NYNY Empire Resorts Inc

Empire Resorts, Inc. (NASDAQ: NYNY) today reported financial results for the second quarter and six months ended June 30, 2006. Net revenue for the second quarter was a record $25.9 million, up 18% from the $22.0 million reported in the second quarter of 2005. Revenue from racing increased by approximately $1.6 million, or 44%, reflecting higher revenue allocations from off-track betting facilities, while revenue from the company's video gaming machine (VGM) business rose by approximately $2.3 million, or 13%. Empire's VGM operations experienced an increase in daily visits of approximately 5%. Excluding the write-off of $2.3 million in development expenses in the prior-year period, operating costs rose by approximately $3.3 million, or 16%, for the quarter versus the second quarter of 2005, reflecting the rise in revenue. The company posted operating income of $1.3 million this quarter, versus a loss of $(1.6) million in the prior-year period, including the impact of the $2.3 million write-off. EBITDA improved to $1.6 million from negative $(1.3) million in the second quarter of 2005. The company posted a net loss for the second quarter of $(0.8) million, or $(0.03) per diluted share, compared with a net loss of $(3.1) million, or $(0.12) per diluted share, in 2005. For the first six months of fiscal 2006, Empire reported net revenue of $48.5 million, versus $38.6 million in the same period last year. EBITDA was $1.7 million for the first two quarters of 2006, as compared to negative $(2.8) million in 2005. Empire's net loss for the period was $(3.0) million, or $(0.11) per diluted share, versus a net loss of $(6.4) million, or $(0.24) per diluted share, last year. "We continue to make improvements to our core operations, with the company's VGM business recording its best performance ever," commented David Hanlon, CEO and president. "We are also pleased with the progress made this quarter with regard to bringing a St. Regis Mohawk casino to the Catskills. As previously disclosed, our partners, the St. Regis Mohawks, submitted a modified Environmental Assessment to the Department of the Interior's Bureau of Indian Affairs in early July. We have been working closely with the Tribe and the BIA to complete this phase of the approval process. Although there is no set deadline for this review, we are optimistic about a conclusion in the near future. In the meantime, we have been meeting with architects, designers, and planners to facilitate a quick transition once final approvals are received. We look forward to working with Governor Pataki and the St. Regis Mohawks to bring a world class casino to the Catskills." The company makes use of EBITDA (earnings before interest, taxes, depreciation and amortization) as a financial measure which it believes is a useful performance indicator. EBITDA is not a recognized term under generally accepted accounting principles, or "GAAP," and should not be considered as an alternative to net income/(loss) or net cash provided by operating activities, which are GAAP measures. A reconciliation of EBITDA to net income/(loss) appears at the end of this release, as do both actual results for the quarter and year-to-date periods. About Empire Resorts, Inc. Empire Resorts operates the Monticello Raceway and is involved in the development of other legal gaming venues. Empire's Mighty M Gaming facility now features over 1,500 video gaming machines and amenities including a 350-seat buffet and live entertainment. Empire is also working to develop a "Class III" Native American casino and resort on a site adjacent to the Raceway and other gaming and non-gaming resort projects in the Catskills region and other areas. Additional information can be found at www.empireresorts.com. Statements in this press release regarding the company's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties, including the need for regulatory approvals, financing and successful completion of construction. The company wishes to caution readers not to place undue reliance on such forward-looking statements, which statements are made pursuant to the Private Securities Litigation Reform Act of 1994, and as such, speak only as of the date made. To the extent the content of this press release includes forward-looking statements, they involve various risks and uncertainties including (i) the risk that the various approvals necessary as described herein and other approvals required to be obtained from the United States Congress, the Bureau of Indian Affairs, the National Indian Gaming Regulatory Commission, the Governor of the State of New York and various other federal, State and local governmental entities are not received, (ii) the risk that financing necessary for the proposed programs or projects may not be able to be obtained because of credit factors, market conditions or other contingencies, (iii) the risk that sovereign Native American governments may exercise certain broad rights with regard to termination of its agreements with the company (iv) the risk of non-compliance by various counterparties of the related agreements, and (v) general risks affecting the company as described from time to time in it's reports filed with the Securities and Exchange Commission. For a full discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the company's Annual Report or Form 10-K for the most recently ended fiscal year. -0- *T EMPIRE RESORTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 -------- -------- -------- -------- Net Revenues $25,882 $21,953 $48,543 $38,643 Operating Costs 20,636 18,277 39,812 34,002 Selling, General & Administrative 3,641 2,698 7,023 5,103 Depreciation 286 280 569 557 Impairment Loss - Deferred Development Costs 2,318 2,318 --------------------------------- -------- ------- -------- ------- Total Costs & Expenses 24,563 23,573 47,404 41,980 --------------------------------- ------- ------- ------- ------- Income (Loss) From Operations 1,319 (1,620) 1,139 (3,337) Amortization of Deferred Financing Costs 170 146 316 283 Interest Expense 1,535 992 3,005 1,996 --------------------------------- ------- ------- ------- ------- Net (Loss) (386) (2,758) (2,182) (5,616) Cumulative Undeclared Dividends on Preferred Stock 388 388 776 776 --------------------------------- ------- ------- ------- ------- Net Loss Applicable to Common Shareholders $ (774) $(3,146) $(2,958) $(6,392) ================================= ======= ======= ======= ======= Weighted Average Common Shares Outstanding 26,643 26,101 26,487 26,094 Loss Per Common Share $ (0.03) $ (0.12) $ (0.11) $ (0.24) ================================= ======= ======= ======= ======= Reconciliation of Net Loss to EBITDA Net Loss $ (386) $(2,758) $(2,182) $(5,616) Less: Depreciation and Amortization 456 426 885 840 Less: Provision for Income Taxes - - - - Less: Interest 1,535 992 3,005 1,996 ---------------------------------- ------ ------- ------- ------- EBITDA (Negative) $1,605 $(1,340) $ 1,708 $(2,780) ================================== ====== ======= ======= ======= EMPIRE RESORTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 30, December 31, 2006 2005 (Unaudited) (Audited) ----------- --------- Assets Current Assets: Cash and Cash Equivalents $ 10,376 $ 6,992 Restricted Cash 2,725 4,716 Accounts Receivable 5,632 3,358 Prepaid Expenses and Other Current Assets 1,267 1,112 ------------------------------------------------- -------- -------- Total Current Assets 20,000 16,178 Property and Equipment - Net 32,110 32,536 Deferred Financing Costs - Net 3,455 2,973 Deferred Development Costs 6,382 5,558 ------------------------------------------------- -------- -------- Total Assets $ 61,947 $ 57,245 ================================================= ======== ======== Liabilities and Stockholders' Deficit Current Liabilities: Accounts Payable $ 3,549 $ 3,529 Revolving Credit Facility 7,617 7,476 Accrued Expenses and Other Current Liabilities 11,984 8,455 ------------------------------------------------- -------- -------- Total Current Liabilities 23,150 19,460 Senior Convertible Notes 65,000 65,000 ------------------------------------------------- -------- -------- Total Liabilities 88,150 84,460 Stockholders' Deficit (26,203) (27,215) ------------------------------------------------- -------- -------- Total Liabilities and Stockholders' Deficit $ 61,947 $ 57,245 ================================================= ======== ======== *T