Ameristar Casinos, Inc. (NASDAQ: ASCA)
- Third Quarter Consolidated Net Revenues Hold
Steady Year Over Year at $299.6 Million
- Strong Consolidated Adjusted EBITDA of $81.2
Million and Adjusted EBITDA Margin of 27.1% Despite Low Table Games
Hold at Several Properties
- Ameristar Black Hawk Adjusted EBITDA Grew 38.3% ($3.8 Million) Year Over Year,
Benefiting from the New Hotel and Other Amenities
- Continued Strengthening of Balance Sheet with
$59 Million in Third Quarter Debt Repayments for a Total of $123
Million in Year-to-Date Repayments
Ameristar Casinos, Inc. (NASDAQ: ASCA) today announced financial
results for the third quarter of 2010.
"The third quarter produced a solid and steady financial
performance," said Gordon Kanofsky, Ameristar's Chief Executive
Officer. "Our key financial metrics, including net revenues,
Adjusted EBITDA and Adjusted EBITDA margin, generally reflected
signs of stabilization in this difficult economic environment.
Overall, we had smaller quarterly year-over-year variances and
relatively consistent sequential results. These steadied results
were also evident at our East Chicago and St. Charles properties,
both of which have encountered new challenges in their respective
markets. A bridge closure near our East Chicago property has
adversely impacted the year-over-year comparisons since November
2009. However, we believe East Chicago's 2010 third quarter results
were positive under the circumstances and indicative of our
expectations for normalized operations going forward. Also, our St.
Charles property appears to have stabilized in all key financial
metrics, as well as admissions and market share, since the opening
of a new competitor in March 2010.
"Ameristar Black Hawk had strong third quarter year-over-year
net revenue growth of 50.5%. This significantly contributed to
producing the first quarter since 2008 in which consolidated net
revenues did not decline year over year," added Kanofsky. "In
addition to Ameristar Black Hawk, several of our properties in
stable competitive environments produced solid financial results
this quarter in all key financial metrics. Our Vicksburg, Council
Bluffs and Kansas City properties improved or were down only
slightly in Adjusted EBITDA compared to the prior-year third
quarter."
Third Quarter 2010 Results The following
factors impacted the comparison between the third quarters of 2010
and 2009:
- East Chicago bridge closure. The closure of the Cline Avenue
bridge has made access less convenient for many of the property's
guests. The closure resulted in decreases of $4.6 million (7.7%)
and $2.5 million (24.3%) in the property's net revenues and
Adjusted EBITDA, respectively, as compared to the prior-year third
quarter. This is a substantial improvement from the second quarter
of 2010, in which the property had year-over-year declines of $17.5
million (25.6%) in net revenues and $9.2 million (62.6%) in
Adjusted EBITDA.
- Black Hawk hotel. Our hotel that opened in late September 2009
contributed to Ameristar Black Hawk's $13.3 million and $3.8
million increases in year-over-year net revenues and Adjusted
EBITDA, respectively. "We continue to be pleased with Ameristar
Black Hawk's financial performance, especially considering we
reached the anniversary of the regulatory improvements at the
beginning of the third quarter," said Kanofsky. "To offer some
long-term perspective on Ameristar Black Hawk's growth, the
property produced approximately $7 million in Adjusted EBITDA
during 2005, which was the first full calendar year following our
acquisition of the property. Adjusted EBITDA for the 12 months
ended September 30, 2010 totaled $53.0 million on our total
investment in the property of approximately $415 million. The
significant growth can be attributed to our hotel, the regulatory
changes and our 2006 rebranding, which more than offset the adverse
impact of the statewide smoking ban that went into effect in
2008."
- Ameristar St. Charles. During the third quarter of 2010, our
St. Charles property's net revenues and Adjusted EBITDA declined
$6.6 million (9.1%) and $4.4 million (17.7%), respectively, from
the prior-year third quarter. The decreases were mostly due to the
entry of a new competitor in the St. Louis gaming market in March
2010. The adverse impact from the new competitor stabilized during
the second and third quarters of 2010. The third quarter declines
were relatively consistent with the second quarter's year-over-year
declines of 11.6% in net revenues and 14.2% in Adjusted
EBITDA.
