On July 25, 2023, Golden Entertainment, Inc. (“Golden” or the “Company”) completed the sale of Rocky Gap Casino Resort (“Rocky Gap”) to Century Casinos, Inc. (“Century”) and VICI Properties, L.P. (“VICI”), an affiliate of VICI Properties Inc., for aggregate consideration of $260 million (the “Transaction”). Specifically, Century acquired the operations of Rocky Gap for approximately $56.1 million, subject to customary working capital adjustments, and VICI acquired an interest in the land and buildings associated with Rocky Gap for approximately $203.9 million. A portion of the sale proceeds was used to repay $175 million in principal amount of term loan B loans outstanding under the Company’s senior secured credit facilities.
The unaudited pro forma condensed consolidated financial statements have been derived from the Company’s historical consolidated financial statements and give effect to the Transaction. The following unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2023 and for the year ended December 31, 2022 reflect the Company’s results as if the Transaction had occurred as of January 1, 2022. The adjustments in the “Transaction Accounting Adjustments” column in the unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2023 and for the year ended December 31, 2022 give effect to the Transaction as if it had occurred as of January 1, 2022. The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2023 reflects the Company’s financial position as if the Transaction had occurred on March 31, 2023.
The unaudited pro forma condensed consolidated financial statements have been prepared based upon the information available to management as of the filing date and management estimates and are subject to assumptions and adjustments described below and in the accompanying notes to those financial statements. Management believes these assumptions and adjustments are reasonable, given the information available at the filing date. The unaudited pro forma condensed consolidated financial statements are provided for illustrative and informational purposes only and should not be considered indicative of what the Company’s results of operations or financial condition would have been had the Transaction been completed on the dates indicated in the unaudited pro forma condensed consolidated financial statements and do not purport to project the Company’s future results of operation or financial condition after giving effect to the Transaction. The actual financial position and results of operations of the Company may differ significantly from those reflected in the following unaudited pro forma condensed consolidated financial statements for a number of reasons, including but not limited to differences between the assumptions used to prepare these unaudited pro forma condensed consolidated financial statements and actual amounts. The Company therefore cautions you not to place undue reliance on the following unaudited pro form condensed consolidated financial statements.
The following unaudited pro forma combined consolidated financial statements give effect to the Transaction in accordance with Article 11 of the Securities and Exchange Commission’s (SEC) Regulation S-X. In May 2020, the SEC adopted Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” or the Final Rule. The Final Rule became effective on January 1, 2021, and the unaudited pro forma combined consolidated financial information herein is presented in accordance therewith.
The unaudited pro forma combined consolidated financial information set forth below should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the historical consolidated financial statements and the corresponding notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and its Quarterly Report on Form 10-Q for the three months ended March 31, 2023. The use of estimates and projections may affect the reported amounts in the pro forma financial statements, thus the actual results might differ from the pro forma amounts.
Golden Entertainment, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2023
(in thousands)
As Reported
Transaction Accounting Adjustments
Notes
Pro Forma
ASSETS
Current assets
Cash and cash equivalents
$
110,474
$
86,146
(1)
$
196,620
Accounts receivable, net of allowance for credit losses
15,097
—
15,097
Prepaid expenses
21,257
—
21,257
Inventories
7,239
—
7,239
Other
8,234
—
8,234
Assets held for sale
293,365
(41,236)
(2)
252,129
Total current assets
455,666
44,910
500,576
Property and equipment, net
812,308
—
812,308
Operating lease right-of-use assets, net
80,619
—
80,619
Goodwill
80,751
—
80,751
Intangible assets, net
49,718
—
49,718
Deferred income tax assets
11,822
—
11,822
Other assets
9,000
—
9,000
Total assets
$
1,499,884
$
44,910
$
1,544,794
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
—
Current portion of long-term debt and finance leases
$
477
$
—
$
477
Current portion of operating leases
12,989
—
12,989
Accounts payable
