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Press Release: Ameristar Casinos, Inc.
October 31, 2002
LAS VEGAS, NV -- Ameristar Casinos, Inc. (Nasdaq: ASCA) Oct. 29 announced financial results for the quarter ended
September 30, 2002. Highlights for the third quarter include:
-- Net revenues of $187.3 million, an increase of $31.5 million, or
20.2 percent, over the third quarter of 2001.
-- Adjusted operating income of $31.4 million, representing a decrease of
$0.6 million in operating income, or 1.9 percent, as compared to the
same quarter last year. Adjusted operating income for the third
quarter of 2002 excludes $6.0 million of non-recurring charges
associated with (1) preopening expenses of $4.9 million relating to
the new St. Charles facility and (2) a $1.1 million impairment loss
from the pending sale of certain gaming equipment.
-- EBITDA (as defined below) of $45.0 million compared to $41.9 million
for the third quarter of 2001, representing an increase of
7.4 percent.
-- Net income of $7.4 million, down $3.9 million, or 34.5 percent, as
compared to the third quarter of 2001.
-- Diluted earnings per share of $0.28 compared to $0.49 for the third
quarter of 2001. Diluted earnings per share before non-recurring
charges were $0.43.
The growth in revenues and EBITDA in the third quarter of 2002 as compared to the prior year was driven primarily
by increased revenues at the expanded Ameristar St. Charles facility, which opened August 6, 2002, as well as continued
strong operating results at the Company's Council Bluffs and Vicksburg properties. The Company's net income in
the third quarter 2002 was negatively impacted by an increase in the base of depreciable assets and the reduction
of capitalized interest following the opening of the new St. Charles facility, the preopening expenses described
above, and initial operating inefficiencies at the new St. Charles facility.
"We are pleased that our innovative marketing initiatives, leading-edge design and value-oriented amenities
have resulted in record market shares in each of our markets in the third quarter," said Craig H. Neilsen,
the Company's Chairman, President and CEO. "Our commitment to delivering an exceptional gaming and entertainment
experience to our customers is ongoing. We believe the tangible results of this commitment and operating philosophy
will be realized through continuing growth in revenues and improvements in operating performance."
Net revenues at Ameristar St. Charles for the third quarter of 2002 grew to $55.0 million, an increase of 53.2
percent from the third quarter of 2001, marking the seventh straight quarter of double-digit revenue growth for
the property. Ameristar St. Charles continued to improve its market share, with an increase in the third quarter
of 2002 to an all-time record 26.8 percent, up from 19.0 percent in the third quarter of 2001, principally due
to the opening of the new facility in August 2002. Adjusted operating income (operating income before impairment
loss on certain gaming equipment held for sale and preopening expenses related to the new St. Charles facility)
was $8.8 million in the third quarter of 2002, representing a decrease of 19.3 percent from the corresponding period
in 2001. Recurring operating expenses (i.e., excluding preopening expenses and impairment loss) increased by $21.1
million largely due to higher labor and related costs and depreciation expenses associated with the opening of
the new facility. As a result, the adjusted operating income margin declined to 16.0 percent from 30.3 percent
for the third quarter of 2001.
Management expects to achieve improved operating margins in future periods through labor efficiencies, player development
initiatives, and other operational changes, but the property's stabilized operating income margin is not expected
to reach the level of the old facility because the old facility was substantially smaller, offered limited amenities
and could not always meet customer demand. The new facility is designed to absorb continuing growth of the dynamic
St. Louis market. Despite operating inefficiencies associated with the opening of the new facility, EBITDA at the
St. Charles property improved to $13.1 million in the third quarter of 2002, an increase of 11.0 percent over the
corresponding period in 2001.
Ameristar Kansas City generated net revenues of $55.5 million for the third quarter of 2002, which represents an
increase of $4.6 million, or 9.0 percent, over the prior year's quarter. The property's 15.2 percent increase in
gaming revenues as compared to the third quarter of 2001 exceeded the 5.6 percent growth in the overall Kansas
City market and improved the property's market share in the third quarter of 2002 to 35.7 percent (an all-time
record for Ameristar), up from 32.6 percent in the third quarter of the prior year. The Kansas City property has
held the number-one market position since the opening of the new 2,650-space parking garage in June 2002. Increased
costs of targeted marketing programs, including coin coupon offerings, which are recorded as promotional allowances,
caused net revenues to grow at a lower rate than gaming revenues.