Consolidated net revenues for the third quarter improved year
over year by $0.1 million, to $299.6 million. For the quarter ended
September 30, 2010, promotional allowances increased $10.6 million
(15.6%) over the prior-year third quarter. The rise in promotional
allowances was mostly due to increased promotional spending related
to the new hotel in Black Hawk and our efforts to draw business
following the bridge closure near our East Chicago property. We
generated operating income of $48.7 million in the third quarter of
2010, compared to $50.7 million in the same period in 2009.
Consolidated Adjusted EBITDA decreased 3.8%, from $84.4 million in
the third quarter of 2009 to $81.2 million in 2010. Consolidated
Adjusted EBITDA margin decreased 1.1 percentage points, from 28.2%
in the third quarter of 2009 to 27.1% in the third quarter of
2010.
The declines in operating income, Adjusted EBITDA and the
related margin are primarily attributable to lower table games hold
percentages at our Vicksburg and Missouri properties. We believe
that table hold variances accounted for approximately $2.8 million
of the decline in Adjusted EBITDA and a drop of 0.9 percentage
point in Adjusted EBITDA margin compared to the prior-year third
quarter. Also contributing to the declines were the changed
competitive environments at St. Charles and East Chicago, offset to
a significant degree by the improved performance at Black Hawk.
For the quarter ended September 30, 2010, the Company reported
net income of $11.9 million, or $0.20 per diluted share, compared
to net income of $14.5 million, or $0.25 per diluted share, for the
quarter ended September 30, 2009. Adjusted EPS was $0.21 for the
quarter ended September 30, 2010, compared to $0.27 for the 2009
third quarter. The decrease in Adjusted EPS from the prior-year
third quarter was primarily attributable to higher income tax
expense and increased depreciation expense from the Black Hawk
hotel, as partially offset by lower borrowing costs.
Additional Financial Information
Debt. At September 30, 2010, our
outstanding debt was $1.57 billion. Net repayments in the third
quarter of 2010 totaled $59.2 million, including a $58.0 million
repayment of a portion of the principal balance outstanding under
the revolving credit facility. After taking into consideration the
$120.0 million in net repayments under the revolving credit
facility made during the first nine months of 2010, the Company has
$107.0 million due on November 10, 2010, with approximately $168
million available for borrowing under the extended portion of the
revolving credit facility. The Company intends to repay all 2010
debt maturities with cash from operations and availability under
the extended portion of the revolving credit facility. At September
30, 2010, our total leverage and senior leverage ratios (each as
defined in the senior credit facility) were required to be no more
than 6.00:1 and 5.50:1, respectively. As of that date, our total
leverage and senior leverage ratios were each 4.81:1.
Interest Expense. For the third quarter of
2010, net interest expense was $28.1 million, compared to $30.1
million in the prior-year third quarter. The decrease is due mostly
to the July 2010 termination of the Company's two interest rate
swap agreements, with a partial offset from lower capitalized
interest. Capitalized interest decreased from $4.2 million for the
third quarter of 2009 to $0.2 million in the 2010 third quarter,
due to the completion of the Black Hawk hotel.
Capital Expenditures. For the third
quarters of 2010 and 2009, capital expenditures were $14.1 million
and $33.3 million, respectively.
Dividends. During the third quarter of
2010, our Board of Directors declared a cash dividend of $0.105 per
share, which we paid on September 27, 2010.
Outlook "We believe the signs of
stabilization that were evident at most of our properties in the
third quarter will continue into the 2010 fourth quarter," said
Kanofsky. "Year-over-year quarterly variances are expected to
narrow at our Black Hawk and East Chicago properties. The positive
impact from the Black Hawk hotel will be fully included in the
final quarters of 2010 and 2009. During the fourth quarter, we will
also lap the November 2009 East Chicago bridge closure and its
adverse impact on that property's financial results. As always, we
will continue to focus on producing net revenue and EBITDA growth.
