Net Loss of $4.9 million; Trump Taj Mahal Adding New 800-room Hotel Tower
|ATLANTIC CITY, N.J. - Aug. 1, 2006 -- Trump Entertainment Resorts,
Inc. (the "Company") (NASDAQ NMS: TRMP) today reported its operating results
for the second quarter and six months ended June 30, 2006. The Company's
loss from continuing operations was ($4.9) million or ($0.16) per share
for the quarter ended June 30, 2006 and ($14.7) million or ($0.48) per
share for the six months ended June 30, 2006. As a result of the Company's
reorganization completed on May 20, 2005 and the application of fresh-start
accounting principles, the financial results for 2005 are presented separately
for the Predecessor Company (through May 19, 2005) and the Reorganized
Company (period from May 20, 2005 through June 30, 2005). As such, the
financial statements for the quarter and six months ended June 30, 2006
are not comparable to the results for a similar period in 2005, except
for the purpose of comparing property level operating performance as discussed
herein. A summary of results follows:
Adjusted EBITDA is income (loss) from operations excluding reorganization expenses and related costs, development costs, expense of ten year warrants and stock compensation. The Company is presenting Adjusted EBITDA in 2006 to highlight differences that exist between the Company and its predecessor due to the reorganization of the Company and new accounting pronouncements. 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 valuation of gaming companies. Refer to the selected financial information accompanying this press release for a reconciliation of income (loss) from operations to Adjusted EBITDA.
For purposes of comparing operating performance we have combined the 2005 results for the Predecessor Company and the Reorganized Company data for the three and six month periods ended June 30, 2005, as we believe it provides the best comparison for the respective periods. The Company reported Adjusted EBITDA of $44.4 million on net revenues of $256.0 million in the second quarter of 2006 compared to Adjusted EBITDA of $42.7 million in 2005 on net revenues of $246.1 million for the Predecessor Company and the Reorganized Company combined in the second quarter of 2005. Before corporate and other expenses, our three operating properties reported Adjusted EBITDA of $50.5 million in the second quarter of 2006 compared to Adjusted EBITDA of $46.9 million in 2005 for the Predecessor Company and the Reorganized Company.
Mark Juliano, the Company's Chief Operating Officer, commented, "As a Company, we are continuing to alter our marketing programs and operations to focus on growing revenue profitability, and we believe the changes have produced significant results in both reaching higher value customers and eliminating much of our unprofitable business. During the second quarter, net revenues grew at the Taj Mahal and remained stable to slightly decreased at the Plaza and the Marina, as we experienced property level flow through of $3.6 million in adjusted EBITDA on incremental net revenue of $9.9 million resulting in a 60 basis point increase in property level adjusted EBITDA margins.
In the first half of the year we were able to increase cash room revenues by $3.6 million, a 44.0% increase over last year. Going forward, we are focused on adjusting our offers to mid-tier customers to continue to increase our occupancy and redemption rates, and we believe our upcoming technology upgrades will give us the tools to successfully accomplish this goal. We believe that the completion of our Company-wide data warehouse and the implementation of a hotel yield management system in the third quarter will provide the necessary infrastructure to improve net revenues and EBITDA across all three of our properties.
The trends were positive at all three properties as the second quarter ended. It is unfortunate that the state-imposed casino shutdown briefly halted that momentum. We estimate the Company-wide impact of this action will cause our net revenue in July to be approximately 6.0% less than July 2005. We are hopeful that legislative action will prevent this type of closure from happening again."
The Company reported corporate and other costs of $8.8 million for the second quarter of 2006 compared to $4.6 million in 2005.
Comparable corporate and other costs for the second quarter of 2005 are before consideration of reorganization costs of $50.5 million and $8.0 million for 10 year warrants issued to Mr. Trump in connection with a services agreement. The increase of $4.2 million in corporate and other costs to $8.8 million in the second quarter of 2006 is a result of $1.4 million in expense related to stock based compensation, increased legal expenses and development costs of $1.9 million and $0.9 million for other corporate expenses.
In addition to the above mentioned items, as a result of our reorganization effective in May 2005, the comparability of our operating results from continuing operations for the second quarter ended June 2006 versus the second quarter ended June 30, 2005 were impacted by the following items:
1. Overall interest expense decreased $13.9 million from $46.5 million
for the quarter ended June 30, 2005 to $32.6 million for the quarter ended
June 30, 2006, due to the decreased debt levels and interest rates.
James B. Perry, Chief Executive Officer and President, added, "I believe that we have made significant progress in the turnaround of our business during the year I have served as the Company's CEO. As we indicated last year, such a turnaround requires at least an 18-month to two-year process, necessitating the continued diligence of our management team and employees. Today, I believe that we are on track to accomplish our goal of reaching industry-average margins during the second half of 2007.
Our renovation and development plans for Atlantic City continue to move forward. At the Trump Taj Mahal, the construction of the new, nearly 800-room hotel tower has officially commenced. Additionally, we have recently announced the opening of several new amenities at the Taj Mahal including EGO Bar and Lounge on the casino floor, a new Asian gaming area, The Rim noodle bar and a new retail outlet, Trump Exchange. Further, the promenade renovation project, which will reinvent the entrance experience to the Taj Mahal from the parking garage, is underway and several new venues will open throughout the summer.
The extensive casino floor renovations at Trump Plaza were completed in June, ending the construction disruption that impacted the Plaza's results. We are currently developing plans for Phase II of our renovation projects, including a master plan for Trump Marina, and expect we will have an announcement before the end of the year.
In addition to our Atlantic City development progress, we continue to pursue opportunities to introduce the Trump brand to other gaming markets and to diversify our cash flows. We believe that our recent option for additional acreage for our proposed Trump Street facility in Philadelphia makes our proposal to the Pennsylvania Gaming Control Board both stronger and more compelling, and we continue to be excited about the prospect of a casino in Philadelphia. The recent legislative action in Rhode Island has ended our efforts in the Town of Johnston, as the state government has acted to preclude an open bidding process for a gaming license. The addition of a senior development professional to coordinate existing and future opportunities in non-Atlantic City gaming markets remains a priority for the Company."
The Company reported that as of June 30, 2006 it had cash of $152.9
million excluding $46.1 million of cash restricted in use by the agreement
governing the sale of Trump Indiana. The Company indicated that debt had
decreased by $18.6 million since December 31, 2005 to $1,419.4 million
at June 30, 2006. Capital expenditures through June 30, 2006 were approximately
$54.2 million and the Company expects capital expenditures for the rest
of 2006 to be approximately $100.0 million.
About Our Company:
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, trend analysis and other information contained in this release relative to the Company's or its subsidiaries' performance, trends in the Company's or its subsidiaries' operations or financial results, plans, expectations, estimates and beliefs, as well as other statements including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "could," "can" and other similar expressions, constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995.
Trump Entertainment Resorts, Inc.
|Also See:||Trump Entertainment Resorts, Inc. Reports a Net Loss of $26.5 million from Date of Reorganization through December 31, 2005; Operating and Cultural Changes at the Proerties Will Take 18 months Before Benefits Seen / March 2006|
|Trump Entertainment Resorts and Diamondhead Casino Corporation Sign Letter of Intent for Mississippi Casino Development; Diamondhead Owns 404 Acres on the Bay of St. Louis / June 2006|