10-K 1 a20111231-10k.htm FORM 10-K 2011.12.31-10K
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________________________
FORM 10-K
(Mark One)
 
 
ý
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2011
or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from                                  to                                   .
Commission file number 000-53831
_________________________________________________________________________________
TROPICANA ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
Delaware
 
27-0540158
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer
Identification No.)

3930 Howard Hughes Parkway, 4th Floor, Las Vegas, Nevada 89169
(Address of principal executive offices), (Zip Code)
Registrant's telephone number, including area code: 702-589-3900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer ý 
 
Non-accelerated filer o
(Do not check if a smaller
reporting company)
 
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý    No o
The aggregate market value of the common stock held by non-affiliates (all other persons other than executive officers or directors) of the registrant as of June 30, 2011, the last business day of the registrant's most recently completed second fiscal quarter, was approximately $147.1 million based on the closing sales price of $16.00 per share of such stock on the OTCQB Market on June 30, 2011. As of March 1, 2012, there were 26,312,500 shares outstanding of the Registrant's common stock, $0.01 par value per share, outstanding.
Documents Incorporated by Reference
Portions of the registrant's Proxy Statement for its 2011 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14, of this Form 10-K.
 
 
 
 
 



TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). These statements involve known and unknown risks, uncertainties and other factors, which may cause our or our industry's actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding our expectations, hopes or intentions regarding the future, including but not limited to statements regarding our operating or other strategic plans; our competition, financing, revenue, or tax benefits; our beliefs regarding the sufficiency of our existing cash and credit sources, including our Exit Facility (as defined herein) and cash flows from operating activities to meet our projected expenditures (including operating and maintenance capital expenditures) and costs associated with certain of our projects over the next twelve months; our expectations regarding the potential refinancing of our Exit Facility; estimated asset and liability values; risk of counterparty nonperformance; our legal strategies and the potential effect of pending legal claims on our business and financial condition; and any financial or other information included herein based upon or otherwise incorporating judgments or estimates based upon future performance or events. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions intended to identify forward-looking statements. Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections and may be materially better or worse than anticipated. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements represent our estimates and assumptions only as of the date of this report. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events, except to the extent required by applicable securities laws. All forward-looking statements are qualified in their entirety by reference to the factors discussed above and under “Risk Factors” set forth in Part I Item 1A of this report, as well as the risks and uncertainties discussed elsewhere in this report. We qualify all of our forward-looking statements by these cautionary statements. We caution you that these risks are not exhaustive. We operate in a continually changing business environment and new risks emerge from time to time.





3


PART I
ITEM 1.    BUSINESS.
Unless the context indicates otherwise, or unless specifically stated otherwise, references to the "Company," "TEI," "we," "our" and "us" refer to Tropicana Entertainment Inc. and its subsidiaries.
Introduction
We are an owner and operator of regional casino and entertainment properties located in the United States and one casino resort development located on the island of Aruba. Our United States properties include three casinos in Nevada, two casinos in Mississippi, and one casino in each of Indiana, Louisiana and New Jersey. We primarily cater to local and regional guests to provide a fun and exciting gaming environment with high quality and high value lodging, dining, retail and entertainment amenities. Our properties offer a broad array of gaming options specifically tailored for our patrons in each market.
The following chart summarizes certain features of our properties as of December 31, 2011:
Name
 
Location
 
Casino
Square
Footage
 
Slot
Machines (a)
 
Table
Games (b)
 
Hotel
Rooms
East
 
 
 
 
 
 
 
 
 
 
Tropicana AC
 
Atlantic City, NJ
 
137,000

 
2,660

 
113

 
2,078

Central
 
 
 
 
 
 
 
 
 
 
Casino Aztar
 
Evansville, IN
 
38,360

 
908

 
34

 
347

West
 
 
 
 
 
 
 
 
 
 
Tropicana Laughlin
 
Laughlin, NV
 
53,000

 
968

 
18

 
1,495

River Palms
 
Laughlin, NV
 
58,000

 
568

 
7

 
1,001

MontBleu
 
South Lake Tahoe, NV
 
45,000

 
559

 
22

 
437

South and other
 
 
 
 
 
 
 
 
 
 
Lighthouse Point (c)
 
Greenville, MS
 
22,000

 
509

 

 

Jubilee (c)
 
Greenville, MS
 
28,500

 
460

 
7

 
41

Belle of Baton Rouge
 
Baton Rouge, LA
 
28,500

 
851

 
23

 
300

Tropicana Aruba (d)
 
Noord, Aruba
 
3,400

 
100

 
7

 
361

 
 
 
 
413,760

 
7,583

 
231

 
6,060

______________________________________________________________________________
(a)
Includes slot machines, video poker machines and other electronic gaming devices.
(b)
Includes blackjack ("21"), craps, roulette and other table games; does not include poker tables.
(c)
The Company plans to expand Lighthouse Point into a renovated, land-side facility. As part of this project, the operations at Jubilee are planned to be consolidated into Lighthouse Point. The new combined property is expected to include 550 slot machines, seven table games and 41 hotel rooms.
(d)
The Company opened a small temporary casino on December 16, 2011. Plans for a permanent casino are under development. A 361-unit timeshare and rental unit is currently operational.
We were formed in May 2009 to acquire certain assets of Tropicana Entertainment Holdings, LLC ("TEH") pursuant to TEH's plan of reorganization as described further in "Item 1—Business—Our Corporate History and Information."
Our Strengths
Focus on Regional Gaming Markets in Favorable Jurisdictions. Our properties primarily serve local and regional markets. We believe that regional gaming markets have been less volatile than destination gaming markets, which rely on air travel for their patronage. Our properties are primarily located in significant drive-in gaming markets, which allows our casino patrons to reach us in short travel times and make repeated trips to our gaming facilities. In order to meet the specific needs of local and regional customers, we tailor our gaming and entertainment experience to offer our customers a high quality product at a compelling price point. In addition, the majority of the states in which we operate offer favorable gaming tax laws, with approximately 70% of our net revenues generated in states with 8% or lower gaming tax rates.

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Diversity in Geography and Product Offerings.    We operate both land-based and dockside gaming facilities in several of the largest commercial gaming states in the United States. In addition, we currently operate a small temporary casino at our property on the Caribbean island of Aruba and are developing plans for a permanent casino. Because our facilities are geographically diversified, we are not subject to reliance on any single gaming market, which we believe mitigates the impact of potential market cycles. The majority of our gaming facilities offer multi-denominational, state-of-the-art slot machines as well as a full range of table games and betting minimums and limits, catering to a wide range of potential customers. The majority of our casino properties include hotel rooms, which both diversifies our revenue base and helps extend the average length our patrons' stay at our facilities. Additionally, our customers enjoy a strong breadth of product offerings at our facilities, including restaurants, nightclubs, bars, retail stores and entertainment venues, which further diversifies our sources of revenue and offers our customers attractive non-gaming entertainment options.
Emphasis on Slot Play.    At certain properties, we emphasize slot machine wagering, which we believe is typically both the highest margin and most predictable component of the gaming industry. Slot machines do not have the staffing requirements of table games nor do they have the variation in hold percentages that characterize the table game component of the casino business. We believe this affords us a more stable and predictable revenue base, as well as the potential for more consistent margins.
Committed Sponsorship.    Icahn Enterprises L.P. ("Icahn Enterprises"), the beneficial owner of approximately 65.1% of our common stock, has demonstrated a history of successfully acquiring assets and improving and enhancing such assets' operations. Its investment record is based on a long-term investment horizon that enhances business value. Our management continues to work closely with Icahn Enterprises to identify immediate and long-term strategic and operational improvements.
Our Strategies
Offer A Fun and Exciting Experience at Good Value.    We believe our facilities provide our guests with an attractive price-to-value relationship by offering an exciting gaming atmosphere in attractive surroundings. We intend to apply this positioning across all gaming and related amenities while maintaining attentive and friendly guest service. To ensure consistent first-class service, we emphasize professional and courteous attitudes consistent with our high hospitality standards. By communicating our clearly defined value proposition to customers through our marketing programs and their experiences at our properties, we believe we distinguish ourselves from our competition.
Leverage Brand Awareness and Customer Loyalty.    Tropicana is a longstanding and recognizable brand in the gaming industry. We continuously strive to identify marketing and promotion innovations that strengthen brand awareness and improve customer flow. In August 2010, we introduced the Trop Advantage, a player loyalty card program offering customers discounts and other benefits across our properties. We have also implemented strategically targeted direct mail marketing programs to enhance brand loyalty with current customers and attract new patrons to our properties.
Continue Execution of Operational Improvements and Cost Saving Opportunities.    Since TEH's plan of reorganization in March 2010, we have implemented a number of capital investment programs and operational "best practices" aimed at growing revenue, improving margins at our properties, and reducing corporate overhead expenses. Our highly analytical approach to running the properties and in-depth research of gaming operations have allowed us to identify further cost saving opportunities across our portfolio of assets. Most of these savings do not impact customer service but rather involve more efficient use of resources. These changes include centralizing purchasing to reduce costs, consolidating and streamlining back office operations, including utilizing third parties for certain services, reconfiguring gaming floor layouts and optimizing table game rules to increase hold and win. Other identified initiatives include developing a database and campaign manager system, outsourcing of minimal skill, large staff functions and consolidating business functions in areas where there are geographic synergies.
Pursue Appropriate Expansion Opportunities.    Our primary focus since acquiring assets of TEH in bankruptcy has been the stabilization of revenue degradation driven by gaming market declines, implementation of operational improvements, and development of strategic business initiatives at our existing properties. We will also consider prudent expansion opportunities in new gaming jurisdictions and underserved markets and acquisition opportunities and other strategic transactions that may arise periodically. In addition, we continue to evaluate, enhance and expand our existing facilities, potentially high return on investment projects and other opportunities.
Properties and Segments
The Company views each casino property as an operating segment which is aggregated by region in order to present our reportable segments: (i) East, (ii) Central, (iii) West and (iv) South and other. The following describes each of our properties by region.

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East
Tropicana AC
Tropicana Casino and Resort, Atlantic City ("Tropicana AC") is situated on a 14-acre site with approximately 660 feet of ocean frontage in Atlantic City, New Jersey. This market generated gaming revenues of approximately $3.3 billion in 2011, making it the second largest gaming market in the United States. Located within driving distance from the densely populated New York-to-Washington D.C. corridor, the Atlantic City market attracts customers within a 300-mile radius, which includes approximately 48 million adults. In addition to gaming facilities, the property features The Quarter, a Havana-themed, Las Vegas-style, approximately 200,000 square-foot indoor entertainment and retail center, hosting several restaurants, shops and an IMAX theatre. Other amenities include a 2,000-seat showroom, a full service spa and salon, a health club and indoor pool, a beach and pool bar and approximately 99,000 square feet of meeting and convention space.
Central
Casino Aztar
Casino Aztar Evansville ("Casino Aztar") is a large casino hotel and entertainment complex, and a popular attraction in Evansville, the third largest city in the state of Indiana. The property serves customers in the tri-state region of southern Indiana, southeastern Illinois and northwestern Kentucky and is the only casino within an 85-mile radius, an area with approximately 1.2 million adults. Over 60% of Casino Aztar's revenues come from customers within a 50-mile radius. The property's casino operations are located dockside on the three-deck "City of Evansville" riverboat. Located adjacent to the casino, we own two distinctive hotels: the Casino Aztar Hotel, a 251-room hotel that offers guests a restaurant, conference rooms and banquet facilities; and Le Merigot Hotel, a luxurious 96-room boutique hotel with an upscale martini lounge. A 44,000-square-foot pavilion adjacent to the riverboat features three restaurants, an entertainment lounge, gift shop, coffee shop, players club and VIP lounge. The District at Casino Aztar, a $33 million entertainment complex that opened in late 2006, includes two restaurants and the Le Merigot Hotel. During the first quarter of 2012, we plan to finish construction of a new pedestrian bridge to connect the Le Merigot Hotel to the riverboat. Casino Aztar also includes a seven-story parking garage as well as surface parking.
West
Tropicana Laughlin
Tropicana Laughlin Hotel and Casino ("Tropicana Laughlin") is located on an approximately 31-acre site on Casino Drive, Laughlin, Nevada's principal thoroughfare. The property attracts customers who drive in from southern California and Arizona. Tropicana Laughlin primarily targets customers in this market who are seeking great value, a breadth of amenities and friendly service in their gaming, lodging, dining and entertainment experiences. Non-gaming amenities include 1,495 hotel rooms, a heated outdoor swimming pool, seven restaurants, three full service bars, an entertainment lounge with live music, a premium lounge for high-end players, an 800-seat multi-purpose showroom and concert hall, meeting and convention space, retail stores, an arcade and a covered parking structure.
River Palms
River Palms Hotel and Casino ("River Palms") is located on an approximately 35-acre site also on Casino Drive, with approximately 1,300 feet of frontage on the Colorado River. The property attracts customers who drive in from southern California and Arizona. The friendly, country style atmosphere attracts customers seeking a relaxed experience at great value. Non-gaming amenities include 1,001 hotel rooms, 10,500 square feet of meeting and convention space, an outdoor pool, fitness center, three restaurants, three full service bars, a showroom, two entertainment lounges with live music and a covered parking structure.
MontBleu
MontBleu Casino Resort & Spa ("MontBleu") is situated on approximately 21 acres in South Lake Tahoe, Nevada surrounded by the Sierra Nevada Mountains. The property attracts both drive-in and destination patrons, primarily from the northern California and northern Nevada markets. The area also attracts people seeking outdoor recreational activities. In May 2006, an extensive re-branding and refurbishment of the property's casino, lobby, retail facilities, restaurants and nightclubs was completed, further solidifying its position in the area. In addition to the casino, the property offers guests 437 hotel rooms, a choice of three restaurants and various non-gaming amenities, including retail shops, two nightclubs, a 1,500-seat showroom, approximately 14,000 square feet of meeting and convention space, a parking garage, a full service health spa and workout area, an indoor heated lagoon style pool with whirlpool and a 120-seat wedding chapel.

6


South and other
Lighthouse Point
Lighthouse Point Casino ("Lighthouse Point") is a 210-foot, three-deck, dockside riverboat located in Greenville, Mississippi. Lighthouse Point and Jubilee, together with a third land-based casino, are currently the only gaming facilities in the Greenville market. The properties draw customers primarily from the local market and to some extent from the Little Rock, Vicksburg and Tunica markets. In addition to slot machines, the riverboat includes a deli and bars on each floor while the dockside facility includes a buffet, a bar and 386 onsite surface parking spaces.
Jubilee
Bayou Caddy's Jubilee Casino ("Jubilee"), a 240-foot dockside riverboat, is also located in Greenville, in close proximity to Lighthouse Point. In addition to the casino facilities, the property includes a bar on each floor, a deli and approximately 700 parking spaces. The property also owns and operates the Greenville Inn & Suites, a 41-room suite hotel located less than a mile away, which offers free shuttle service to and from Jubilee and Lighthouse Point.
The Company plans to expand Lighthouse Point into a renovated, land-side facility. As part of this project, the operations at Jubilee are planned to be consolidated into Lighthouse Point and the current Jubilee riverboat facility is expected to be closed in the second quarter of 2012. The new combined property is expected to include 550 slot machines, seven table games and 41 hotel rooms. The Company will continue to operate the Greenville Inn & Suites.
Belle of Baton Rouge
Belle of Baton Rouge Casino & Hotel ("Belle of Baton Rouge") is a dockside riverboat situated on approximately 23 acres on the Mississippi River in the downtown historic district of Baton Rouge, across from the River Center, a 70,000-square-foot convention center. The three-deck, dockside riverboat casino is one of two casino facilities in the Baton Rouge market. Baton Rouge is located 75 miles north of New Orleans and is the largest city in Louisiana. The city has experienced significant growth in recent years, particularly after Hurricane Katrina struck the New Orleans region in 2005. Over 90% of the Belle of Baton Rouge customer base resides within a 50-mile radius of the property. Non-gaming amenities include 300 hotel rooms, 25,000 square feet of meeting space, an outdoor pool, a fitness center, two restaurants, a deli, buffet, an entertainment venue inside a 56,000-square-foot glass atrium that also encloses a lush tropical lobby and a 326-space parking garage.
Tropicana Aruba
Tropicana Aruba Resort & Casino ("Tropicana Aruba"), a casino resort under development in Noord, Aruba, currently consists of 361 timeshare and rental units as well as a 3,400-square-foot temporary casino opened in December 2011. When fully developed, we expect the property will have approximately 361 timeshare and rental units, an approximately 16,000 square foot permanent casino, two pools, a swim-up bar & grill, a fitness center and tennis courts which will be located on approximately 14 acres near Eagle Beach. The development project is currently in the planning and design stages, however, our development plans have not been finalized and we may decide not to proceed.
Our Equity Owners
As part of the reorganization pursuant to the Plan (as defined below), certain affiliates of Icahn Enterprises became the beneficial owners of approximately 47.5% of our Common Stock (as defined below) as of March 8, 2010. As of December 31, 2011, Icahn Enterprises was the beneficial owner of approximately 65.1% of the Company's Common Stock. Icahn Enterprises is a diversified holding company that owns subsidiaries engaged in the investment management, automotive, gaming, metals, real estate, home fashion, railcar and food packaging industries. Icahn Enterprises is publicly listed on the NASDAQ Global Select Market (ticker: "IEP"). Carl C. Icahn, who is the chairman of our board of directors, is also the chairman of the board of directors of the general partner of Icahn Enterprises.
Our Corporate History and Information
We are a Delaware corporation that was formed on May 11, 2009 to acquire certain assets of TEH and certain of its subsidiaries pursuant to their plan of reorganization under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). We also acquired Columbia Properties Vicksburg, LLC ("CP Vicksburg") which we later sold in March 2011, JMBS Casino, LLC ("JMBS Casino") and CP Laughlin Realty, LLC ("Realty"), all of which were part of the same plan of reorganization (the "Plan") as TEH (collectively, the "Predecessors"). In addition, we acquired certain assets of Adamar of New Jersey, Inc. ("Adamar"), an unconsolidated subsidiary of TEH, including Tropicana AC.

7


On May 5, 2008 (the "Petition Date"), the Predecessors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The reorganization of the Predecessors and the acquisition of Tropicana AC (together, the "Restructuring Transactions") were consummated and became effective on March 8, 2010 (the "Effective Date"), at which time we acquired certain assets of Adamar and several of the Predecessors' gaming properties and related assets. Prior to the Effective Date, we conducted no business, other than in connection with the reorganization of the Predecessors and the acquisition of Tropicana AC, and had no material assets or liabilities.
Pursuant to the Plan, on the Effective Date, a series of restructuring transactions were consummated through which we acquired the Predecessors in exchange for (i) the issuance of 12,098,053 shares of our common stock, $0.01 par value per share ("Common Stock") and warrants to purchase an additional 3,750,000 shares of Common Stock (the "Ordinary Warrants") in accordance with the Plan and (ii) the issuance of new debt in accordance with the Plan, which included the issuance to certain lenders of warrants to purchase an additional 1,312,500 shares of our Common Stock at $0.01 per share (the "Penny Warrants" and, together with the Ordinary Warrants, the "Warrants"). As a result of the reorganization we applied fresh-start reporting. Additionally, on the Effective Date, certain of our subsidiaries acquired Tropicana AC, and the lenders under the Credit Facility (as defined herein) each received their pro rata share of 12,901,947 shares of our Common Stock in exchange for their $200.0 million credit bid.
Our executive offices are located at 3930 Howard Hughes Parkway, 4th Floor, Las Vegas, Nevada. Our telephone number is (702) 589-3900 and our website is www.tropicanacasinos.com.
Competition
We own land-based and riverboat casino facilities in five states and one casino resort development located on the island of Aruba. We compete with numerous casinos and casino hotels of varying quality and size in the markets in which our properties are located and with other forms of legalized gaming, including state-sponsored lotteries, racetracks, off-track wagering, video lottery, video poker terminals and card parlors. We also compete with other non-gaming resorts and vacation areas, and with various other entertainment businesses. The casino entertainment business is characterized by competitors that vary considerably by their size, quality of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity.
In most markets, we compete directly with other casino facilities operating in the immediate and surrounding market areas including casinos located on Native American reservations. In some markets, we face competition from nearby markets in addition to direct competition within our market areas.
We believe competition in existing markets has intensified over the last several years, due to new markets opening for development, overall challenging economic conditions and decreased spending on leisure activities. Many casino operators have invested in expanding existing facilities, developing new facilities, and acquiring established facilities in existing markets. This expansion of existing casino entertainment properties, the increase in the number of properties and the aggressive marketing strategies of many of our competitors has increased competition in many markets in which we compete, and we expect this intense competition to continue.
Our operating results can be adversely affected by costs associated with advertising, promotions and complimentary services to patrons, the amount and timing of which may be affected by the policies of our properties' competitors and our efforts to keep pace with them. Going forward, if our operating revenues are insufficient to allow us to match the promotions of competitors, the number of our casino patrons may decline, which may have a material adverse effect on our financial performance. In addition, some of our competitors have significantly greater financial resources than we do, and as a result we may not be able to successfully compete with them in the future.
Our ability to compete successfully is dependent upon our ability to manage our costs and develop and implement strong and effective marketing campaigns both at our individual properties and across our business, as well as invest in, and upgrade, the facilities we own. To the extent we are unable to develop and implement these types of marketing initiatives and invest in and upgrade our facilities, we may not be successful in competing in our markets, which may have a material adverse effect on our financial position.
The competitive environment of each of our properties is described below by region.
East
Tropicana AC
Tropicana AC primarily competes with casino and gaming facilities located in Atlantic City, Pennsylvania, New York, Maryland, Delaware and Connecticut. The following is a brief summary of competition in these six markets.