We are optimistic the combination of solid net revenues and
consistently strong margins should continue to produce efficient
revenue flow-through."
For the full year 2010, the Company currently expects:
- depreciation to range from $108.2 million to $109.2
million.
- interest expense, net of capitalized interest, to be between
$122.5 million and $123.5 million, including non-cash interest
expense of approximately $11 million.
- the combined state and federal income tax rate to be in the
range of 43.5% to 44.5%.
- capital spending of $65 million to $70 million.
- capitalized interest of $0.6 million to $0.7 million.
- non-cash stock-based compensation expense of $13.8 million to
$14.3 million.
Conference Call Information We will hold a
conference call to discuss our third quarter results on Wednesday,
November 3, 2010 at noon EDT. The call may be accessed live by
dialing toll-free (888) 694-4728 domestically, or (973) 582-2745,
and referencing conference ID number 13620413. Conference call
participants are requested to dial in at least five minutes early
to ensure a prompt start. Interested parties wishing to listen to
the conference call and view corresponding informative slides on
the Internet may do so live at our website -- www.ameristar.com --
by clicking on "About Us/Investor Relations" and selecting the
"Webcasts and Events" link. A copy of the slides will be available
in the corresponding "Earnings Releases" section one-half hour
before the conference call. In addition, the call will be recorded
and can be replayed from 3 p.m. EDT, November 3, 2010 until 11:59
p.m. EST, November 17, 2010. To listen to the replay, call
toll-free (800) 642-1687 domestically, or (706) 645-9291, and
reference the conference ID number above.
Forward-Looking Information This 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,"
"should" or words of similar meaning, with reference to Ameristar
or our management. Similarly, statements that describe our future
plans, objectives, strategies, financial results or position,
operational expectations or goals are forward-looking statements.
It is possible that our expectations may not be met due to various
factors, many of which are beyond our control, and we therefore
cannot give any assurance that such expectations will prove to be
correct. For a discussion of relevant factors, risks and
uncertainties that could materially affect our future results,
attention is directed to "Item 1A. Risk Factors" and "Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual Report on Form 10-K for the
year ended December 31, 2009, and "Item 1A. Risk Factors" and "Item
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2010.
On a monthly basis, gaming regulatory authorities in certain
states in which we operate publish gross gaming revenue and/or
certain other financial information for the gaming facilities that
operate within their respective jurisdictions. Because various
factors in addition to our gross gaming revenue (including
operating costs, promotional allowances and corporate and other
expenses) influence our operating income, Adjusted EBITDA and
diluted earnings per share, such reported information, as it
relates to Ameristar, may not accurately reflect the results of our
operations for such periods or for future periods.
About Ameristar Ameristar Casinos, Inc. is
a leading Las Vegas-based gaming and entertainment company known
for its premier properties characterized by state-of-the-art casino
floors and superior dining, lodging and entertainment offerings.
Ameristar's focus on the total entertainment experience and the
highest quality guest service has earned it leading positions in
the markets in which it operates. Founded in 1954 in Jackpot, Nev.,
Ameristar has been a public company since November 1993. The
Company has a portfolio of eight casinos in seven markets:
Ameristar Casino Resort Spa St. Charles (greater St. Louis);
Ameristar Casino Hotel East Chicago (Chicagoland area); Ameristar
Casino Hotel Kansas City; Ameristar Casino Hotel Council Bluffs
(Omaha, Neb., and southwestern Iowa); Ameristar Casino Hotel
Vicksburg (Jackson, Miss., and Monroe, La.); Ameristar Casino
Resort Spa Black Hawk (Denver metropolitan area); and Cactus Petes
Resort Casino and The Horseshu Hotel and Casino in Jackpot, Nev.
(Idaho and the Pacific Northwest).
Visit Ameristar Casinos' website at www.ameristar.com (which
shall not be deemed to be incorporated in or a part of this news
release).
Please refer to the tables near the end of this release for the
reconciliation of the non-GAAP financial measures Adjusted EBITDA
and Adjusted EPS reported throughout this release. Additionally,
more information on these non-GAAP financial measures can be found
under the caption "Use of Non-GAAP Financial Measures" at the end
of this release.
