        Corporate expense

 

(9,500)

 

-

 

-

 

(9,500)

 

        Wholly-owned Adjusted EBITDA

 

65,914

 

-

 

-

 

65,914

 

   Atlantic City

 

-

 

34,096

 

-

 

34,096

 

       Our share of Borgata's operating income before net

                 

         amortization, preopening and other items

 

8,770

 

-

 

(8,770)

 

-

 

           Adjusted EBITDA

 

$                         74,684

 

$                         34,096

 

$                          (8,770)

 

$                       100,010

 
                   

Other operating costs and expenses

                 

   Deferred rent

 

1,067

 

-

 

-

 

1,067

 

   Depreciation and amortization

 

34,797

 

16,573

 

-

 

51,370

 

   Preopening expenses

 

3,415

 

-

 

-

 

3,415

 

   Our share of Borgata's write-downs and other items, net

 

-

 

-

 

-

 

-

 

   Share-based compensation expense

 

3,200

 

-

 

-

 

3,200

 

   Write-downs and other items, net

 

(203)

 

(16)

 

-

 

(219)

 

   Other

 

954

 

-

 

-

 

954

 

           Total other operating costs and expenses

 

43,230

 

16,557

 

-

 

59,787

 

Operating income

 

31,454

 

17,540

 

(8,770)

 

40,224

 
                   

Other non-operating items

                 

   Interest expense, net

 

33,224

 

21,791

 

-

 

55,015

 

   Fair value adjustment of derivative instruments

 

480

 

-

 

-

 

480

 

   Gain on early retirements of debt

 

1,191

 

-

 

-

 

1,191

 

   Gain on controlling interest in Borgata

 

-

 

-

 

-

 

-

 

   Other income

 

-

 

-

 

-

 

-

 

   Our share of Borgata's non-operating expenses, net

 

10,838

 

-

 

(10,838)

 

-

 

           Total other non-operating costs and expenses, net

 

45,733

 

21,791

 

(10,838)

 

56,686

 
                   

Income (loss) before income taxes

 

(14,279)

 

(4,251)

 

2,068

 

(16,462)

 

Income taxes

 

7,181

 

115

 

-

 

7,296

 

Net income (loss)

 

(7,098)

 

(4,136)

 

2,068

 

(9,166)

 

Noncontrolling interest

 

-

 

-

 

2,068

 

2,068

 

Net income (loss) attributable to ACME Inc.

 

$                          (7,098)

 

$                          (4,136)

 

$                           4,136

 

$                          (7,098)

 
                 

 

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on October 1, 2009 for the period through December 31, 2009. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
                   
   

Three Months Ended December 31, 2009

 
   

ACME Inc.

 

Borgata

     

ACME Inc.

 
   

Historical

 

Stub

 

Adjustments

 

Pro Forma

 
   

(In thousands)

 

Net Revenues

                 

   Las Vegas Locals

 

$                       154,966

 

$                                   -

 

$                                   -

 

$                       154,966

 

   Downtown Las Vegas

 

58,049

 

-

 

-

 

58,049

 

   Midwest and South

 

170,251

 

-

 

-

 

170,251

 

   Atlantic City

 

-

 

175,408

 

-

 

175,408

 

           Reportable Segment Net revenues

 

383,266

 

175,408

 

-

 

558,674

 

   Other

 

1,682

 

-

 

-

 

1,682

 

           Net revenues

 

$                       384,948

 

$                       175,408

 

$                                   -

 

$                       560,356

 
                   

Adjusted EBITDA

                 

   Las Vegas Locals

 

$                         34,736

 

$                                   -

 

$                                   -

 

$                         34,736

 

   Downtown Las Vegas

 

12,247

 

-

 

-

 

12,247

 

   Midwest and South

 

29,369

 

-

 

-

 

29,369

 

       Wholly-owned property Adjusted EBITDA

 

76,352

 

-

 

-

 

76,352

 

        Corporate expense

 

(9,581)

 

-

 

-

 

(9,581)

 