8


Atlantic City.    The Atlantic City market primarily serves the New York-Philadelphia-Baltimore-Washington, D.C. corridor with nearly 48 million adults living within a 300-mile radius. The Atlantic City market is currently the second largest gaming market in the United States, after Las Vegas.
Competition in Atlantic City is intense and continues to increase. Currently, the 11 casino hotels located in Atlantic City, including Tropicana AC, compete with each other on the basis of customer service, quality and extent of amenities and promotional offers. For this reason, Tropicana AC and its competitors have historically incurred substantial capital expenditures to compete effectively. The current economic downturn and increased competition (actual and pending) from neighboring jurisdictions, particularly Pennsylvania, New York, Delaware and Maryland (as discussed in more detail below), has further intensified the competition among the 11 casino hotels operating in Atlantic City, and may require us to increase our capital expenditures.
Revel Entertainment Group is currently completing construction of an approximately $2 billion resort on a 20-acre, oceanfront site next to the Showboat Casino Hotel, which is currently projected to open in the spring of 2012. When completed, this project will add significantly to the intra-city competition for casino patrons.
Significant regulatory and legislative action took place in 2011 which impacts the New Jersey gaming industry. Of import are three laws enacted in early 2011. The first law enacted in January 2011 allows for "boutique casinos" in Atlantic City. These boutique casinos are subject to less stringent size and costs structures than those to which Tropicana AC and other existing casinos were and are currently subject but would be subject to a higher gross gaming tax than non-boutique Atlantic City casinos. These smaller, less capital intensive to build casinos could enhance the gaming market product in Atlantic City; however, the increased competition and new, modern casino experience and higher gross gaming tax rates could have a detrimental effect on the performance of existing facilities. In addition to this law, on February 1, 2011, two bills, the Tourism District Bill and the Deregulation Bill were signed into law. The overall impact of the Tourism District Bill is to delegate redevelopment authority and the responsibility for the creation of a master plan to the New Jersey Casino Reinvestment Development Authority (the "CRDA"). The Tourism District Bill also authorizes the CRDA to enter into a public private partnership with the casinos in Atlantic City that have formed the Atlantic City Alliance to jointly market the city. The Deregulation Bill makes substantial and sweeping amendments to the New Jersey Casino Control Act and eliminates many duplicative and onerous functions that the New Jersey Casino Control Commission (the "NJCCC") and the Division of Gaming Enforcement ("NJDGE"), two state agencies that share regulatory control over the New Jersey casino industry, previously required of casino license holders. The stated purpose of the reforms, which address areas such as technology, internal controls, licensing and licensing requirements, among others, is "to modernize and streamline the current outdated casino regulatory structure in order to achieve efficiencies and cost savings." During 2011, the NJDGE adopted regulations to implement many provisions of the Deregulation Bill. Most of the monies saved through the Deregulation Bill initiatives are to be redirected to the CRDA for redevelopment and marketing purposes. These savings and the more industry favorable regulatory structure that are intended to result from the Deregulation Bill are expected to make New Jersey casinos more competitive with neighboring jurisdictions, where both casinos and racetracks with slot operations are proliferating. In addition to these three bills, in November 2011 New Jersey voters approved an amendment to New Jersey's constitution to allow for sports betting at Atlantic City casinos and racetracks, and in January 2012 the New Jersey Legislature enacted a law permitting sports betting at those facilities. Implementation is subject to amendment or repeal of existing Federal law that prohibits sports betting in New Jersey. Should sports betting be implemented at Atlantic City casinos and racetracks increased competition among these facilities will likely result.
In August 2008, the Atlantic City casinos executed a Purse Enhancement Agreement ("PEA") with the New Jersey Sports and Exposition Authority ("NJSEA"). This agreement required substantial annual payments to be made by the casinos to the NJSEA in 2008 through 2011 to subsidize horse racing. In exchange for these payments, a moratorium on the conduct of casino gaming in New Jersey outside of Atlantic City, including video lottery terminals at racetracks, was put in place until the expiration of the agreement on December 31, 2011.
We cannot ascertain at this time the effects that any new projects could have on the Atlantic City gaming market. However, future developments and expansions could have a material adverse effect on our business and operations.
Pennsylvania.    In July 2004, the Pennsylvania legislature enacted the Race Horse Development and Gaming Act which authorizes the Pennsylvania Gaming Control Board to permit a total of up to 61,000 slot machines in up to fourteen different licensed locations in Pennsylvania, seven at racetracks (each with up to 5,000 slot machines), five at free standing casinos (two in Philadelphia, one in Pittsburgh and two elsewhere, each with up to 5,000 slot machines) and two at established resorts (each with up to 500 slot machines). Three of the racetrack sites, Pocono Downs, Philadelphia Park and Chester Downs, along with three slot parlors, two in Philadelphia and one in Bethlehem, are located in the market area of Tropicana AC. Slot machine operations commenced in late 2006 at the racetracks and, as of December 31, 2011, approximately 27,000 slot machines were operating in Pennsylvania. Sands Casino Resort Bethlehem opened in May 2009 and currently has approximately 3,000 slot machines and 130 table games. In September 2010, Sugar House Casino opened its casino in Philadelphia, which includes

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approximately 1,600 slot machines and 50 table games. Competition from the Pennsylvania area slot machine facilities that are currently operational has adversely impacted Atlantic City casinos, including Tropicana AC. In addition, in 2011 the Pennsylvania Gaming Control Board revoked the license related to a second proposed casino development in Philadelphia and has indicated that it will re-bid and re-issue the license. In the event the second license is awarded to another gaming company and another casino is developed in Philadelphia, it could further impact Atlantic City gaming revenues.
In addition, Pennsylvania approved the legalization of live table games in January 2010. The Pennsylvania Gaming Control Board issued table game regulations and table game operations commenced in July 2010. As of December 31, 2011, there were approximately 900 table games operating in Pennsylvania. The legalization of live table games in Pennsylvania and the potential opening of additional slot parlors or casinos will continue to adversely impact Atlantic City casinos, including Tropicana AC.
New York.    Pursuant to legislation enacted in 2001, the Division of the Lottery of the State of New York is authorized to permit the installation of video lottery terminals ("VLTs") at various horse racing facilities in New York. During 2004, VLT operations commenced at four upstate and western New York racetracks and at a racetrack in Sullivan County, which operates approximately 1,100 VLTs and is considerably closer (approximately 95 miles) to Manhattan than Tropicana AC. The VLT facility at Yonkers Raceway ("Yonkers") opened in late 2006 and now operates approximately 5,400 VLTs. The Genting Group was granted a license to operate 4,500 VLTs at Aqueduct Racetrack (the "Aqueduct") in Queens, NY, and opened Resorts World Casino in late 2011, which operates approximately 3,800 VLTS. Additionally, at various times there have been discussions about allowing VLTs at the Belmont racetrack ("Belmont"). The Yonkers, Aqueduct and Belmont locations are less than fifteen miles from Manhattan.
The 2001 legislation also authorized the Governor of New York to negotiate compacts authorizing the operation of up to six Native American casino facilities including slot machine gaming. A compact negotiated in 2002 authorized three such facilities located in the western part of New York and outside of Tropicana AC's primary market area. The remaining three Native American casinos, if developed, are required by law to be located in either Sullivan County or Ulster County, adjoining counties less than 100 miles northwest of Manhattan. The Bureau of Indian Affairs has rejected a compact between the Stockbridge Munsee Band of Mohicans and New York to build a casino and resort in Sullivan County. Competition from the VLT facilities at Aqueduct and Yonkers as well as from potential Native American casinos as may be authorized and operated in Sullivan or Ulster County could adversely impact Atlantic City casinos, including Tropicana AC.
Maryland.    In November 2008, Maryland voters passed a referendum to allow 15,000 slot machines at five locations across that state. The State of Maryland set a February 2009 deadline for bids to operate the five locations and received only four qualified bids to operate slot machines and no bids for the fifth location. In the initial bids received, potential operators bid for 6,550 of the total potential slot machines available. Penn National Gaming ("Penn") opened Hollywood Perryville in September 2010 with approximately 1,500 slot machines. Ocean Downs Racetrack opened in January 2011 with 750 slot machines. The Cordish Company was awarded a license in Anne Arundel County and is developing a property with 4,750 slot machines and electronic table games in Baltimore, which is Maryland's largest planned casino project expected to open in Summer 2012. We believe these facilities in Maryland could adversely impact Atlantic City casinos, including Tropicana AC.
Delaware.    Tropicana AC competes with Delaware primarily for gaming customers from the southern New Jersey, southern Pennsylvania and Delaware regions. In May 2009, Delaware approved sports betting, which is currently limited to parlay wagering on National Football League games, where bettors must win bets on multiple games. In addition, live table game legislation was approved and table game operations commenced at the three Delaware casinos during 2010. While Atlantic City's casinos currently offer table games, they are currently not permitted to offer sports betting. We believe the introduction of limited sports betting and live table games in Delaware have adversely impacted Atlantic City casinos, including Tropicana AC.
Connecticut. Connecticut features two mature resort style Native American casinos, Mohegan Sun and Foxwoods Resort and Casino. Mohegan Sun offers dining, hotel accommodations, entertainment and shopping in addition to 300,000 square feet of gaming space within three casinos. Foxwoods Resort and Casino also offers dining, hotel accommodations, entertainment and shopping in addition to 6,300 slot and video poker machines and over 360 table games. These casinos draw customers from the New York metropolitan area and Southern New England that had traditionally gambled in Atlantic City. Atlantic City casinos continue to market against and compete with these facilities for customers in these geographic areas.
In addition to these six markets, in 2011 the Commonwealth of Massachusetts enacted a law providing for three resort casinos to be constructed in the Central, Southeastern and Western parts of the state, and for one slot parlor with a maximum of 1,250 slot machines and no table games. During 2012, under this law, Massachusetts will form a gaming commission that is expected to issue a request for proposals for these casinos in late 2012 or early 2013. It is anticipated that a large casino facility constructed in the Western part of Massachusetts could draw customers from the New York metropolitan area which could have a negative impact on Atlantic City revenues.

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Central
Casino Aztar
As the only casino within an 85-mile radius of Evansville, Casino Aztar enjoys a prime location. Its nearest direct competitor, French Lick Casino, is located 85 miles to the northeast. Other casino competitors include: Horseshoe Southern Indiana located 115 miles east; Harrah's Metropolis located 140 miles southwest; and four casinos in the St. Louis, Missouri area located approximately 165 miles northwest. Indiana racino competitors include Indiana Live located 205 miles northeast; and Hoosier Park located 225 miles northeast.
Legislation to bring casino gambling to neighboring Kentucky has been intermittently introduced dating back to 1988. Now that Kentucky is bordered by five states with legalized gaming it may put additional pressure on Kentucky legislators to legalize gaming. State leaders have debated for years whether Kentucky, a state with a long tradition of betting on horse races, can offer casino-style gambling at racetracks and new legislative initiatives have been announced for the 2012 Legislative session. Although legislation to allow slots at the racetracks faltered, in July 2010 the Kentucky Horse Racing Commission (the "KHRC") approved regulations that would allow Instant Racing to be operated by Kentucky's racetracks. The game, Instant Racing, currently in use in Arkansas, allows players to bet on historical races that are chosen at random and shown on a video screen. Subsequently, the KHRC sought a ruling upholding its legal authority to adopt the regulations. In December 2010, a circuit judge ruled in favor of the KHRC. The ruling is under appeal. Ellis Park, a thoroughbred racetrack in Henderson, Kentucky is located approximately eight driving miles south of Casino Aztar. The racetrack traditionally conducts live racing from July 4th to September 1st every year and has announced plans to install up to 300 Instant Racing machines at its racetrack in 2012. The financial results of Casino Aztar could be adversely affected if Instant Racing is implemented at Ellis Park or if gaming is legalized in Kentucky.
West
Tropicana Laughlin and River Palms
Tropicana Laughlin and River Palms compete primarily with other Laughlin hotels and casinos located along the Colorado River based on a mix of casino games, personal service, payout ratios, price of hotel rooms, restaurant value and promotions. The Laughlin market is a value-oriented destination for travelers seeking an alternative to the fast-paced Las Vegas experience. During 2008, one of our direct competitors in the Laughlin market, Aquarius Casino Resort, completed a large capital improvement program including renovations to the casino and common areas, new slot machines, new signage and renovations to suites and standard hotel rooms.
Tropicana Laughlin and River Palms also compete with casinos in nearby locations, including the Mojave tribe's casino situated eight miles south of Laughlin, Native American casinos in Arizona and California, and numerous casinos in Las Vegas. The Laughlin area is situated in an unincorporated portion of Clark County in the southern portion of the State of Nevada. Laughlin is located along the west side of the Colorado River, which forms the boundary between Nevada and Arizona. Las Vegas is located approximately 97 miles to the north via U.S. Highway 95. Los Angeles is approximately 300 miles west with access being provided by Interstate 40 and Interstate 15. Flagstaff, Arizona is approximately 180 miles east via Interstate 40 while Phoenix, Arizona is approximately 185 miles southeast of Laughlin.
MontBleu
The South Lake Tahoe area consists of five casino properties including MontBleu and Tahoe Horizon Casino Resort ("Tahoe Horizon"). Two Harrah's casino properties, Harvey's Resort Hotel and Harrah's Casino Hotel, are the largest competitors in this market. The fifth property, The Lakeside Inn, is primarily a casino catering to local residents with an attached motor lodge catering to overnight visitors. There are also three other casinos on the North Shore of Lake Tahoe, which are approximately 25 miles from the South Lake Tahoe market. There are also numerous casinos located in Reno, Nevada, which is approximately 60 miles from South Lake Tahoe and several casinos located in Carson City, Nevada, which is approximately 30 miles from South Lake Tahoe. Gaming revenues in the South Lake Tahoe area are directly and adversely affected by the ongoing proliferation of Native American gaming in northern California. Native American casinos, including the Cache Creek in Brooks, Jackson Ranchero in Jackson, Thunder Valley Casino in Auburn and Red Hawk Casino located on Highway 50 in Placerville, the corridor from the San Francisco/Oakland Bay Area leading into Lake Tahoe, vigorously compete for would-be South Lake Tahoe visitors from northern California and the Pacific Northwest.
South and other
Lighthouse Point and Jubilee
Jubilee, Lighthouse Point and Harlow's Casino are currently the only licensed riverboat gaming facilities in the Greenville, Mississippi market. Harlow's Casino opened in November 2007 with a total project cost of $70 million, and

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features more than 900 gaming positions, 100 hotel rooms and a 2,500-seat theater. This facility has adversely impacted the financial performance of our Greenville properties. Expected to debut in early May 2012, Lighthouse Point will be expanded and rebranded as Trop Casino Greenville with a new land-side casino floor featuring new gaming machines, an improved dining experience and other renovations to create a new and improved entertainment experience for customers in the Greenville region. As part of this project, the operations at Jubilee are planned to be consolidated into Lighthouse Point and the current Jubilee riverboat facility is expected to close in the second quarter of 2012.
Several potential gaming sites still exist in or near Greenville, and from time to time potential competitors have proposed the development of additional casinos. Most recently, in 2010, the Delta Blues Casino was proposed for development on a site in downtown Greenville in close proximity to Jubilee. Although the Delta Blues Casino site development as currently proposed has yet to be considered or approved by the Mississippi Gaming Commission ("MGC"), the MGC previously issued now-expired approvals for the Delta Blues Casino site in 2003 and 2004.
To a lesser extent, the Greenville market also competes with the Vicksburg market which is 90 miles to the south and the Tunica, Mississippi market which is 115 miles to the northeast.
Belle of Baton Rouge
Belle of Baton Rouge is currently one of two licensed dockside riverboat gaming facilities operating in Baton Rouge. The other riverboat facility, Hollywood Casino Baton Rouge, is owned by Penn National Gaming, Inc.
Belle of Baton Rouge also faces competition from land-based and riverboat casinos throughout Louisiana and on the Mississippi Gulf Coast, from casinos on Native American lands and from non-casino gaming opportunities within Louisiana. Belle of Baton Rouge faces competition from eleven casinos on the Mississippi Gulf Coast, which is approximately 120 miles east of Baton Rouge. Many of these casinos are destination resorts that attract customers from the Baton Rouge area. Subsequent to Hurricane Katrina, Mississippi Gulf Coast casinos have been allowed to operate as land-based facilities. Belle of Baton Rouge also faces competition from four locations in New Orleans, which is approximately 75 miles from Baton Rouge, in the form of two riverboat casinos, one racetrack with more than 600 slot machines, and one land-based casino. In addition, there are also three Native American casinos in Louisiana. The two closest Native American casinos are land-based facilities located approximately 45 miles southwest and approximately 65 miles northwest of Baton Rouge, respectively. Belle of Baton Rouge also faces competition from a riverboat casino located in Amelia, Louisiana, approximately a ninety-minute drive from Baton Rouge, and from a second racetrack located approximately 55 miles from Baton Rouge operating approximately 1,400 gaming machines. In addition, approximately 14,500 slot machines in non-casino venues such as truck stops, restaurants, bars and off-track betting facilities located in Louisiana provide additional competition.
Another gaming operator, Pinnacle Entertainment, received approval from the Louisiana Gaming Control Board ("LGCB") for a third riverboat casino in Baton Rouge that was subject to a local option referendum subsequently approved by East Baton Rouge Parish voters in February 2008. This new Pinnacle resort will be located on 575 acres of land approximately eight miles southeast of downtown Baton Rouge, and is expected to have approximately 1,500 slot machines and 50 table games. The project is currently under development and is scheduled to open in the summer of 2012. The Pinnacle project may have a material adverse effect on Belle of Baton Rouge.
Tropicana Aruba
There are currently eleven operating casinos in Aruba including our temporary casino. The La Cabana Timeshare Resort immediately adjacent to our resort is currently constructing an approximately 8,500 square foot casino expected to contain up to 225 slot machines and up to eight table games. This casino, expected to open in 2012, will compete directly against our temporary casino and our future planned permanent casino. In addition, it is expected that a new casino will open in the next five years as part of the Ritz Carlton project currently under construction. Other than these two projects under development, we do not expect that the Aruban casino market will experience any additional significant growth as casino licenses in Aruba are only granted to hotels with an average of 350 rooms and no additional projects of the requisite size have been announced. The casino properties in Aruba can be categorized as amenities to resort operations. Once Tropicana Aruba is fully developed, we expect it to be one of the largest casinos on the island. However, our development plans for a permanent casino have not been finalized and we may decide not to proceed.
Governmental Regulation
General Governmental and Gaming Regulations
The following is a summary of the provisions of the laws and regulations applicable to our gaming operations and other laws and regulations applicable to us. The summary does not purport to be a full description thereof and is qualified in its entirety by reference to such laws and regulations.

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The ownership and operation of our gaming facilities is subject to pervasive regulation under the laws and regulations of each of the five states in which we operate, Nevada, New Jersey, Mississippi, Indiana and Louisiana, as well as in Aruba where we operate a temporary casino. Gaming laws generally are based upon declarations of public policy designed to protect gaming consumers and the viability and integrity of the gaming industry. Gaming laws also may be designed to protect and maximize state and local revenues derived through taxes and licensing fees imposed on the gaming industry participants as well as to enhance economic development and tourism. To accomplish these public policy goals, gaming laws establish procedures to ensure that participants in the gaming industry meet certain standards of character and financial fitness. In addition, gaming laws generally require gaming industry participants to:
establish and maintain responsible accounting practices and procedures;
maintain effective controls over their financial practices, including establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues;
maintain systems for reliable record keeping;
file periodic reports with gaming regulators;
ensure that contracts and financial transactions are commercially reasonable, reflect fair market value, and are arm's-length transactions entered into with suitable persons;
establish procedures designed to prevent cheating and fraudulent practices; and
establish programs to promote responsible gaming.
Typically, a jurisdiction's regulatory environment is established by statute and is administered by a regulatory agency with broad discretion to regulate, among other things, the affairs of owners, managers and persons with financial interests in gaming operations. Among other things, gaming authorities in the various jurisdictions in which we operate:
adopt rules and regulations under the implementing statutes;
interpret and enforce gaming laws, rules and regulations;
impose disciplinary sanctions for violations, including fines and penalties;
review the character and financial fitness of participants in gaming operations and make determinations regarding their suitability or qualification for participation and licensure;
grant licenses for participation in gaming operations;
collect and review reports and information submitted by participants in gaming operations;
review and approve certain transactions, such as acquisitions or change-of-control transactions, of gaming industry participants, securities offerings and debt transactions engaged in by such participants; and
establish and collect fees and taxes.
Any change in the laws or regulations of a gaming jurisdiction could have a material adverse effect on our gaming operations.
Licensing
Gaming laws require us and certain of our subsidiaries, as well as our directors, officers (with respect to corporations), managers (with respect to limited liability companies), and certain other key employees and, in some cases, certain of our shareholders, (with respect to corporations), members (with respect to limited liability companies), and holders of debt securities, to obtain licenses, findings of suitability or other approvals from gaming authorities. Licenses or findings of suitability typically require a determination that the applicant is suitable or otherwise qualifies to hold the license or to merit the finding of suitability necessary to hold equity, debt securities or position with the gaming licensee or its affiliated entities. Where not mandated by statute, rule or regulation, gaming authorities generally have broad discretion in determining who must apply for a finding of suitability and whether an applicant qualifies for licensing or should be deemed suitable or otherwise qualified.
To determine whether to grant a license or finding of suitability to an entity to conduct gaming operations, gaming authorities generally consider the following factors (which vary among the jurisdictions in which we operate):
the financial stability, integrity, and responsibility of the applicant, including whether the operation is adequately capitalized in the state and exhibits the ability to maintain adequate insurance levels;
the quality of the applicant's casino facilities;
the amount of revenue to be derived by the applicable state from the operation of the applicant's casino;
the applicant's practices with respect to diversity in employment and procurement;
the effect on competition and general impact on the community; and
the good character, honesty and integrity of the applicant and its parent entities.
Many gaming jurisdictions limit the number of licenses granted to operate casinos within the state, and some states limit the number of licenses granted to a single gaming operator or the number of licenses in which an investor may hold an

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ownership interest. Licenses under gaming laws generally are not transferable. Licenses in most of the jurisdictions in which we conduct gaming operations are granted for limited durations and require renewal from time to time. The failure to obtain or renew any of our licenses could have a material adverse effect on our gaming operations.
In evaluating individual applicants, gaming authorities generally consider the individual's business probity and casino experience, the individual's reputation for good character, honesty, and integrity, the individual's criminal history and the character and reputation of those with whom the individual associates.
Findings of Qualification and Suitability Determinations
As noted above, gaming authorities may investigate any individual who has a material relationship to or material involvement with our operations to determine whether such individual is suitable or should be licensed or found suitable as a business associate of a gaming licensee. In many of the jurisdictions in which we operate, our directors, officers (with respect to corporations), managers (with respect to limited liability companies), and certain other key employees must file applications with the gaming authorities and may be required to be licensed, qualify, or otherwise be found suitable. Qualification and suitability determinations generally require the submission of detailed personal and financial information followed by a thorough investigation. The applicant must pay all the costs of the investigation. Changes with respect to the individuals who occupy licensed positions must be reported to gaming authorities and—in addition to their authority to deny an application for licensure, qualification, or a finding of suitability—gaming authorities have jurisdiction to disapprove a change in a corporate position.
If one or more gaming authorities were to find that a director, officer (with respect to corporations), manager (with respect to limited liability companies), or other key employee of ours does not qualify, is unsuitable for licensing or is unsuitable to continue having a relationship with us, we may be required to sever all relationships with such person. In addition, gaming authorities may require that we terminate the employment of any person who refuses to file appropriate applications.
Moreover, in many jurisdictions, certain holders of our debt and equity securities may be required to undergo a suitability investigation similar to that described above. All of the jurisdictions in which we operate require any person who acquires beneficial ownership of more than a certain percentage of voting securities, and, in the case of Louisiana, also non-voting securities, typically 5%, to report the acquisition to the gaming authorities, and the gaming authorities may require such holders to apply for qualification or a finding of suitability; provided, however, that with very limited exceptions Nevada requires that all equity holders of a private gaming company be found suitable (unless a waiver is obtained). Most jurisdictions provide that "institutional investors" may seek a waiver of these requirements. In such jurisdictions, an "institutional investor" generally is defined as a qualified investor (i.e., certain banks, insurance companies, investment companies or advisors) acquiring and holding voting securities (or non-voting securities in jurisdictions that do not make a distinction between voting and non-voting securities) in the ordinary course of business for investment purposes only, and not for the purpose of causing, directly or indirectly, the election of a majority of the gaming entity's board of directors, any change in such entity's corporate charter, bylaws, management, policies, or operations, or those of any of such entity's affiliates, or the taking of any other action that gaming authorities find to be inconsistent with holding the securities solely for investment purposes. Even if a waiver is granted, an institutional investor generally may not take any action inconsistent with its status when the waiver was granted without once again becoming subject to the foregoing reporting and application obligations.
The definition of an "institutional investor" varies from jurisdiction to jurisdiction. In addition, in order to obtain a qualification waiver, some jurisdictions, including Nevada, Louisiana, Mississippi, Indiana and New Jersey, require an institutional investor to certify to, among other things, its intent and purpose in acquiring and holding an issuer's securities. In Indiana, an institutional investor that acquires, directly or indirectly, the beneficial ownership of 15% or more of a public gaming company's voting securities must apply for a finding of suitability within 45 days after acquiring the securities. The definition of "public company" varies from jurisdiction to jurisdiction, but in general, a public company is one that has a class of securities registered under the Securities Exchange Act of 1934 (the "Exchange Act"). In Mississippi, an institutional investor that acquires, directly or indirectly, beneficial ownership of more than 10%, but not more than 15%, of a gaming company's voting securities may apply to the Gaming Commission for a waiver of the suitability requirement if the institutional investor holds such voting securities for investment purposes only, and, under certain circumstances, such an investor that has obtained a waiver can hold, directly or indirectly, up to 19% of the voting securities of a gaming company for a limited period of time and maintain the waiver.
In Nevada, beneficial owners of more than 10% of a public gaming company's voting securities must apply to the Nevada Gaming Commission for a finding of suitability within 30 days after the Chairman of the Nevada State Gaming Control Board mails a written notice requiring the filing of an application for such a finding. However, an institutional investor that beneficially owns more than 10% but not more than 11% of a public gaming company's voting securities as a result of a stock repurchase by the public gaming company may not be required to file such an application. Additionally, an institutional investor that acquires more than 10% but not more than 25% of a public gaming company's voting securities may apply to the