Ameristar Kansas City's results were also adversely impacted by business disruption associated with construction
activity related to enhancements of its casino and entertainment facilities that began in July of this year. These
enhancements, undertaken to further improve its competitive position in the Kansas City market, include significant
improvements to the casino and major renovations to the property's land-based amenities, and are expected to be
completed in the first quarter of 2003.
Despite the increase in revenues, adjusted income from operations at Ameristar Kansas City decreased $0.7 million,
or 6.5 percent, and EBITDA decreased $0.3 million, or 2.2 percent, in the third quarter of 2002 compared to the
third quarter of 2001. The increase in operating expenses of $5.3 million, or 13.2 percent, from the third quarter
of 2001 to 2002 was due to higher labor and related costs associated with customer service initiatives as well
as additional expenses directly related to increased revenues, including gaming taxes and other expenses attributable
to player development strategies.
Ameristar Council Bluffs posted substantially improved financial results again in the third quarter of 2002 as
it continued to benefit from the on-going refinement of targeted marketing programs, the installation of new gaming
equipment and the implementation of cost containment programs. Net revenues increased to $36.9 million, up $4.4
million from the third quarter of 2001. The 13.5 percent increase in net revenues was driven by a 15.5 percent
increase in gaming revenues, which far outpaced the Council Bluffs market's 3.4 percent growth in gross gaming
revenues. As a result, Ameristar Council Bluffs improved its leading market share position to an all-time record
38.0 percent for the third quarter of 2002, up from 34.4 percent in the third quarter of 2001. Ameristar has now
been the market share leader in Council Bluffs for thirteen consecutive months. Adjusted operating income and EBITDA
also improved significantly, up 32.1 percent and 23.5 percent, respectively, over the same quarter in 2001.
Ameristar Vicksburg also experienced dramatic improvement in the third quarter of 2002, with net revenues increasing
by $3.1 million, or 15.3 percent, over the same quarter in 2001, due to the same factors stated above with respect
to Ameristar Council Bluffs. Adjusted operating income increased $2.3 million, or 63.9 percent, and EBITDA increased
$2.3 million, or 39.0 percent, over the same quarter in 2001. Ameristar Vicksburg, the long-time market share leader
in Vicksburg, improved its market share to an all-time record 40.2 percent in the third quarter of 2002, up from
34.6 percent in the third quarter of 2001.
Net revenues at the Jackpot Properties in the third quarter of 2002 were $16.5 million, up 1.2 percent from the
third quarter of 2001. This improvement is attributable to more effective marketing programs and an improved Southern
Idaho economy in the 2002 period compared to the 2001 period. The Jackpot Properties generated adjusted operating
income of $2.7 million and EBITDA of $3.6 million, down 32.5 percent and 26.5 percent, respectively, from the third
quarter of 2001. The decline in adjusted operating income and EBITDA is primarily the result of a $0.7 million
increase in employee benefit costs.
At September 30, 2002, the Company's total debt was $755.9 million, representing an increase of $40.3 million from
total debt at June 30, 2002. The increase is primarily attributable to borrowings made to fund construction of
the new casino and entertainment facility at Ameristar St. Charles and the parking garage at Ameristar Kansas City.
The Company's cash increased $1.4 million to $47.2 million from June 30 to September 30, 2002.
The Company's interest expense in the third quarter of 2002 was $13.9 million, down 6.1 percent from $14.8 million
in the third quarter of 2001, due to a lower average interest rate on the outstanding debt. Total interest cost,
before capitalizing interest associated with the Company's ongoing construction projects, was $17.4 million in
the third quarter of 2002 compared to $20.0 million for the same period in 2001. In September 2002, Standard &
Poor's Ratings Services increased its rating on the Company's senior secured debt to BB-, which reduced the interest
rate on a portion of the Company's senior credit facilities.
In accordance with Statement of Financial Accounting Standards No. 142, which the Company adopted on January 1,
2002, the Company no longer records goodwill amortization expense. Ameristar recorded $0.8 million in goodwill
amortization expense ($0.5 million after tax) in the third quarter of 2001, which decreased diluted earnings per
share by $0.02 for that quarter.
The number of diluted shares outstanding increased by 15.1 percent from the third quarter of 2001 to the third
quarter of 2002, primarily due to the issuance of 4.9 million shares in the Company's December 2001 public equity
offering. Among other factors, this increase in outstanding shares affects the comparability of earnings per share
between the third quarter of 2001 and the third quarter of 2002.