17,722
—
17,722
Accrued payroll and related
19,556
—
19,556
Accrued liabilities
36,680
6,047
(3)
42,727
Liabilities related to assets held for sale
74,472
(11,039)
(2)
63,433
Total current liabilities
161,896
(4,992)
156,904
Long-term debt, net and non-current finance leases
901,405
(175,000)
(1)
726,405
Non-current operating leases
83,609
—
83,609
Deferred income tax liabilities
53
—
53
Other long-term obligations
448
—
448
Total liabilities
1,147,411
(179,992)
967,419
Commitments and contingencies (Note 10)
Shareholders’ equity
Common stock
288
—
288
Additional paid-in capital
467,977
—
467,977
Retained Earnings
—
224,902
(4)
224,902
Accumulated deficit
(115,792)
—
(115,792)
Total shareholders’ equity
$
352,473
$
224,902
$
577,375
Total liabilities and shareholders’ equity
$
1,499,884
$
44,910
$
1,544,794
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
2
Golden Entertainment, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 2023
(Unaudited, in thousands, except per share data)
As Reported
Transaction Accounting Adjustments
Notes
Pro Forma
Revenues
Gaming
$
188,087
$
(14,514)
(5)
$
173,573
Food and beverage
46,271
(1,866)
(5)
44,405
Rooms
30,577
(1,545)
(5)
29,032
Other
13,116
(203)
(5)
12,913
Total revenues
278,051
(18,128)
259,923
Expenses
Gaming
106,926
(7,665)
(5)
99,261
Food and beverage
34,022
(1,217)
(5)
32,805
Rooms
14,781
(722)
(5)
14,059
Other operating
3,830
(141)
(5)
3,689
Selling, general and administrative
62,036
(3,263)
(5)
58,773
Depreciation and amortization
23,508
—
23,508
Gain on disposal of assets
(86)
—
(86)
Preopening expenses
384
—
384
Total expenses
245,401
(13,008)
232,393
Operating income
32,650
(5,120)
27,530
Non-operating expense
Interest expense, net
(18,236)
3,251
(6)
(14,985)
Total non-operating expense, net
(18,236)
3,251
(14,985)
Income before income tax provision
14,414
(1,869)
12,545
Income tax provision
(2,784)
396
(7)
(2,388)
Net income
$
11,630
$
(1,473)
$
10,157
Weighted-average common shares outstanding
Basic
28,308
28,308
Diluted
30,904
30,904
Net income per share
Basic
$
0.41
$
0.36
Diluted
$
0.38
$
0.33
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
3
Golden Entertainment, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2022
(in thousands, except per share data)
As Reported
Transaction Accounting Adjustments
Notes
Pro Forma
Revenues
Gaming
$
760,906
$
(59,553)
(5)
$
701,353
Food and beverage
175,363
(8,440)
(5)
166,923
Rooms
122,324
(7,787)
(5)
114,537
Other
63,126
(2,230)
(5)
60,896
Total revenues
1,121,719
(78,010)
1,043,709
Expenses
Gaming
428,984
(30,647)
(5)
398,337
Food and beverage
131,863
(4,922)
(5)
126,941
Rooms
56,414
(2,939)
(5)
53,475
Other operating
19,889
(1,178)
(5)
18,711
Selling, general and administrative
235,404
(12,919)
(5)
222,485
Depreciation and amortization
100,123
(2,423)
(5)
97,700
Loss on disposal of assets
934
—
934
Preopening expenses
161
—
161
Gain on sale
—
(224,902)
(4)
(224,902)
Total expenses
973,772
(279,930)
693,842
Operating income
147,947
201,920
349,867
Non-operating expense
Interest expense, net
(63,490)
8,556
(6)
(54,934)
Loss on debt extinguishment and modification
(1,590)
—
(1,590)
Total non-operating expense, net
(65,080)
8,556
(56,524)
Income before income tax provision
82,867
210,476
293,343
Income tax provision
(521)
(44,646)
(7)
(45,167)
Net income
$
82,346
$
165,830
$
248,176
Weighted-average common shares outstanding
Basic
28,662
28,662
Diluted
31,514
31,514
Net income per share
Basic
$
2.87
$
8.66
Diluted
$
2.61
$
7.88
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
4
Notes to Unaudited Pro Forma Consolidated Financial Statements
Transaction Accounting Adjustments
(1) Represents cash proceeds from the closing of the Transaction, subject to estimated closing adjustments, in the amount of $261.1 million less $175 million paid to repay $175 million in principal amount of term loan B loans outstanding under the Company’s senior secured credit facilities.
(2) Represents the elimination of assets and liabilities of Rocky Gap as part of the Transaction.
(3) Represents transaction costs incurred upon closing of the Transaction that had not been accrued for or paid as of July 25, 2023.
(4) This adjustment reflects the gain of $224.9 million arising from the Transaction as of July 25, 2023. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments.
(5) Represents the elimination of historical revenue and operating costs and expenses related to Rocky Gap for the three months ended March 31, 2023 and year ended December 31, 2022.
(6) Represents the elimination of interest expense on the term loan B loans that were repaid with a portion of the proceeds of the Transaction.
(7) Represents the estimated income tax effect for the three months ended March 31, 2023 and for the year ended December 31, 2022 as a result of the Transaction. The tax effect of the pro forma adjustments was calculated using the historical statutory rates in effect for the periods presented.