        Wholly-owned Adjusted EBITDA

 

66,771

 

-

 

-

 

66,771

 

   Atlantic City

 

-

 

36,448

 

-

 

36,448

 

       Our share of Borgata's operating income before net

                 

         amortization, preopening and other items

 

8,535

 

-

 

(8,535)

 

-

 

           Adjusted EBITDA

 

$                         75,306

 

$                         36,448

 

$                          (8,535)

 

$                       103,219

 
                   

Other operating costs and expenses

                 

   Deferred rent

 

1,088

 

-

 

-

 

1,088

 

   Depreciation and amortization

 

39,428

 

19,380

 

-

 

58,808

 

   Preopening expenses

 

3,025

 

-

 

-

 

3,025

 

   Our share of Borgata's preopening expenses

 

-

 

-

 

-

 

-

 

   Our share of Borgata's write-downs and other items, net

 

5

 

-

 

(5)

 

-

 

   Share-based compensation expense

 

4,186

 

-

 

-

 

4,186

 

   Write-downs and other items, net

 

365

 

10

 

-

 

375

 

   Other

 

1,288

 

-

 

-

 

1,288

 

           Total other operating costs and expenses

 

49,385

 

19,390

 

(5)

 

68,770

 

Operating income

 

25,921

 

17,058

 

(8,530)

 

34,449

 
                   

Other non-operating items

                 

   Interest expense, net

 

33,023

 

5,787

 

-

 

38,810

 

   Gain on early retirements of debt

 

(3,223)

 

-

 

-

 

(3,223)

 

   Other non-operating expenses

 

3

 

-

 

-

 

3

 

   Our share of Borgata's non-operating expenses, net

 

3,073

 

-

 

(3,073)

 

-

 

           Total other non-operating costs and expenses, net

 

32,876

 

5,787

 

(3,073)

 

35,590

 
                   

Income (loss) before income taxes

 

(6,955)

 

11,271

 

(5,457)

 

(1,141)

 

Income taxes

 

5,931

 

(359)

 

-

 

5,572

 

Net income (loss)

 

(1,024)

 

10,912

 

(5,457)

 

4,431

 

Noncontrolling interest

 

-

 

-

 

(5,455)

 

(5,455)

 

Net income (loss) attributable to ACME Inc.

 

$                          (1,024)

 

$                         10,912

 

$                        (10,912)

 

$                          (1,024)

 
                 

 

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on January 1, 2010, for the year ended December 31, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
                   
   

Year Ended December 31, 2010

 
   

ACME Inc.

 

Borgata

     

ACME Inc.

 
   

Consolidated

 

Stub

 

Adjustments

 

Pro Forma

 
   

(In thousands)

 

Net Revenues

                 

   Las Vegas Locals

 

$                       607,366

 

$                                   -

 

$                                   -

 

$                       607,366

 

   Downtown Las Vegas

 

218,221

 

-

 

-

 

218,221

 

   Midwest and South

 

728,767

 

-

 

-

 

728,767

 

   Atlantic City

 

580,140

 

158,290

 

-

 

738,430

 

           Reportable Segment Net revenues

 

2,134,494

 

158,290

 

-

 

2,292,784

 

   Other

 

6,405

 

-

 

-

 

6,405

 

           Net revenues

 

$                    2,140,899

 

$                       158,290

 

$                                   -

 

$                    2,299,189

 
                   

Adjusted EBITDA

                 

   Las Vegas Locals

 

$                       137,464

 

$                                   -

 

$                                   -

 

$                       137,464

 

   Downtown Las Vegas

 

34,227

 

-

 

-

 

34,227

 

   Midwest and South

 

143,699

 

-

 

-

 

143,699

 

       Wholly-owned property Adjusted EBITDA

 

315,390

 

-

 

-

 

315,390

 

        Corporate expense

 

(39,565)

 

-

 

-

 

(39,565)

 

        Wholly-owned Adjusted EBITDA

 

275,825

 

-

 

-

 

275,825

 

   Atlantic City

 