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
REVENUES:
Casino $ 314,314 $ 311,143 $ 941,973 $ 949,547
Food and beverage 35,444 31,198 101,379 103,970
Rooms 20,602 16,598 60,234 47,084
Other 7,499 8,197 23,681 25,012
---------- ---------- ---------- ---------
377,859 367,136 1,127,267 1,125,613
Less: promotional allowances (78,292) (67,706) (232,077) (201,444)
---------- ---------- ---------- ---------
Net revenues 299,567 299,430 895,190 924,169
OPERATING EXPENSES:
Casino 137,595 135,418 407,237 421,898
Food and beverage 15,727 16,186 47,803 49,270
Rooms 4,650 2,162 13,782 6,496
Other 3,131 3,593 9,681 11,340
Selling, general and
administrative 62,692 64,995 183,262 180,579
Depreciation and
amortization 27,016 26,106 81,821 78,807
Impairment of goodwill - - 21,438 -
Impairment of other
intangible assets 191 - 34,791 -
Impairment of fixed assets - 12 4 107
Net (gain) loss on
disposition of assets (148) 264 (95) 99
---------- ---------- ---------- ---------
Total operating expenses 250,854 248,736 799,724 748,596
Income from operations 48,713 50,694 95,466 175,573
OTHER INCOME (EXPENSE):
Interest income 114 122 338 390
Interest expense, net of
capitalized interest (28,065) (30,100) (96,564) (72,617)
Loss on early retirement of
debt - (155) - (5,365)
Other 956 1,091 655 1,675
---------- ---------- ---------- ---------
INCOME (LOSS) BEFORE INCOME
TAX PROVISION 21,718 21,652 (105) 99,656
Income tax provision 9,794 7,190 2,185 41,013
---------- ---------- ---------- ---------
NET INCOME (LOSS) $ 11,924 $ 14,462 $ (2,290) $ 58,643
========== ========== ========== =========
EARNINGS (LOSS) PER SHARE:
Basic $ 0.20 $ 0.25 $ (0.04) $ 1.02
========== ========== ========== =========
Diluted $ 0.20 $ 0.25 $ (0.04) $ 1.01
========== ========== ========== =========
CASH DIVIDENDS DECLARED PER
SHARE $ 0.11 $ 0.21 $ 0.32 $ 0.32
========== ========== ========== =========
WEIGHTED-AVERAGE SHARES
OUTSTANDING:
Basic 58,188 57,648 58,003 57,491
========== ========== ========== =========
Diluted 59,421 58,647 58,003 58,233
========== ========== ========== =========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
September 30, 2010 December 31, 2009
---------------------- ----------------------
Balance sheet data
Cash and cash
equivalents $ 87,269 $ 96,493
Total assets $ 2,101,091 $ 2,214,628
Total debt, net of
discount of $10,615 and
$12,779 $ 1,555,902 $ 1,677,128
Stockholders' equity $ 342,901 $ 335,993
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Consolidated cash flow
information
Net cash provided by
operating activities $ 69,776 $ 86,040 $ 177,077 $ 212,244
Net cash used in
investing activities $ (13,917) $ (40,165) $ (45,108) $ (136,569)
Net cash used in
financing activities $ (66,496) $ (7,781) $ (141,193) $ (17,277)
Net revenues
Ameristar St. Charles $ 65,479 $ 72,065 $ 200,579 $ 222,548
Ameristar East Chicago 55,379 59,967 162,358 196,088
Ameristar Kansas City 56,928 57,528 166,973 176,354
Ameristar Council Bluffs 38,759 38,451 116,141 120,689
Ameristar Vicksburg 27,335 27,918 87,489 92,063
Ameristar Black Hawk 39,499 26,246 113,963 67,292