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Nevada Gaming Commission for a waiver of these application requirements if the investor holds the voting securities for investment purposes only. An institutional investor that has obtained a waiver may own more than 25% but not more than 29% of a public gaming company's voting securities and maintain the waiver where the additional ownership results from a stock repurchase by the public gaming company.
In New Jersey, recent amendments to the gaming laws permit an institutional investor holding either under 25% of the equity securities of a casino licensee's holding or intermediary companies, or debt securities of a casino licensee's holding or intermediary companies, or another subsidiary company of a casino licensee's holding or intermediary companies which is related in any way to the financing of the casino licensee, where the securities represent a portion of the outstanding debt of the company not exceeding 25% or a percentage of any issue of the outstanding debt of the company not exceeding 50%, unless the full issue is in the amount of $150 million or less (in which case no qualification is required), shall be granted a waiver of the qualification requirement if the securities are those of a corporation, whether publicly traded or privately held, and its holdings of such securities were purchased for investment purposes only and the institutional investor provides a certification which, among other things, confirms that its holdings of such securities were purchased for investment purposes only. The Director of the NJDGE may grant a waiver of the qualification requirement to an institutional investor holding a higher percentage of such securities upon a showing of good cause and compliance with the certification submission requirement.
In Aruba, any direct or indirect holder of an Aruban casino license is required to provide certain information, including information regarding its ownership. Information required to be provided by the owners of a license holder includes the number of shares of the license holder held as well as a certificate of good standing.
Generally, in each of the jurisdictions in which our subsidiaries operate, any person who fails or refuses to apply for a finding of suitability or a license within the prescribed period after being advised by gaming authorities that it is required to do so may be denied a license or found unsuitable or unqualified, as applicable. Any holder of equity securities that is found unsuitable or unqualified or denied a license, and who holds, directly or indirectly, any beneficial ownership of a gaming entity's equity securities beyond such period of time as may be prescribed by the applicable gaming authorities may be guilty of a criminal offense. Furthermore, a gaming entity may be subject to disciplinary action if such gaming entity, after receiving notice that a person is unsuitable to be a holder of equity securities or to have any other relationship with such gaming entity or any of its subsidiaries: (i) pays that person any dividend or interest upon the securities; (ii) allows that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; (iii) pays remuneration in any form to that person for services rendered or otherwise; (iv) allows that person to continue an ownership or economic interest or receive any economic benefit; or (v) fails to pursue all lawful efforts to require such unsuitable person to relinquish the securities including, if necessary, the immediate purchase of such securities for the lesser of fair value at the time of repurchase or fair value at the time of acquisition by the unsuitable holder. In the event that disqualified holders fail to divest themselves of such securities, gaming authorities have the power to revoke or suspend the casino license or licenses related to the regulated entity that issued the securities.
Our certificate of incorporation includes provisions establishing our ability to redeem the securities of unsuitable holders if (i) the holder is determined by a gaming authority, or if we have been notified by the staff of a gaming authority that it will recommend that the gaming authority determine the holder to be, unsuitable, unqualified, or disqualified to own or control such securities or unsuitable to be connected with a person engaged in gaming activities in that jurisdiction, or (ii) the holder is deemed likely to preclude or materially delay, impede, impair or jeopardize our application for or ability to obtain, right to the use of or ability to reinstate or retain any gaming license, or to result in the imposition of materially burdensome terms of or conditions on any gaming license.
Some of the gaming jurisdictions in which we operate also require that suppliers of certain goods and services to gaming industry participants be licensed or otherwise approved, and require that we purchase and lease gaming equipment, supplies, and services only from such licensed or approved suppliers.
Violations of Gaming Laws
The gaming authorities in each of the jurisdictions in which our subsidiaries operate may also, among other things, limit, condition, suspend, or revoke a gaming license or approval to own the equity or joint venture interests of any of our operations in such licensing authority's jurisdiction for any cause deemed reasonable by such licensing authority. In addition, if our subsidiaries violate applicable gaming laws, their gaming licenses could be limited, conditioned, suspended, or revoked by gaming authorities, and we and any other persons and entities involved could be subject to substantial fines. Further, gaming authorities may appoint a supervisor or conservator to operate our gaming properties or, in some jurisdictions, take title to our gaming assets. Under certain circumstances, earnings generated during such appointment could be forfeited to the applicable state or states. Furthermore, violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions and, as a result, violations by us of applicable gaming laws in one jurisdiction could have a material adverse effect on all of the our gaming operations. Finally, some gaming jurisdictions prohibit certain types of political activity by a gaming licensee, its

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directors, officers (with respect to corporations), managers (with respect to limited liability companies), and certain other key people. In Indiana, for example, a licensee or a person with an interest in a licensee is prohibited from making certain political contributions. A violation of such a prohibition may subject the offender to criminal charges and disciplinary action.
Reporting and Record-Keeping Requirements of Gaming Authorities
We are periodically required to submit detailed financial and operating reports and furnish any other information that gaming authorities may require. Under federal law, we are required to record and submit detailed reports of currency transactions at our casinos involving greater than $10,000, as well as any suspicious activity that may occur at such facilities. Additionally, we are required to maintain a current stock ledger that may be examined by gaming authorities at any time. Moreover, the state of Indiana requires that we submit quarterly reports to the election commission as well as to gaming authorities setting forth those persons who directly or indirectly hold a 1% interest in the legal entity that holds the gaming license. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to gaming authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. In addition, gaming authorities may require that our Common Stock certificates and Warrant certificates bear a legend indicating that the securities are subject to specified gaming laws.
Review and Approval by Gaming Authorities of Certain Transactions
Substantially all material loans, leases, sales of securities, and similar financing transactions by us must be reported to, and in some cases, requires the prior approval of gaming authorities. We may not make a public offering of securities without the prior approval of certain gaming authorities. Changes in control through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or otherwise, are subject to prior approval of gaming authorities. Entities seeking to acquire control of us or one of our subsidiaries must satisfy gaming authorities with respect to a variety of standards prior to assuming control. Gaming authorities may also require controlling stockholders, directors, officers (with respect to corporations), managers (with respect to limited liability companies), and certain other key employees having a material relationship or involvement with the entity proposing to acquire control to be investigated and licensed or qualified as part of the approval process relating to the transaction.
Because of regulatory restrictions, our ability to grant a security interest in any of our gaming assets is limited and subject to receipt of approval by gaming authorities. Some jurisdictions, including Louisiana, Indiana, Mississippi and Aruba, prohibit the transfer of a gaming license or the granting of a security interest in the same.
License for Sale of Alcoholic Beverages
The service and sale of alcoholic beverages at our various casinos are subject to licensing, control and regulation by various governmental authorities, some of which have the authority to approve all persons owning or controlling stock, and all directors and officers in a manner similar to the gaming suitability determinations discussed above. Although these authorities, with the exception of Indiana, Louisiana and Mississippi, typically defer to the suitability determinations of the relevant gaming authority in their jurisdiction, they retain the jurisdiction to conduct any investigation and take any regulatory action deemed appropriate under the circumstances. Any holder found to be unsuitable by such an authority must dispose of held securities, and such securities would be subject to repurchase by us, as provided in our certificate of incorporation. In New Jersey, pursuant to recent amendments to the gaming laws, the authority to grant any license for, or to permit or prohibit the presence of, alcoholic beverages in, on, or about any premises licensed as part of a casino hotel is exclusively vested in the NJDGE.
Other Regulations
We are subject to various federal, state and local laws and regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters (see "—Environmental Matters"), currency transactions, employees, taxation, zoning and building codes, marketing and advertising, vessels and permanently moored craft. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our business.
Trademarks
We use a variety of trade names, service marks and trademarks and have all the rights and licenses necessary to conduct our continuing operations. We have registered several service marks and trademarks with the United States Patent and Trademark Office or otherwise acquired the licenses to use those which are material to the conduct of our business. We own the following federally registered trademarks or service marks which are material to our business: MontBleu, Aztar, Trop, Tropicana, Belle of Baton Rouge, Trop Advantage and the Quarter at Tropicana.

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Tropicana Trademark Litigation
Certain parties (the "Plaintiffs") affiliated with the new owners of the Tropicana Las Vegas ("Tropicana LV") filed a declaratory judgment action in the District Court, Clark County, Nevada ("Nevada State Court"), on July 20, 2009, against Aztar Corporation ("Aztar") and Tropicana Entertainment, LLC ("TE") originally seeking a declaratory judgment that Tropicana LV had the right to operate a hotel and casino under the name "Tropicana" without any interference by or payment to Aztar or TE (together, the "Defendants"). The Plaintiffs' complaint sought no damages or injunctive relief. On August 10, 2009, Defendants removed the action to the District of Nevada and filed an answer and counterclaim asserting Plaintiffs' use of "Tropicana" infringes upon Defendants' rights in three federally registered trademarks. The Plaintiffs filed a motion to remand the action to Nevada State Court, which was granted on January 21, 2010.
During the course of proceedings, the Plaintiffs and Defendants each filed a motion for summary judgment claiming ownership of the "Tropicana" trademark. Both motions were denied, although the Nevada State Court preliminarily found that the Plaintiffs might have an unexercised reversionary ownership interest in the “Tropicana” trademark as a result of an agreement that is 30 years old. Nonetheless, because any exercise of this purported reversionary interest by Tropicana LV could have potentially deprived the Company, as successor to TE, of its asserted ownership of the Tropicana trademark, the Defendants filed a motion in the Chapter 11 Cases for an order rejecting the 1980 trade name agreement. In addition, the Company, together with its subsidiary, New Tropicana Holdings, Inc. ("New Tropicana"), and certain affiliates of Icahn Capital, as secured lenders to the Company, filed a complaint in the Chapter 11 Cases against the Plaintiffs (the “Bankruptcy Court action”), seeking a declaration that, consistent with prior, uncontested orders of the Bankruptcy Court, New Tropicana is the owner of the "Tropicana" trademark, the Exit Facility lenders have a perfected security interest in that property, and the Nevada State Court action, to the extent it sought to assert ownership over the trademark or question the validity of the security interest, violated the automatic stay. The complaint also demanded an injunction against any further efforts by the Plaintiffs to re-litigate the ownership issue, and sought other remedies on behalf of the Exit Facility lenders.
On August 9, 2011 all parties to the Nevada State Court action and the Bankruptcy Court action entered into a global Settlement Agreement (the “Settlement Agreement”) concluding both actions and governing the respective rights of the parties to the “Tropicana” trademark. Pursuant to the Settlement Agreement, which became effective on September 28, 2011, the Plaintiffs, subject to certain advertising exceptions and other terms and conditions set forth in the Settlement Agreement, have perpetual exclusive rights to use the names, trademarks, and/or service marks (the “Marks”) TROPICANA LAS VEGAS (or TROP LAS VEGAS) and TROPICANA LV (or TROP LV) (the “TLV Marks”, as defined in the Settlement Agreement) in conjunction with its services (“Services”, as defined in the Settlement Agreement) in the City of Las Vegas, Nevada and within a 50-mile radius of the front entrance of the Tropicana Las Vegas Hotel and Casino located at 3801 Las Vegas Boulevard South, Las Vegas, Nevada (the “TLV Territory”) along with certain rights to use the TLV Marks on the Internet without geographic limitation and to register the TLV Marks as domain names. Defendants, subject to certain advertising exceptions and other terms and conditions set forth in the Settlement Agreement, have perpetual exclusive worldwide rights (excluding the TLV Territory) to use the TROPICANA and TROP Marks coupled with either a pre-existing identifier of its Services (such as "TROPICANA ENTERTAINMENT" or "TROP ADVANTAGE") or an accurate geographic identifier of the location of a Tropicana Entertainment property (other than LAS VEGAS or the name of any city within the TLV Territory) (the “TE Marks”) along with certain rights to use the TE Marks on the Internet without geographic limitation and to register the TE Marks as domain names.
Seasonality
Our cash flows from operating activities are seasonal in nature. Operating results are traditionally the strongest in the third quarter and traditionally the weakest during the fourth quarter. Any excess cash flows achieved from operations during the peak seasons are used to subsidize non-peak seasons. Performance in non-peak seasons is usually dependent on favorable weather and a long-weekend holiday calendar. In the event that we are not able to generate excess cash flows during the peak seasons, we may not be able to fully subsidize non-peak seasons.
Environmental Matters
We have to address, and are liable for, hazardous materials or contamination on our properties. Some of our properties currently have or had in the past underground fuel storage tanks and construction materials containing asbestos. We may become liable for contamination on our properties that was caused by former owners or operators. Our ongoing operations are subject to stringent regulations relating to protection of the environment and handling of waste, particularly with respect to the management of wastewater from the facilities. See "Item 1A—Risk Factors—Noncompliance with environmental, health and safety regulations applicable to our hotels and casinos could adversely affect our results of operations."

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Employees
As of December 31, 2011, we had approximately 6,700 employees and had collective bargaining agreements with several unions covering approximately 2,600 of those employees, substantially all of whom are employed at Tropicana AC, Belle of Baton Rouge and Casino Aztar. We periodically experience challenges in negotiating collective bargaining agreements with certain unions. In September 2011, a collective bargaining agreement with UNITE HERE Local 54 covering approximately 1,100 employees at Tropicana AC expired and Tropicana AC is presently operating without an agreement with this union. We cannot assure that this situation will not result in a labor disruption at the property.
Financial Information
See "Item 6.—Selected Financial Data" and "Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations" for information about our revenues and operating results and "Item 15.—Exhibits and Financial Statement Schedules" for our financial statements and accompanying footnotes.
Available Information
We are required to file annual, quarterly and other current reports and information with the Securities and Exchange Commission (the "SEC"). You may read and copy any materials filed by the Company with the SEC at its Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our filings are also available to the public from commercial document retrieval services and at the world wide web site maintained by the SEC at http://www.sec.gov.
Copies of our annual, quarterly and current reports and amendments to those reports are available on our web site at www.tropicanacasinos.com or free of charge by contacting our Investors Relations Department at Tropicana Entertainment Inc., Howard Hughes Parkway, 4th floor, Las Vegas, Nevada 89169.
ITEM 1A.    RISK FACTORS.
The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. See "Cautionary Statement Regarding Forward-Looking Statements," above. Our actual results could differ materially from those contained in the forward-looking statements. Factors that may cause such differences include, but are not limited to, those discussed below as well as those discussed elsewhere in this Annual Report on Form 10-K. Additional risks and uncertainties that management is not aware of or that are currently deemed immaterial may also adversely affect our business operations. If any of the following risks materialize, our business, financial condition or operating results could be materially adversely affected.
Risks Related to Our Business and Our Industry
Intense competition exists and is growing in the gaming industry, and we may not be able to compete effectively which could negatively affect our results of operations.
The gaming industry is highly competitive for both customers and employees, including those at the management level. We face increasing intense competition with numerous casinos and hotel casinos of varying quality and size in market areas where our properties are located. We also compete with other non-gaming resorts and vacation destinations, and with various other casino and other entertainment businesses and could compete with any new forms of gaming that exist or may be legalized in the future, including on-line gaming. The casino entertainment business is characterized by competitors that vary considerably in their size, quality of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity, and may soon include virtual casinos having entirely different cost structures and game offerings. In most markets, we compete directly with other casino facilities operating in the immediate and surrounding market areas. In some markets, we face competition from nearby markets in addition to direct competition within our market areas as well as the threat from new, emerging markets.
In 2010, Tropicana AC implemented a new marketing strategy to target high end table game players to counter the increased competition from Pennsylvania and other surrounding markets. Casino revenues can vary because of table game hold percentage and differences in the odds for different table games. High end play may lead to greater fluctuations in our table game hold percentage and, as a result, we may experience greater revenue and earnings fluctuation between reporting periods due to this marketing strategy.
In recent years, competition in existing markets has intensified. For example, competition with the Atlantic City market has increased with Pennsylvania and Delaware commencing live table game operations in fiscal 2010, two new casinos

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opening in September 2010 and January 2011 in Maryland, a new casino opening in New York in late 2011 and a new competitor in Atlantic City to open in Spring 2012. In addition, our competitors have invested in expanding their existing facilities and developing new facilities. Our subsidiaries, on the other hand, historically have been subject to limitations on capital expenditures resulting from the Chapter 11 Cases. Our ability to invest in our properties going forward may continue to be constrained, and we may not be able to compete effectively with casinos that have been modernized or recently expanded.
Furthermore, competition from internet lotteries and other internet wagering gaming services, which allow their customers to wager on a wide variety of sporting events and play Las Vegas-style casino games from home, could divert customers from our properties and thus adversely affect our business. Such internet wagering services are generally illegal under federal law but operate from overseas locations, and are nevertheless sometimes accessible to domestic gamblers.  Some states are considering legislation to legalize intrastate internet wagering.  There are also proposals that would specifically legalize internet gaming under federal law.
This expansion of existing casino entertainment properties, the increase in the number of gaming opportunities, the potential emergence of legal internet gaming and the aggressive marketing strategies of many of our competitors has also increased competition in many markets in which we compete, and we expect this intense competition to continue.
If our competitors operate more successfully than we do, if they are more successful than us in attracting and retaining employees, if their properties are enhanced or expanded, if additional hotels and casinos are established in and around the locations in which we conduct business, or if on-line gaming is permitted and conducted in any of our markets, we may lose market share or the ability to attract or retain employees. In particular, the expansion of casino gaming in or near any geographic area from which we attract or expect to attract a significant number of our customers could materially adversely affect our business, financial condition and results of operations.
The casino, hotel and resort industry is capital intensive and we may not be able to finance expansion and renovation projects, which could put us at a competitive disadvantage.
Our properties have an ongoing need for renovations and other capital improvements to remain competitive, including replacement, from time to time, of furniture, fixtures and equipment. Because of the bankruptcies, the Predecessors and Tropicana AC deferred renovations and capital improvements. We also need to make capital expenditures to comply with applicable laws and regulations.
Renovations and other capital improvements of our properties require significant capital expenditures. In addition, renovations and capital improvements of our properties usually generate little or no cash flow until the project is completed. We may not be able to fund such projects solely from cash provided from operating activities. Consequently, we rely upon the availability of debt or equity capital to fund renovations and capital improvements and our ability to carry them out will be limited if we cannot obtain satisfactory debt or equity financing, which will depend on, among other things, market conditions. We cannot assure that we will be able to obtain additional equity or debt financing or that we will be able to obtain such financing on favorable terms. Our failure to renovate our gaming properties may put us at a competitive disadvantage, which could materially adversely affect our business, financial condition and results of operations.
Renovations and other capital improvements may disrupt our operations.
Renovation projects may cause us to temporarily close all or a portion of our facilities to customers and disrupt service and room availability, causing reduced demand, occupancy and rates. As a result, any future capital improvements projects may increase our expenses and reduce our cash flows and our revenues and, accordingly, may have a material adverse effect on our business, financial condition and results of operations.
Work stoppages, labor problems and unexpected shutdowns may limit our operational flexibility and negatively impact our future profits.
We are party to 10 collective bargaining agreements with different unions. In September 2011, a collective bargaining agreement with UNITE HERE Local 54 covering approximately 1,100 employees at Tropicana AC expired and Tropicana AC is presently operating without an agreement with this union. In January 2012, Tropicana AC advised UNITE HERE Local 54 that the parties were at an impasse and provided the union with Tropicana AC's final proposal. The Company withdrew from the UNITE HERE National Retirement Fund on February 25, 2012. We cannot assure that we will be able to enter into a new collective bargaining agreement with UNITE HERE Local 54 or renegotiate the other collective bargaining agreements with other unions currently in effect. The addition of new or changes to the existing collective bargaining agreements could cause significant increases in labor costs, which could have a material adverse effect on our businesses, financial condition and results of operations.
In addition, the unions with which we have collective bargaining agreements or other unions could seek to organize

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employees at our non-union properties or groups of employees at our properties that are not currently represented by unions. Union organization efforts could cause disruptions in our businesses and result in significant costs, both of which could have a material adverse effect on our businesses, financial condition and results of operations.
Finally, if we are unable to negotiate these agreements on mutually acceptable terms, the affected employees, including union members with the UNITE HERE Local 54 bargaining unit, may engage in a strike or other job actions instead of continuing to operate without contracts or under expired contracts, which could have a materially adverse effect on our results of operations and financial condition, including the operations of Tropicana AC. Any unexpected shutdown of one of the casino properties, including Tropicana AC, from a work stoppage or strike action could have a material adverse effect on our businesses and results of operations. Moreover, strikes and work stoppages could also result in adverse media attention or otherwise discourage customers from visiting our casinos. We cannot assure that we can be adequately prepared for unexpected labor developments that may lead to a temporary or permanent shutdown of any of our casino properties.
Our business is particularly sensitive to reductions in discretionary consumer spending as a result of downturns in the local, regional or national economy.
Consumer demand for casino and hotel properties, such as ours, is particularly sensitive to downturns in the local, regional or national economy and the corresponding impact on discretionary spending on leisure activities. Changes in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions, the current housing crisis, the recent credit crisis, the impact of high energy and food costs, the increased cost of travel, the potential for continued bank failures, perceived or actual declines in disposable consumer income and wealth, the effect of the current economic environment and changes in consumer confidence in the economy, or fears of war and future acts of terrorism could further reduce customer demand for amenities that we offer.
The current housing crisis and recent recession in the United States have resulted in a significant decline in tourism and consumer spending. Economic conditions like the recent downturn (and slowdowns or recessions less severe) could cause fewer consumers to spend money or cause consumers to spend less money at our properties and could materially adversely affect our business, financial condition and results of operations. While general economic conditions have modestly improved, we cannot assure that they will continue to improve or will not worsen in the future.
The recent state of the global financial markets may impact our ability to obtain sufficient financing and credit on a going forward basis which could negatively impact our ability to operate our business.
In addition to earnings and cash flows from operations, we may rely on borrowed money to finance our business, which may be constrained if we are unable to borrow additional capital or refinance existing borrowings on reasonable terms. Developments in the global financial markets that have led to unpredictable government interventions in the United States and European banking systems, including the 2008 capital crisis in the banking system, a series of rating agency downgrades of subprime United States mortgage-related assets and significant provisions for loan losses recorded by major financial institutions and downgrades of sovereign debt in the United States and certain EU member nations have resulted in volatility in the credit markets, a low level of liquidity in many global financial markets and other adverse conditions for issuers in fixed income, credit and equity markets. In the recent past, these markets have experienced disruption that had a dramatic impact on the availability and cost of capital and credit. The market interest rate for debt of companies similar to ours has been volatile. The United States and other governments have enacted legislation and taken other actions to help alleviate these conditions, although we cannot assure that such steps will have the effect of easing the conditions in global credit and capital markets. Therefore, we cannot assure that such steps will facilitate our further access to credit or capital markets at desirable times or at rates that we would consider acceptable, and the lack of such funding could have a material adverse effect on our business, results of operations and financial condition and our ability to service our indebtedness. While these conditions have recently improved, we cannot assure that they will not worsen in the future. We are unable to predict the likely duration or severity of any disruption in the capital and credit markets, or its impact on the larger economy. A disruption in the global credit and financial markets may materially and adversely affect our ability to obtain sufficient financing to execute our business strategy.
Changes in our management team could affect our business strategy and adversely impact our performance and results of operations.
In the last year, we have experienced significant management changes. Daniel A. Ninivaggi, the president and principal executive officer of Icahn Enterprises, was appointed as our Interim President and Chief Executive Officer in January 2011. Lance J. Millage was promoted to Executive Vice President, Chief Financial Officer and Treasurer in February 2011. Effective February 2012, Anthony P. Rodio assumed the position of President & Chief Operating Officer and Mr. Ninivaggi remains our Interim Chief Executive Officer. We intend to continue to focus on strengthening our management team. However, we cannot assure that we will be successful. In addition, turnover in our management team could have a negative impact on our performance and results of operations.