136,278

 

33,115

 

-

 

169,393

 

        Our share of Borgata's operating income before net

                 

         amortization, preopening and other items

 

8,180

 

-

 

(8,180)

 

-

 

           Adjusted EBITDA

 

$                       420,283

 

$                         33,115

 

$                          (8,180)

 

$                       445,218

 
                   

Other operating costs and expenses

     

-

 

-

     

   Deferred rent

 

4,271

 

-

 

-

 

4,271

 

   Depreciation and amortization

 

199,275

 

16,753

 

-

 

216,028

 

   Preopening expenses

 

8,405

 

-

 

-

 

8,405

 

   Our share of Borgata's preopening expenses

 

-

 

-

 

-

 

-

 

   Our share of Borgata's write-downs and other items, net

 

34

 

-

 

(34)

 

-

 

   Share-based compensation expense

 

11,324

 

-

 

-

 

11,324

 

   Write-downs and other items, net

 

4,713

 

68

 

-

 

4,781

 

   Other

 

3,848

 

-

 

-

 

3,848

 

           Total other operating costs and expenses

 

231,870

 

16,821

 

(34)

 

248,657

 

Operating income

 

188,413

 

16,294

 

(8,146)

 

196,561

 
                   

Other non-operating items

                 

   Interest expense, net

 

164,449

 

5,063

 

-

 

169,512

 

   Fair value adjustment of derivative instruments

 

480

 

-

 

-

 

480

 

   Gain on early retirements of debt

 

(2,758)

 

-

 

-

 

(2,758)

 

   Gain on equity distribution

 

(2,535)

 

-

 

-

 

(2,535)

 

   Other income

 

(10,000)

 

-

 

-

 

(10,000)

 

   Our share of Borgata's non-operating expenses, net

 

3,133

 

-

 

(3,133)

 

-

 

            Total other non-operating costs and expenses, net

 

152,769

 

5,063

 

(3,133)

 

154,699

 
                   

Income before income taxes

 

35,644

 

11,231

 

(5,013)

 

41,862

 

Income taxes

 

(8,236)

 

(1,206)

 

-

 

(9,442)

 

Net income

 

27,408

 

10,025

 

(5,013)

 

32,420

 

Noncontrolling interest

 

(17,098)

 

-

 

(5,012)

 

(22,110)

 

Net income attributable to ACME Inc.

 

$                         10,310

 

$                         10,025

 

$                        (10,025)

 

$                         10,310

 
                 

 

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on January 1, 2009, for the year ended December 31, 2009. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
                 
 

Year Ended December 31, 2009

 
 

ACME Inc.

         

ACME Inc.

 
 

Historical

 

Borgata

 

Adjustments

 

Pro Forma

 
 

(In thousands)

 

Net Revenues

               

   Las Vegas Locals

$                       641,941

 

$                                       -

 

$                         -

 

$                        641,941

 

   Downtown Las Vegas

229,149

 

-

 

-

 

229,149

 

   Midwest and South

762,336

 

-

 

-

 

762,336

 

   Atlantic City

-

 

777,408

 

-

 

777,408

 

           Reportable Segment Net revenues

1,633,426

 

777,408

 

-

 

2,410,834

 

   Other

7,560

 

-

 

-

 

7,560

 

           Net revenues

$                    1,640,986

 

$                           777,408

 

$                         -

 

$                     2,418,394

 
                 

Adjusted EBITDA

               

   Las Vegas Locals

$                       155,336

 

$                                       -

 

$                         -

 

$                        155,336

 

   Downtown Las Vegas

46,102

 

-

 

-

 

46,102

 

   Midwest and South

165,534

 

-

 

-

 

165,534

 

       Wholly-owned property Adjusted EBITDA

366,972

 

-

 

-

 

366,972

 

        Corporate expense

(36,934)

 

-

 

-

 

(36,934)

 

        Wholly-owned Adjusted EBITDA

330,038

 

-

 

-

 

330,038

 

   Atlantic City

-

 

197,659

 