Jackpot Properties 16,188 17,255 47,687 49,135
---------- ---------- ---------- ----------
Consolidated net
revenues $ 299,567 $ 299,430 $ 895,190 $ 924,169
========== ========== ========== ==========
Operating income (loss)
Ameristar St. Charles $ 13,544 $ 17,952 $ 44,998 $ 56,390
Ameristar East Chicago 3,686 6,330 (46,240) 29,912
Ameristar Kansas City 15,579 15,006 44,279 47,613
Ameristar Council Bluffs 12,320 12,232 36,144 36,439
Ameristar Vicksburg 7,440 6,099 26,457 25,373
Ameristar Black Hawk 8,634 4,567 25,462 10,438
Jackpot Properties 3,851 4,171 10,288 11,472
Corporate and other (16,341) (15,663) (45,922) (42,064)
---------- ---------- ---------- ----------
Consolidated operating
income $ 48,713 $ 50,694 $ 95,466 $ 175,573
========== ========== ========== ==========
Adjusted EBITDA
Ameristar St. Charles $ 20,333 $ 24,704 $ 64,995 $ 77,113
Ameristar East Chicago 7,814 10,316 21,876 41,255
Ameristar Kansas City 19,310 19,228 55,497 59,933
Ameristar Council Bluffs 14,971 15,254 44,343 45,224
Ameristar Vicksburg 11,063 10,329 37,923 38,132
Ameristar Black Hawk 13,586 9,823 40,469 22,921
Jackpot Properties 5,240 5,813 14,646 16,292
Corporate and other (11,100) (11,025) (33,786) (31,754)
---------- ---------- ---------- ----------
Consolidated Adjusted
EBITDA $ 81,217 $ 84,442 $ 245,963 $ 269,116
========== ========== ========== ==========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED
(Dollars in Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Operating income (loss) margins
(1)
Ameristar St. Charles 20.7% 24.9% 22.4% 25.3%
Ameristar East Chicago 6.7% 10.6% -28.5% 15.3%
Ameristar Kansas City 27.4% 26.1% 26.5% 27.0%
Ameristar Council Bluffs 31.8% 31.8% 31.1% 30.2%
Ameristar Vicksburg 27.2% 21.8% 30.2% 27.6%
Ameristar Black Hawk 21.9% 17.4% 22.3% 15.5%
Jackpot Properties 23.8% 24.2% 21.6% 23.3%
Consolidated operating income
margin 16.3% 16.9% 10.7% 19.0%
Adjusted EBITDA margins (2)
Ameristar St. Charles 31.1% 34.3% 32.4% 34.7%
Ameristar East Chicago 14.1% 17.2% 13.5% 21.0%
Ameristar Kansas City 33.9% 33.4% 33.2% 34.0%
Ameristar Council Bluffs 38.6% 39.7% 38.2% 37.5%
Ameristar Vicksburg 40.5% 37.0% 43.3% 41.4%
Ameristar Black Hawk 34.4% 37.4% 35.5% 34.1%
Jackpot Properties 32.4% 33.7% 30.7% 33.2%
Consolidated Adjusted EBITDA
margin 27.1% 28.2% 27.5% 29.1%
(1) Operating income (loss) margin is operating income (loss) as
a percentage of net revenues.
(2) Adjusted EBITDA margin is Adjusted EBITDA as a percentage of
net revenues.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
(Dollars in Thousands) (Unaudited)
The following tables set forth reconciliations of operating
income (loss), a GAAP financial measure, to Adjusted EBITDA, a
non-GAAP financial measure.
Three Months Ended September 30, 2010
-------------------------------------
Impairment
Loss
and Deferred
Depreci- (Gain) Compen- Non-
ation Loss on Stock- sation Operational
Operating and Disposi- Based Plan Profess-
Income Amorti- tion of Compen- Expense ional Adjusted
(Loss) zation Assets sation (1) Fees EBITDA
-------- -------- ------- -------- ------- -------- --------
Ameristar St.