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The bankruptcy filing has had a negative impact on Tropicana AC and the Predecessors' image which may negatively impact our business going forward.
As a result of the Chapter 11 Cases, the Predecessors and Tropicana AC were the subject of negative publicity which has had an impact on the image of their assets. This negative publicity may have an effect on the terms under which some customers and suppliers are willing to do business with us and could materially adversely affect our business, financial condition and results of operations.
We may face potential successor liability for liabilities of the Predecessors not provided for in the Plan.
As the successor to the Predecessors, we may be subject to certain liabilities of the Predecessors not provided for in the Plan. Such liabilities may arise in a number of circumstances, including, but not limited to, those where:
a creditor of the Predecessors did not receive proper notice of the pendency of the bankruptcy case relating to the Plan or the deadline for filing claims therein;
the injury giving rise to, or the source of, a creditor's claim did not manifest itself in time for the creditor to file the creditor's claim;
a creditor did not timely file the creditor's claim in such bankruptcy case due to excusable neglect;
we are liable for the Predecessors' federal and/or state tax liabilities under a theory of successor liability; or
the order of confirmation for the Plan was procured by fraud.
Although we have no reason to believe that we will become subject to liabilities of the Predecessors that are not provided for in the Plan, should we become subject to such liabilities, they could materially adversely affect our business, financial condition and results of operations.
Our financial results were affected by the adoption of fresh-start reporting and the acquisition of Tropicana AC and may not reflect historical trends.
We were formed pursuant to the Plan to acquire and operate Tropicana AC and certain assets of the Predecessors. We operate our business with a different capital structure from the Predecessors and we own fewer total casinos. Most significantly, we do not own or control Tropicana LV and Tahoe Horizon. The Restructuring Transactions resulted in us becoming a new reporting entity and adopting fresh-start reporting in accordance with accounting guidance on reorganizations. As required by fresh-start reporting, we have caused the Predecessors' assets and liabilities to be adjusted to fair value, and certain assets and liabilities not previously recognized in the Predecessors' financial statements have been recognized under fresh-start reporting. The Plan was consummated and became effective on March 8, 2010 and fresh-start reporting was adopted on March 8, 2010. Our financial statements included in this Annual Report on Form 10-K give effect to adjustments in the carrying values of assets or liabilities that were recorded upon implementation of the Plan under fresh-start reporting rules. Accordingly, our financial condition and results of operations from and after the Effective Date are not comparable to the financial condition and results of operations reflected in the Predecessors' and Tropicana AC's historical financial statements.
Our business has a limited operating history.
We were formed in May 2009 and have a limited operating history. There are substantial risks and uncertainties to which our business is subject. To address these risks and uncertainties, we must do the following, among other things:
Successfully execute our business strategy;
Respond to competitive developments; and
Attract, integrate, retain and motivate qualified personnel
We cannot assure that we will operate profitably or that we will have adequate working capital to meet our obligations as they become due. Additionally, we cannot assure that our business strategy will be successful, that we will successfully address the risks that face our business or that we will be able to access capital markets if the need arises. In the event that we do not successfully address these risks, our business, prospects, financial condition and results of operations could be materially and adversely affected.
We may be subject to litigation resulting from our gaming, resort and dining operations which, if adversely determined, could result in substantial losses.
We will be, from time to time, during the ordinary course of operating our businesses, subject to various litigation claims and legal disputes, including contract, lease, employment and regulatory claims as well as claims made by visitors to our properties. Certain litigation claims may not be covered entirely or at all by our insurance policies or our insurance carriers may seek to deny coverage. In addition, litigation claims can be expensive to defend and may divert our attention from the operations of our businesses. Further, litigation involving visitors to our properties, even if without merit, can attract adverse

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media attention. As a result, litigation can have a material adverse effect on our businesses. We cannot predict the outcome of any action, and it is possible that adverse judgments or settlements could significantly reduce our earnings or result in losses.
State gaming laws and regulations may require holders of our debt or equity securities to undergo a suitability investigation, and may result in redemption of their securities.
Many jurisdictions require any person who acquires beneficial ownership of debt or equity securities of a casino gaming company to apply for qualification or a finding of suitability. Generally, any person who fails or refuses to apply for a finding of suitability or a license within the prescribed period after being advised by gaming authorities that it is required to do so may be denied a license or found unsuitable or unqualified, as applicable. Any holder of securities that is found unsuitable or unqualified or denied a license, and who holds, directly or indirectly, any beneficial ownership of a gaming entity's securities beyond such period of time as may be prescribed by the applicable gaming authorities may be guilty of a criminal offense. Furthermore, a gaming entity may be subject to disciplinary action if such gaming entity, after receiving notice that a person is unsuitable to be a holder of securities or to have any other relationship with such gaming entity or any of its subsidiaries:
pays that person any dividend or interest upon the securities;
allows that person to exercise, directly or indirectly, any voting ownership right conferred through securities held by that person;
pays remuneration in any form to that person for services rendered or otherwise;
allows that person to continue in an ownership or economic interest or receive any economic benefit; or
fails to pursue all lawful efforts to require such unsuitable person to relinquish the securities including, if necessary, the immediate (or within such other time period as prescribed by the applicable gaming authorities) purchase of such securities for the lesser of fair value or market price at the time of repurchase or fair value or market price at the time of acquisition by the unsuitable holder.
In the event that disqualified holders fail to divest themselves of such securities, gaming authorities have the power to revoke or suspend the casino license or licenses related to the regulated entity that issued the securities. In addition, our certificate of incorporation provides that we may redeem our securities from an Unsuitable Person (as such term is defined in our certificate of incorporation).
Regulation by gaming authorities could adversely affect our businesses, financial condition and results of operations.
We are subject to extensive regulation with respect to the ownership and operation of our gaming facilities. Federal, state and local gaming authorities require that we and our subsidiaries hold various licenses, qualifications, findings of suitability, registrations, permits and approvals. The gaming regulatory authorities have broad powers with respect to the licensing of casino operations and alcoholic beverage service and may deny, revoke, suspend, condition, or limit our gaming or other licenses, impose substantial fines, temporarily suspend casino operations, and take other actions, any one of which could adversely affect our businesses, financial condition and results of operations.
We own, operate, or have an interest in gaming facilities located in Nevada, Indiana, Mississippi, Louisiana, New Jersey and Aruba. We have obtained all material governmental licenses, qualifications, registrations, permits, and approvals necessary for the operation of our gaming facilities as operations at such facilities are presently conducted. However, we cannot assure that we can obtain any new licenses, or renew any existing, licenses, qualifications, findings of suitability, registrations, permits, or approvals that may be required in the future or that existing ones will not be suspended or revoked. If we relocate or expand any of our current gaming facilities or enter new jurisdictions, we must obtain all additional licenses, qualifications, findings of suitability, registrations, permits and approvals of the applicable gaming authorities in such jurisdictions. If state regulatory authorities were to find an officer, director, owner, or other person affiliated with our operations unsuitable, we would be required to sever our relationship with that person. Gaming authorities, as well as other state regulatory authorities, may conduct similar investigations in the future in connection with new equity and debt holders. We cannot predict the outcome of these investigations or their potential impact on our businesses.
Additionally, certain manufacturers, distributors and suppliers of gaming devices, junkets, goods or services to our gaming facilities, may be required to obtain a license, permit or registration or undergo a suitability investigation by the gaming authorities. We cannot assure that such licenses, permits or registrations will be obtained by such vendors. The failure of any such vendors to obtain any required licenses, permits or registrations on a timely basis could materially adversely affect our business, financial condition and results of operations.

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Our operations are subject to numerous laws and regulations resulting from our presence in several states and diverse operating activities.
In addition to gaming regulations, we are also subject to various federal, state and local laws and regulations affecting businesses in general. We operate hotels, restaurants, entertainment facilities, parking garages, swimming pools, riverboats and other facilities connected with our core gaming business. Many of these activities are subject to federal, state and local laws and regulations. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. For example, in July 2006, New Jersey gaming properties, including Tropicana AC, were required to temporarily close their casinos for three days as a result of a New Jersey statewide government shutdown that affected certain New Jersey state employees required to be at casinos when they are open for business that resulted in loss of revenues. Any cessation of operations as a result of a government shutdown or similar events resulting from laws and regulations affecting businesses could materially adversely affect our business, financial condition and results of operations.
Potential changes in legislation and regulation could negatively impact our gaming operations.
From time to time, legislators and special interest groups propose legislation that would expand, restrict, or prevent gaming operations in the jurisdictions in which we operate and in neighboring jurisdictions. Further, from time to time, individual jurisdictions have considered or enacted legislation and referenda, such as bans on smoking in casinos and other entertainment and dining facilities, which could adversely affect our operations going forward. Any restriction on or prohibition relating to our future gaming operations, or enactment of other adverse legislation or regulatory changes, could materially adversely affect our business, financial condition and results of operations.
We may be subject to increases in taxation and fees resulting from our gaming operations.
The casino gaming industry represents a significant source of tax revenues to the various jurisdictions in which casinos operate. Gaming companies are currently subject to significant federal, state and local taxes and fees in addition to the federal and state income taxes that typically apply to corporations, and such taxes and fees could increase at any time. From time to time, various state and federal legislators and officials have proposed changes in tax laws or in the administration of such laws, including increases in tax rates, which would affect the gaming industry. Economic conditions could intensify the efforts of federal, state and local governments to raise revenues through increases in gaming taxes and fees. In addition, growing federal, state or local budget shortfalls resulting from the recent recession could prompt tax or fee increases. Any material increase in assessed taxes, or the adoption of additional taxes or fees in any of our markets could materially adversely affect our business, financial condition and results of operations.
The risks associated with international operations could affect our ability to pursue expansion opportunities.
We plan to develop a casino resort in Aruba. However, our development plans have not been finalized and we may decide not to proceed. In addition, international operations are subject to inherent risks including variation in local economies, currency fluctuation, greater difficulty in accounts receivable collection, trade barriers, burden of complying with a variety of international laws, and political and economic instability. Each of these risks could impair our ability to execute our business strategy and adversely affect our business.
If we decide to proceed with the development of Tropicana Aruba, we could encounter problems during development, construction, renovation and refurbishment that could increase the construction costs or delay the opening of Tropicana Aruba. In addition, we may not be able to complete development of or operate Tropicana Aruba if we do not obtain all necessary permits, licenses and approvals.
Construction projects like the development, construction, renovation and refurbishment of Tropicana Aruba are subject to significant development and construction risks, any of which could cause unanticipated cost increases and delays. These include, among others, the following:
adverse weather conditions that damage the project or cause delays;
changes to the plans or specifications;
shortages and increased costs of energy, materials and skilled labor;
engineering problems;
labor disputes and work stoppages;
environmental issues;
fire, flooding and other natural disasters; and
geological, construction, excavation, regulatory and equipment problems.
We have not finalized a budget for the permanent casino project. Once a budget for the permanent casino facility is developed, if the actual costs greatly exceed the budgeted amounts, we may not be able to modify the design in a manner that

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would enable us to remain within budget and, therefore, we may not have sufficient funds to complete the project. Failure to complete Tropicana Aruba on time or within budget could have a material adverse effect on our financial condition, results of operations, prospects and ability to satisfy our obligations. Opening Tropicana Aruba within our anticipated time frame and remaining within budget will depend upon, among other things, the absence of any unforeseen difficulties or delays.
In addition, certain permits, licenses and approvals necessary for the development, construction and operation of Tropicana Aruba have not yet been obtained. The scope of the approvals required for a project of this nature is extensive. Unexpected changes or concessions required by Aruban regulatory authorities could involve significant additional costs and result in delay in the scheduled opening of Tropicana Aruba. We may not receive the necessary licenses and approvals or obtain them within our anticipated time frame.
Our business, financial condition and results of operations could be materially adversely affected by the occurrence of accidents, natural disasters, such as hurricanes, or other catastrophic events, including war and terrorism.
Natural disasters, such as hurricanes, floods, fires and earthquakes could adversely affect our businesses and operating results. Hurricanes are common to the areas in which our Louisiana and Mississippi properties are located and the severity of such natural disasters is unpredictable. For example, in May 2011 both of our properties in Greenville, Mississippi - Lighthouse Point and Jubilee - were closed for approximately 29 days as a result of Mississippi River flooding causing substantial damage at our Lighthouse Point property and adversely affecting our operating results at both properties. Likewise, in August 2011 Hurricane Irene and mandatory governmental evacuation orders for Atlantic City caused an approximate three-day closure of our Tropicana AC property, adversely affecting our operating results. Also, in 2005, Hurricanes Katrina and Rita caused significant damage in the Gulf Coast region. We cannot predict the impact that any future natural disasters will have on our ability to maintain our customer base or to sustain our business activities.
Moreover, our riverboats will face additional risks from the movement of vessels on waterways, such as collisions with other vessels or damage from debris in the water. Reduced patronage and the loss of a dockside or riverboat casino from service for any period of time could materially adversely affect our business, financial condition and results of operations.
Catastrophic events such as terrorist and war activities in the United States and elsewhere have had a negative effect on travel and leisure expenditures, including lodging, gaming (in some jurisdictions), and tourism. In addition, any man-made or natural disasters in or around our properties could have a materially adverse effect on our businesses, financial condition and results of operations. We cannot predict the extent to which such events may affect us, directly or indirectly, in the future. We also cannot ensure that we will be able to obtain any insurance coverage with respect to occurrences of terrorist acts and any losses that could result from these acts.
In the future, the prolonged disruption at any of our properties due to natural disasters, terrorist attacks, or other catastrophic events could materially adversely affect our business, financial condition and results of operations.
Leisure and business travel, especially travel by air, are particularly susceptible to global geopolitical events, such as terrorist attacks or acts of war or hostility. These events can create economic and political uncertainties that could adversely impact our business levels. Furthermore, although we may have some insurance coverage for certain types of terrorist acts, insurance coverage against loss or business interruption resulting from war and some forms of terrorism may be unavailable.
Our properties, including our riverboats and dockside facilities, are subject to risks relating to mechanical failure, weather and regulatory compliance.
All of our facilities are subject to the risk that operations could be halted for a temporary or extended period of time, as result of casualty, forces of nature, mechanical failure, or extended or extraordinary maintenance, among other causes. In addition, our gaming operations, particularly those conducted on riverboats or at dockside facilities, could be damaged or halted due to extreme weather conditions. For example, in May 2011 both of our properties in Greenville, Mississippi, - Lighthouse Point and Jubilee - were closed for approximately 29 days as a result of Mississippi River flooding causing substantial damage at our Lighthouse Point property and adversely affecting our operating results at both properties. Likewise, in August 2011 Hurricane Irene and mandatory governmental evacuation orders for Atlantic City caused an approximate three-day closure of our Tropicana AC property, adversely affecting our operating results.
Each of our riverboats must comply with U.S. Coast Guard requirements as to boat design, on-board facilities, equipment, personnel and safety. Each riverboat must hold a Certificate of Inspection for stabilization and flotation, and may also be subject to local zoning codes. The U.S. Coast Guard requirements establish standards, set limits on the operation of the vessels and require individual licensing of all personnel involved with the operation of the vessels. Loss of a vessel's Certificate of Inspection or American Bureau of Shipping approval would preclude its use as a casino.

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Except for our riverboats that have opted for alternate inspection by the American Bureau of Shipping allowed in those gaming jurisdictions where we operate that provide for such alternative inspections, U.S. Coast Guard regulations require a hull inspection for all riverboats at five-year intervals. Under certain circumstances, alternative hull inspections may be approved. The U.S. Coast Guard may require that such hull inspections be conducted at a dry-docking facility, and if so required, the cost of travel to and from such docking facility, as well as the time required for inspections of the affected riverboats, could be significant. To date, the U.S. Coast Guard has allowed in-place inspections of our riverboats. The U.S. Coast Guard may not allow these types of inspections in the future. The loss of a riverboat casino from service for any period of time could materially adversely affect our business, financial condition and results of operations.
U.S. Coast Guard regulations also require certain of our properties to prepare and follow certain security programs. In the first quarter of 2003, Casino Aztar implemented the American Gaming Association's Alternative Security Program at its riverboat casino. In January of 2007, Casino Aztar implemented the Passenger Vessel Association program and remains with this program to date. Belle of Baton Rouge applies a customized alternative security program. The American Gaming Association's Alternative Security Program is specifically designed to address maritime security requirements at riverboat casinos and their respective dockside facilities. Changes to these regulations could adversely affect our business, financial condition and results of operations.
Noncompliance with environmental, health and safety regulations applicable to our hotels and casinos could adversely affect our results of operations.
As the owner, operator, and developer of real property, we must address, and may be liable for, hazardous materials or contamination of these sites and any other off-site locations at which any hazardous materials that our activities generate are disposed. Our ongoing operations are subject to stringent regulations relating to the protection of the environment and handling of waste, particularly with respect to the management of wastewater from our facilities. Any failure to comply with existing laws or regulations, the adoption of new laws or regulations with additional or more rigorous compliance standards, or the more vigorous enforcement of environmental laws or regulations could limit our future opportunities and, accordingly, could materially adversely affect our business, financial condition and results of operations by increasing our expenses and limiting our future opportunities.
The concentration and evolution of the slot machine manufacturing industry could impose additional costs on our operations.
A majority of our gaming revenue is attributable to slot machines operated at our gaming facilities. It is important, for competitive reasons, that we offer popular and technologically advanced slot machine games to our customers. A substantial majority of the slot machines sold in the United States in recent years were manufactured by a limited number of companies. A deterioration in the commercial arrangements with any of these slot machine manufacturers or significant industry demand, could result in our being unable to acquire the slot machines desired by our customers or could result in manufacturers significantly increasing the cost of these machines. Going forward, the inability to obtain new and up to date slot machine games could impair our competitive position and result in decreased gaming revenues at our casinos. In addition, increases in the costs associated with acquiring slot machine games could adversely affect our profitability and, accordingly, have a material adverse effect on our business, financial condition and results of operations.
In recent years, the prices of new slot machines have dramatically increased. Furthermore, in recent years, slot machine manufacturers have frequently refused to sell slot machines featuring the most popular games, instead requiring gaming operators to execute participation lease arrangements for them to be able to offer such machines to patrons. Participation slot machine leasing arrangements typically require the payment of a fixed daily rental fee. Such agreements may (depending on regulatory restrictions in the applicable jurisdiction) also include a percentage payment to the manufacturer based on the usage of the machine or the gaming company's receipts from the machine, sometimes referred to as "coin-in" or "net win" percentage payments. Generally, a slot machine participation lease is more expensive over the long term than the cost of purchasing a new slot machine. We have slot machine participation leases at each of our properties.
For competitive reasons, we may be forced to purchase new, more contemporary slot machines, or enter into participation lease arrangements that are more expensive than the costs currently associated with the continued operation of existing slot machines. If the newer slot machines do not result in sufficient incremental revenues to offset the increased investment and participation lease costs, it could materially adversely affect our business, financial condition and results of operations.
We may not have or be able to obtain sufficient insurance coverage to replace or cover the full value of losses we may suffer.
Our casino properties may be subject to extreme weather conditions, including, but not limited to, hurricanes and floods. In the future, such extreme weather conditions may interrupt our operations, damage our properties, and reduce the number of customers who visit our facilities. Although we maintain both property and business interruption insurance coverage for certain

25


extreme weather conditions, such coverage is subject to deductibles and limits on maximum benefits, including limitation on the coverage period for business interruption. We cannot assure you that we will be able to fully insure such losses or fully collect, if at all, on claims resulting from such extreme weather conditions. Furthermore, such extreme weather conditions may interrupt or impede access to our affected properties and may cause visits to our affected properties to decrease for an indefinite period.
While we maintain insurance against many risks to the extent and in amounts that we believe are reasonable, these policies will not cover all risks. Furthermore, portions of our businesses are difficult or impracticable to insure. Therefore, after carefully weighing the costs, risks, and benefits of retaining versus insuring various risks, as well as the availability of certain types of insurance coverage, we occasionally may opt to retain certain risks not covered by our insurance policies. Retained risks are associated with deductible limits or self-insured retentions, partial self-insurance programs and insurance policy coverage ceilings.
We carry certain insurance policies that, in the event of certain substantial losses, may not be sufficient to pay the full current market value or current replacement cost of damaged property. As a result, if a significant event were to occur that is not fully covered by our insurance policies, we may lose all, or a portion of, the capital we have invested in a property, as well as the anticipated future revenue from such property. We cannot assure that we will not face uninsured losses pertaining to the risks we have retained. Consequently, uninsured losses may negatively affect our financial condition, liquidity and results of operations.
We may not be able to obtain sufficient insurance coverage and cannot predict whether we may encounter difficulty in collecting on any insurance claims we may submit, including claims for business interruption.
Energy price increases may adversely affect our business, financial condition and results of operations due to the significant amounts of energy used in our operations.
Our casino properties use significant amounts of electricity, oil, natural gas and other forms of energy. Substantial increases in energy and fuel prices may negatively affect our businesses, financial condition and results of operations in the future. The extent of the impact is subject to the magnitude and duration of the energy and fuel price increases, but the impact could be material. In addition, energy and gasoline price increases in cities that constitute a significant source of customers for our properties could result in a decline in disposable income of potential customers and a corresponding decrease in visitation and spending at our properties, which would negatively impact our revenues. Further, increases in fuel prices, and resulting increases in transportation costs, could materially adversely affect our business, financial condition and results of operations.
Our investment activities are subject to risks that may adversely affect our results of operations, liquidity and financial condition.
From time to time we may invest in marketable securities, or derivatives thereof, including higher risk equity securities and high yield debt instruments. These securities are subject to general credit, liquidity, market risks and interest rate fluctuations that can affect various sectors of the financial markets, including the credit and stock markets. The market risks associated with any investments we may make may have a material adverse effect on our results of operations, liquidity and financial condition.
Our investments at any given time also may become highly concentrated within a particular company, industry, asset category, trading style or financial or economic market. In that event, our investment portfolio will be more susceptible to fluctuations in value resulting from adverse economic conditions affecting the performance of that particular company, industry, asset category, trading style or economic market than a less concentrated portfolio would be. As a result, our investment portfolio could become concentrated and its aggregate return may be volatile and may be affected substantially by the performance of only one or a few holdings.
For reasons not necessarily attributable to any of the risks set forth in this Form 10-K (for example, supply/demand imbalances or other market forces), the prices of the securities in which we invest may decline substantially.
Risks Related to Our Indebtedness
We may not be able to refinance our existing Exit Facility prior to March 8, 2013 when the Exit Facility matures.  If we are able to refinance the Exit Facility or, in the alternative, renew or extend the facility, it may be on terms substantially less favorable than the current Exit Facility.