-

 

197,659

 

       Our share of Borgata's operating income before net

               

         amortization, preopening and other items

59,470

 

-

 

(59,470)

 

-

 

           Adjusted EBITDA

$                       389,508

 

$                           197,659

 

$             (59,470)

 

$                        527,697

 
                 

Other operating costs and expenses

               

   Deferred rent

4,354

 

-

 

-

 

4,354

 

   Depreciation and amortization

165,725

 

78,719

 

-

 

244,444

 

   Preopening expenses

17,798

 

699

 

-

 

18,497

 

   Our share of Borgata's preopening expenses

349

 

-

 

(349)

 

-

 

    Our  share of Borgata's write-downs and other items, net

(14,303)

 

-

 

14,303

 

-

 

   Share-based compensation expense

13,970

 

-

 

-

 

13,970

 

   Write-downs and other items, net

41,780

 

(28,606)

 

-

 

13,174

 

   Other

3,642

 

-

 

-

 

3,642

 

           Total other operating costs and expenses

233,315

 

50,812

 

13,954

 

298,081

 

Operating income

156,193

 

146,847

 

(73,424)

 

229,616

 
                 

Other non-operating items

               

   Interest expense, net

146,824

 

27,668

 

-

 

174,492

 

   Gain on early retirements of debt

(15,284)

 

-

 

-

 

(15,284)

 

   Other non-operating expenses

33

 

-

 

-

 

33

 

   Our share of Borgata's non-operating expenses, net

19,303

 

-

 

(19,303)

 

-

 

            Total other non-operating costs and expenses, net

150,876

 

27,668

 

(19,303)

 

159,241

 

Income before income taxes

5,317

 

119,179

 

(54,121)

 

70,375

 

Income taxes

(1,076)

 

(10,938)

 

-

 

(12,014)

 

Net income

4,241

 

108,241

 

(54,121)

 

58,361

 

Noncontrolling interest

-

 

-

 

(54,120)

 

(54,120)

 

Net income attributable to ACME Inc.

$                           4,241

 

$                           108,241

 

$           (108,241)

 

$                            4,241

 
               

 

The following table reconciles the presentation of corporate expense on our condensed consolidated statements of operations to the presentation on the accompanying table.

     
                   
   

Three Months Ended

 

Year Ended

 
   

December 31,

 

December 31,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Corporate expense as reported on our

                 

  consolidated statements of operations

 

$         12,225

 

$         12,540

 

$         48,861

 

$         47,617

 

Corporate share-based compensation expense

 

(2,725)

 

(2,959)

 

(9,296)

 

(10,683)

 

Corporate expense as reported on the accompanying table

 

$           9,500

 

$           9,581

 

$         39,565

 

$         36,934

 
                   
                   
                   
                 

 

The following table reconciles the presentation of our share of Borgata’s operating income on our consolidated statements of operations to the presentation of our share of Borgata’s results on the accompanying table.

 
                   
   

Three Months Ended

 

Year Ended

 
   

December 31,

 

December 31,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Operating income from Borgata, as reported on our

                 

    consolidated statements of operations

 

$                   -

 

$           8,205

 

$           8,146

 

$         72,126

 

Add back:

                 

   Net amortization expense related to our

                 

       investment in Borgata

 

-

 

325

 

-

 

1,298

 

   Our share of preopening expenses

 

-

 

-

 

-

 

349

 

   Our share of write-downs and other items, net

 

-

 

5

 

34

 

(14,303)

 

Our share of Borgata's operating income before net

                 

   amortization, preopening and other items

                 

   as reported on the accompanying table

 

$                   -

 

$           8,535

 

$           8,180

 

$         59,470

 
                   
                   
                 

 

The following table reconciles the presentation of depreciation and amortization on our condensed consolidated statements of operations to the presentation on the accompanying table.