This press release contains certain forward-looking information that generally can be identified by the context
of the statement or the use of forward-looking terminology, such as "believes," "estimates,"
"anticipates," "intends," "expects," "plans," "is confident that"
or words of similar meaning, with reference to Ameristar or its management. Similarly, statements that describe
Ameristar's future plans, objectives, strategies, financial position, operational expectations or goals are forward-looking
statements. It is possible that the Company's expectations may not be met due to various factors, many of which
are beyond the control of the Company, and the Company therefore cannot give any assurance that such expectations
will prove to be correct. For a discussion of some of the factors, risks and uncertainties that could materially
affect Ameristar's future results, attention is directed to "Item 1. Business - Risk Factors" and "Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's
Annual Report on Form 10-K for the year ended December 31, 2001 and "Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations" in the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2002.
Ameristar Casinos, Inc. is an innovative, Las Vegas-based gaming and entertainment company known for its distinctive,
quality conscious hotel- casinos and value orientation. Led by President and Chief Executive Officer Craig H. Neilsen,
the organization's roots go back nearly five decades to a tiny roadside casino in the high plateau country that
borders Idaho and Nevada. Publicly held since November 1993, the Company owns and operates six properties in Missouri,
Iowa, Mississippi and Nevada, two of which carry the prestigious American Automobile Association's Four Diamond
designation. Ameristar's Common Stock is traded on the Nasdaq National Market System under the symbol: ASCA.
Visit Ameristar Casinos' Web site at www.ameristarcasinos.com
(which shall not be deemed to be incorporated in or a part of this news release).
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2002 2001 2002
REVENUES:
Casino $142,965 $176,347 $409,651 $485,881
Food and beverage 18,589 23,039 52,351 60,722
Rooms 6,313 6,492 17,908 18,629
Other 5,048 5,703 13,698 14,343
172,915 211,581 493,608 579,575
Less: Promotional
allowances 17,109 24,323 42,809 63,231
Net revenues 155,806 187,258 450,799 516,344
OPERATING EXPENSES:
Casino 63,809 80,867 187,507 217,093
Food and beverage 11,283 15,477 34,066 38,512
Rooms 2,156 2,010 6,053 5,683
Other 3,120 4,488 9,136 10,403
Selling, general and
administrative 33,492 39,443 97,556 108,953
Depreciation and
amortization 9,974 13,602 28,292 34,024
Impairment loss on
assets held for sale -- 1,077 -- 5,213
Preopening expenses -- 4,925 -- 6,401
Total operating
expenses 123,834 161,889 362,610 426,282
Income from
operations 31,972 25,369 88,189 90,062
OTHER INCOME (EXPENSE):
Interest income 193 23 475 108
Interest expense (14,818) (13,935) (50,839) (33,931)
Other 143 (318) (143) (415)
INCOME BEFORE INCOME TAX
PROVISION AND CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 17,490 11,139 37,682 55,824
Income tax provision 6,225 3,731 13,546 20,337
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 11,265 7,408 24,136 35,487
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE - adoption of
SFAS No. 133, net of
income tax benefit of $73 -- -- (135) --
NET INCOME $11,265 $7,408 $24,001 $35,487
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-CONTINUED
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2002 2001 2002
EARNINGS PER SHARE:
Income before cumulative
effect of change in
accounting principle:
Basic $0.54 $0.28 $1.17 $1.36
Diluted $0.49 $0.28 $1.08 $1.34
Net income:
Basic $0.54 $0.28 $1.16 $1.36
Diluted $0.49 $0.28 $1.07 $1.34
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 20,845 26,159 20,655 26,067
Diluted 22,908 26,367 22,349 26,424
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2002 2001 2002
Net revenues (1)
Ameristar St. Charles $35,928 $54,966 $103,176 $131,903
Ameristar Kansas City 50,877 55,536 153,236 159,732
Ameristar Council Bluffs 32,497 36,920 89,965 109,647
Ameristar Vicksburg 20,230 23,315 55,859 69,161
Jackpot Properties 16,274 16,521 43,853 45,726