On December 29, 2009, we entered into a credit facility (the "Exit Facility"), which consists of a $130 million senior secured term loan credit facility issued at a discount of 7% and a $20 million senior secured revolving credit facility. The Exit Facility matures on March 8, 2013. As of the date of filing of this Annual Report on Form 10-K, we are in discussions with a

26


group of potential lenders concerning a possible refinancing of our Exit Facility. An entity affiliated with Carl C. Icahn, the chairman of our board of directors and, through Icahn Enterprises, our principal beneficial stockholder, is a lender under the Exit Facility and holds more than 50% of the loans extended under the Exit Facility. In addition, an entity affiliated with Mr. Icahn is the administrative agent and collateral agent under the Exit Facility.
While we believe that we have sufficient cash and cash generating resources to meet our debt service obligations, if we have not refinanced the Exit Facility prior to the maturity date our cash on hand and cash flow from operations will be negatively impacted.  This impact to our cash on hand and cash flows will restrict our ability to reinvest in our business and pursue expansion opportunities.  We may be forced to refinance the Exit Facility on materially worse terms than we have currently.  Failure to obtain new debt on favorable or reasonable terms to replace existing debt could affect our liquidity and the value of our equity.  Our ability to refinance or otherwise retire our Exit Facility prior to March 8, 2013, or in the alternative to renew or extend our existing Exit Facility could be impaired if current market conditions decline.  Lenders may seek more restrictive lending provisions and higher interest rates that may reduce our borrowing capacity and increase our costs.
We cannot assure that we will be able to refinance our Exit Facility prior to its maturity date on favorable terms, if at all. Consummation of any such refinancing is subject to market and other customary conditions including, among other things, the negotiation and execution of definitive documentation. If we are unable to refinance our Exit Facility, we cannot assure that we will be able to renew or extend the Exit Facility or enter into a new credit facility, or whether any such other financing will be available on acceptable terms, if at all. Failure to obtain sufficient financing on acceptable terms would constrain our ability to operate our business and to continue our development and expansion projects. Any of these circumstances could have a material adverse effect on our business, financial condition and results of operations.
Circumstances may arise whereby the Company may become overleveraged, which could have significant negative consequences.
As of December 31, 2011, we had total indebtedness of approximately $103.8 million, which consists primarily of our Exit Facility. Circumstances may arise that could cause us to become overleveraged, which could have significant negative consequences, including:
we may be vulnerable to a downturn in the markets in which we operate or a downturn in the economy in general;
we may be required to dedicate a substantial portion of our cash flow from operations to fund working capital, capital expenditures, and other general corporate requirements;
we may be limited in our flexibility to plan for, or react to, changes in our businesses and the industry in which we operate or entry of new competitors into our markets;
we may be placed at a competitive disadvantage compared to our competitors that have less debt; and
we may be limited in borrowing additional funds.
Our indebtedness could adversely affect our business, financial condition and results of operations and prevent us from fulfilling our obligations under the terms of our indebtedness.
Our indebtedness could adversely affect our business, financial condition and results of operations and prevent us from fulfilling our obligations under the terms of our indebtedness. The terms of the Exit Facility require us to maintain a minimum fixed charge coverage ratio and maximum total debt ratio. In addition, other covenants in the Exit Facility may restrict our flexibility. Such covenants may place restrictions on our ability to incur additional indebtedness; pay dividends and make other restricted payments or investments; sell assets; make capital expenditures; engage in certain mergers and acquisitions; and refinance existing indebtedness. Additionally, there may be factors beyond our control that could affect our ability to meet debt service requirements. Our ability to meet debt service requirements will depend on our future performance and our ability to sustain sales conditions in the markets in which we operate, the economy generally, and other factors that are beyond our control. We cannot assure that our businesses will generate sufficient cash flow from operations or that future borrowings will be available in amounts sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. Moreover, our Exit Facility matures in March 2013. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we are unable to make scheduled debt payments or comply with the other provisions of our debt instruments, our lenders will be permitted under certain circumstances to accelerate the maturity of the indebtedness owing to them and exercise other remedies provided for in those instruments and under applicable law.
Risks Related to Our Common Stock
Mr. Carl C. Icahn exerts significant influence over us and his interests may conflict with the interest of our other stockholders.
Mr. Carl C. Icahn, the chairman of our board of directors, controlled approximately 65.1% of the outstanding shares of

27


our common stock as of December 31, 2011. Mr. Icahn is able to control or exert substantial influence over us, including the election of our directors and controlling most matters requiring board approval, including business strategies, mergers, business combinations, acquisitions or dispositions of significant assets, issuances of common stock, incurrence of debt or other financings. The existence of a controlling stockholder may have the effect of making it difficult for, or may discourage or delay, a third party from seeking to acquire, a majority of our outstanding common stock, which may adversely decrease the value of shares held by other stockholders. An entity affiliated with Mr. Icahn is a lender under the Exit Facility and holds over 50% of the loans extended under the Exit Facility. In addition, an entity affiliated with Mr. Icahn is the administrative agent and collateral agent under the Exit Facility. Furthermore, entities affiliated with Mr. Icahn hold financial interests that may be competitive to us. For example, entities affiliated with Mr. Icahn are lenders to Trump Entertainment Resorts, Inc.
As a public company, we may have reduced access to resources of, and benefits provided by, entities affiliated with Mr. Carl Icahn.
We believe that our relationship with entities affiliated with Mr. Icahn has, in many cases, provided us with a competitive advantage in identifying and attracting partners for critical supply and buying arrangements. Specifically, Icahn Sourcing, LLC (Icahn Sourcing) is an entity formed and controlled by Mr. Icahn in order to maximize the potential buying power of a group of entities with which Mr. Icahn has a relationship in negotiating with a wide range of suppliers of goods, services and tangible and intangible property. We are a member of the buying group and, as such, are afforded the opportunity to purchase goods, services and property from vendors with whom Icahn Sourcing has negotiated rates and terms. Icahn Sourcing does not guarantee that we will purchase any goods, services or property from any such vendors, and we are under no obligation to do so. We do not pay Icahn Sourcing any fees or other amounts with respect to the buying group arrangement. We have purchased a variety of goods and services as members of the buying group at prices and on terms that we believe are more favorable than those that would be achieved on a stand-alone basis.
If we were unable to participate in these supply and buying group arrangements, our costs could increase, which could materially adversely affect our business, financial condition and results of operations.
Our common stock is traded on the OTCQB Market, is illiquid and subject to price volatility unrelated to our operations.
Our shares of common stock are currently traded on the OTCQB Market. Many institutional investors have investment policies which prohibit them from trading in stocks on the OTCQB Market. As a result, stocks traded on the OTCQB Market generally have limited trading volume and exhibit a wide spread between the bid/ask quotations than stock traded on national exchanges.
In addition, the stock market is subject to extreme price and volume fluctuations. The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, our quarterly operating results, operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. Certain of these factors can have a significant effect on the market price for our stock for reasons that are unrelated to our operating performance.
Issuance of common stock to our management and directors will dilute our stockholders.
On the Effective Date, 7% of our common stock, on a fully diluted basis, was reserved for issuance as grants of stock, restricted stock, options, or similar equity awards in connection with a management and director equity incentive program, which has not yet been adopted. Any future issuance of common stock will dilute the percentage ownership of existing holders of our common stock. For example, the issuance of the full 7%, or 1,881,720 shares of common stock, would dilute a stockholder with 1% of the pre-issuance outstanding shares by 0.07%, resulting in a post-issuance ownership of 0.93% by that stockholder.
We have not paid dividends in the past, and do not plan to pay dividends in the future.
We do not plan to pay any dividends or make any distributions on our common stock in the foreseeable future. Therefore you should not expect to receive any dividend income from our shares of common stock.
ITEM 1B.    UNRESOLVED STAFF COMMENTS.
Not applicable.


28


ITEM 2.    PROPERTIES.
See "Item 1.—Business—Properties and Segments" for a brief description of the location and general character of each of our properties.
East
Tropicana AC is situated along the Boardwalk in Atlantic City, New Jersey, on approximately 14 acres, which we own.
Central
Casino Aztar is a riverboat along with a hotel and entertainment complex situated on approximately 20 acres along the Ohio River in Evansville, Indiana. We own the riverboat along with 10 acres and the remaining 10 acres are leased from the City of Evansville. Under the terms of the lease, we may extend the lease term through November 30, 2040 by exercising up to seven five-year renewal options. In March 2010, we amended the Casino Aztar land lease and exercised its second of seven renewal options which extends the lease term through November 2015. Under the terms of the lease renewal, effective December 1, 2010, we are required to pay a percentage of the adjusted gross receipts ("AGR") for the year in rent with a minimum annual rent of no less than $2 million. The percentage rent is equal to 2% of the AGR up to $25 million, plus 4% of the AGR in excess of $25 million up to $50 million, plus 6% of the AGR in excess of $50 million up to $75 million, plus 8% of the AGR in excess of $75 million up to $100 million and plus 12% of the AGR in excess of $100 million. In accordance with the lease renewal, during the Successor Period, we paid a total of $13.5 million for the prepayment of rent to the City of Evansville for the period between January 2011 and December 2015. In addition, per the terms of the lease, we have agreed to construct a pedestrian bridge to Casino Aztar as a leasehold improvement at an estimated cost of approximately $3.0 million to be completed within three years after the Effective Date. As of December 31, 2011 we have spent approximately $1.2 million on the pedestrian bridge and expect to complete the project in the first quarter of 2012.
West
Tropicana Laughlin is located in Laughlin, Nevada. Tropicana Laughlin is situated on approximately 31 acres, which we own.
River Palms is also located in Laughlin, Nevada. River Palms is situated on approximately 35 acres, which we own.
MontBleu is situated on approximately 21 acres in South Lake Tahoe, Nevada. We have a lease agreement with respect to the land and building which MontBleu operates through December 31, 2028. Under the terms of the lease, rent is $333,333 per month, plus 10% of gross revenues in excess of $50 million through December 31, 2011. Beginning in 2012, rent will be equal to the greater of (i) $333,333 per month as increased by the same percentage that the Consumer Price Index has increased from 2009 thereafter, or (ii) 10% of gross revenues.
South and other
Lighthouse Point is a dockside riverboat situated on approximately four acres in Greenville, Mississippi. We own the riverboat in which Lighthouse Point conducts its operations and lease the land on which the docking, entry and parking facilities of the casino are situated. We are required to pay an amount equal to 2% of Lighthouse Point's monthly gross gaming revenues in rent, with a minimum monthly payment of $75,000. In addition, in any given year in which Lighthouse Point's annual gross gaming revenues exceed $36.6 million, we are required to pay 8% of the excess amount as rent pursuant to the terms of the lease. The current lease expires in 2014 with an option to extend its term through 2044. The Company plans to expand Lighthouse Point into a renovated, land-side facility. As part of this project, the operations at Jubilee are planned to be consolidated into Lighthouse Point and the current Jubilee riverboat facility is expected to close in the second quarter of 2012. The new combined property is expected to include 550 slot machines, seven table games and 41 hotel rooms.
Jubilee is a dockside riverboat situated on approximately 16 acres in Greenville, Mississippi. We own the riverboat and have a lease agreement with the City of Greenville, Mississippi, for the moorage, docking and berthing used in the operations of Jubilee. Our current lease with the City of Greenville requires annual rental payments of $420,000 which expires in August 2020 and provides us with the option of two five-year renewals.
Belle of Baton Rouge is a dockside riverboat situated on approximately 23 acres on the Mississippi River in Baton Rouge, Louisiana. We lease certain land and buildings under separate leases, with annual payments of $0.2 million which run through 2013 with options to extend for up to 70 years. In addition, we lease a parking lot with annual rent of $0.6 million through August 2012.
Tropicana Aruba, a casino resort under development, is located in Noord, Aruba on approximately 14 acres of land which is leased through July 30, 2051. Under the terms of the land lease, the required annual payments are approximately $93,000.

29


Corporate
We also lease office space for our corporate headquarters in Las Vegas, Nevada. In addition to the property described above, we own or lease certain facilities that are not material to our operations.
ITEM 3.    LEGAL PROCEEDINGS.
Tropicana Trademark Litigation
Certain parties (the "Plaintiffs") affiliated with the new owners of the Tropicana Las Vegas ("Tropicana LV") filed a declaratory judgment action in the District Court, Clark County, Nevada ("Nevada State Court"), on July 20, 2009, against Aztar Corporation ("Aztar") and Tropicana Entertainment, LLC ("TE") originally seeking a declaratory judgment that Tropicana LV had the right to operate a hotel and casino under the name "Tropicana" without any interference by or payment to Aztar or TE (together, the "Defendants"). The Plaintiffs' complaint sought no damages or injunctive relief. On August 10, 2009, Defendants removed the action to the District of Nevada and filed an answer and counterclaim asserting Plaintiffs' use of "Tropicana" infringes upon Defendants' rights in three federally registered trademarks. The Plaintiffs filed a motion to remand the action to Nevada State Court, which was granted on January 21, 2010.
During the course of proceedings, the Plaintiffs and Defendants each filed a motion for summary judgment claiming ownership of the "Tropicana" trademark. Both motions were denied, although the Nevada State Court preliminarily found that the Plaintiffs might have an unexercised reversionary ownership interest in the “Tropicana” trademark as a result of an agreement that is 30 years old. Nonetheless, because any exercise of this purported reversionary interest by Tropicana LV could have potentially deprived the Company, as successor to TE, of its asserted ownership of the Tropicana trademark, the Defendants filed a motion in the Chapter 11 Cases for an order rejecting the 1980 trade name agreement. In addition, the Company, together with its subsidiary, New Tropicana Holdings, Inc. ("New Tropicana"), and certain affiliates of Icahn Capital, as secured lenders to the Company, filed a complaint in the Chapter 11 Cases against the Plaintiffs (the “Bankruptcy Court action”), seeking a declaration that, consistent with prior, uncontested orders of the Bankruptcy Court, New Tropicana is the owner of the "Tropicana" trademark, the Exit Facility lenders have a perfected security interest in that property, and the Nevada State Court action, to the extent it sought to assert ownership over the trademark or question the validity of the security interest, violated the automatic stay. The complaint also demanded an injunction against any further efforts by the Plaintiffs to re-litigate the ownership issue, and sought other remedies on behalf of the Exit Facility lenders.
On August 9, 2011 all parties to the Nevada State Court action and the Bankruptcy Court action entered into a global Settlement Agreement (the “Settlement Agreement”) concluding both actions and governing the respective rights of the parties to the “Tropicana” trademark. Pursuant to the Settlement Agreement, which became effective on September 28, 2011, the Plaintiffs, subject to certain advertising exceptions and other terms and conditions set forth in the Settlement Agreement, have perpetual exclusive rights to use the names, trademarks, and/or service marks (the “Marks”) TROPICANA LAS VEGAS (or TROP LAS VEGAS) and TROPICANA LV (or TROP LV) (the “TLV Marks”, as defined in the Settlement Agreement) in conjunction with its services (“Services”, as defined in the Settlement Agreement) in the City of Las Vegas, Nevada and within a 50-mile radius of the front entrance of the Tropicana Las Vegas Hotel and Casino located at 3801 Las Vegas Boulevard South, Las Vegas, Nevada (the “TLV Territory”) along with certain rights to use the TLV Marks on the Internet without geographic limitation and to register the TLV Marks as domain names. Defendants, subject to certain advertising exceptions and other terms and conditions set forth in the Settlement Agreement, have perpetual exclusive worldwide rights (excluding the TLV Territory) to use the TROPICANA and TROP Marks coupled with either a pre-existing identifier of its Services (such as "TROPICANA ENTERTAINMENT" or "TROP ADVANTAGE") or an accurate geographic identifier of the location of a Tropicana Entertainment property (other than LAS VEGAS or the name of any city within the TLV Territory) (the “TE Marks”) along with certain rights to use the TE Marks on the Internet without geographic limitation and to register the TE Marks as domain names.
Wimar and CSC Administrative Expense Claims
On March 31, 2009, Wimar Tahoe Corporation ("Wimar") and Columbia Sussex Corporation ("CSC") filed separate proceedings with the Bankruptcy Court related to administrative expense claims against the Predecessors. On August 4, 2010, Wimar and CSC separately filed motions for summary judgment seeking payment on account of these claims from the Company totaling approximately $5.4 million, which was recorded as a liability upon emergence from bankruptcy and is included in accounts payable in our accompanying balance sheet as of December 31, 2011. In its objection to Wimar and CSC's motions for summary judgment, the Company disputes the administrative expense and/or priority status of certain amounts claimed and also contends that any payment to CSC or Wimar should await the resolution of the adversary proceeding instituted by Lightsway Litigation Services, LLC, as Trustee of the Tropicana Litigation Trust established in the Chapter 11 Cases, against CSC and Wimar. On June 24, 2011, the Company, CSC, and Wimar, along with certain other parties, participated in mediation concerning Wimar and CSC's claims, but the mediation terminated without resolution of the claims. Oral

30


argument on the summary judgment motions were conducted on September 27, 2011 and November 22, 2011 and the parties are awaiting the Court's decision regarding these motions.
Aztar v. Marsh
Aztar filed a broker malpractice and breach of contract action in the Superior Court of New Jersey, Atlantic County, Law Division (the “Court”) on August 12, 2010, against Marsh & McLennan Companies, Marsh, Inc., Marsh USA, Inc. and various fictitious Marsh entities (together, the "Marsh Defendants"). The claim seeks $100 million or more in compensatory damages against the Marsh Defendants, Aztar's risk management and insurance brokers at the time of a 2002 expansion of Tropicana AC by Aztar, including, but not limited to, lost profits, expenses arising from the interruption of operations, attorneys' fees, loss of the use of the insurance proceeds at issue, and litigation expenses resulting from the Marsh Defendants' failure to secure for Aztar business interruption and property damage coverage covering losses sustained by Aztar from the collapse of a parking garage that occurred at Tropicana AC on October 30, 2003.
The Marsh Defendants filed an answer on October 20, 2010 denying the material allegations of the complaint and subsequently filed a Motion to Dismiss for Forum Non Conveniens in December 2010, which motion was denied by the Court on April 12, 2011. On August 18, 2011 the Marsh Defendants filed a Motion for Summary Judgment arguing that the Court should apply the Arizona Statue of Limitations to the action. Aztar filed an objection to the Marsh Defendants' motion on September 23, 2011 arguing, inter alia, that the New Jersey Statute of Limitations applies to the action. The Marsh Defendants filed its Reply on October 3, 2011. The motion was argued in January 2012, and a decision is currently pending before the Court. Discovery is also proceeding, and trial is not expected to take place until 2012, at the earliest. Any recovery obtained by Aztar in this action will be recoverable by the Company as the current owner of Tropicana AC.
Nevada Use Tax Refund Claims
On March 27, 2008, the Nevada Supreme Court issued a decision in Sparks Nugget, Inc. vs. The State of Nevada Department of Taxation (the "Department"), that food purchased for subsequent use in the provision of complimentary and/or employee meals was exempt from both sales and use tax. The Predecessors had previously paid use tax on food purchased for subsequent use in complimentary and employee meals at our Nevada casino properties and has filed refunds for the periods from February 2000 through March 2008.
The Company is claiming the exemption on sales and use tax returns for periods from March 2008 to February 2012 based on the Nevada Supreme Court decision and has not accrued or paid any sales or use tax for that period. Recently the Nevada Department of Taxation has asserted that gaming companies should pay sales tax on customer complimentary meals and employee meals on a prospective basis. This position stems from a recent Nevada Tax Commission decision concerning another gaming company which states that complimentary meals provided to customers are subject to sales tax at the retail value of the meal and employee meals are subject to sales tax at the cost of the meal. The other gaming company filed in Clark County District Court a petition for judicial review of the Nevada Tax Commission decision. The Company is currently evaluating whether or not to accrue tax prospectively as it disagrees with the position asserted by the Nevada Department of Taxation.
Greenville Riverboat, LLC Appraisal Action
On October 28, 2010, we elected to effect a merger which resulted in the purchase of the minority interests in Greenville Riverboat, LLC, our subsidiary that owns Lighthouse Point. The minority owner received $2.5 million in cash, and exercised appraisal rights, requesting an additional $3.2 million as payment for its minority interest. The minority owner also asserted certain cross claims against Lighthouse Point in the appraisal proceedings for additional distributions. We believe that the cross claims are without merit and intend to vigorously defend the same. We also have contested any additional payment for the minority interest. There can be no assurance that we will succeed in this proceeding, and we could be required to make additional payments.
In addition, we are party to certain lawsuits in the normal course of business. While the outcome of any such open legal proceedings cannot at this time be predicted with certainty, we do not expect these matters will materially affect our financial condition or results of operations.
ITEM 4.    MINE SAFETY DISCLOSURES.
Not applicable.


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PART II
ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Effective November 15, 2010, our common stock was quoted on the OTCQB Market under the symbol "TPCA.PK".
The following table sets forth the high and low sales prices per share of our common stock on the OTCQB Market for the period indicated. The over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily reflect actual transactions.
 