 
                   
   

Three Months Ended

 

Year Ended

 
   

December 31,

 

December 31,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Depreciation and amortization as reported on our

                 

  condensed consolidated statements of operations

 

$         51,370

 

$         39,103

 

$       199,275

 

$       164,427

 

Net amortization expense related to our investment in Borgata

 

-

 

325

 

-

 

1,298

 

Depreciation and amortization as reported on

                 

  the accompanying table

 

$         51,370

 

$         39,428

 

$       199,275

 

$       165,725

 
                 

 

The following table presents Borgata's condensed consolidated statements of operations.  

 
                 
 

Three Months Ended

 

Year Ended

 
 

December 31,

 

December 31,

 
 

2010

 

2009

 

2010

 

2009

 
 

(In thousands)

 

Revenues

               

   Gaming

$                  148,759

 

$                  153,387

 

$                  643,904

 

$                  691,428

 

   Food and beverage

34,162

 

32,297

 

147,751

 

143,410

 

   Room

27,004

 

26,087

 

115,199

 

113,143

 

   Other

9,705

 

10,124

 

42,931

 

42,620

 

Gross revenues

219,630

 

221,895

 

949,785

 

990,601

 

Less promotional allowances

50,844

 

46,487

 

211,356

 

213,193

 

       Net revenues

168,786

 

175,408

 

738,429

 

777,408

 
                 

Costs and expenses

               

   Gaming

62,313

 

65,352

 

263,823

 

280,620

 

   Food and beverage

16,396

 

15,395

 

69,489

 

64,217

 

   Room

3,213

 

2,942

 

13,992

 

11,940

 

   Other

7,681

 

8,323

 

34,334

 

34,908

 

   Selling, general and administrative

30,510

 

31,914

 

123,963

 

128,164

 

   Maintenance and utilities

14,576

 

15,034

 

63,435

 

59,900

 

   Depreciation and amortization

16,573

 

19,380

 

69,640

 

78,719

 

   Preopening expenses

-

 

-

 

-

 

699

 

   Write-downs and other items, net

(16)

 

10

 

60

 

(28,606)

 

       Total costs and expenses

151,246

 

158,350

 

638,736

 

630,561

 

Operating income

17,540

 

17,058

 

99,693

 

146,847

 
                 

Other expense (income)

               

    Interest expense, net of amounts capitalized

21,791

 

5,787

 

50,199

 

27,668

 

Income (loss) before state income taxes

(4,251)

 

11,271

 

49,494

 

119,179

 

State income taxes

115

 

(359)

 

(5,273)

 

(10,938)

 

Net income (loss)

$                    (4,136)

 

$                    10,912

 

$                    44,221

 

$                  108,241

 
               

 

The following table reconciles operating income to Adjusted EBITDA for Borgata.

         
                   
   

Three Months Ended

 

Year Ended

 
   

December 31,

 

December 31,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Operating income

 

$                    17,540

 

$                    17,058

 

$                    99,693

 

$                  146,847

 

   Depreciation and amortization

 

16,573

 

19,380

 

69,640

 

78,719

 

   Preopening expenses

 

-

 

-

 

-

 

699

 

   Write-downs and other items, net

 

(16)

 

10

 

60

 

(28,606)

 

Adjusted EBITDA

 

$                    34,096

 

$                    36,448

 

$                  169,393

 

$                  197,659

 
                 

 

Footnotes and Safe Harbor Statements

Non-GAAP Financial Measures

Regulation G, "Conditions for Use of Non-GAAP Financial Measures," prescribes the conditions for use of non-GAAP financial information in public disclosures. We believe that our presentations of the following non-GAAP financial measures are important supplemental measures of operating performance to investors: earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, Adjusted Earnings, Adjusted Earnings Per Share (Adjusted EPS) and net revenues (excluding the 8 days of consolidation for Borgata). The following discussion defines these terms and why we believe they are useful measures of our performance.

In the accompanying release, and the Company's periodic reports filed with the Securities and Exchange Commission, Dania Jai-Alai's results are included as part of total other operating costs and expenses. In addition, as of the same date, we reclassified the reporting of corporate expense to exclude it from our subtotal for Reportable Segment Adjusted EBITDA and include it as part of total other operating costs and expenses. Furthermore, in the Company's periodic reports, corporate expense is presented to include its portion of share-based compensation expense.