Charles $ 13,544 $ 6,520 $ 76 $ 193 $ - $ - $ 20,333
Ameristar East
Chicago 3,686 4,046 3 79 - - 7,814
Ameristar
Kansas City 15,579 3,577 (4) 158 - - 19,310
Ameristar
Council Bluffs 12,320 2,525 - 126 - - 14,971
Ameristar
Vicksburg 7,440 3,480 - 143 - - 11,063
Ameristar Black
Hawk 8,634 4,838 (32) 146 - - 13,586
Jackpot
Properties 3,851 1,263 - 126 - - 5,240
Corporate and
other (16,341) 767 - 2,346 1,081 1,047 (11,100)
-------- -------- ------- -------- ------- -------- --------
Consol-
idated $ 48,713 $ 27,016 $ 43 $ 3,317 $ 1,081 $ 1,047 $ 81,217
======== ======== ======= ======== ======= ======== ========
Three Months Ended September 30, 2009
-------------------------------------
Impairment
Loss and
Loss Deferred
Depreci- on Compen-
ation Disposi- Stock- sation
Operating and tion Based Plan Pre-
Income Amorti- of Compen- Expense Opening Adjusted
(Loss) zation Assets sation (1) Costs EBITDA
-------- -------- ------- -------- ------- -------- --------
Ameristar St.
Charles $ 17,952 $ 6,487 $ - $ 265 $ - $ - $ 24,704
Ameristar East
Chicago 6,330 3,890 12 84 - - 10,316
Ameristar
Kansas City 15,006 3,909 81 232 - - 19,228
Ameristar
Council Bluffs 12,232 2,703 143 176 - - 15,254
Ameristar
Vicksburg 6,099 3,953 40 237 - - 10,329
Ameristar Black
Hawk 4,567 2,889 - 142 - 2,225 9,823
Jackpot
Properties 4,171 1,475 - 167 - - 5,813
Corporate and
other (15,663) 800 - 2,800 1,038 - (11,025)
-------- -------- ------- -------- ------- -------- --------
Consol-
idated $ 50,694 $ 26,106 $ 276 $ 4,103 $ 1,038 $ 2,225 $ 84,442
======== ======== ======= ======== ======= ======== ========
(1) Deferred compensation plan expense represents the change in
the Company's non-cash liability based on plan participant
investment results. This expense is included in selling, general
and administrative expenses in the accompanying condensed
consolidated statements of operations.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA - CONTINUED
(Dollars in Thousands) (Unaudited)
Nine Months Ended September 30, 2010
------------------------------------
Impairment
Loss
and Deferred
(Gain) Compens- Non-
Deprecia- Loss on Stock- ation Operational
Operating tion and Disposi- Based Plan Profess-
Income Amortiz- tion of Compen- Expense ional Adjusted
(Loss) ation Assets sation (1) Fees EBITDA
-------- -------- ------- ------- ------- -------- --------
Ameri-
star
St.
Char-
les $ 44,998 $ 19,386 $ 90 $ 521 $ - $ - $ 64,995
Ameri-
star
East
Chic-
ago (46,240) 11,847 56,032 237 - - 21,876
Ameri-
star
Kansas
City 44,279 10,844 (48) 422 - - 55,497
Ameri-
star
Council
Bluffs 36,144 7,850 - 349 - - 44,343
Ameri-
star
Vicks-
burg 26,457 11,023 14 429 - - 37,923
Ameri-
star
Black
Hawk 25,462 14,652 (32) 387 - - 40,469
Jackpot
Prop-
erties 10,288 3,925 78 355 - - 14,646
Corporate
and
other (45,922) 2,294 4 7,896 895 1,047 (33,786)
-------- -------- ------- ------- ------- -------- --------
Con-
soli-
dat-
ed $ 95,466 $ 81,821 $56,138 $10,596 $ 895 $ 1,047 $245,963
======== ======== ======= ======= ======= ======== ========
Nine Months Ended September 30, 2009
------------------------------------
Impairment
Loss and
(Gain)
Loss Deferred
Deprecia- on Compen- One-Time
tion Disposi- Stock- sation Property
Operating and tion Based Plan Pre- Tax
Income Amortiz- of Compen- Expense Opening Adjust- Adjusted
(Loss) ation Assets sation (1) Costs ment EBITDA
-------- -------- ------- ------- ------- -------- -------- --------
Ameri-
star
St.