 
High
 
Low
2011
 
 
 
 
First Quarter
 
$
17.75

 
$
15.25

Second Quarter
 
$
17.20

 
$
15.55

Third Quarter
 
$
16.15

 
$
13.31

Fourth Quarter
 
$
16.50

 
$
13.42

2010
 
 
 
 
Fourth Quarter (November 15, 2010 - December 31, 2010)
 
$
16.00

 
$
14.00

Holders
As of February 28, 2012, there were 60 holders of record of our common stock.
Dividends
We have not paid, and do not anticipate paying in the foreseeable future, any dividends or making any distributions on our common stock. We have certain restrictions under the Exit Facility from paying dividends in the future. See "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Exit Facility."
Recent Sales of Unregistered Securities
We did not sell any unregistered securities during the period covered in this report that were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The table below reflects open market purchases during the three months ended December 31, 2011 of our common stock by Mr. Carl C. Icahn, the chairman of our board of directors and, through Icahn Enterprises, our principal beneficial stockholder, and certain of his affiliates, each of whom may be deemed to be an “affiliated purchaser” as such term is defined in Rule 10b-18(b)(3) under the Exchange Act. The information contained in this table is based upon filings with the SEC made by Mr. Icahn and his affiliates. We did not repurchase any shares of our common stock during the period covered by this annual report.
Period
 
Total Number of Shares Purchased
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
 
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2011 - October 31, 2011
 

 
$

 

 

November 1, 2011 - November 30, 2011
 
898,212

 
14.30

 

 

December 1, 2011 - December 31, 2011
 

 

 

 

Total
 
898,212

 
$
14.30

 

 

(1) No purchases were made pursuant to a publicly announced plan or program.
Securities Authorized for Issuance Under Equity Compensation Plans
While we currently do not have any equity compensation plans, in connection with the Restructuring Transactions and pursuant to the Plan, on the Effective Date, 7% of our common stock, on a fully diluted basis, was reserved for issuance as grants of stock, restricted stock, options, or stock appreciation rights or similar equity awards in connection with a

32


compensation plan.
Stock Performance Graph
The graph below compares the cumulative total return on our common stock to the cumulative total return of the Dow Jones US Casino Index and the Russell 2000 Index for the period from November 15, 2010, the date our common stock began trading on the OTCQB Market, through December 31, 2011. The performance graph assumes that $100 was invested on November 15, 2010 in each of the Company's common stock, the Dow Jones US Casino Index and the Russell 2000 Index, and that all dividends were reinvested. The stock price performance shown in this graph is neither necessarily indicative of, nor intended to suggest, future stock price performance.
 
Cumulative Total Return
 
 
11/15/2010
 
12/31/2010
 
12/31/2011
 
Tropicana Entertainment Inc.
$
100.00

 
$
108.93

 
$
117.79

 
Dow Jones US Casino Index
$
100.00

 
$
100.59

 
$
93.11

 
Russell 2000 Index
$
100.00

 
$
108.85

 
$
102.91

 

The performance graph should not be deemed filed or incorporated by reference into any other of our filings under the Securities Act of 1933 or the Exchange Act of 1934, unless we specifically incorporate the performance graph by reference therein.
ITEM 6.    SELECTED FINANCIAL DATA
The selected financial data presented below has been derived from the data of the Company as of and for the year ended December 31, 2011 and as of December 31, 2010 and for the period from March 8, 2010 through December 31, 2010 (the "Successor Period") and the data of the Predecessors for the period from January 1, 2010 through March 7, 2010 (the "Predecessor Period") and as of and for each of the years ended December 31, 2009, 2008 and 2007. The selected financial data of the Company presented below has been derived from the audited financial statements of the Company as of December 31, 2011, December 31, 2010 and for the Successor Period included elsewhere in the Annual Report on Form 10-K. The selected financial data of the Predecessors presented below for the Predecessor Period and for the year ended December 31, 2009 has been derived from the audited financial statements of the Predecessors included elsewhere in this Annual Report on Form 10-K. The selected financial data of the Predecessors presented below as of December 31, 2009, 2008 and 2007 and for the years ended December 31, 2008 and 2007 has been derived from the audited financial statements of the Predecessors not included in

33


this Annual Report on Form 10-K. The selected financial data set forth below is qualified in its entirety by, and should be read in conjunction with, "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited financial statements, the notes thereto and other financial and statistical information included elsewhere in this Annual Report on Form 10-K. The historical results set forth below do not indicate results expected for any future periods. Our future results of operations will be subject to significant business, economic, regulatory and competitive uncertainties and contingencies, some of which are beyond our control.
Selected Financial Data—Tropicana Entertainment Inc.
 
 
Successor
 
 
Predecessors
 
 
Year ended December 31, 2011
 
Period from
March 8, 2010
through
December 31,
2010
 
 
Period from January 1, 2010
through
March 7, 2010
 
 
 
 
 
 
 
 
 
Discontinued
Operations (a)
 
 
(in thousands, except per share data)
 
TEI (a)
 
TEI (a)(b)
 
 
TEH
 
CP Vicksburg
 
JMBS Casino
Income Statement Data:
 
 
 
 

 
 
 
 
 
 
 
Net revenues
 
$
623,556

 
$
539,032

 
 
$
64,519

 
$
1,271

 
$
3,552

Operating income (loss)
 
33,568

 
5,300

 
 
4,421

 
(874
)
 
933

Income (loss) from continuing operations, including noncontrolling interest (c)
 
(2,990
)
 
(17,529
)
 
 
2,122,179

 
2,287,351

 
2,267,643

Income (loss) from continuing operations, attributable to Tropicana Entertainment Inc. 
 
(2,990
)
 
(17,409
)
 
 
 

 
 

 
 

Basic and Diluted Earnings Per Share:
 
 
 
 

 
 
 
 
 
 
 
Income (loss) from continuing operations, attributable to Tropicana Entertainment Inc. per share
 
$
(0.11
)
 
$
(0.66
)
 
 
 

 
 

 
 
Balance Sheet Data (as of period end) (d):
 
 
 
 

 
 
 
 
 
 
 
Total assets
 
$
821,554

 
$
848,892

 
 
 

 
 

 
 
Total debt
 
94,087

 
109,477

 
 
 

 
 

 
 
Total shareholders' equity
 
582,565

 
585,397

 
 
 

 
 

 
 
_______________________________________________________________________________

(a)
In December 2010, CP Vicksburg, a former wholly owned subsidiary of the Company, entered into an agreement to sell substantially all of the assets and certain liabilities associated with the operation of the Horizon Vicksburg, in exchange for $3.25 million in cash, a transaction which closed in March 2011. Accordingly, the results of operations for Horizon Vicksburg are presented as discontinued operations for the Successor Period. In addition, CP Vicksburg is one of our Predecessors. We are required to report the historical results of our Predecessors and accordingly have presented CP Vicksburg as discontinued operations in our selected financial data.
(b)
In August 2010, we purchased the Tropicana Aruba which includes a 361-unit timeshare and rental property, a temporary casino opened in December 2011, and a casino resort under development.
(c)
During the year ended December 31, 2011, we recognized an impairment loss of $0.3 million related to our intangible assets and $5.1 million related to certain long-lived assets. During the Successor Period, we recognized an impairment loss of $19.0 million related to our intangible assets and $1.7 million related to our goodwill. During the Predecessor Period, reorganization items and fresh-start adjustments were a gain of $2.1 billion, $2.3 billion and $2.3 billion at TEH, CP Vicksburg and JMBS Casino, respectively. These amounts primarily represent non-cash charges related to the adoption of fresh-start reporting as of the Effective Date.
(d)
Upon the Effective Date and following the completion of the Restructuring Transactions, we adopted fresh-start reporting in accordance with accounting guidance on reorganizations. As a result, the value of the Predecessors' assets, including intangible assets, and liabilities has been adjusted to their fair values.

34


Selected Financial Data—Predecessors
 
 
Predecessor
 
 
TEH
 
 
Year Ended December 31,
 
 
2009
 
2008
 
2007 (a)
 
 
(in thousands)
Income Statement Data:
 
 
 
 
 
 
Net revenues
 
$
359,869

 
$
398,862

 
$
874,906

Operating income (loss) (b)
 
(153,496
)
 
(635,189
)
 
(959,940
)
Income (loss) from continuing operations, including noncontrolling interest (c)
 
(189,307
)
 
(842,827
)
 
(1,097,125
)
Balance Sheet Data (as of period end):
 
 
 
 
 
 
Total assets
 
$
818,212

 
$
1,705,551

 
$
2,674,600

Total debt (excluding related party)
 
2,354,929

 
2,787,459

 
2,711,344

Total members' (deficit) equity
 
(1,823,939
)
 
(1,593,677
)
 
(544,167
)
 
 
Predecessor
 
 
Discontinued Operations (d)
 
 
CP Vicksburg
 
 
Year Ended December 31,
 
 
2009
 
2008
 
2007
 
 
(in thousands)
Income Statement Data:
 
 
 
 
 
 
Net revenues
 
$
12,448

 
$
24,576

 
$
29,680

Operating income (loss)
 
(7,274
)
 
(13,199
)
 
(4,334
)
Net income (loss) (e)
 
(15,097
)
 
(2,293,026
)
 
(4,099
)
Balance Sheet Data (as of period end):
 
 
 
 
 
 
Total assets
 
$
16,731

 
$
23,004

 
$
34,066

Total debt
 

 

 

Members' (deficit) equity
 
(2,283,246
)
 
(2,268,149
)
 
24,877

 
 
Predecessor
 
 
JMBS Casino
 
 
Year Ended December 31,
 
 
2009
 
2008
 
2007
 
 
(in thousands)
Income Statement Data:
 
 
 
 
 
 
Net revenues
 
$
15,694

 
$
18,981

 
$
26,500

Operating income (loss)
 
1,281

 
(8,981
)
 
3,183

Net income (loss) (e)
 
(6,322
)
 
(2,289,899
)
 
3,505

Balance Sheet Data (as of period end):
 
 
 
 
 
 
Total assets
 
$
34,969

 
$
33,552

 
$
41,232

Total debt
 

 

 

Members' (deficit) equity
 
(2,258,208
)
 
(2,251,886
)
 
38,013

_______________________________________________________________________________

(a)
On January 3, 2007, Wimar, TEH's ultimate parent company and predecessor, acquired Aztar which included the operations of Tropicana AC, Casino Aztar, Tropicana Laughlin, a casino sold by TEH in June 2007 and another casino TEH disposed of in June 2009. In addition, Wimar contributed five of its gaming properties to TEH on January 3, 2007, which included River Palms, MontBleu, Lighthouse Point, Belle of Baton Rouge and another casino TEH no longer owned subsequent to October 2009. The results of Tropicana AC are included for the period January 3, 2007 (date of acquisition) through December 12, 2007 when TEH determined that Tropicana AC should not be consolidated, and thereafter accounted for its interest in Tropicana AC, held by the interim casino authorization trust (the "Trust"), under the cost method.

35


(b)
Tropicana AC was presented as a beneficial interest in Trust in TEH's balance sheets as of December 31, 2009, 2008 and 2007. TEH's cost basis investment in Tropicana AC was adjusted to fair value which resulted in impairment charges of $154.3 million, $530.8 million and $635.9 million during the years ended December 31, 2009, 2008 and 2007, respectively.
During the years ended December 31, 2008 and 2007, TEH recorded $97.9 million and $311.0 million, respectively, of impairment losses related to its intangible assets other than goodwill.
During the year ended December 31, 2008, TEH recorded $27.8 million of impairment loss related to its property and equipment.
During the year ended December 31, 2007, TEH recorded $142.4 million in impairment loss related to goodwill recognized in the acquisition of Aztar.
(c)
During the years ended December 31, 2009 and 2008, TEH recorded $27.0 million and $92.4 million, respectively, in reorganization items as a result of the Chapter 11 Cases.
(d)
In December 2010, CP Vicksburg entered into an agreement to sell substantially all of the assets and certain liabilities associated with the operation of the Horizon Vicksburg, in exchange for $3.25 million in cash. Accordingly, the results of operations for Horizon Vicksburg are presented as discontinued operations in the Successor Period. In addition, CP Vicksburg is one of our Predecessors. We are required to report the historical results of our Predecessors and accordingly have presented CP Vicksburg as discontinued operations in our selected financial data.
(e)
During the years ended December 31, 2009 and 2008, CP Vicksburg and JMBS Casino each recorded $8.0 million and $2.3 billion, respectively, in non-cash loss related to the guarantee of TEH's debt which was in default as a result of the denial by the NJCCC of TEH's qualification as a holding company for Tropicana AC.
ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Overview
We are an owner and operator of regional casino and entertainment properties located in the United States and one casino resort development located on the island of Aruba. Our United States properties include three casinos in Nevada, two casinos in Mississippi, and one casino in each of Indiana, Louisiana and New Jersey. We primarily cater to local and regional guests to provide a fun and exciting gaming environment with high quality and high value lodging, dining, retail and entertainment amenities. Our properties offer a broad array of gaming options specifically tailored for our patrons in each market. As of December 31, 2011, our properties collectively included approximately 414,000 square feet of gaming space with 7,583 slot machines, 231 table games and 6,060 hotel rooms.
We view each property as an operating segment which we aggregate by region in order to present our reportable segments: (i) East, (ii) Central, (iii) West and (iv) South and other. Our operations by region include the following:
East—Tropicana AC located in Atlantic City, New Jersey;
Central—Casino Aztar located in Evansville, Indiana;
West—Tropicana Laughlin located in Laughlin, Nevada; River Palms located in Laughlin, Nevada; and MontBleu located in South Lake Tahoe, Nevada; and
South and other—Belle of Baton Rouge located in Baton Rouge, Louisiana; Jubilee located in Greenville, Mississippi; Lighthouse Point located in Greenville, Mississippi; and Tropicana Aruba located in Noord, Aruba.
We are a Delaware corporation that was formed on May 11, 2009 to acquire certain assets of TEH and certain of its subsidiaries pursuant to the Plan. We also acquired CP Vicksburg (which we sold in March 2011), JMBS Casino and Realty, all of which were part of the Plan.
In addition, we acquired certain assets of Adamar, an unconsolidated subsidiary of TEH, including Tropicana AC. The Restructuring Transactions were consummated and became effective on the Effective Date, March 8, 2010, at which time we acquired Adamar and several of the Predecessors' gaming properties and related assets. Prior to the Effective Date, we conducted no business, other than in connection with the reorganization of the Predecessors and the acquisition of Tropicana AC, and had no material assets or liabilities. The results of operations of Tropicana AC are not presented for the Predecessor Period (as defined below). The results of operations of Tropicana AC are included from the Effective Date.
Upon the Effective Date and following the completion of the Restructuring Transactions, we adopted fresh-start reporting in accordance with accounting guidance on reorganizations. As a result, the values of the Predecessors' assets, including intangible assets, and liabilities were adjusted as of the Effective Date to their estimated fair values on our balance sheet.

36


The historical financial results of the Predecessors and Adamar are not indicative of our current financial condition or our future results of operations following the Effective Date. Our future results of operations will be subject to significant business, economic, regulatory and competitive uncertainties and contingencies, some of which are beyond our control.
Presentation
References in this Annual Report on Form 10-K to "Successor" refer to the Company on or after March 8, 2010, after giving effect to (i) the issuance of 12,098,053 shares of common stock and Ordinary Warrants in accordance with the Plan, (ii) the entry into our Exit Facility in accordance with the Plan, which included the issuance of Penny Warrants, (iii) the application of fresh-start reporting and (iv) the issuance of 12,901,947 shares of our common stock related to the acquisition of Tropicana AC. References to "Predecessors" refer to the Predecessors prior to March 8, 2010.
Due to the adoption of fresh-start reporting on March 8, 2010, the accompanying statements of operations and cash flows for the year ended December 31, 2010 are presented for two periods: January 1, 2010 through March 7, 2010 (the "Predecessor Period") for each of the Predecessors, and March 8, 2010 through December 31, 2010 (the "Successor Period") for the Company. The Predecessor Period reflects the historical accounting basis in the Predecessors' assets and liabilities, while the Successor Period reflects the assets and liabilities at fair value by allocating the Company's enterprise value to its assets and liabilities pursuant to accounting guidance related to business combinations.
Because we conducted no business prior to March 8, 2010, we have presented the results of the Predecessors for the year ended December 31, 2009 for comparison purposes. We refer to the Predecessors' combined prior year period as "2009 Combined," derived from the summation of the results of TEH's and JMBS Casino's year ended December 31, 2009. We refer to our year ended December 31, 2010 results as "2010 Combined," derived from the summation of the results of TEI for the Successor Period and TEH and JMBS Casino for the Predecessor Period. CP Vicksburg is excluded from 2009 Combined and 2010 Combined periods as it is classified as discontinued operations. However, CP Vicksburg was one of our Predecessors and we are required to report the historical results of our Predecessors and accordingly have presented CP Vicksburg as discontinued operations in our management's discussion and analysis of financial condition and results of operations. The discussion of our results of operations contains a comparison of our results for the 2010 Combined period and the results for the Predecessors for the 2009 Combined period. The application of fresh-start reporting did not materially affect the Company's continuing operations; however the 2010 Combined and 2009 Combined periods may yield results that are not fully comparable on a period-by-period basis, particularly with respect to depreciation and amortization and interest expense. The combined presentation does not comply with generally accepted accounting principles in the United States ("GAAP") or with the rules of the SEC for pro forma presentation; however, it is presented because we believe it is the most meaningful comparison of our results between periods.
Results of Operations
Our financial results are highly dependent upon the number of customers that we attract to our facilities and the amounts those customers spend per visit. Additionally, our operating results may be affected by, among other things, overall economic conditions affecting the discretionary income of our customers, competitive factors, gaming tax increases and other regulatory changes, the opening or acquisition of new gaming operations, the negative impact the Predecessors' bankruptcy filings had on our facilities, our ability to reinvest in our properties, potential future exposure for liabilities of the Predecessors that we assumed, our limited operating history, and general public sentiment regarding travel. We may experience significant fluctuations in our quarterly operating results due to seasonality and other factors. Historically, our operating results are the strongest in the third quarter and the weakest in the fourth quarter. In addition, weather and long-weekend holidays affect our operating results.
Casino revenues are one of our main performance indicators and account for a significant portion of our net revenues. Casino revenues represent the difference between wins and losses from gaming activities such as slot machines and table games. Key volume indicators include table game volumes and slot volumes, which refer to amounts wagered by our customers. Win or hold percentage represents the percentage of the amounts wagered by the customer that is won by the casino, which is not fully controllable by us, and recorded as casino revenue. Most of our revenues are cash-based, through customers wagering with cash or chips or paying for non-gaming services with cash or credit cards, and therefore are not subject to any significant or complex estimation. As a result, fluctuations in net revenues have a direct impact on cash flows from operating activities. Other performance indicators include hotel occupancy, which is a volume indicator for hotels, and the average daily rate, which is a price indicator for the amount customers paid for hotel rooms.
The following significant factors and trends should be considered in analyzing our operating performance:
Tropicana AC.  We acquired Tropicana AC on March 8, 2010 and its operating results are included only from the Effective Date. In 2010, Tropicana AC implemented a new marketing strategy to target high end table game players to counter the increased competition from Pennsylvania and other surrounding markets. Casino revenues can vary

37


because of table game hold percentage and differences in the odds for different table games. High end play may lead to greater fluctuations in our table game hold percentage and, as a result, we may experience greater revenue fluctuation between reporting periods due to this marketing strategy. For the year ended December 31, 2011, the table game hold decreased 2.2 percentage points at Tropicana AC when compared to the same period in the prior year. This hold percentage is not necessarily indicative of results that can be expected for future periods.
Fresh-Start Reporting.  As noted above, we adopted fresh-start reporting on March 8, 2010 and as a result our results of operations are not comparable to those of the Predecessors. In particular, the assets and liabilities of the Predecessors have been adjusted to fair value and certain assets and liabilities not previously recognized in the Predecessors' financial statements have been recognized under fresh-start reporting. The most significant changes are in depreciation and amortization as we recorded our property and equipment at their estimated fair values upon the Effective Date.
General Economic Conditions.  Current economic conditions continue to adversely impact us and the gaming industry as a whole. We believe our guests have reduced their discretionary spending as a result of uncertainty and instability relating to employment and the investment and housing markets. While general economic conditions have modestly improved, we cannot assure that they will continue to improve or will not worsen in the future.
Cost Efficiencies.  As a result of economic conditions, the Predecessors focused on efficiency initiatives that they began implementing in early 2009. These cost saving initiatives included a reduction in the number of employees, reduced advertising and promotional expenses, and the suspension of the employer match to the 401(k) plan at certain of our properties, among other initiatives. In 2011, we also decreased our payroll and benefits expense related to our company-sponsored health insurance plans.
Debt and Interest Expense.  On December 29, 2009, we entered into a credit facility (the "Exit Facility"), which consists of (i) a $130 million senior secured term loan credit facility issued at a discount of 7% (the "Term Loan Facility") and (ii) a $20 million senior secured revolving credit facility (the "Revolving Facility"). The Exit Facility matures on March 8, 2013. The Term Loan Facility requires principal payments of $1.3 million annually on March 8, 2011 and 2012. The Revolving Facility does not generally require principal payments prior to the maturity date. All amounts outstanding under the Exit Facility bear interest at a rate per annum of 15% so long as no default or event of default has occurred and is continuing, or at a rate per annum of 17% in the event that a default or event of default has occurred and is continuing. On the Effective Date, the proceeds of the Term Loan Facility were used to repay certain indebtedness, including the TEH's $65 million post-petition, debtor-in-possession financing (the "DIP Credit Facility"), to pay Bankruptcy Court-approved administrative claims and expenses, to provide for working capital, to pay fees and expenses related to the Exit Facility and for other general corporate purposes. As a result of entering into the Exit Facility, our interest expense was $32.4 million and $26.9 million for the year ended December 31, 2011 and the Successor Period, respectively, which includes $12.8 million and $10.5 million of amortization of the related debt discount, Penny Warrants and debt issuance costs. The Exit Facility is guaranteed by substantially all our existing and future subsidiaries. In addition to our scheduled principal payment in March 2011, we made a $25.0 million prepayment on our Exit Facility in December 2011 reducing the principal amount due on this loan to $103.7 million, and recognized a $2.4 million loss related to that prepayment. As of the date of filing of this Annual Report on Form 10-K, we are in discussions with a group of potential lenders concerning a possible refinancing of our Exit Facility. An entity affiliated with Carl C. Icahn, the chairman of our board of directors and, through Icahn Enterprises, our principal beneficial stockholder, is a lender under the Exit Facility and holds more than 50% of the loans extended under the Exit Facility. In addition, an entity affiliated with Mr. Icahn is the administrative agent and collateral agent under the Exit Facility. We cannot assure that we will be able to refinance our Exit Facility on favorable terms, if at all.
Impairment Loss.  As a result of our annual impairment testing in the fourth quarter of 2011, we recognized an impairment loss of $5.4 million, of which $0.3 million was related to the "Tropicana" trade name and $5.1 million was related to our long-lived assets at River Palms. These impairments were primarily due to reduced revenue and cash flow projections. As a result of our annual impairment test in the fourth quarter of 2010, we recognized an impairment loss of $19.0 million related to intangible assets that were recorded upon the adoption of fresh-start reporting, of which $3.7 million was related to the "Tropicana" trade name, $10.5 million was related to the gaming license at Casino Aztar and $4.8 million was related to the gaming license at Belle of Baton Rouge. In addition, we recognized a $1.7 million 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.
On December 12, 2007, the NJCCC denied the application of TEH to be found qualified to be a holding company of