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in our industry which we believe, when considered with measures calculated in accordance with GAAP, gives investors a more complete understanding of operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. Management has historically adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of our core operating results and as a means to evaluate period-to-period results. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core on- going operations. We do not reflect such items when calculating EBITDA; however, we adjust for these items and refer to this measure as Adjusted EBITDA. We have historically reported this measure to our investors and believe that the continued inclusion of Adjusted EBITDA provides consistency in our financial reporting. We use Adjusted EBITDA in this press release because we believe it is useful to investors in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA is among the more significant factors in management's internal evaluation of total company and individual property performance and in the evaluation of incentive compensation related to property management. Management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions. Adjusted EBITDA is also widely used by management in the annual budget process. Externally, we believe these measures continue to be used by investors in their assessment of our operating performance and the valuation of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent, preopening expenses, share-based compensation expense, write-downs and other charges, net, increase in value of derivative instruments, gain on early retirements of debt, other non-operating expenses, and our share of Borgata's non-operating expenses, preopening expenses and other items and write-downs, net. In addition, Adjusted EBITDA includes corporate expense. A reconciliation of Adjusted EBITDA to net income (loss), based upon GAAP, is included in the financial schedules accompanying this release.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before preopening expenses, increase in value of derivative instruments, write-downs and other charges, net, gain on early retirements of debt, prior period interest expense related to the finalization of our purchase price for Dania Jai-Alai, accelerated interest expense related to our bank credit facility amendment, certain one-time permanent tax readjustments, other non-operating expenses, and our share of Borgata's preopening expenses and other items and write-downs, net. Adjusted Earnings and Adjusted EPS are presented solely as supplemental disclosures because management believes that they are widely used measures of performance in the gaming industry. A reconciliation of net loss based upon GAAP to Adjusted Earnings and Adjusted EPS are included in the financial schedules accompanying this release.

Pro Forma Effect of Consolidation of Borgata

The effective change in control of Borgata was triggered at the end of the first quarter 2010. For purposes of comparability throughout this release, when such results are reported on a consolidated basis, the results of the prior year are retroactively recast to present such results on a consolidated basis, comparable to the current period. Additionally, for further purposes of comparability, certain year to date amounts have been presented on a pro forma basis, as if the consolidation of Borgata had occurred as of the beginning of the period presented (i.e. January 1, for the year ended September 30, 2010, or September 30, 2009, as applicable).

Limitations on the Use of Non-GAAP Measures

The use of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures has certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS or certain other non-GAAP financial measures may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation and amortization expense, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest and income taxes, capital expenditures and other items both in our reconciliations to the GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.

Forward Looking Statements and Company Information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding the economic recovery, increases in both visitation and spend-per-visit, and returning to consistent year-over-year growth in the business.  Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: fluctuations in our operating results; recovery of our properties in various markets; the state of the economy and its effect on consumer spending and our results of operations; the timing for the economic recovery, its effect on our business and the local economies where our properties are located; consumer reaction to fluctuations in the stock market and economic factors; the fact that our expansion, development and renovation projects (including enhancements to improve property performance) are subject to many risks inherent in expansion, development or construction of a new or existing project; the effects of events adversely impacting the economy or the regions from which we draw a significant percentage of our customers; competition; litigation; financial community and rating agency perceptions of the Company; changes in laws and regulations, including increased taxes; the availability and price of energy, weather, regulation, economic, credit and capital market conditions; and the effects of war, terrorist or similar activity. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, filed with the SEC, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.

About ACME Inc.

Headquartered in Las Vegas, ACME Inc. (NYSE: ACME) is a leading diversified owner and operator of 16 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana, and Louisiana.  ACME Inc. press releases are available at www.prnewswire.com.  Additional news and information on ACME Inc. can be found at www.google.com.

SOURCE ACME Inc.

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