The Reserve (2) -- -- 4,710 --
Corporate and other -- -- -- 175
Consolidated net
revenues $155,806 $187,258 $450,799 $516,344
Adjusted operating
income (loss) (3)
Ameristar St. Charles $10,867 $8,773 $30,828 $31,096
Ameristar Kansas City 10,751 10,133 35,166 32,829
Ameristar Council Bluffs 7,791 10,324 19,501 30,225
Ameristar Vicksburg 3,638 5,927 10,810 18,961
Jackpot Properties 3,955 2,690 8,039 8,432
The Reserve (2) -- -- 67 --
Corporate and other (5,030) (6,475) (16,222) (19,868)
Consolidated adjusted
operating income $31,972 $31,372 $88,189 $101,675
EBITDA (4)
Ameristar St. Charles $11,795 $13,067 $33,313 $37,843
Ameristar Kansas City 13,804 13,476 44,345 42,122
Ameristar Council Bluffs 10,190 12,603 26,502 37,142
Ameristar Vicksburg 5,902 8,249 16,877 25,936
Jackpot Properties 4,917 3,564 11,039 11,161
The Reserve (2) -- -- 67 --
Corporate and other (4,662) (5,986) (15,662) (18,504)
Consolidated EBITDA $41,946 $44,973 $116,481 $135,700
Adjusted operating
income margins (3)
Ameristar St. Charles 30.3% 16.0% 29.9% 23.6%
Ameristar Kansas City 21.1% 18.3% 23.0% 20.6%
Ameristar Council Bluffs 24.0% 28.0% 21.7% 27.6%
Ameristar Vicksburg 18.0% 25.4% 19.4% 27.4%
Jackpot Properties 24.3% 16.3% 18.3% 18.4%
The Reserve (2) -- -- 1.4% --
Consolidated adjusted
operating Income margin 20.5% 16.8% 19.6% 19.7%
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA-CONTINUED
(Dollars in Thousands)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2002 2001 2002
EBITDA margins (4)
Ameristar St. Charles 32.8% 23.8% 32.3% 28.7%
Ameristar Kansas City 27.1% 24.3% 28.9% 26.4%
Ameristar Council Bluffs 31.4% 34.1% 29.5% 33.9%
Ameristar Vicksburg 29.2% 35.4% 30.2% 37.5%
Jackpot Properties 30.2% 21.6% 25.2% 24.4%
The Reserve (2) -- -- 1.4% --
Consolidated EBITDA margin 26.9% 24.0% 25.8% 26.3%
(1) The Company previously recorded costs associated with its coin coupon
offerings as a casino department expense. However, under Emerging
Issues Task Force Issue 00-22, "Accounting for 'Points' and Certain
Other Time-Based or Volume-Based Sales Incentive Offers, and Offers
for Free Products or Services to be Delivered in the Future," these
charges must now be recorded as a reduction of casino department
revenue. Accordingly, the Company has reclassified these charges for
the prior periods to conform to current periods' presentation.
(2) Operating results for The Reserve in 2001 are through January 29,
2001, when it was sold by the Company.
(3) Adjusted operating income (loss) is income (loss) from operations (as
reported) before the impairment loss on assets held for sale at some
of the Company's properties and preopening expenses related to the new
St. Charles facility. Impairment loss and preopening expenses totaled
$6.0 million and $11.6 million, respectively, for the quarter and the
nine-month period ended September 30, 2002. Adjusted operating income
margin is adjusted operating income as a percentage of net revenues.
Adjusted operating income information is presented solely as a
supplemental disclosure in addition to GAAP-defined results as
management believes that it is a widely used measure of operating
performance in the gaming industry.
(4) EBITDA consists of income from operations plus depreciation,
amortization, impairment loss on assets held for sale and preopening
expenses related to the new St. Charles facility. EBITDA margin is
EBITDA as a percentage of net revenues.Gaming companies have
historically reported EBITDA information as a supplemental performance
measure in addition to the GAAP-defined results. EBITDA should not be
construed as an alternative to income from operations (as determined
in accordance with generally accepted accounting principles) as an
indicator of the Company's operating performance, or as an alternative
to cash flow from operating activities (as determined in accordance
with generally accepted accounting principles) as a measure of
liquidity. The Company has significant uses of cash flows, including
capital expenditures, interest payments, taxes and debt principal
repayments, which are not reflected in EBITDA. It should also be
noted that not all gaming companies that report EBITDA information
calculate EBITDA in the same manner as the Company.
Source: Ameristar Casinos, Inc.