38


Adamar, including Tropicana AC. Prior to the Effective Date and as a result of the actions taken on December 12, 2007 by the NJCCC, TEH determined that Tropicana AC should not be consolidated subsequent to December 12, 2007. TEH thereafter accounted for its interest in Tropicana AC, held by the interim casino authorization trust (the "ICA Trust"), under the cost method. TEH's cost basis was then adjusted to fair value in accordance with accounting guidance related to accounting for certain investments in debt and equity securities. Under the accounting guidance related to the meaning of other-than-temporary impairment and its application to certain investments, cost basis investments such as TEH's beneficial interest in the ICA Trust were evaluated for impairment under a process that results in an impairment charge reducing the cost basis to fair value when other-than-temporary impairment exists. The estimated fair value of the beneficial interest in the ICA Trust declined to $200.0 million which was based on the $200 million credit bid by the lenders under a senior credit facility (the "Credit Facility") comprised of a $1.53 billion senior secured term loan and a $180 million senior secured revolving credit facility entered into in January 2007, resulting in impairment charges at TEH of $154.3 million during year ended December 31, 2009.
Acquisitions.  On August 31, 2010 we purchased a casino resort in Aruba with approximately 361 units, including the unsold fractional timeshares attached to such property, a temporary casino not in operation and an unfinished permanent casino structure. The Company renamed the property Tropicana Aruba Resort & Casino. We are currently operating the timeshare facilities, opened the temporary casino in December 2011 and are currently developing a permanent casino. However, our development plans have not been finalized and we may decide not to proceed.
On October 28, 2010, we elected to effect a merger which resulted in the purchase of the minority interests in Greenville Riverboat, LLC, our subsidiary that owns Lighthouse Point. The minority owner received $2.5 million in cash, and exercised appraisal rights, requesting an additional $3.2 million as payment for its minority interest. The minority owner also asserted certain cross claims against Lighthouse Point in the appraisal proceedings for additional distributions. We believe that the cross claims are without merit and intend to vigorously defend the same. We also have contested any additional payment for the minority interest. We cannot assure that we will succeed in this proceeding, and we could be required to make additional payments.
Discontinued Operations.  On December 1, 2010, we, through CP Vicksburg, entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Delta Investments & Development, LLC ("Delta") pursuant to which we agreed to sell substantially all of the assets associated with the operation of Horizon Vicksburg in exchange for $3.25 million in cash and the assumption by Delta of certain liabilities associated with Horizon Vicksburg. The transaction closed in March 2011, resulting in a gain of $1.0 million, which is included in the gain from discontinued operations in the accompanying condensed statements of operations for the year ended December 31, 2011.
Year ended December 31, 2011 compared to year ended December 31, 2010 (2011 compared to 2010 Combined (as defined above))
The following table presents detail of our net revenues (in thousands):
 
 
Successor (a)
 
 
Predecessors (a)
 
 
Year ended December 31, 2011
 
Period from March 8, 2010 through December 31, 2010
 
 
Period from January 1, 2010 through March 7, 2010
 
 
 
 
 
 
 
 
 
Discontinued
Operations
 
 
 
 
TEI
 
TEI
 
 
TEH
 
CP
Vicksburg
 
JMBS
Casino
Revenues:
 
 
 
 

 
 
 
 
 
 
 
Casino
 
$
506,547

 
$
446,147

 
 
$
55,416

 
$
1,189

 
$
3,498

Rooms
 
105,516

 
87,872

 
 
7,101

 
86

 
45

Food and beverage
 
88,052

 
74,844

 
 
9,306

 
75

 
78

Other
 
24,034

 
22,137

 
 
1,559

 
16

 
30

Gross revenues
 
724,149

 
631,000

 
 
73,382

 
1,366

 
3,651

Less promotional allowances
 
(100,593
)
 
(91,968
)
 
 
(8,863
)
 
(95
)
 
(99
)
Net revenues
 
$
623,556

 
$
539,032

 
 
$
64,519

 
$
1,271

 
$
3,552

_______________________________________________________________________________

(a)
The results for the Successor are not comparable to the Predecessors due to the completion of the Restructuring Transactions on March 8, 2010.

39


The following table sets forth certain information concerning our results of operations by region (dollars in thousands):
 
 
Successor (b)
 
 
Predecessors (b)
 
 
Year ended December 31, 2011
 
Period from
March 8, 2010
through
December 31,
2010
 
 
Period from January 1, 2010
through
March 7, 2010
 
 
 
 
 
 
 
 
 
Discontinued
Operations
 
 
 
 
TEI
 
TEI
 
 
TEH
 
CP
Vicksburg
 
JMBS
Casino
Net revenues:
 
 
 
 

 
 
 
 
 
 
 
East
 
$
279,063

 
$
257,431

 
 
$

 
$

 
$

Central
 
123,975

 
98,466

 
 
22,432

 

 

West
 
123,608

 
104,840

 
 
26,174

 

 

South and other
 
96,910

 
78,256

 
 
15,868

 
1,271

 
3,552

Corporate
 

 
39

 
 
45

 

 

Total net revenues
 
$
623,556

 
$
539,032

 
 
$
64,519

 
$
1,271

 
$
3,552

Operating income (loss):
 
 
 
 

 
 
 
 
 
 
 
East
 
$
2,286

 
$
15,170

 
 
$

 
$

 
$

Central
 
26,284

 
5,296

 
 
4,691

 

 

West
 
7,160

 
5,434

 
 
1,731

 

 

South and other
 
10,670

 
(1,375
)
 
 
2,603

 
(874
)
 
933

Corporate
 
(12,832
)
 
(19,225
)
 
 
(4,604
)
 

 

Impairment of beneficial interest in Trust
 

 

 
 

 

 

Total operating income (loss)
 
$
33,568

 
$
5,300

 
 
$
4,421

 
$
(874
)
 
$
933

Operating income (loss) margin (c):
 
 
 
 

 
 
 
 
 
 
 
East
 
0.8
%
 
5.9
 %
 
 

 

 

Central
 
21.2
%
 
5.4
 %
 
 
20.9
%
 

 

West
 
5.8
%
 
5.2
 %
 
 
6.6
%
 

 

South and other
 
11.0
%
 
(1.8
)%
 
 
16.4
%
 
(68.8
)%
 
26.3
%
Total operating income (loss) margin
 
5.4
%
 
1.0
 %
 
 
6.9
%
 
(68.8
)%
 
26.3
%
__________________________________________________________________________
(b)
The results for the Successor are not comparable to the Predecessors due to the completion of the Restructuring Transactions on March 8, 2010, particularly for results related to depreciation, amortization and interest expense.
(c)
Operating income (loss) margin is operating income (loss) as a percentage of net revenues.
Net Revenues
In the East region, net revenues were $279.1 million for the year ended December 31, 2011, an increase of 8.4% over the 2010 Combined period. As the acquisition of Tropicana AC occurred on March 8, 2010, the 2010 Combined period includes 66 fewer days of operations of Tropicana AC. The Atlantic City market experienced year over year declines in casino revenue of 7.8% in the year ended December 31, 2011. The Atlantic City market has been negatively impacted by the introduction of table games in Pennsylvania in mid 2010 and the opening of a new casino in New York City in the fourth quarter of 2011. Tropicana AC results were unfavorable to market results primarily due to volatility in the hold percentage associated with high end table game play and low slot volumes. Table game volumes at Tropicana AC were 4.4% higher for the year ended December 31, 2011 when compared to the same period in the prior year. However, the table game hold percentage was 2.2 percentage points lower for the year ended December 31, 2011 when compared to the same period in the prior year. Slot volumes at Tropicana AC decreased 7.3% when compared to the same period in the prior year, which was unfavorable to market results. We believe this was primarily due to competitors in the Atlantic City market increasing their marketing and promotional efforts on slot volumes more than Tropicana AC in the first half of the year. The occupancy rate at Tropicana AC was 83% and the average daily room rate was $100 for the year ended December 31, 2011, which is a slight decrease from the comparable prior year period.
In the Central region, net revenues were $124.0 million for the year ended December 31, 2011, an increase of 2.5% compared to the 2010 Combined period due primarily to a 2.4% increase in the slot volumes, which is partially attributable to new slot product and marketing initiatives at Casino Aztar. The average daily room rate at our Central region property was $84 for the year ended December 31, 2011, a 7.8% increase compared to the 2010 Combined period. Our occupancy rate was 72% for the year ended December 31, 2011, down 3.0 percentage points from the 2010 Combined period.
In the West region, net revenues were $123.6 million for the year ended December 31, 2011, a decrease of 5.7%

40


compared to the 2010 Combined period. This decrease was primarily driven by a 14.8% decrease in slot volumes, a 10.2% decrease in table volumes and a 4.3 percentage point decline in the occupancy rate for the year ended December 31, 2011, compared to the 2010 Combined period. We believe net revenues in the West region continue to be negatively impacted by the deterioration of casino revenues in the Laughlin market resulting from the current economic conditions and reduced consumer discretionary spending. In addition, both Laughlin properties were negatively impacted by the road construction during the first six months of the year and both properties shifted their marketing strategy in the last six months towards a more profitable customer. We have reduced the gaming capacity at River Palms to reduce expenses which has also contributed to the decline in gaming volumes.
In the South and other region, net revenues were $96.9 million for the year ended December 31, 2011, a decrease of 0.8% compared to the 2010 Combined period. This decrease is driven by casino revenue declines at our Mississippi properties. Our Mississippi properties experienced a 15.7% decrease in total gaming volumes compared to the 2010 Combined period, which we believe was primarily related to reduced consumer discretionary spending due to local economic conditions, as well as the Mississippi property closures due to river flooding in May 2011. This decrease was partially offset by hotel revenues at Tropicana Aruba, which was acquired on August 31, 2010. Belle of Baton Rouge also experienced a decrease in net revenues primarily due to a 1.3% decrease in slot volumes and a 6.9% decrease in the average daily room rate for the year ended December 31, 2011 compared to the 2010 Combined period. Our occupancy rate in the South and other region was 49% and the average daily room rate was $73 for the year ended December 31, 2011.
Operating Income
In the East region, operating income for the year ended December 31, 2011 was $2.3 million, a $12.9 million decrease compared to the 2010 Combined period. Despite the fact that the 2010 Combined period includes 66 fewer days of Tropicana AC operations, operating income declined primarily due to the lower table game hold percentage, lower slot volumes and fewer occupied rooms in the year ended December 31, 2011.
In the Central region, operating income for the year ended December 31, 2011 was $26.3 million, a $16.3 million increase compared to the 2010 Combined period. The increase in operating income is primarily related to the increased revenues noted above in addition to an impairment loss of $10.5 million recorded in the Combined 2010 period which related to the gaming license intangible asset. In the year ended December 31, 2011, operating income also increased due to a decrease in payroll and benefits expense which was partially offset by increased rent expense. Under the terms of the lease renewal, effective December 2010, for the land on which Casino Aztar is situated, rent expense increased approximately $3.4 million in the year ended December 31, 2011 from the 2010 Combined period.
In the West region, operating income for the year ended December 31, 2011 was $7.2 million, a 0.1% decrease compared to the 2010 Combined period. This decrease is mainly attributable to a $5.1 million impairment loss recognized at River Palms offset by decreased payroll and benefits in the year ended December 31, 2011 and decreased depreciation and amortization expense due to certain assets having been fully depreciated in the current period.
In the South and other region, operating income for the year ended December 31, 2011 was $10.7 million, a $8.5 million increase compared to the 2010 Combined period. The increase is primarily due to increased operating income at Belle of Baton Rouge, partially offset by losses due to the Mississippi property closures discussed above and operating losses at Tropicana Aruba, which was acquired on August 31, 2010. At Belle of Baton Rouge, the increase in operating income was driven by decreased payroll and benefits expenses, decreased gaming taxes as well as decreased depreciation and amortization expense due to certain assets having been fully depreciated during the year ended December 31, 2011. The decreased gaming taxes in Baton Rouge are a result of both a tax credit and a reduced tax rate during the year ended December 31, 2011. In addition, Belle of Baton Rouge recorded impairments related to goodwill and the gaming license intangible asset totaling $6.5 million during the 2010 Combined period.
Corporate expenses were $12.8 million for the year ended December 31, 2011, a $11.0 million decrease from the 2010 Combined period, primarily due to a reduction of reserves related to pre-bankruptcy emergence claims sought by Wimar Tahoe Corporation and Columbia Sussex Corporation, a refund of amounts that had been held in escrow related to the Adamar bankruptcy and a reduction in outside professional fees and payroll and benefits expenses during the current year. In addition, we recognized a $0.3 million impairment related to the "Tropicana" tradename during the year ended December 31, 2011 compared to a $3.7 million impairment during the 2010 Combined period.
Interest Expense
Interest expense for the year ended December 31, 2011 was $32.4 million. The interest expense was related to our Exit Facility, which was funded on March 8, 2010, bears interest at 15% per annum and was issued at a 7% discount. Cash paid for interest expense was $19.6 million for the year ended December 31, 2011. Interest expense for the Successor Period related to the Exit Facility was $26.9 million and cash paid for interest for the same period was $16.3 million. TEH's interest expense for

41


the Predecessor Period was $2.0 million related to the Predecessors' DIP Credit Facility and cash paid for interest was $2.0 million for the same period.
Income Taxes
The income tax expense was $2.7 million for the year ended December 31, 2011, and our effective income tax rate was 779.4%. The difference between the federal statutory rate of 35% and the effective tax rate for the year ended December 31, 2011 was primarily due to disallowed foreign losses, state income taxes (net of federal benefits), employment credits, and the change in the valuation allowance. The income tax benefit was $3.2 million for the Successor Period and our effective tax rate was 15.3%. The difference between the federal statutory rate of 35% and the effective tax rate for the Successor Period was primarily related to the goodwill impairments, state income taxes (net of federal benefit), and the establishment of a valuation allowance. TEH's income tax benefit was $26.7 million for the Predecessor Period and the effective income tax rate was (1.3)%. The difference between the federal statutory rate of 35% and the effective tax rate for Predecessor Period was primarily due to reorganization charges at TEH, for which no tax benefit was recognized.
Discontinued Operations
The Company sold substantially all of CP Vicksburg's assets related to the operation of Horizon Vicksburg, in March 2011. Accordingly, the results of operations of Horizon Vicksburg are presented as discontinued operations in the accompanying condensed statements of operations for the year ended December 31, 2011 and the Successor Period. The cash flows of the discontinued operations are included with the cash flows of continuing operations in the accompanying condensed statements of cash flows for the year ended December 31, 2011 and the Successor Period.
Net Income (Loss)
Net loss for the year ended December 31, 2011 was $2.8 million which was impacted by impairment charges and other write-downs of $5.8 million primarily related to long-lived assets in our West region and intangible assets held at corporate.
Net loss for the Successor Period was $20.9 million, which was impacted by impairment losses of $20.7 million related to goodwill and intangible assets and also included a loss from discontinued operations of $3.5 million.
Net income for TEH for the Predecessor Period was $2.1 billion, which was impacted by a net gain of $2.1 billion related to reorganization items as a result of the discharge of debt and liabilities subject to compromise.
Net income for the Predecessor Period was $2.3 billion for CP Vicksburg, which was impacted by a net gain of $2.3 billion related to reorganization items as a result of the discharge of debt and liabilities subject to compromise.
Net income for the Predecessor Period was $2.3 billion for JMBS Casino, which was impacted by a net gain of $2.3 billion related to reorganization items as a result of the discharge of debt and liabilities subject to compromise.

Year ended December 31, 2010 compared to year ended December 31, 2009 (2010 Combined compared to 2009 Combined (as defined above))
The following table presents detail of our net revenues (in thousands):
 
 
Successor (a)
 
 
Predecessors (a)
 
 
 
 
 
 
 
 
Period from March 8, 2010 through December 31, 2010
 
 
Period from January 1, 2010 through March 7, 2010
 
Year ended December 31, 2009
 
 
 
 
 
 
 
Discontinued
Operations
 
 
 
 
 
Discontinued
Operations
 
 
 
 
TEI
 
 
TEH
 
CP
Vicksburg
 
JMBS
Casino
 
TEH
 
CP
Vicksburg
 
JMBS
Casino
Revenues:
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Casino
 
$
446,147

 
 
$
55,416

 
$
1,189

 
$
3,498

 
$
308,794

 
$
11,188

 
$
15,822

Rooms
 
87,872

 
 
7,101

 
86

 
45

 
39,574

 
895

 
326

Food and beverage
 
74,844

 
 
9,306

 
75

 
78

 
56,030

 
924

 
388

Other
 
22,137

 
 
1,559

 
16

 
30

 
12,845

 
263

 
192

Gross revenues
 
631,000

 
 
73,382

 
1,366

 
3,651

 
417,243

 
13,270

 
16,728

Less promotional allowances
 
(91,968
)
 
 
(8,863
)
 
(95
)
 
(99
)
 
(57,374
)
 
(822
)
 
(1,034
)
Net revenues
 
$
539,032

 
 
$
64,519

 
$
1,271

 
$
3,552

 
$
359,869

 
$
12,448

 
$
15,694

_______________________________________________________________________________

42



(a)
The results for the Successor are not comparable to the Predecessors due to the completion of the Restructuring Transactions on March 8, 2010.
The following table sets forth information concerning our results of operations by region (dollars in thousands):
 
 
Successor (b)
 
 
Predecessors (b)
 
 
Period from
March 8, 2010
through
December 31,
2010
 
 
Period from January 1, 2010
through
March 7, 2010
 
Year ended December 31, 2009
 
 
 
 
 
 
 
Discontinued
Operations
 
 
 
 
 
Discontinued
Operations
 
 
 
 
TEI
 
 
TEH
 
CP
Vicksburg
 
JMBS
Casino
 
TEH
 
CP
Vicksburg
 
JMBS
Casino
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
East
 
$
257,431

 
 
$

 
$

 
$

 
$

 
$

 
$

Central
 
98,466

 
 
22,432

 

 

 
120,190

 

 

West
 
104,840

 
 
26,174

 

 

 
146,411

 

 

South and other
 
78,256

 
 
15,868

 
1,271

 
3,552

 
93,265

 
12,448

 
15,694

Corporate
 
39

 
 
45

 

 

 
3

 

 

Total net revenues
 
$
539,032

 
 
$
64,519

 
$
1,271

 
$
3,552

 
$
359,869

 
$
12,448

 
$
15,694

Operating income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
East
 
$
15,170

 
 
$

 
$

 
$

 
$

 
$

 
$

Central
 
5,296

 
 
4,691

 

 

 
16,997

 

 

West
 
5,434

 
 
1,731

 

 

 
(2,744
)
 

 

South and other
 
(1,375
)
 
 
2,603

 
(874
)
 
933

 
13,828

 
(7,274
)
 
1,281

Corporate
 
(19,225
)
 
 
(4,604
)
 

 

 
(27,277
)
 

 

Impairment of beneficial interest in Trust
 

 
 

 

 

 
(154,300
)
 

 

Total operating income (loss)
 
$
5,300

 
 
$
4,421

 
$
(874
)
 
$
933

 
$
(153,496
)
 
$
(7,274
)
 
$
1,281

Operating income (loss) margin (c):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
East
 
5.9
 %
 
 

 

 

 

 

 

Central
 
5.4
 %
 
 
20.9
%
 

 

 
14.1
 %
 

 

West
 
5.2
 %
 
 
6.6
%
 

 

 
(1.9
)%
 

 

South and other
 
(1.8
)%
 
 
16.4
%
 
(68.8
)%
 
26.3
%
 
14.8
 %
 
(58.4
)%
 
8.2
%
Total operating income (loss) margin
 
1.0
 %
 
 
6.9
%
 
(68.8
)%
 
26.3
%
 
(42.7
)%
 
(58.4
)%
 
8.2
%
_______________________________________________________________________________

(b)
The results for the Successor are not comparable to the Predecessors due to the completion of the Restructuring Transactions on March 8, 2010, particularly for results related to depreciation, amortization and interest expense.
(c)
Operating income (loss) margin is operating income (loss) as a percentage of net revenues.
Net Revenues
In the East region, net revenues were $257.4 million for the Successor Period, all of which were attributable to the acquisition of Tropicana AC. The 2009 Combined period does not include the results of operations of Tropicana AC. For the year ended December 31, 2010, the Atlantic City market experienced a year over year decline in casino revenue of 9.6% compared to the year ended December 31, 2009.
In the Central region, net revenues for the 2010 Combined period increased 0.6% when compared to the 2009 Combined period primarily due to a 0.5 point increase in the slot hold percent. New slot product and marketing initiatives at Casino Aztar have shown a positive result for the Central region. The occupancy rate for the 2010 Combined period at our property was 74.7%, which was flat compared to the 2009 Combined period. The average daily room rate at our property was $78 for the 2010 Combined period, a 5.5% increase over the 2009 Combined period. Casino Aztar's market has experienced an overall market decline in casino revenue of 3.3% in the year ended December 31, 2010 compared to the year ended December 31, 2009.
In the West region, net revenues for the 2010 Combined period were 10.5% lower than the 2009 Combined period. This