Char-
les $ 56,390 $ 20,102 $ 41 $ 580 $ - $ - $ - $ 77,113
Ameri-
star
East
Chic-
ago 29,912 11,076 81 186 - - - 41,255
Ameri-
star
Kansas
City 47,613 11,772 32 516 - - - 59,933
Ameri-
star
Council
Bluffs 36,439 8,403 (3) 385 - - - 45,224
Ameri-
star
Vicks-
burg 25,373 12,212 56 491 - - - 38,132
Ameri-
star
Black
Hawk 10,438 8,434 - 351 - 2,422 1,276 22,921
Jackpot
Prop-
erties 11,472 4,449 (1) 372 - - - 16,292
Corp-
orate
and
other (42,064) 2,359 - 6,408 1,543 - - (31,754)
-------- -------- ------- ------- ------- -------- -------- --------
Con-
soli-
dat-
ed $175,573 $ 78,807 $ 206 $ 9,289 $ 1,543 $ 2,422 $ 1,276 $269,116
======== ======== ======= ======= ======= ======== ======== ========
(1) Deferred compensation plan expense represents the change in
the Company's non-cash liability based on plan participant
investment results. This expense is included in selling, general
and administrative expenses in the accompanying condensed
consolidated statements of operations.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(Dollars in Thousands) (Unaudited)
The following table sets forth a reconciliation of consolidated
net income (loss), a GAAP financial measure, to consolidated
Adjusted EBITDA, a non-GAAP financial measure.
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
-------- -------- -------- --------
Net income (loss) $ 11,924 $ 14,462 $ (2,290) $ 58,643
Income tax provision 9,794 7,190 2,185 41,013
Interest expense, net of
capitalized interest 28,065 30,100 96,564 72,617
Interest income (114) (122) (338) (390)
Other (956) (1,091) (655) (1,675)
Net (gain) loss on disposition
of assets (148) 264 (95) 99
Impairment of goodwill - - 21,438 -
Impairment of other intangible
assets 191 - 34,791 -
Impairment of fixed assets - 12 4 107
Depreciation and amortization 27,016 26,106 81,821 78,807
Stock-based compensation 3,317 4,103 10,596 9,289
Deferred compensation plan
expense 1,081 1,038 895 1,543
Non-operational professional
fees 1,047 - 1,047 -
Loss on early retirement of debt - 155 - 5,365
Black Hawk hotel pre-opening
costs - 2,225 - 2,422
One-time non-cash adjustment to
Black Hawk property taxes - - - 1,276
-------- -------- -------- --------
Adjusted EBITDA $ 81,217 $ 84,442 $245,963 $269,116
======== ======== ======== ========
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
(Unaudited)
The following table sets forth a reconciliation of diluted
earnings (loss) per share (EPS), a GAAP financial measure, to
adjusted diluted earnings per share (Adjusted EPS), a non-GAAP
financial measure.
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
---------- ---------- --------- ----------
Diluted earnings (loss) per
share (EPS) $ 0.20 $ 0.25 $ (0.04) $ 1.01
Non-operational professional
fees 0.01 - 0.01 -
Impairment loss on East Chicago
intangible assets - - 0.56 -
Black Hawk hotel pre-opening
expenses - 0.02 - 0.03
Loss on early retirement of debt - - - 0.06
One-time non-cash adjustment to
Black Hawk property taxes - - - 0.01
---------- ---------- --------- ----------
Adjusted diluted earnings per
share (Adjusted EPS) $ 0.21 $ 0.27 $ 0.53 $ 1.11
========== ========== ========= ==========
Use of Non-GAAP Financial Measures
Securities and Exchange Commission Regulation G, "Conditions for
Use of Non-GAAP Financial Measures," prescribes the conditions for
use of non-GAAP financial information in public disclosures. We
believe our presentation of the non-GAAP financial measures
Adjusted EBITDA and Adjusted EPS are important supplemental
measures of operating performance to investors. The following
discussion defines these terms and explains why we believe they are
useful measures of our performance.
Adjusted EBITDA is a commonly used measure of performance in the
gaming industry that we believe, when considered with measures
calculated in accordance with United States generally accepted
accounting principles, or GAAP, gives investors a more complete
understanding of operating results before the impact of investing
and financing transactions, income taxes and certain non-cash and
non-recurring items and facilitates comparisons between us and our
competitors.
Adjusted EBITDA is a significant factor in management's internal
evaluation of total Company and individual property performance and
in the evaluation of incentive compensation for employees.
Therefore, we believe Adjusted EBITDA is useful to investors
because it allows greater transparency related to a significant
measure used by management in its financial and operational
decision-making and because it permits investors similarly to
perform more meaningful analyses of past, present and future
operating results and evaluations of the results of core ongoing
operations. Furthermore, we believe investors would, in the absence
of the Company's disclosure of Adjusted EBITDA, attempt to use
equivalent or similar measures in assessment of our operating
performance and the valuation of our Company. We have reported
Adjusted EBITDA to our investors in the past and believe its
inclusion at this time will provide consistency in our financial
reporting.
Adjusted EBITDA, as used in this press release, is earnings
before interest, taxes, depreciation, amortization, other
non-operating income and expenses, stock-based compensation,
deferred compensation plan expense, non-operational professional
fees, impairment charges related to intangible assets, pre-opening
costs and a one-time Black Hawk property tax adjustment. In future
periods, the calculation of Adjusted EBITDA may be different than
in this release. The foregoing tables reconcile Adjusted EBITDA to
operating income (loss) and net income (loss), based upon GAAP.
Adjusted EPS, as used in this press release, is diluted earnings
(loss) per share, excluding the after-tax per-share impacts of
non-operational professional fees, impairment charges related to
intangible assets, pre-opening expenses, the one-time Black Hawk
property tax adjustment and the loss on early debt retirement.
Management adjusts EPS, when deemed appropriate, for the evaluation
of operating performance because we believe that the exclusion of
certain items is necessary to provide the most accurate measure of
our core operating results and as a means to compare
period-to-period results. We have chosen to provide this
information to investors to enable them to perform more meaningful
analysis of past, present and future operating results and as a
means to evaluate the results of our core ongoing operations.
Adjusted EPS is a significant factor in the internal evaluation of
total Company performance. Management believes this measure is used
by investors in their assessment of our operating performance and
the valuation of our Company. In future periods, the adjustments we
make to EPS in order to calculate Adjusted EPS may be different
than or in addition to those made in this release. The foregoing
table reconciles EPS to Adjusted EPS.
Limitations on the Use of Non-GAAP Measures
The use of Adjusted EBITDA and Adjusted EPS has certain
limitations. Our presentation of Adjusted EBITDA and Adjusted EPS
may be different from the presentations used by other companies and
therefore comparability among companies may be limited.
Depreciation expense for various long-term assets, interest
expense, income taxes and other items have been and will be
incurred and are not reflected in the presentation of Adjusted
EBITDA. Each of these items should also be considered in the
overall evaluation of our results. Additionally, Adjusted EBITDA
does not consider capital expenditures and other investing
activities and should not be considered as a measure of our
liquidity. We compensate for these limitations by providing the
relevant disclosure of our depreciation, interest and income tax
expense, capital expenditures and other items both in our
reconciliations to the GAAP financial measures and in our
consolidated financial statements, all of which should be
considered when evaluating our performance.
Adjusted EBITDA and Adjusted EPS should be used in addition to
and in conjunction with results presented in accordance with GAAP.
Adjusted EBITDA and Adjusted EPS should not be considered as an
alternative to net income, operating income or any other operating
performance measure prescribed by GAAP, nor should these measures
be relied upon to the exclusion of GAAP financial measures.
Adjusted EBITDA and Adjusted EPS reflect additional ways of viewing
our operations that we believe, when viewed with our GAAP results
and the reconciliations to the corresponding GAAP financial
measures, provide a more complete understanding of factors and
trends affecting our business than could be obtained absent this
disclosure. Management strongly encourages investors to review our
financial information in its entirety and not to rely on a single
financial measure.
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