43


decrease was driven by a 15.5% decline in slot volumes, an 11.0% decline in table game volumes and a 4.3 percentage point decline in the occupancy rate for the 2010 Combined period compared to the 2009 Combined period. The average daily room rate for the West region was $40 for the 2010 Combined period, a 1.4% decrease from the 2009 Combined period. 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. Based on the most recent market data available, the Laughlin market as a whole witnessed a decline in casino revenue of 2.1% for the year ended December 31, 2010 when compared to the year ended December 31, 2009. For the year ended December 31, 2010, the South Lake Tahoe market experienced a decline in casino revenue of 6.3% compared to the year ended December 31, 2009.
In the South and other region, net revenues from continuing operations for the 2010 Combined period were 10.4% lower than the 2009 Combined period. This decrease was driven by a 12.7% decline in slot volumes, a 16.0% decline in table game volumes and a 23.4% decline in the average daily rate for the 2010 Combined period compared to the 2009 Combined period. The average daily room rate for the South and other region was $66 for the 2010 Combined period. The decline in net revenues in the South and other region was primarily attributable to decreases in net revenues resulting from the continuing economic slowdown, reduced consumer discretionary spending and a re-branding of the hotel at the Belle of Baton Rouge which has eliminated our participation in a nationally recognized reservations system. The Baton Rouge market has experienced an overall market decline in casino revenue of 8.2% for the year ended December 31, 2010 compared to the year ended December 31, 2009.
Operating Income
In the East region, the Successor Period includes operating income of $15.2 million attributable to the acquisition of Tropicana AC.
In the Central region, operating income for the 2010 Combined period decreased compared to the 2009 Combined period. This decrease included an impairment loss related to the gaming license intangible asset of $10.5 million in the 2010 Combined period offset by decreased depreciation and amortization expense due to the lower valuation of our fixed assets under fresh-start reporting. Excluding the impairment loss and the decrease in depreciation and amortization expense the operating income improved by 1.7% related to an increase in net revenues and a decrease in insurance expense and property taxes between the 2010 Combined and 2009 Combined periods.
In the West region, operating income for the 2010 Combined period increased compared to the 2009 Combined period. The increase in the West region's operating income was primarily related to decreased depreciation and amortization expense. In addition, during the Successor Period the amortization of the unfavorable lease liability, recognized as a result of fresh-start reporting, reduced rent expense at MontBleu contributing to the overall improved operating income in the 2010 Combined period compared to the 2009 Combined period. Excluding depreciation and amortization expense from the West region, the operating results for the 2010 Combined period decreased approximately 5.6% compared to the 2009 Combined period due to decreased revenues and continued weak economic conditions.
In the South and other region, the operating income from continuing operations decreased 85.7% in the 2010 Combined period compared to the 2009 Combined period. This decrease can be attributed to the reduced net revenues, impairments related to goodwill and gaming license intangible assets of $1.7 million and $4.8 million, respectively, and increased food and beverage costs primarily related to higher food costs for seafood as well as increased repair and maintenance expense at Belle of Baton Rouge.
An impairment charge of $154.3 million was recognized at TEH during the year ended December 31, 2009 to reduce the cost basis investment in the beneficial interest in Trust to its fair value. The estimated fair value of the beneficial interest in Trust declined to $200.0 million at December 31, 2009, which was based on the $200 million credit bid by the lenders under the Credit Facility.
Interest Expense
Interest expense for the Successor Period was $26.9 million. The interest expense was related to our Exit Facility, which was funded on March 8, 2010, bears interest at 15% per annum and was issued at a 7% discount. Cash paid for interest expense was $16.3 million for the Successor Period. TEH's interest expense for the Predecessor Period was $2.0 million related to TEH's DIP Credit Facility and cash paid for interest was $2.0 million for the same period. For the year ended December 31, 2009, TEH's interest expense of $14.0 million was related to the TEH's DIP Credit Facility.
Income Taxes
Income tax benefit was $3.2 million for the Successor Period and our effective income tax rate was 15.3%. The difference between the federal statutory rate of 35% and the effective tax rate for the Successor Period was primarily related to

44


the goodwill impairments, state income taxes (net of federal benefit), and the establishment of a valuation allowance. TEH's income tax benefit was $26.7 million for the Predecessor Period and the effective income tax rate was (1.3)%. The difference between the federal statutory rate of 35% and the effective tax rate for Predecessor Period was primarily due to reorganization charges at TEH, for which no tax benefit was recognized. For the year ended December 31, 2009, TEH's effective income tax rate was 2.6%. The difference between the federal statutory rate of 35% and TEH's effective income tax rate for the year ended December 31, 2009 was primarily due to Tropicana AC interest inclusions, changes in TEH's valuation allowance and the impairment charge related to the beneficial interest in Trust.
Net Income (Loss)
Net loss for the Successor Period was $20.9 million, which was impacted by impairment losses of $20.7 million, of which $19.0 million related to our intangible assets and $1.7 million related to our goodwill.
Net income for the Predecessor Period was $2.1 billion for TEH, which was impacted by a net gain of $2.1 billion related to reorganization items as a result of the discharge of debt and liabilities subject to compromise. Net loss for TEH for the year ended December 31, 2009 was $234.5 million, which included an impairment charge of $154.3 million, loss from discontinued operations of $41.0 million and net expenses of $27.0 million related to reorganization items.
Net income for the Predecessor Period was $2.3 billion for CP Vicksburg, which was impacted by a net gain of $2.3 billion related to reorganization items as a result of the discharge of debt and liabilities subject to compromise. Net loss for CP Vicksburg for the year ended December 31, 2009 was $15.1 million, including an $8.0 million loss related to the guarantee of affiliate debt. CP Vicksburg is included in discontinued operations for the Successor Period.
Net income for the Predecessor Period was $2.3 billion for JMBS Casino, which was impacted by a net gain of $2.3 billion related to reorganization items as a result of the discharge of debt and liabilities subject to compromise. Net loss for JMBS Casino for the year ended December 31, 2009 was $6.3 million, including an $8.0 million loss related to the guarantee of affiliate debt.
Liquidity and Capital Resources
Our cash flows are and will continue to be affected by a variety of factors, many of which are outside of our control, including regulatory restrictions, competition, financial markets and other general business conditions. On the Effective Date, we repaid the DIP Credit Facility with the Term Loan Facility as discussed below. We believe that we will have sufficient liquidity through anticipated borrowing availability, available cash, trade credit and cash flow from our properties to fund our cash requirements and capital expenditures for our expected operating activities for at least twelve months. We will endeavor to fund capital expenditures for maintenance of our properties through future improvements in operating results and increased borrowing availability for at least twelve months. However, we cannot provide assurance that we will generate sufficient income and liquidity to meet all of our liquidity requirements and other obligations as our results for future periods are subject to numerous uncertainties that may result in liquidity problems, which could affect our ability to meet our obligations while attempting to meet competitive pressures or adverse economic conditions. In addition, we continually evaluate our financing needs and we may refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of the indebtedness on acceptable terms or at all.
Part of our overall strategy includes consideration of expansion opportunities in new gaming jurisdictions, underserved markets and acquisition and other strategic opportunities that may arise periodically. We may require additional funds in order to execute on such strategic growth, and may incur additional debt or sell additional equity to finance any such transactions. We cannot assure you that we will be able to incur such debt or sell any such additional equity on acceptable terms or at all.
Our material cash requirements for 2012 are expected to include (i) principal and interest payments related to our Exit Facility of $1.3 million and $15.6 million, respectively, (ii) capital maintenance expenditures expected to be between $30 million and $40 million, (iii) growth capital expenditures expected to be approximately $60 million, (iv)minimum lease payments under our operating leases of $6.9 million and (v) construction and development costs related to Tropicana Aruba's permanent casino which is currently in the planning and design stages. While we have not finalized our development plans related to Tropicana Aruba, and we may decide not to proceed with the project, we currently estimate that we will spend approximately $10 million on the permanent casino project during 2012. Likewise, the majority of our planned capital expenditures are discretionary and we may decide to spend more or less than the amounts described above.

45


The following table summarizes our historical cash flows (in thousands):
 
 
Successor (a)
 
 
Predecessors (a)
 
 
Year ended December 31, 2011
 
Period from
March 8, 2010
through
December 31,
2010
 
 
Period from January 1, 2010
through
March 7, 2010
 
 
 
 
 
 
 
 
 
Discontinued
Operations
 
 
 
 
TEI
 
TEI
 
 
TEH
 
CP
Vicksburg
 
JMBS
Casino
Cash Flow Information:
 
 
 
 

 
 
 
 
 
 
 
Net cash provided by operating activities
 
$
43,445

 
$
32,270

 
 
$
1,923

 
$
6

 
$
1,000

Net cash (used in) provided by investing activities
 
(25,676
)
 
(28,832
)
 
 
(1,057
)
 
3

 
(11
)
Net cash (used in) provided by financing activities
 
(23,956
)
 
(2,520
)
 
 
38,014

 

 

Net increase (decrease) in cash and cash equivalents
 
$
(6,187
)
 
$
918

 
 
$
38,880

 
$
9

 
$
989

_______________________________________________________________________________
(a)
The results for the Successor are not comparable to the Predecessors due to the completion of the Restructuring Transactions on March 8, 2010, particularly related to depreciation, amortization and interest expense.
For the year ended December 31, 2011 and the Successor Period net cash provided by operating activities included the results of Tropicana AC. Cash paid for interest expenses was $19.6 million, $16.3 million and $2.0 million for year ended December 31, 2011, the Successor Period and Predecessor Period, respectively. In the year ended December 31, 2009, TEH's cash paid for interest was $31.9 million. Interest expense for TEH in the Predecessor Period and year ended December 31, 2009 period is related to the DIP Credit Facility which had an interest rate of 13.3% on an outstanding balance of $65.2 million, which was repaid in full on March 8, 2010. In addition, TEH paid approximately $37.5 million in reorganization items as a result of the Chapter 11 Cases during the year ended December 31, 2009.
Net cash used in investing activities in the year ended December 31, 2011 consisted primarily of $34.0 million for capital expenditures offset by proceeds from insurance settlements and the sale of our Vicksburg property. Net cash used in investing activities in the Successor Period consisted primarily of $17.3 million for capital expenditures in addition to $12.0 million for the Tropicana Aruba acquisition. Capital expenditures relate to expenditures necessary to keep our existing properties at their current levels and are typically replacement items due to the normal wear and tear of our properties and equipment as a result of use and age. Capital expenditures in the 2010 Combined period were higher than 2009 Combined period due to capital expenditures at Tropicana AC, which were not included in the 2009 Combined period.
Net cash used in financing activities in the year ended December 31, 2011 consisted primarily of $26.3 million repayments on our Exit Facility. Net cash used in financing activities in the Successor Period consisted primarily of $2.5 million to acquire the noncontrolling interest in Greenville Riverboat, LLC. Other items include amounts related to the repayment of debt and proceeds from the exercise of the Penny Warrants. In TEH's Predecessor Period, net cash provided by financing activities consisted of $120.9 million of net proceeds from the Exit Facility which was used to repay certain indebtedness, including $65.2 million related to the DIP Credit Facility, to pay Bankruptcy Court-approved administrative claims and expenses, to provide for working capital, to pay $1.5 million for fees and expenses related to the Exit Facility and for other general corporate purposes.
Exit Facility
On December 29, 2009, we entered into the Exit Facility, which consists of (i) the $130 million Term Loan Facility and (ii) the $20 million Revolving Facility. The Term Loan Facility was funded on the Effective Date and matures on March 8, 2013. The Term Loan Facility requires mandatory principal payments of $1.3 million annually on March 8, 2011 and 2012. In March 2011 we made our scheduled principal payment of $1.3 million and then in December 2011 we made a $25.0 million prepayment on our Exit Facility and recognized a $2.4 million loss on the retirement of that portion of our debt. The Revolving Facility requires no mandatory borrowing or principal payments. Additionally, we issued 1,312,500 Penny Warrants to purchase our common stock at a strike price of $0.01 to participating lenders of the Exit Facility. On the Effective Date, the proceeds of the Term Loan Facility were used to repay certain indebtedness, including the TEH's DIP Credit Facility, to pay Bankruptcy Court-approved administrative claims and expenses, to provide for working capital, to pay fees and expenses related to the Exit Facility and for other general corporate purposes. All amounts outstanding under the Exit Facility bear interest at a rate per annum of 15% so long as no default or event of default has occurred and is continuing, or at a rate per annum of 17% in the event that a default or event of default has occurred and is continuing. In addition, we are required to pay an annual

46


administrative fee of $100,000 and an unused line fee equal to 0.75% of the daily average undrawn portion of the Revolving Facility. The Exit Facility is guaranteed by substantially all of our existing and future subsidiaries. An entity affiliated with Carl C. Icahn, Chairman of our board of directors, and through Icahn Enterprises, our principal beneficial stockholder, is a lender under the Exit Facility and holds more than 50% of the loans extended under the Exit Facility. In addition, an entity affiliated with Mr. Icahn is the administrative agent and collateral agent under the Exit Facility.
The Exit Facility, as amended in February 2011, contains mandatory prepayment provisions from proceeds received by us and our subsidiaries as a result of asset sales and the incurrence of indebtedness (subject in each case to certain exceptions). Key covenants binding us and our subsidiaries include (i) $50 million limitation per annum on capital expenditures, (ii) compliance with a fixed charge coverage ratio of not less than 2.00 to 1.00 (other than (i) for the quarter ended December 31, 2010, which has no requirement and (ii) for each of the quarters in the year ending December 31, 2011, which requires compliance with a ratio of not less than 1.00 to 1.00), and (iii) compliance with a total leverage ratio not to exceed 4.25 to 1.00. Financial covenants are tested at the end of each fiscal quarter on a last twelve months basis. Key defaults (termination provisions) include (i) failure to repay principal, interest, fees and other amounts owing under the facility, (ii) cross default to other material indebtedness, (iii) the rendering of a material judgment against us or any of our subsidiaries, (iv) failure of security documents to create valid liens on property securing the facility and to perfect such liens, (v) revocation of casino, gambling or gaming licenses, and (vi) our or our subsidiaries' bankruptcy or insolvency. Many defaults are also subject to cure periods prior to such default giving rise to the right of the lenders to accelerate the loans and to exercise remedies. After giving effect to the amendment to the Exit Facility that amended the fixed charge coverage ratio to the levels described above, we were in compliance with these covenant requirements at December 31, 2011.
Our interest expense for the year ended December 31, 2011 was $32.4 million which includes $12.8 million of amortization of the related debt discount, Penny Warrants and debt issuance costs. Interest expense for the Successor Period was $26.9 million, which includes $10.5 million of amortization. As a result of entering into the Exit Facility, we experienced an increase in interest expense in 2011 compared to the 2010 Combined period.
As of the date of filing of this Annual Report on Form 10-K, we are in discussions with a group of potential lenders concerning a possible refinancing of our Exit Facility. We cannot assure that we will be able to refinance our Exit Facility on favorable terms, if at all. Consummation of any such refinancing is subject to market and other customary conditions including, among other things, the negotiation and execution of definitive documentation. If we are unable to refinance our Exit Facility, we cannot assure that we will be able to renew or extend the Exit Facility or enter into a new credit facility, or whether any such other financing will be available on acceptable terms, if at all.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in Item 303 (a)(4)(ii) of SEC Regulation S-K.
Contractual Obligations
The following table summarizes our material future contractual obligations as of December 31, 2011 (in thousands):
 
 
Payments Due By Period
 
 
Less Than
1 Year
 
1 To 3 Years
 
3 to 5 Years
 
More Than
5 Years
 
Total
Debt (a)
 
$
1,342

 
$
102,489

 
$

 
$

 
$
103,831

Estimated interest payment on debt (b)
 
15,653

 
2,859

 

 

 
18,512

Operating leases
 
6,871

 
12,042

 
9,758

 
52,756

 
81,427

Purchase obligations (c)
 
6,074

 
88

 

 

 
6,162

Total
 
$
29,940

 
$
117,478

 
$
9,758

 
$
52,756

 
$
209,932

_______________________________________________________________________________
(a)
The Exit Facility provides for a stated maturity date of March 8, 2013.
(b)
Estimated interest payment on debt is based on principal amounts outstanding and the interest rate at December 31, 2011 and required principal payments through the maturity of the debt.
(c)
Includes commitments for various contracts, including advertising, maintenance contracts and service agreements.
Critical Accounting Policies
Management's discussion and analysis of our results of operations and liquidity and capital resources is based on our financial statements. We prepare our financial statements in conformity with accounting principles generally accepted in the United States. Certain of our accounting policies require that we apply significant judgment in determining the estimates and assumptions for calculating estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our

47


judgments are based in part on our historical experience, terms of existing contracts, observance of trends in the gaming industry and information obtained from independent valuation experts or other outside sources. We cannot assure you that our actual results will conform to our estimates. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where changes in estimates and assumptions could have a material impact on our results of operations, financial position and, generally to a lesser extent, cash flows.
We believe the following items are the critical accounting policies and more significant estimates and assumptions used in the preparation of our financial statements. These accounting policies conform to the accounting policies contained in our financial statements contained elsewhere in this Annual Report on Form 10-K.
Business Combinations
The Company accounts for business combinations in accordance with guidance related to business combinations using the purchase method of accounting for business combinations, which requires that the assets acquired and liabilities assumed be recorded on the date of acquisition at their respective fair value and the identification and recognition of intangible assets separately from goodwill. Additionally, the guidance requires, among other things, the buyer to: (1) expense acquisition-related costs; (2) recognize assets or liabilities assumed arising from contractual contingencies on the acquisition date using acquisition-date fair values; (3) recognize goodwill as the excess of the consideration transferred plus the fair value of any noncontrolling interest over the acquisition-date fair value of net assets acquired; (4) recognize on the acquisition date any contingent consideration using acquisition-date fair values (i.e., fair value earn-outs in the initial accounting for the acquisition); and (5) eliminate the recognition of liabilities for restructuring costs expected to be incurred as a result of the business combination. In addition, if the buyer determines that some or all of its previously booked deferred tax valuation allowance is no longer needed as a result of the business combination, the guidance requires that the reduction or elimination of the valuation allowance be accounted as a reduction of income tax expense.
Fresh-Start Reporting
The adoption of fresh-start reporting results in a new reporting entity. Under fresh-start reporting, all assets and liabilities are recorded at their estimated fair values and the predecessor's accumulated deficit is eliminated. In adopting fresh-start reporting, the Company was required to determine its enterprise value, which represents the fair value of the entity before considering its interest bearing debt.
Receivables
Receivables consist primarily of casino, hotel and other receivables, net of an allowance for doubtful accounts. Receivables are typically non-interest bearing and are initially recorded at cost. Accounts are written off when management deems the account to be uncollectible. An estimated allowance for doubtful accounts is maintained to reduce the Company's receivables to their expected realization, which approximates fair value. The allowance is estimated based on specific reviews of customer accounts as well as historical collection experience and current economic and business conditions. Recoveries of accounts previously written off are recorded when received.
Property and Equipment
Property and equipment under fresh-start reporting and business combination guidance is stated at fair value as of the Effective Date and acquisition date, respectively. Property and equipment acquired subsequent to the Effective Date and the acquisition date are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets or, for capital leases and leasehold improvements, over the shorter of the asset's useful life or the term of the lease. Gains or losses on disposals of assets are recognized as incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred.
We must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered a maintenance expense or a capital asset is a matter of judgment. In contrast to normal repair and maintenance costs that are expensed when incurred, items we classify as maintenance capital are expenditures necessary to keep our existing properties at their current levels and are typically replacement items due to the normal wear and tear of our properties and equipment as a result of use and age. Our depreciation expense is highly dependent on the assumptions we make about our assets' estimated useful lives. We determine the estimated useful lives based on our experience with similar assets, engineering studies and our estimate of the usage of the asset. Whenever events or circumstances occur that change the estimated useful life of an asset, we account for the change prospectively.
Long-Lived Assets
We evaluate our property and equipment and other long-lived assets for impairment in accordance with accounting guidance related to impairment or disposal of long-lived assets. For assets to be held for sale, we recognize the asset to be sold

48


at the lower of carrying value or fair value less costs to sell. Fair value for assets held for sale is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model. For long-lived assets to be held and used, we review for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we compare the estimated undiscounted future cash flows of the asset to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows are less than the carrying value, then impairment is measured based on estimated fair value compared to carrying value, with fair value typically based on a discounted cash flow model.
Goodwill and Intangible Assets
Goodwill represents the excess of purchase price over fair value of assets acquired and liabilities assumed in business combinations. In accordance with accounting guidance related to goodwill and other intangible assets, we test for impairment of goodwill and indefinite-lived intangible assets annually in the fourth quarter of each year and in certain situations between those annual dates.
Our annual impairment testing for goodwill is performed at the reporting unit level and each of our casino properties is considered to be a reporting unit. The annual goodwill impairment testing utilizes a two-step process. In the first step, we compare the fair value of each reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is estimated using the expected present value of future cash flows along with indications provided by the current valuation multiples of comparable publicly traded companies. If the fair value of the reporting unit exceeds its carrying amount, then goodwill of the reporting unit is not considered impaired. If the carrying amount of the reporting unit exceeds it fair value, then the goodwill of the reporting unit is considered impaired and we proceed to the second step of the goodwill impairment test. In the second step, we determine the implied value of the reporting unit's goodwill by allocating the fair value of the reporting unit determined in step one to the assets and liabilities of the reporting unit, as if the reporting unit had been acquired in business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.
Our indefinite-lived intangible assets which include our "Tropicana" trade name and certain gaming licenses are not subject to amortization but are tested for impairment annually. The annual impairment test for our indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The fair value of our trade name is estimated using the relief from royalty method of the income approach which is a function of projected revenue, the royalty rate that would hypothetically be charged by a licensor of an asset to an unrelated licensee, and a discount rate. The fair value of our gaming licenses is estimated using the Greenfield method of the discounted cash flow approach which is the function of the cost to build a new casino operation, the build out period, projected cash flows attributed to the casino once operational, and a discount rate.
Our definite life intangible assets include customer lists and favorable lease arrangements. Intangible assets with a definite life are amortized over their useful life, which is the period over which the asset is expected to contribute directly or indirectly to future cash flows. Management periodically assesses the amortization period of intangible assets with definite lives based upon estimated future cash flows from related operations.
Inherent in the reviews of the carrying amounts of goodwill and intangible assets are various estimates. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. If our ongoing estimates of future cash flows are not met, additional impairment charges may be recorded in future accounting periods. Estimates of cash flows are based on the current regulatory, political and economic climates, recent operating information and budgets of the various properties where we conduct operations. These estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or other events affecting various forms of travel and access to our properties.
CRDA Investment
The New Jersey Casino Reinvestment Development Authority ("CRDA") deposits made by Tropicana AC are carried at cost less a valuation allowance because they have to be used to purchase CRDA bonds that carry below market interest rates unless an alternative investment is approved. The valuation allowance is established by a charge to the statement of operations as part of general and administrative expense at the time the obligation is incurred to make the deposit unless there is an agreement with the CRDA for a return of the deposit at full face value. If the CRDA deposits are used to purchase CRDA bonds, the valuation allowance is transferred to the bonds as a discount, which is amortized to interest income using the interest method. If the CRDA deposits are used to make other investments, the valuation allowance is transferred to those investments and remains a valuation allowance. The CRDA bonds are classified as held-to-maturity securities and are carried at amortized cost less a valuation allowance.

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Self-Insurance Reserves
We are self-insured up to certain stop loss amounts for employee health coverage, workers' compensation and general liability claims. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of estimates for claims incurred but not yet reported as provided by a third party. In estimating these accruals, we consider historical loss experience and make judgments about the expected levels of costs per claim. We believe our estimates of future liability are reasonable based upon our methodology; however, changes in health care costs, accident frequency and severity and other factors could materially affect the estimate for these liabilities. The Company continually monitors changes in claim type and incident and evaluates the insurance accrual, making necessary adjustments based on the evaluation of these qualitative data points.
Customer Loyalty Program
The Company provides certain customer loyalty programs (the "Programs") at its casinos, which allow customers to redeem points earned from their gaming activity for cash, food, beverage, rooms or merchandise. Under the Programs, customers are able to accumulate points that may be redeemed in the future, subject to certain limitations and the terms of the Programs. The Company records a liability for the estimated cost of the outstanding points under the Programs that it believes will ultimately be redeemed. The estimated cost of the outstanding points under the Programs is calculated based on estimates and assumptions regarding marginal costs of the goods and services, redemption rates and the mix of goods and services for which the points are expected to be redeemed. For points that may be redeemed for cash, the Company accrues this cost (after consideration of estimated redemption rates) as they are earned, which is included in promotional allowances. For points that may only be redeemed for goods or services but cannot be redeemed for cash, the Company estimates the cost and accrues for this expense as the points are earned from gaming play, which is recorded as casino operating costs and expenses.
Income Taxes
We account for income taxes under accounting guidance for income taxes, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using